Nick
04-04-2006, 10:21 PM
Title: In U.S. Immigration Debate, Specter Has It Right: Kevin Hassett (http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_hassett&sid=aRqmOcE7fSKw)
Author: Kevin Hassett
Publisher: Bloomberg (http://www.bloomberg.com/index.html?Intro=intro2)
Date Published: April 3, 2006
Full Text:
In U.S. Immigration Debate, Specter Has It Right: Kevin Hassett
by Kevin Hassett
Last week, the U.S. Senate began considering major reforms of immigration and border-security legislation, elevating a simmering issue into an explosive national debate. Of all the proposals out there, only one has its economics right.
Right now in the Senate, the two major plans being debated are from Majority Leader Bill Frist and Judiciary Committee Chairman Arlen Specter. Frist's bill focuses primarily on border protection, and has been characterized as an ``enforcement only'' proposal. Specter's proposal borrows from a bill that Senators John McCain and Ted Kennedy introduced last year. It includes provisions for temporary guest worker visas and for legalizing the status of currently undocumented individuals.
Both bills exist because lawmakers and citizens are worried about illegal immigration. The best estimates suggest about 12 million individuals reside in the U.S. illegally. Since essentially anyone born in the U.S. has a right to citizenship, many illegal immigrants have become parents of legal citizens, and productive members of their communities. Accordingly, despite the heat of the debate, any plan to round up existing illegals and send them home is politically dead on arrival.Logic Trap
The Frist bill and an immigration measure passed by the House of Representatives in December provide for stiff enforcement measures, including felony charges for smuggling illegal aliens into the U.S.
Such a policy falls into a logic trap that is well known to economists. It lacks what they call ``time consistency.'' We feel sympathy for the folks already here, but don't want to allow more illegal immigrants in. Yet as we work out a solution that may take years to become effective, if it ever does, there will arrive a whole new population of illegal immigrants who we will feel sympathy towards.
If we are willing to grant amnesty for immigrants today, we will be willing to grant amnesty again five years later. History appears to bear this out. Some are comparing Specter's proposal to a 1986 bill, signed by Ronald Reagan, that offered amnesty to millions of illegal immigrants, and did little to stem the inflow of more of them.
Amnesty Signal
As pointed out in a different context by Nobel Prize-winning economists Finn Kydland and Edward Prescott, rational individuals will recognize the time inconsistency of the U.S. position: We promise to be tough in the future, but give an amnesty today that amounts to a signal that there will be future amnesties. Even with tighter borders, if we are kinder to current illegal residents, we can expect more to come in the future.
It is essentially dishonest to consider such proposals. Accordingly, there really should be only two immigration policies to choose between. We can round up all of the illegal residents today and ship them home, crack down hard at the borders, and promise to do both again and again forever.
Or, we can find a way to ease the path toward citizenship for current residents, establish generous rules for entry into the U.S., and be willing to load anyone who doesn't follow those rules into a bus and ship them home.
The Frist approach resembles neither. The Specter approach resembles the latter, and is the far better policy.
Immigration Impact
Immigration has been extensively studied by economists, and the literature suggests there are two main effects. First, immigrants have relatively low skills on average, so they drive down the wages of domestically born low-skilled workers. Second, immigrants tend to have different skill sets, so they increase the beneficial diversity of the workforce, making firms that hire immigrants and the overall economy more productive.
New Orleans is an example that illustrates the latter. A friend recently returned and mentioned how quickly the city is snapping back to life. He saw construction under way throughout the city, performed by swarms of workers who appeared to be predominantly Spanish-speaking. Without those construction workers, restaurants, hotels and other businesses might still be closed.
In the aggregate, cheaper construction makes it easier for firms to invest, grow and compete in the global marketplace. And there are many other areas where immigrant skills complement those of native-born Americans.
`Sizeable Benefits'
How big are these beneficial effects? A recent National Bureau of Economic Research paper by economists Gianmarco Ottaviano and Giovanni Peri was the first to attempt to quantify the benefits of labor force diversity. Their striking conclusion was that the benefits of immigration to U.S workers are positive and quite significant. They say that ``immigration, as we have known it during the nineties, had a sizeable beneficial effect on the wages of U.S.-born workers.''
While lower-skilled individuals may lose relative to those higher up in the distribution network, the net effect is that society gains when people move to the U.S. If concerns about the folks at the bottom arise, a transfer program should be possible that leaves everyone better off.
If we take the harsh approach, choosing a policy that admits almost nobody, we give up the large potential economic gains associated with diversity in the workforce. It may be politically expedient to do so, but America will be shooting itself in the foot if Specter loses this battle.
To contact the writer of this column:
Kevin Hassett at [email protected].
Submitted by juang. Thanks.
[This message was automatically generated.]
Author: Kevin Hassett
Publisher: Bloomberg (http://www.bloomberg.com/index.html?Intro=intro2)
Date Published: April 3, 2006
Full Text:
In U.S. Immigration Debate, Specter Has It Right: Kevin Hassett
by Kevin Hassett
Last week, the U.S. Senate began considering major reforms of immigration and border-security legislation, elevating a simmering issue into an explosive national debate. Of all the proposals out there, only one has its economics right.
Right now in the Senate, the two major plans being debated are from Majority Leader Bill Frist and Judiciary Committee Chairman Arlen Specter. Frist's bill focuses primarily on border protection, and has been characterized as an ``enforcement only'' proposal. Specter's proposal borrows from a bill that Senators John McCain and Ted Kennedy introduced last year. It includes provisions for temporary guest worker visas and for legalizing the status of currently undocumented individuals.
Both bills exist because lawmakers and citizens are worried about illegal immigration. The best estimates suggest about 12 million individuals reside in the U.S. illegally. Since essentially anyone born in the U.S. has a right to citizenship, many illegal immigrants have become parents of legal citizens, and productive members of their communities. Accordingly, despite the heat of the debate, any plan to round up existing illegals and send them home is politically dead on arrival.Logic Trap
The Frist bill and an immigration measure passed by the House of Representatives in December provide for stiff enforcement measures, including felony charges for smuggling illegal aliens into the U.S.
Such a policy falls into a logic trap that is well known to economists. It lacks what they call ``time consistency.'' We feel sympathy for the folks already here, but don't want to allow more illegal immigrants in. Yet as we work out a solution that may take years to become effective, if it ever does, there will arrive a whole new population of illegal immigrants who we will feel sympathy towards.
If we are willing to grant amnesty for immigrants today, we will be willing to grant amnesty again five years later. History appears to bear this out. Some are comparing Specter's proposal to a 1986 bill, signed by Ronald Reagan, that offered amnesty to millions of illegal immigrants, and did little to stem the inflow of more of them.
Amnesty Signal
As pointed out in a different context by Nobel Prize-winning economists Finn Kydland and Edward Prescott, rational individuals will recognize the time inconsistency of the U.S. position: We promise to be tough in the future, but give an amnesty today that amounts to a signal that there will be future amnesties. Even with tighter borders, if we are kinder to current illegal residents, we can expect more to come in the future.
It is essentially dishonest to consider such proposals. Accordingly, there really should be only two immigration policies to choose between. We can round up all of the illegal residents today and ship them home, crack down hard at the borders, and promise to do both again and again forever.
Or, we can find a way to ease the path toward citizenship for current residents, establish generous rules for entry into the U.S., and be willing to load anyone who doesn't follow those rules into a bus and ship them home.
The Frist approach resembles neither. The Specter approach resembles the latter, and is the far better policy.
Immigration Impact
Immigration has been extensively studied by economists, and the literature suggests there are two main effects. First, immigrants have relatively low skills on average, so they drive down the wages of domestically born low-skilled workers. Second, immigrants tend to have different skill sets, so they increase the beneficial diversity of the workforce, making firms that hire immigrants and the overall economy more productive.
New Orleans is an example that illustrates the latter. A friend recently returned and mentioned how quickly the city is snapping back to life. He saw construction under way throughout the city, performed by swarms of workers who appeared to be predominantly Spanish-speaking. Without those construction workers, restaurants, hotels and other businesses might still be closed.
In the aggregate, cheaper construction makes it easier for firms to invest, grow and compete in the global marketplace. And there are many other areas where immigrant skills complement those of native-born Americans.
`Sizeable Benefits'
How big are these beneficial effects? A recent National Bureau of Economic Research paper by economists Gianmarco Ottaviano and Giovanni Peri was the first to attempt to quantify the benefits of labor force diversity. Their striking conclusion was that the benefits of immigration to U.S workers are positive and quite significant. They say that ``immigration, as we have known it during the nineties, had a sizeable beneficial effect on the wages of U.S.-born workers.''
While lower-skilled individuals may lose relative to those higher up in the distribution network, the net effect is that society gains when people move to the U.S. If concerns about the folks at the bottom arise, a transfer program should be possible that leaves everyone better off.
If we take the harsh approach, choosing a policy that admits almost nobody, we give up the large potential economic gains associated with diversity in the workforce. It may be politically expedient to do so, but America will be shooting itself in the foot if Specter loses this battle.
To contact the writer of this column:
Kevin Hassett at [email protected].
Submitted by juang. Thanks.
[This message was automatically generated.]