Category: Current Affairs

Open Letter on Immigration

I have written an open letter on immigration reflecting the consensus opinion of economists on the major issues.  In cooperation with the Independent Institute I am looking for as many
signatures as possible from economists and other social scientists.  Brad DeLong, Greg Mankiw, Vernon Smith, Tyler Cowen and many others from both the left and the right have already signed on. 

You can sign by emailing your Name, Title and Organization.

I do hope that bloggers of all political stripes will circulate the letter.

The goal of the letter is not to cover all the issues but rather to say, ‘here is the hard-won consensus that economists have come to on these major issues.  By all means let us have a debate but let it be an informed debate.’

References and further information can be found here.

Here is the text.

Dear President George W. Bush and All Members of Congress:

People
from around the world are drawn to America for its promise of freedom
and opportunity. That promise has been fulfilled for the tens of
millions of immigrants who came here in the twentieth century.

Throughout
our history as an immigrant nation, those who are already here worry
about the impact of newcomers. Yet, over time, immigrants have become
part of a richer America, richer both economically and culturally. The
current debate over immigration is a healthy part of a democratic
society, but as economists and other social scientists we are concerned
that some of the fundamental economics of immigration are too often
obscured by misguided commentary.

Overall, immigration has
been a net gain for existing American citizens, though a modest one in
proportion to the size of our 13 trillion-dollar economy.

Immigrants
do not take American jobs. The American economy can create as many jobs
as there are workers willing to work so long as labor markets remain
free, flexible and open to all workers on an equal basis.

Immigration
in recent decades of low-skilled workers may have lowered the wages of
domestic low-skilled workers, but the effect is likely to be small,
with estimates of wage reductions for high-school dropouts ranging from
eight percent to as little as zero percent.

While a small
percentage of native-born Americans may be harmed by immigration,
vastly more Americans benefit from the contributions that immigrants
make to our economy, including lower consumer prices. As with trade in
goods and services, the gains from immigration outweigh the losses. The
effect of all immigration on low-skilled workers is very likely
positive as many immigrants bring skills, capital and entrepreneurship
to the American economy.

Legitimate concerns about the impact
of immigration on the poorest Americans should not be addressed by
penalizing even poorer immigrants. Instead, we should promote policies,
such as improving our education system that enables Americans to be
more productive with high-wage skills.

We must not forget
that the gains to immigrants from coming to the United States are
immense. Immigration is the greatest anti-poverty program ever devised.
The American dream is a reality for many immigrants who not only
increase their own living standards but who also send billions of
dollars of their money back to their families in their home countries–a
form of truly effective foreign aid..

America is a generous
and open country and these qualities make America a beacon to the
world. We should not let exaggerated fears dim that beacon.

Sign here if you are in agreement.  Thanks!

Med Mal Talk

On Thursday morning I will be speaking in New York at the Harvard Club on my new Manhattan Institute study (with Amanda Agan), Medical Malpractice Awards, Insurance, and Negligence: Which are Related?  No link yet, the study will be released Thursday.

There is a reception, 8-8:30 am, followed by the seminar and questions, 8:30-9:30 am.  If you would like to attend RSPV to (212) 599-7000 and be sure and give me the secret MR signal at the club so I know who you are.

John Kenneth Galbraith passes away

He was 97 years old.  Here are a few blogger reactions.  Here is a lengthy New York Times obituary.  Here is an earlier Brad DeLong review.

His analytic legacy? He much overrated corporate power.  But he kept alive the notion that the exercise of consumer demand and consumer sovereignty do not alone guarantee a good outcome.  The market failures of the past were when consumers did not get what they want.  The market failures of the future will come when consumers do get what they want.  We can expect to see an intensifying arms race: suppliers will attempt to persuade people and grab their attention; the meta-rational parts of consumers will build up preemptive defenses.

The Peace Corp.

Private security companies like Blackwater have thrived in Iraq, where
the US military has relied on them for everything from guarding convoys
to securing the Green Zone. But these companies recognize that the
demand for their services in Iraq will eventually diminish, and
Blackwater, for one, is looking for new markets….When Kofi Annan was UN undersecretary general for
peacekeeping, he explored the option of hiring the South African
private military company Executive Outcomes to aid in the Rwandan
refugee crisis. He ultimately decided against the option, declaring
that ”the world is not yet ready to privatize peace." 

The world still appears to be unready-and representatives of
private military companies believe that’s shortsighted. ”When
traditional peacekeepers can’t provide an adequate response because of
their home country obligations, there’s an alternative that should be
openly and frankly discussed. And that’s a private professional group,"
says Chris Taylor, Blackwater’s vice president for strategic
initiatives….

…When the world’s governments and multilateral organizations
have proven as ineffectual as they have in Darfur, should they turn to
the private sector for help? In the absence of a viable alternative, is
the international community’s aversion to what some call ”mercenarism"
stronger than its will to fight genocide?

From the Boston Globe.

No doubt there are some issues to be addressed but this objection from  David Isenberg, senior analyst at the British American Security Information Council, is farcical.

”How do you ensure oversight, compliance with international
humanitarian law, follow the rules of warfare, rules of engagement,
comply with the Geneva Conventions, and the whole bureaucratic panoply
of rules that come into play?"

How indeed.  But after Guantanamo, Abu Ghraib, secret CIA prisons etc. how can anyone claim that this is an argument against privatization?

Thanks to David Theroux for the pointer.


Addendum
: Matt Yglesias has some sensible and surprisingly positive thoughts on the peace corp question. In the comments LaFollette Prog writes "If Doctors Without Borders decides to hire a regiment of Doctors With Heavy Artillery and starts capping some Janjaweed ass, it might improve their fundraising efforts in rural America…"

Jane Jacobs passes away

Here is a NYT obituary.  Her The Death and Life of Great American Cities is one of the best books I have read.  From the NYT:

In her book "Death and Life of Great American Cities," written in 1961,
Ms. Jacobs’s enormous achievement was to transcend her own withering
critique of 20th-century urban planning and propose radically new
principles for rebuilding cities. At a time when both common and
inspired wisdom called for bulldozing slums and opening up city space,
Ms. Jacobs’s prescription was ever more diversity, density and dynamism
– in effect, to crowd people and activities together in a jumping,
joyous urban jumble.

French economics

Earlier I wrote that French students need more Bastiat and less Foucault.  Supporting evidence is provided by The International Herald Tribune which notes:

In a 22-country survey published in January, France was the only nation
disagreeing with the premise that the best system is "the free-market
economy." In the poll, conducted by the University of Maryland, only 36
percent of French respondents agreed, compared with 65 percent in
Germany, 66 percent in Britain, 71 percent in the United States and 74
percent in China
(!, AT)….

"The question of how economics is taught in France, both at the bottom
and at the top of the educational pyramid, is at the heart of the
current crisis," said Jean-Pierre Boisivon, director of the Enterprise
Institute…

"In France we are still stuck in 1970s Keynesian-style economics – we
live in the world of 30 years ago," he said. …

And then there are the textbooks. One, published by Nathan and widely
used by final-year students, has this to say on p. 137: "One must
analyze the salary as purchasing power that you could not cut without
sparking a deflationary spiral and thus higher unemployment." Another
popular textbook, published by La Découverte, asks on p. 164: "Are
there still enough jobs for everyone?" It then suggests that the state
subsidize jobs in the public sector: "We can seriously envisage this
because our economy allows us already to support a large number of
unemployed people."

These arguments were frequently used on the streets in recent weeks,
where many protesters said raising salaries and subsidizing work was a
better way to cut joblessness than flexibility.

Hat tip to Peter Gordon who is teaching in Paris but finds his students considerably more sophisticated.

Zimbabwe Fact of the Day

Zimbabwe continues its descent

The country’s money is devaluing so fast that you have to lug around plastic bags full of it if you’re doing a small grocery shop. To buy anything bigger, you’ll need to fill a suitcase. …A telephone bill last month – more than 15 million Zimbabwe dollars – would have bought five houses five years ago. Nice houses, in Harare’s rich suburbs.

This week, $15 million is worth just £41 – enough to buy a tank of black-market petrol. Next week – who knows?

Here’s a previous post on Zimbabwe, cadavers for rent.  Hat tip to Newmark’s Door.

Assorted links

1. Economists agree that stadium subsidies don’t pay for themselves.  I am on board though I worry that not all these studies account for the indirect benefits of having a team in your area to root for.  Go, Gilbert.

2. Markets in everything: Flushable toddler urinals, why make them sit?  Thanks to Carrie Conko for the pointer.

3. Robin Hanson’s recent talk on the economics of robots.  He is speaker number three, skip ahead if you wish.

4. The most expensive cars, $440,000 and up.

5. AARP list: the sexiest people over 50.  But where is Mitsuko Uchida?

Sentence of the Day – French Edition

Unexpected violence broke out in Lyon when a march of about 2,500 Turks
protesting against a memorial to Armenian victims of a 1915 massacre in
the then Ottoman Empire crossed paths with the anti-CPE demonstrations.

(From Reuters
regarding today’s huge protests in France against the new bill allowing
firms to fire young workers in their first two years of empolyment if
they don’t work out.)