Brooks and Krugman

Bobo is going to be drummed out of the Republican party and ridden out of town on a rail.  In “The Easy Problem” he says taken on cold economic grounds alone, the case for immigration reform is a no-brainer.  It’s amazing.  He doesn’t moralize about the poor browns making sexy-time he doesn’t approve of, and there’s not a word about huge fences all along our southern border…  Prof. Krugman has a question in “Looking for Mr. Goodpain:”  Where are the austerity successes? Britain? Ireland? Keep looking.  Here’s Bobo:

Over here in the department of punditry, we deal with a lot of hard issues, ones on which the evidence is mixed and the options are all bad. But the immigration issue is a blessed relief. On immigration, the evidence is overwhelming; the best way forward is clear.

The forlorn pundit doesn’t even have to make the humanitarian case that immigration reform would be a great victory for human dignity. The cold economic case by itself is so strong.

Increased immigration would boost the U.S. economy. Immigrants are 30 percent more likely to start new businesses than native-born Americans, according to a research summary by Michael Greenstone and Adam Looney of The Hamilton Project. They are more likely to earn patents. A quarter of new high-tech companies with more than $1 million in sales were also founded by the foreign-born.

A study by Madeline Zavodny, an economics professor at Agnes Scott College, found that every additional 100 foreign-born workers in science and technology fields is associated with 262 additional jobs for U.S. natives.

Thanks to the labor of low-skill immigrants, the cost of food, homes and child care comes down, living standards rise and more women can afford to work outside the home.

The second clear finding is that many of the fears associated with immigration, including illegal immigration, are overblown.

Immigrants are doing a reasonable job of assimilating. Almost all of the children of immigrants from Africa and Asia speak English and more than 90 percent of the children of Latin-American immigrants do. New immigrants may start out disproportionately in construction and food-service jobs, but, by second and third generation, their occupation profiles are little different from the native-born.

Immigrants, including illegal immigrants, are not socially disruptive. They are much less likely to wind up in prison or in mental hospitals than the native-born.

Immigrants, both legal and illegal, do not drain the federal budget. It’s true that states and localities have to spend money to educate them when they are children, but, over the course of their lives, they pay more in taxes than they receive in benefits. Furthermore, according to the Congressional Budget Office, giving the current illegals a path to citizenship would increase the taxes they pay by $48 billion and increase the cost of public services they use by $23 billion, thereby producing a surplus of $25 billion.

It’s also looking more likely that immigrants don’t even lower the wages for vulnerable, low-skill Americans. In 2007, the last time we had a big immigration debate, economists were divided on this. One group, using one methodology, found immigration had a negligible effect on low-skill wages. Another group, using another methodology, found that the wages of the low-skilled were indeed hurt.

Since then, as Heidi Shierholz of the Economic Policy Institute explains, methodological advances suggest that the wages of most low-skill workers are probably not significantly affected. It turns out that immigrant workers are not always in direct competition with native-born workers, and, in some cases, they push the native-born upward into jobs that require more communication skills.

Shierholz found that between 1994 and 2007 immigration increased overall American wages by a small amount ($3.68 per week). It decreased the wages of American male high school dropouts by a very small amount ($1.37 per week). And it increased the wages of female high school dropouts by a larger amount ($4.19 per week).

The argument that immigration hurts the less skilled is looking less persuasive.

Because immigration is so attractive, most nations are competing to win the global talent race. Over the past 10 years, 60 percent of nations have moved to increase or maintain their immigrant intakes, especially for high-skilled immigrants.

The United States is losing this competition. We think of ourselves as an immigrant nation, but the share of our population that is foreign-born is now roughly on par with Germany and France and far below the successful immigrant nations Canada and Australia. Furthermore, our immigrants are much less skilled than the ones Canada and Australia let in. As a result, the number of high-tech immigrant start-ups has stagnated, according to the Kauffman Foundation, which studies entrepreneurship.

The first big point from all this is that given the likely gridlock on tax reform and fiscal reform, immigration reform is our best chance to increase America’s economic dynamism. We should normalize the illegals who are here, create a legal system for low-skill workers and bend the current reform proposals so they look more like the Canadian system, which tailors the immigrant intake to regional labor markets and favors high-skill workers.

The second big conclusion is that if we can’t pass a law this year, given the overwhelming strength of the evidence, then we really are a pathetic basket case of a nation.

Well, Bobo honey, your wingnut buddies are the ones who’ve driven us into that basket, and we’re headed rapidly for warmer climes…  Here’s Prof. Krugman:

Three years ago, a terrible thing happened to economic policy, both here and in Europe. Although the worst of the financial crisis was over, economies on both sides of the Atlantic remained deeply depressed, with very high unemployment. Yet the Western world’s policy elite somehow decided en masse that unemployment was no longer a crucial concern, and that reducing budget deficits should be the overriding priority.

In recent columns, I’ve argued that worries about the deficit are, in fact, greatly exaggerated — and have documented the increasingly desperate efforts of the deficit scolds to keep fear alive. Today, however, I’d like to talk about a different but related kind of desperation: the frantic effort to find some example, somewhere, of austerity policies that succeeded. For the advocates of fiscal austerity — the austerians — made promises as well as threats: austerity, they claimed, would both avert crisis and lead to prosperity.

And let nobody accuse the austerians of lacking a sense of romance; in fact, they’ve spent years looking for Mr. Goodpain.

The search began with a passionate fling between the austerians and the Republic of Ireland, which turned to harsh spending cuts soon after its real estate bubble burst, and which for a while was held up as the ultimate exemplar of economic virtue. Ireland, said Jean-Claude Trichet of the European Central Bank, was the role model for all of Europe’s debtor nations. American conservatives went even further. For example, Alan Reynolds, a senior fellow at the Cato Institute, declared that Ireland’s policies showed the way forward for the United States, too.

Mr. Trichet’s encomium was delivered in March 2010; at the time Ireland’s unemployment rate was 13.3 percent. Since then, every uptick in the Irish economy has been hailed as proof that the nation is recovering — but as of last month the unemployment rate was 14.6 percent, only slightly down from the peak it reached early last year.

After Ireland came Britain, where the Tory-led government — to the sound of hosannas from many pundits — turned to austerity in mid-2010, influenced in part by its belief that Irish policies were a smashing success. Unlike Ireland, Britain had no particular need to adopt austerity: like every other advanced country that issues debt in its own currency, it was and still is able to borrow at historically low interest rates. Nonetheless, the government of Prime Minister David Cameron insisted both that a harsh fiscal squeeze was necessary to appease creditors and that it would actually boost the economy by inspiring confidence.

What actually happened was an economic stall. Before the turn to austerity, Britain was recovering more or less in tandem with the United States. Since then, the U.S. economy has continued to grow, although more slowly than we’d like — but Britain’s economy has been dead in the water.

At this point, you might have expected austerity advocates to consider the possibility that there was something wrong with their analysis and policy prescriptions. But no. They went looking for new heroes and found them in the small Baltic nations, Latvia in particular, a nation that looms amazingly large in the austerian imagination.

At one level this is kind of funny: austerity policies have been applied all across Europe, yet the best example of success the austerians can come up with is a nation with fewer inhabitants than, say, Brooklyn. Still, the International Monetary Fund recently issued two new reports on the Latvian economy, and they really help put this story into perspective.

To be fair to the Latvians, they do have something to be proud of. After experiencing a Great-Depression-level slump, their economy has experienced two years of solid growth and falling unemployment. Despite that growth, however, they have only regained part of the lost ground in terms of either output or employment — and the unemployment rate is still 14 percent. If this is the austerians’ idea of an economic miracle, they truly are the children of a lesser god.

Oh, and if we’re going to invoke the experience of small nations as evidence about what economic policies work, let’s not forget the true economic miracle that is Iceland — a nation that was at ground zero of the financial crisis, but which, thanks to its embrace of unorthodox policies, has almost fully recovered.

So what do we learn from the rather pathetic search for austerity success stories? We learn that the doctrine that has dominated elite economic discourse for the past three years is wrong on all fronts. Not only have we been ruled by fear of nonexistent threats, we’ve been promised rewards that haven’t arrived and never will. It’s time to put the deficit obsession aside and get back to dealing with the real problem — namely, unacceptably high unemployment.


2 Responses to “Brooks and Krugman”

  1. Dan Daily Says:

    Krugman, isn’t the real issue with deficit reduction and supply siders is really just taxes for the rich should be voided? One can argue that defense is more important to survival of a nation than food stamps but the arg goes to non-sequitur when education and equality are packaged in bulk reprisals. Rich people or those who want to be on Foxnews channel business programs are regressively deprived of oxygen so much so that their rants merit attrition. Throw in the occassional Jew or African-American, a white woman or two with a large bosom and the show is ecumenical. Herald the sages of hedges and fundies and so forth and Warren and glad rags and the beach is lovely this time of year. What the nay sayers to taxes are saying is we waste and therefore should not want but for effort. And of course they rattle on like babies. Stuffed shirts like O’Reilly and clueless organisms like Hannity beguile the gullible. It will only be fair when the rich are in control of all money and wealth making is their commandment. I’m quite certain one can make a case for eternal optimism and be contrary to established orthodoxy when it comes to curves and indices but it all is quite fruitless when the numbers lie. We are what someone else grows not what we eat as Obama promulgated. We are not boundless but dependent on fewer and fewer brainiacs who carry the load for the rich and the poor alike. The press is made innumerable dalliances to parlay the mindless think tanks into consumable entries on Twitter and FB but to no remarkable end. The forest is full of trees but no flowers will grow as long as people are overshadowed by narrow minded bigots. Anyway taxes are useful when serviced correctly and that day won’t be here soon.

  2. Winston H. Larson Says:

    The United States is currently experiencing its highest unemployment levels in a generation, and far too many Americans are desperate to find steady work. In the midst of our economic insecurity, Secretary of Homeland Security Janet Napolitano recently argued that now is the time to move forward with comprehensive immigration reform which includes a pathway to legal status for unauthorized immigrants already in the country. Some commentators, understandably, are questioning whether this is really the best time economically to move forward with comprehensive reform. Many of Napolitano’s critics are calling instead for increased immigration enforcement and stepped up deportations of unauthorized immigrants. Although it might seem that subtracting 8.3 million unauthorized immigrant workers from the labor force would automatically improve job prospects for the 15.7 million Americans who are now unemployed, the fact is that employment is not a “zero sum” game. Mass deportation is not the solution to the nation’s unemployment problem.

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