by Richard M. Ebeling
|Economic privilege is never so visible as it is during periods of crisis
and depression. What are merely lone voices crying for protection from
the rigors of the marketplace during normal times become a chorus of special
interests begging for high tariffs and import quotas to camouflage their
inefficiencies. Rarely has the state turned a deaf ear to their pleas.
More often than not, reason and consumer interest have failed in their
attempt to withstand the pressure of those who have striven for gain through
“The Protectionist creed rises like a weed in every soil,” lamented the Classical economist Walter Bagehot over a hundred years ago. “Every nation wishes prosperity for some conspicuous industry. At what cost to the consumer, by what hardship to less conspicuous industries, that prosperity is obtained, it does not care...the visible picture of the smoking chimney absorbs the whole mind.”
The economic recession of the past few years has revived the ideology of protectionism once again. The steel industry won limitations on the importation of European and Japanese steel by ranting about “dumping.” American farmers mass at the Mexican border chanting incantations to ward off the flow of cheap food from south of the Rio Grande. And the trade unions conjure up the image of millions of unemployed workers if protectionist policies are not enacted to “save” American jobs.
All of these myths have been answered and demolished hundreds of times over. In every case, logic has refuted the conclusions of the protectionist rationale. And in every instance, it has been demonstrated that the purpose of the restrictions were to preserve the economic status of some, while victimizing others.
The most insidious form of protectionism, however, does not pertain to the barriers placed in the way of the free movement of goods. As harmful and as illogical as these interventions are, none cause the human hardship and misery that immigration restrictions impose.
The importance of the principle of laissez-passer was understood early in American history. It was clearly enunciated by Thomas Jefferson, when he insisted upon “the natural right which all men have of relinquishing the country in which birth or other accident may have thrown them, and seeking subsistence and happiness wheresoever they may be able, or may hope to find them.”
Leaving behind poverty, despotism, war, and conscription, millions came to the American shores, to build “a nation of immigrants.” Between 1800 and 1840, about 800,000 immigrants arrived in the United States, of whom 750,000 remained in America. And from the middle of the 19th century until the 1930s, gross immigration tended to exceed 200,000 per year (with the number exceeding 1,000,000 per year on six occasions).
Of course, this inflow of immigrants was not without opposition. There were those who feared the “alien” element and the “impurities” that were “polluting” the American soil. In 1903, John R. Commons, a leader of the American Institutionalists, begged for limitations on the immigration of particular ethnic groups. “Our democratic theories and forms of government were fashioned by but one of the many races and peoples,” Commons insisted. “That race, the so-called Anglo-Saxon, developed them out of its own insular experience unhampered by inroads of alien stock.”
But arguments such as Commons had already been shown the contempt they deserved during the heyday of the Know-Nothing Party in the mid-19th century. In 1855, Abraham Lincoln expressed his disgust with this “Americanist” philosophy. “When the Know-Nothings get control,” Lincoln said, “it [the Declaration of Independence] will read ‘all men are created equal except negroes and foreigners and Catholics.’ When it comes to this, I should prefer emigrating to some country where they make no pretense of loving liberty—to Russia, for instance, where despotism can be taken pure, and without the basic alloy of hypocrisy.... ”
Now, in fact, it is difficult to see what exactly that American “stock” was that Commons and others were so concerned about preserving and protecting. To the contrary, America’s history has been one of ever-new faces and peoples. America has truly been a nation of immigrants.
In the 1830s, 500,000 new arrivals touched upon American soil. In the 1840s, that number increased to 1.5 million, with an additional 2.6 million added in the 1850s. By the turn of the century, ton million people of foreign birth were living in the United States. And out of a total U.S. population of slightly over 76 million, 26 million were the children of foreign-born parents.
During the period 1900-1920, approximately 13.5 million more immigrants arrived in America. It was only the post-World War I hysteria about foreign subversives and the influence of vested interests that brought that movement to an end. As the historian Charles Beard aptly put it, “The gates of the once wide-open ‘asylum for the oppressed of all lands’ had been brought together with a bang. . . . ”
In the period 1931 to 1945, only 900,000 new people were allowed entrance. In the post-World War II era, the fear of foreigners dampened slightly and 4.4 million were allowed to enter the country between 1945 and 1965.
This multitude of humanity, however, had not been the product of one culture, but of many. In vast numbers they came from Britain, Ireland, Germany, Italy, the Balkans, Russia, Mexico, and Asia. America was not the child of one racial or cultural strain, but rather the offspring of diversity and change. Not bound by one cultural heritage or one concept of social strata, America developed precisely because of its multicultural fluidity—constantly fed by newcomers supplying fresh spirit and potential.
America became a wide-open—yes, let’s not be afraid to use that cliché—“land of opportunity.” It was clearly seen by the Italian classical liberal Gugliemo Ferrero. At the turn of the century, he wrote:
In 1882 (four years before the Statue of Liberty was given to the United States), the first immigration laws were imposed upon the Chinese. From 40,000 Chinese immigrants in 1882, the number tumbled to ten in 1887. Even to stay in the United States every Chinese required the sworn testimony of a white man. Writing in a recent issue of Society, Betty Lee Sung explained that “before 1943 Chinese immigrants were not permitted to become citizens no matter how long they had resided in this country.... They were forbidden by the Alien Land Acts to own land.... They were also denied the right to intermarry in many western states.”
More recently, the unfair labor competition arguments have been directed against the potential Mexican immigrant (though more generally to all immigrants). With a force of 9,600 men and a budget of $250 million, the Immigration and Naturalization Service (INS) every year sends its men scurrying along the U.S.-Mexican border rounding up “illegals” and sending them back to a Mexican economy that suffers from high inflation and an unemployment rate of 20 to 30 percent. In 1973, the INS deported 655,928 of these “aliens; ” in 1974, 788,145; in 1975, 766,600; and in 1977, the number exceeded one million.
However, for every one potential immigrant captured at the border, the INS admits three to five others escape detection and join the estimated seven to 12 million illegal aliens already residing in the United States.
Thus, the logical step is to ask what exactly are the economic consequences that follow from the free flow of people from one geographical area to another. Let us first abstract from the rest of the world and inquire into how a labor force is distributed within our own country.
Within America, freedom of trade and freedom of movement are established principles. At any given moment in time, consumers are spending their income in a manner that reflects their relative preferences for various goods and services sold on the market. In turn, producers are purchasing various factors of production—including labor—in the anticipation that the costs incurred in hiring them will be compensated when their products are sold on the market. Workers, in turn, look for the best job opportunities that they can find, based upon their view of which employers are offering the highest wages and best working conditions, given the particular skills that they possess.
Producers establish their businesses in various parts of America based upon, among other things, the location of raw materials necessary for their production activities and the transportation costs that must be paid to get the products to their markets. The laborers will, to the extent that they are willing and able to bear the cost of moving from one location to another, move from one job to another in such a way that the same wage rate tends to be paid in all parts of the country for each of the respective types of labor. (Unions, the cost of living, welfare benefits, unemployment insurance, and other such differences, of course, might lead people to act differently.)
Suppose there occurs an increase in the demand for the products produced in a particular part of America—in California, for instance—and a decrease in the demand for products made in, say, New York. The anticipation of a higher selling price for their products will induce these California producers to offer higher wages, to attract more workers into their industries. On the other hand, the fall in the demand for New York products will result in those producers offering wages lower than before. The fall in New York wage rates will create an incentive for some of those workers to migrate to California where higher wages are now available. As more and more workers move to California, the increase in the labor supply will begin to lower California wages. And as more and more workers leave New York, the decrease in the labor supply will raise New York wages. The process will come to an end when the wages received in New York and California are roughly equivalent and the incentive for migration has disappeared.
Of course, there will be some individuals who, because of nonmonetary attachments to their hometown or home state, may choose not to move when a change in wage rates occurs between two locations. Thus, the people residing near Lake Tahoe may decide to remain there, even though higher wages could be received somewhere else. In turn, some people may choose to move from somewhere else without monetary incentives; a desired change in climate or a disapproval of the ideas or morals of the people around them may stimulate immigration to another part of America.
Immigration to California due to these nonmonetary reasons will tend to cause lower wages there. But it will, on the other hand, set off market forces to correct the imbalance. Other areas of America will be offering wages that now are higher than in California. For some residents of California, this will act as an incentive to move elsewhere, until wages are once again adjusted throughout America.
The same principles apply when the geographical area being considered incorporates more than one country. This is most clearly seen when we consider the case of Mexico and the United States. Prior to the U.S. Immigration Act of 1924, movement between the two countries was completely open. A major emigration from Mexico occurred during the decade 1910-1919. The initial cause was the extreme violence in Mexico during that country’s revolutionary war. However, labor shortages (particularly in agriculture) began to develop once the United States entered the First World War. In 1910, 17,760 Mexicans moved into the United States. In 1919, the number increased to 28,844 new arrivals. It peaked in 1923, with the movement of 62,709 Mexicans to areas north of the Rio Grande. But the 1924 immigration act soon brought this torrent to a halt, and by 1933, only 1,000 Mexicans were being allowed into the United States each year. Under the 1968 immigration act, only 120,000 people from the Western Hemisphere were allowed into the United States annually, with Mexico being allowed a maximum of 40,000 out of that total. (Of course, the restrictions on free movement have not been totally the fault of the United States. Under Article 123 of the 1917 Mexican constitution, the unregulated hiring of Mexican citizens by foreign nations had been prohibited.)
The barriers placed in the way of free immigration have prevented the adjustment of wage rates between the United States and Mexico. Under laissez-passer, the discrepancy between what was paid for one type of labor in the United States and what was received for the same type of labor in Mexico would act as an incentive for workers to move, until economic adjustments were made. Instead, this rigidity imposed on the market by the governments concerned has caused the wage differentials to widen more and more.
In 1976, the average hourly wage for agricultural labor in the United States was $2.66; in Mexico, the average hourly wage in the agricultural industry was equivalent to $0.45. In 1977, U.S. manufacturing industries paid, on the average, $5.65 an hour; in Mexico, the equivalent wage was $1.58 per hour. The hourly average wage for American construction workers in 1974 was $6.54; in Mexico, it was $0.84 an hour. In 1973, in the United States, the average hourly salary on the principal railroads was $5.40 (on local railroads and bus lines it averaged $3.97 an hour); in Mexico, the equivalent wage rate in the transportation industry was $0.94 an hour.
While Mexican immigrants in the United States may earn less than the national average in these areas, they will still earn much more than they would have in Mexico.
It is not surprising, then, that many Mexican workers desire to immigrate to the United States. And what would be the terrible consequences if the gates were opened to these Mexicans? In those industries in the American economy that would be affected by the larger labor supply, a lowering of wage rates would occur. Some of the workers in those industries might have to shift to work in other established firms. However, there exist alternative possibilities, as well. Since labor, like any other commodity, is a scarce resource, the larger labor force in America could enable a greater intensification of the division of labor—thus raising the productivity of workers in general. The larger supply of workers would also enable the application of labor towards the production of goods and services that previously could not be supplied at all because of the scarcity of hands. As Stephen Chapman points out in his excellent article, “Let the Aliens In,” in The Washington Monthly July-August 1977):
The flexibility of wage rates—a necessary ingredient for a stable and progressive economy—has been something vehemently resisted by the trade unions. Their opposition to free immigration has always been a key element in their drive for union privileges. “The oft-referred to ‘miracle’ of the high wages in the United States and Australia,” Ludwig von Mises has observed, “may be explained simply by the policy of trying to prevent a new immigration...that the unions in all those countries which have more favorable conditions of production, relatively fewer workers and thus higher wages, seek to prevent an influx of workers from less favored lands....”
At the turn of the century, for example, Samuel Gompers insisted that “as these immigrants flooded basic industries they threatened to destroy our standards.” Gompers proudly added: “[A]s a nation we began to consider policies of regulation. The labor movement was among the first organizations to urge such policies......”
The restrictions pertain, however, not only to unskilled labor and farm workers, but to all types of skilled labor, as well. In fact, there are thirty-two “exclusion” categories expressly forbidding individuals with particular talents from residing and working in the United States. Pressure from the American medical profession has resulted in foreign medical graduates being placed on that restriction list. Laurier B. McDonald, a Texas lawyer long involved with illegal alien cases, has pointed out that existing law “places physicians in the same category as prostitutes, thieves, idiots and subversives.”
The immigration laws have both seen and unseen consequences. The obvious effects are evident all around the world. They are seen in the state of starvation that is the human condition in dozens of countries; they are seen in the cardboard hovels that many Mexicans call “home,” in the area surrounding Tijuana and Ensenada; they are seen on the faces of the desperate individuals who time and time again make the vain attempt to enter the United States—both legally and illegally; and they are seen in the mass attempts to escape from various despotisms and in the bickerings among nations over who will have to take these refugees—most recently in the cases of the Ugandan Asians, and with the Vietnamese and Cambodians.
The unseen burden of immigration laws falls upon those who illegally reside in the United States. As Stephen Chapman wrote in his Washington Monthly article:
Economic reality and basic human justice, therefore, call for the immediate removal of all immigration and emigration restrictions.
One might object that there still remains the problem of the welfare state. Just as the differential in welfare payments between various states has enticed a migration of people to the high-paying welfare areas in America, the same process might occur among nations. But surely this is more an argument against the continuance of the welfare state itself than against the free flow of people. The existence of one set of statist impositions should not be the rationale for imposing yet another set.
Moreover, as Chapman has pointed out, the picture of the illegal alien as a welfare-grasping bum is viciously unjust: “Aliens, like most immigrants, generally appear eager to accept work of any kind because of the social stigma they attach to not working, the improvement it represents over jobs in their native countries, and the hope of advancement.” Moreover, a Department of Labor study by David North and Marion Houston reported the following in 1976:
Even those who should know better fall into the collectivist snares. In a letter to the London Times on February 11, 1978, Professor Friedrich A. Hayek—himself an immigrant several times in his life—praised the British Conservative leader Margaret Thatcher for her call for stringent immigration controls. “While I look forward, as an ultimate ideal, to a state of affairs in which national boundaries have ceased to be obstacles to the free movement of men,” Hayek declared, “I believe that within any period with which we can now be concerned, any attempt to realize it would lead to a revival of strong nationalist sentiments.”
The problem facing the world is not the possibility of a revival of nationalism and other collectivist atavisrns, but rather that they already dominate all social thought and policy. We cannot passively wait for the day when mankind will somehow “naturally” evolve out of collectivism, It must be resisted and abolished—and that includes the abolition of immigration barriers and the human suffering that they cause.
We must embrace the philosophy expressed by the French classical liberal, Emile Levasseur: