Economists Forgetting Economics To Defend Immigration, Part XLI
02/07/2007
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George Mason U. economist Tyler Cowen writes on his Marginal Revolution blog:

"I do understand the concerns raised by Steve Sailer and others against immigrants, and I readily grant that the idea of open borders is a non-starter. But is the United States today in a position where Latino immigrants are tearing us apart? I think not.

"Yes I know your anecdotes, but here is what it would take to budge me. Do a study of real estate prices in San Diego, Santa Ana (a largely Mexican part of Orange County), and the relevant sections of Houston, among other locales. Show me that real estate values in those areas are falling or even plummeting, and yes I do mean in absolute terms and no the recent collapse of the real estate bubble doesn't count. Then I'll give the issue another look. Otherwise the worst I am going to believe is that "things are not getting better as rapidly as they might otherwise be," and that, whether or not you like such a possible state of affairs, does not represent the sky falling."

I'm fascinated by how economists forget everything they know about economics when it comes time to defend immigration. Here are four Econ 101 concepts Tyler is ignoring:

1. Supply and Demand: Why would increased demand from immigration cause lower real estate prices?

2. Actual, Not Nominal, Costs: The standard way economists think (about everything except immigration) is to adjust for cost of living. Minnesota has the highest standard of living, at least in terms of things money can buy (i.e., not weather). At the bottom are Washington D.C., Hawaii and California.

3. Risk vs. Return: What is the risk that America is headed for a Netherlands-style immigration disaster? 20%, say? And what is the risk we're headed for a Kosovo-style catastrophe? 2%? Now, exactly what is the enormous upside to illegal immigration that compensates for risks that bad?

4. Opportunity Costs: Tyler writes:

"Otherwise the worst I am going to believe is that "things are not getting better as rapidly as they might otherwise be," and that, whether or not you like such a possible state of affairs, does not represent the sky falling."

That's a particularly bizarre standard for judging public policy for Tyler of all people to advocate in the light of his own blog posting of August 20, 2004:

"The importance of the growth rate increases, the further into the future we look. If a country grows at two percent, as opposed to growing at one percent, the difference in welfare in a single year is relatively small. But over time the difference becomes very large. For instance, had America grown one percentage point less per year, between 1870 and 1990, the America of 1990 would be no richer than the Mexico of 1990.... But in my view, if you are not supporting growth-maximizing economic policies, you better had a pretty good reason in your pocket."

What would LA be like today without 30 years of illegal immigration? Seattle with sunshine? With its enormous advantages, LA ought to be one of the finest cities in the world by now. Trust me, it's not.

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