Tag: poverty

The One Big Fact that Overawes All Doubts

Bryan Caplan

How do I pick book topics?  On reflection, I usually start with what appears to be a big blatant neglected fact.  Then I try to discover whether anything in the universe is big enough to explain this alleged fact away.  If a laborious search uncovers nothing sufficient, I am left with the seed of a book: One Big Fact that Overawes All Doubts.

Thus, my Myth of the Rational Voter starts with what appears to be a big blatant neglected fact: the typical voter seems highly irrational.  He uses deeply flawed intellectual methods, and holds a wide range of absurd views.  Twist and turn the issue as you please, and this big blatant neglected fact remains.

Selfish Reasons to Have More Kids, similarly, begins with a rather different big blatant neglected alleged fact: Modern parenting is obsessed with “investing” in kids’ long-run outcomes, yet twin and adoption researchers consistently conclude that the long-run effect of nurture is grossly overrated.  Yes, the latter fact is only “blatant” after you read the research, but once you read it, you can’t unread it.

What’s the One Big Fact that Overawes All Doubts in The Case Against Education?  This: education is highly lucrative even though the curriculum is highly irrelevant in the real world.  Yes, it takes a book to investigate the many efforts to explain this One Big Fact away (“learning how to learn,” anyone?).  But without One Big Fact, there’d be no book.

Finally, the big motivated fact behind Open Borders is that simply letting a foreigner move to the First World vastly multiplies his labor earnings overnight.  A Haitian really can make twenty times as much money in Miami the week after he leaves Port-au-Prince – and the reason is clearly that the Haitian is vastly more productive in the U.S.  Which really makes you wonder: Why would anyone want to stop another human being from escaping poverty by enriching the world?  Giving this starting point, anti-immigration arguments are largely attempts to explain this big blatant neglected fact away.  Given what restrictionist arguments are up against, it’s hardly surprising that they don’t measure up.

On reflection, my current book project, Poverty: Who To Blame doesn’t seem to fit this formula.  The book will rest on three or four big blatant neglected facts rather than one.  Yet perhaps as I write, One Big Fact that Overawes All Doubts will come into focus…

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Open Borders Are a Trillion-Dollar Idea

Bryan Caplan

Tearing down all barriers to migration isn’t crazy—it’s an opportunity for a global boom.

The world’s nations, especially the world’s richest nations, are missing an enormous chance to do well while doing good. The name of this massive missed opportunity—and the name of my book on the topic—is “open borders.”

Critics of immigration often hyperbolically accuse their opponents of favoring open borders—a world where all nationalities are free to live and work in any nation they like. For most, that’s an unfair label: They want more visas for high-skilled workers, family reunification, or refugees—not the end of immigration restrictions. In my case, however, this accusation is no overstatement. I think that free trade in labor is a massive missed opportunity. Open borders are not only just but the most promising shortcut to global prosperity.

To see the massive missed opportunity of which I speak, consider the migration of a low-skilled Haitian from Port-au-Prince to Miami. In Haiti, he would earn about $1,000 per year. In Miami, he could easily earn $25,000 per year. How is such upward mobility possible? Simply put: Human beings are much more productive in Florida than in Haiti—thanks to better government policies, better management, better technology, and much more. The main reason Haitians suffer in poverty is not because they are from Haiti but because they are in Haiti. If you were stuck in Haiti, you, too, would probably be destitute.

But borders aren’t just a missed opportunity for those stuck on the wrong side on them. If the walls come down, almost everyone benefits because immigrants sell the new wealth they create—and the inhabitants of their new country are their top customers. As long as Haitians remain in Haiti, they produce next to nothing—and therefore do next to nothing to enrich the rest of the world. When they move, their productivity skyrockets—and so does their contribution to their new customers. When you see a Haitian restaurant in Miami, you shouldn’t picture the relocation of a restaurant from Port-au-Prince; you should picture the creation of a restaurant that otherwise would never have existed—not even in Haiti itself.

The central function of existing immigration laws is to prevent this wealth creation from happening—to trap human talent in low-productivity countries. Out of all the destructive economic policies known to man, nothing on Earth is worse. I’m not joking. Standard estimates say open borders would ultimately double humanity’s wealth production. How is this possible? Because immigration sharply increases workers’ productivity—and the world contains many hundreds of millions of would-be immigrants. Multiply a massive gain per person by a massive number of people and you end up with what the economist Michael Clemens calls “trillion-dollar bills on the sidewalk.”

Or do we? An old saying warns, “If it seems too good to be true, it probably is.” Far lower levels of immigration already inspire vocal complaints. After presenting my basic case in Open Borders, I strive to evaluate all the common (and many not-so-common) objections to immigration. My bottom line: While open borders are undeniably unpopular, they deserve to be popular. Like every social change, immigration has downsides. Yet when we patiently quantify the downsides, the trillions of dollars of gains of open borders dwarf any credible estimate of the harms.

The simplest objection to open borders is logistical: Even the largest countries cannot absorb hundreds of millions of immigrants overnight. True enough, but no reasonable person expects hundreds of millions to come overnight, either. Instead, immigration usually begins slowly and then snowballs. Puerto Ricans have been legally allowed to move to the United States since 1904, but it took almost a century before Puerto Ricans in the United States came to outnumber the population left on the island. Wasn’t the European migration crisis an unmanageable flood of humanity? Hardly. Despite media outcry, total arrivals from 2014 to 2018 came to less than 1 percent of the population of the European Union. Many European countries—most notably West Germany during the Cold War—have swiftly absorbed much larger inflows in the past.

The standard explanation for these asymmetric public reactions is that resistance to immigration is primarily cultural and political, not economic or logistical. While West Germans welcomed millions of East German migrants, a much lower dose of Middle Eastern and African migration has made the whole EU shiver. Aren’t economists who dwell on economic gains just missing the point?

Yes and no. As a matter of political psychology, cultural and political arguments against immigration are indeed persuasive and influential. That does not show, however, that these arguments are correct or decisive. Does immigration really have the negative cultural and political effects critics decry? Even if it did, are there cheaper and more humane remedies than immigration restriction? In any case, what is a prudent price tag to put on these cultural and political effects?

Let’s start with readily measurable cultural and political effects. In the United States, the most common cultural complaint is probably that—in contrast to the days of Ellis Island—today’s immigrants fail to learn English. The real story, though, is that few first-generation immigrants have ever become fluent in adulthood; it’s just too hard. German and Dutch immigrants in the 19th century maintained their stubborn accents and linguistic isolation all their lives; New York’s Yiddish newspapers were a fixture for decades. For their sons and daughters, however, acquiring fluency is child’s play—even for groups like Asians and Hispanics that are often accused of not learning English.

Native-born citizens also frequently worry that immigrants, supposedly lacking Western culture’s deep respect for law and order, will be criminally inclined. At least in the United States, however, this is the reverse of the truth. The incarceration rate of the foreign-born is about a third less than that of the native-born.

What about the greatest crime of all—terrorism? In the United States, non-citizens have indeed committed 88 percent of all terrorist murders. When you think statistically, however, this is 88 percent of a tiny sum. In an average year from 1975 to 2017, terrorists murdered fewer than a hundred people on U.S. soil per year. Less than 1 percent of all deaths are murders, and less than 1 percent of all murders are terrorism-related. Worrying about terrorism really is comparable to worrying about lightning strikes. After you take a few common-sense precautions—do not draw a sword during a thunderstorm—you should just focus on living your life.

The most cogent objection to immigration, though, is that productivity depends on politics—and politics depend on immigration. Native-born citizens of developed countries have a long track record of voting for the policies that made their industries thrive and their countries rich. Who knows how vast numbers of new immigrants would vote? Indeed, shouldn’t we expect people from dysfunctional polities to bring dysfunctional politics with them?

These are fine questions, but the answers are not alarming. At least in the United States, the main political division between the native- and foreign-born is engagement. Even immigrants legally able to vote are markedly less likely than native-born citizens to exercise this right. In the 2012 U.S. presidential election, for example, 72 percent of eligible native-born citizens voted versus just 48 percent of eligible immigrants. Wherever they politically stand, then, immigrants’ opinions are relatively inert.

In any case, immigrants’ political opinions don’t actually stand out. On average, they’re a little more economically liberal and a little more socially conservative, and that’s about it. Yes, low-skilled immigrants’ economic liberalism and social conservatism are more pronounced, but their turnout is low; in 2012, only 27 percent of those eligible to vote opted to do so. So while it would not be alarmist to think that immigration will slightly tilt policy in an economically liberal, socially conservative direction, warning that “immigrants will vote to kill the goose that lays the golden eggs” is paranoid.

Note, moreover, that free immigration hardly implies automatic citizenship. Welcoming would-be migrants is a clear-cut blessing for them and the world. Granting citizenship is more of a mixed bag. While I am personally happy to have new citizens, I often dwell on the strange fact that the Persian Gulf monarchies are more open to immigration than almost anywhere else on Earth. According to the Pew Research Center, 76 percent of people in Kuwait—and 88 percent in the United Arab Emirates—are foreign-born. Why do the native-born tolerate this? Probably because the Gulf monarchies generously share their oil wealth with citizens—and jealously protect the value of citizenship by making naturalization almost impossible. You do not have to ignore the Gulf monarchies’ occasional mistreatment of immigrants to realize that it is much better to welcome immigrants with conditions than to refuse to admit them at all. Migrants—mostly from much poorer parts of the Islamic world—accept this deal, however unfair, exactly because they can still do far better in the Gulf than at home.

In Open Borders, I have the space to address many more concerns about immigration in more detail. What I can’t do, I confess, is address the unmeasured and the unmeasurable. In real life, however, everyone routinely copes with ambiguous dangers—“unknown unknowns.” How do we cope?

For starters, we remember Chicken Little. When people’s warnings about measured dangers turn out to be wrong or overstated, we rightly discount their warnings about unmeasured and unmeasurable dangers. This is how I see mainstream critics of immigration. Their grasp of the basic facts, especially their neglect of the tremendous gains of moving labor from low-productivity countries to high-productivity countries, is too weak to take their so-called vision seriously.

Our other response to unmeasured and unmeasurable dangers, however, is to fall back on existing moral presumptions. Until same-sex marriage was legalized in certain countries, for example, how were we supposed to know its long-term social effects? The honest answer is, “We couldn’t.” But in the absence of strong evidence that these overall social effects would be very bad, a lot of us have now decided to respect individuals’ right to marry whom they like.

This is ultimately how I see the case for open borders. Denying human beings the right to rent an apartment from a willing landlord or accept a job offer from a willing employer is a serious harm. How much would someone have to pay the average American to spend the rest of his or her life in Haiti or Syria? To morally justify such harm, we need a clear and present danger, not gloomy speculation. Yet when we patiently and calmly study immigration, the main thing we observe is: people moving from places where their talent goes to waste to places where they can realize their potential. What we see, in short, is immigrants enriching themselves by enriching the world.

Do I seriously think I am going to convert people to open borders with a short article—or even a full book? No. My immediate goal is more modest: I’d like to convince you that open borders aren’t crazy. While we take draconian regulation of migration for granted, the central goal of this regulation is to trap valuable labor in unproductive regions of the world. This sounds cruel and misguided. Shouldn’t we at least double-check our work to make sure we’re not missing a massive opportunity for ourselves and humanity?

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Do You Talk About X in Open Borders? Yes!

Bryan Caplan

The modal question about Open Borders is, “Do you talk about X?”  The answer is “YES” for all of the following…

1. Do you talk about the historical pattern of global poverty rates?

2. Do you talk about people’s attachment to their country of birth?

3. Do you talk about overcrowding?

4. Do you talk about the global poor’s ability to function in a modern society?

5. Do you talk about global apartheid?

6. Do you talk about the level of illegal immigration?

7. Do you talk about human smuggling?

8. Do you talk about the effectiveness of immigration law at preventing and deterring illegal immigration?

9. Do you talk about immigration as a civil right?

10. Do you talk about whether the plight of the immigrant is our problem?

11. Do you talk about whether there is a right to immigrate?

12. Do you talk about whether this right is absolute?

13. Do you talk about America’s open borders era?

14. Do you talk about how America’s open borders era ended?

15. Do you talk about the potential dangers of open borders?

16. Do you talk about whether we should look before we leap?

17. Do you talk about the Antarctican farmer hypothetical?

18. Do you talk about the connection between mass consumption and mass production?

19. Do you talk about the benefits of immigration for immigrants?

20. Do you talk about the benefits of immigration for natives?

21. Do you talk about how much immigration actually helps immigrants?

22. Do you talk about why immigration helps immigrants?

23. Do you talk about how much a trillion dollars of gains really buys?

24. Do you talk about whether open borders is “trickle-down economics”?

25. Do you talk about how immigration affects native workers?

26. Do you talk about how immigration affects you personally?

27. Do you talk about the effect of immigration on average national incomes?

28. Do you talk about the Arithmetic Fallacy?

29. Do you talk about what open borders would really look like?

30. Do you talk about the effect of open borders on the visibility of poverty?

31. Do you talk about “swamping”?

32. Do you talk about diaspora dynamics?

33. Do you talk about Puerto Rico?

34. Do you talk about brain drain?

35. Do you talk about what good for places versus what’s good for people?

36. Do you talk about zombie economies?

37. Do you talk about how immigration’s fiscal effects vary by immigrant skill?

38. Do you talk about whether open borders and the welfare state are compatible?

39. Do you talk about rival versus non-rival government services?

40. Do you talk about how welfare states prioritize the old versus the poor?

41. Do you talk about the cost of educating immigrants’ children?

42. Do you talk about the effect of immigration on the sustainability of retirement systems?

43. Do you talk about the best way to measure immigrants’ overall fiscal effects?

44. Do you talk about Net Present Value?

45. Do you talk about empirical estimates of  immigrants’ overall fiscal effects?

46. Do you talk about whether more immigration is likely to save Social Security and Medicare?

47. Do you talk about empirical estimates of immigrants’ overall fiscal effects as a function of their education and age?

48. Do you talk about Milton Friedman’s arguments against open borders?

49. Do you talk about the parallels between the fiscal effects of native births versus immigration?

50. Do you talk about how human beings value their cultures?

51. Do you talk about the value of Western civilization?

52. Do you talk about the cultural dangers of admitting non-Western immigrants?

53. Do you talk about terrorism, mass rape, human trafficking, Sharia, and the decline of English?

54. Do you talk about numeracy?

55. Do you talk about the statistics of terrorism, including the share of terrorism committed by foreigners?

56. Do you talk about the Skittles argument against refugees?

57. Do you talk about immigrant crime rates?

58. Do you talk about the effect of immigration on overall crime rates?

59. Do you talk about the “What if it happened to you?” objection to statistical evidence?

60. Do you talk about first-generation immigrant language acquisition?

61. Do you talk about later-generation immigrant language acquisition?

62. Do you talk about immigrant assimilation across generations?

63. Do you talk about how modernity makes assimilation slower?

64. Do you talk about how modernity makes assimilation faster?

65. Do you talk about the social importance of trust?

66. Do you talk about the effect of immigration on national trust?

67. Do you talk about trust assimilation?

68. Do you talk about how much trust a successful society needs?

69.  Do you talk about the cultural benefits of immigration?

70. Do you talk about immigrants’ desire for freedom?

71. Do you talk about immigrants’ disdain for freedom?

72. Do you talk about the danger that immigrants will vote to “kill the goose that lays the golden eggs”?

73. Do you talk about how Democratic immigrant voters are?

74. Do you talk about Indian-American voting?

75. Do you talk about immigrants’ specific policy views?

76. Do you talk about how immigrants’ specific policy views vary by education?

77. Do you talk about the effect of immigration on actual government policy?

78. Do you talk about immigrants’ political assimilation?

79. Do you talk about whether immigrants undermine natives’ support for the welfare state?

80. Do you talk about “Magic Dirt”?

81. Do you talk about research on “Deep Roots”?

82. Do you talk about whether Deep Roots research shows that “trillion-dollar bills on the sidewalk” are illusory?

83. Do you talk about national IQ?

84. Do you talk about the effect of immigration on national IQ?

85. Do you talk about whether you’re virtue signaling?

86. Do you talk about whether IQ research shows that “trillion-dollar bills on the sidewalk” are illusory?

87. Do you talk about the effect of immigration on immigrants’ IQs?

88. Do you talk about human genetics?

89. Do you talk about “keyhole solutions”?

90. Do you talk about imposing admission fees and surtaxes on immigrants to help less-fortune natives?

91. Do you talk about why tax-and-transfer schemes are any better than simple exclusion?

92. Do you talk about restricting immigrants’ eligibility for government benefits?

93. Do you talk about requiring immigrants to learn English?

94. Do you talk about requiring immigrants to acquire cultural literacy?

95. Do you talk about the dangers of Islam?

96. Do you talk about Muslim bans?

97. Do you talk about keyhole solutions for the dangers of Islam?

98. Do you talk about restricting immigrant voting rights?

99. Do you talk about the political feasibility of keyhole solutions?

100. Do you talk about the bracero program?

101. Do you talk about H-1Bs and other work visas?

102. Do you talk about the fairness of keyhole solutions?

103. Do you talk about Sodom and Gomorrah?

104. Do you talk about what utilitarians, egalitarians, libertarians, wealth-maximizers, meritocrats, Christians, and Kantian should think about open borders?

105. Do you talk about whether immigrants have a right to immigrate to your house?

106. Do you talk about who Jesus would deport?

107. Do you talk about the connection between open borders and socialism?

108. Do you talk about immigration and political polarization?

109. Do you talk about why conservatives should favor open borders?

110. Do you talk about why liberals should favor open borders?

111. Do you talk about citizenism?

112. Do you talk about Trump’s views and policies?

113. Do you talk about the best argument against open borders?

114. Do you talk about whether any human is illegal?

115. Do you talk about the best way to frame the immigration debate?

116. Do you talk about immigration as charity?

117. Do you talk about immigration as justice and abundance?

118. Do you talk about open borders with Canada?

119. Do you talk about why you talk so much about the United States?

120. Do you talk about whether you hate America?

121. Do you talk about earlier cosmopolitan transformations?

122. Do you talk about Brexit?

123. Do you talk about public opinion on immigration?

124. Do you talk about scaring people with extremism?

125. Do you talk about the Overton Window?

126. Do you talk about whether open borders is another crazy Ivory Tower Proposal?

127. Do you talk about how to get there from here?

128. Do you have endnotes?  Lots of them?

129. Do you have references?  Lots of them?

130. Do you have acknowledgements?  Lots of them?

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How Children Learn the Humanity of Trade

Kerry McDonald

My older children attend a self-directed learning center for unschoolers a couple of days a week. I love to hear the stories they share about what they do during the day. Classes are offered and are generated based on the young people’s interests, but they are entirely voluntary. Kids can attend classes or do their own projects, either independently or collaboratively, during what is known as “open hangout.” No one directs the hangout. Adults are present to facilitate and help if needed, but they don’t orchestrate the children’s work and play. The kids are free to create at will.

One creation that has been ongoing for months during open hangout is the development of a marketplace and its associated currency, known as myafo. It turns out, some of the kids want to tax the businesses in the marketplace “because that is how it is.”The kids create myafo using crayons and hot glue to make colorful, round gems and then use this currency to “buy” items that are produced for sale in the myafo marketplace. It’s been interesting to hear about the evolution of this economy and its unit of exchange, including the successes and setbacks.

Lately, as the marketplace gains popularity among the young people at the learning center, there have been discussions about creating a central bank and the potential issues related to that. There have also been conversations about power and control. Not surprisingly, one discussion that piqued my interest related to taxes. It turns out, some of the kids want to tax the businesses in the marketplace “because that is how it is.”

Forced Generosity

Others have more magnanimous reasons for taxation, such as using the taxes as a method of charity to allow kids who are new to the center, or who attend irregularly, to fully participate in the marketplace by receiving an allotment of myafo out of the collected taxes. It was called a charity tax. Some children disagreed with the tax idea and suggested that everyone be encouraged to voluntarily donate some of their myafo to help the newcomers. After all, forced generosity isn’t charity; it’s coercion.

It will be interesting to see how the myafo marketplace matures and how the kids address conflicts related to their growing economy. The issues they grapple with are big, and even we adults haven’t figured them out in real life. I am glad to see that dialogue and debate are central to the young people’s decision-making and that it is all completely child-driven. Trade is a fundamental process of human betterment.The kids, who range in age from about six to 14, created this project all on their own, with no adult prompting and no adult interference. It reveals how the idea of peaceful, voluntary cooperation through trade is something humans gravitate toward. Indeed, they have for millennia.

The history of trade dates to prehistoric times, as individuals sought to improve their well-being through trade. Someone has something to barter or sell that someone else wants to barter or buy, and both parties are better off as a result of the exchange. Trade is a fundamental process of human betterment. As it has spread during modern times, particularly when unencumbered by kings, dictators, and other central powers, free trade has led to growing global prosperity and astonishing reductions in poverty.

Trade

FEE’s Dan Sanchez goes so far as to say trade is what makes us human and quotes Adam Smith, who wrote in The Wealth of Nations of humans’ “propensity to truck, barter, and exchange one thing for another.” Smith continues:

It is common to all men, and to be found in no other race of animals, which seem to know neither this nor any other species of contracts. (…) Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that.

If you or your children are curious about the history of money and exchange, I highly recommend this Outschool.com class taught by Tom Bogle, as well as the Netflix original series Origins and its episode on “Money, Banks, and The Stock Market.” And definitely check out FEE’s fantastic Common Sense Soapbox episode “Voluntary Trade is Win-Win!”

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Roderick Long on the Plight of the Worker

Bryan Caplan

In response to my Nickel and Dimed posts, my old friend Roderick Long referred me to his original review of the book.  Highlights of Rod’s review:

Ehrenreich went “undercover” to document the lives of the working poor and the Kafkaesque maze of obstacles they face: the grindingly low wages; the desperate scramble to make ends meet; the perpetual uncertainty; the surreal, pseudo-scientific job application process; the arbitrary and humiliating petty chickenshit tyrannies of employers; the techniques of intimidation and normalisation; the mandatory time-wasting; the indifference to employee health; the unpredictably changing work schedules, making it impossible to hold a second job; etc., etc.

None of this was news to me; I’ve lived the life she describes, and she captures it quite well. But it might well be news to those on the right who heroise the managerial class and imagine that the main causes of poverty are laziness and welfare.

Of course the book has its flaws…

But Ehrenreich’s misguided diagnoses and prescriptions occupy at most a tenth of the book. The bulk of the book is devoted to a description of the problems, and there’s nothing sneerworthy about that. And libertarians will win few supporters so long as they continue to give the impression of regarding the problems Ehrenreich describes as unimportant or non-existent. If you’re desperately ill, and Physician A offers a snake-oil remedy while Physician B merely snaps, “stop whining!” and offers nothing, Physician A will win every time.

Rod’s solutions:

First: eliminate state intervention, which predictably works to benefit the politically-connected, not the poor. As I like to say, libertarianism is the proletarian revolution. Without all the taxes, fees, licenses, and regulations that disproportionately burden the poor, it would be much easier for them to start their own businesses rather than working for others. As for those who do still work for others, in the dynamically expanding economy that a rollback of state violence would bring, employers would have to compete much more vigorously for workers, thus making it much harder for employers to treat workers like crap…

Second: build worker solidarity. On the one hand, this means formal organisation, including unionisation – but I’m not talking about the prevailing model of “business unions,” conspiring to exclude lower-wage workers and jockeying for partnership with the corporate/government elite, but real unions, the old-fashioned kind, committed to the working class and not just union members, and interested in worker autonomy, not government patronage.

I’ve had similar debates with Rod before, but I still can’t resist responding.  Verily, I do “heroise” the managerial class.  And at least in the First World, I do think that irresponsible behavior (partly fueled by the welfare state) is the main cause of severe poverty.  Specifically:

1. Management quality is vital for productivity – and measured management quality really is high in First World countries.  Contrary to stereotypes, poor countries have very little big business. Instead, their economies are dominated by “informality” and self-employment.  So yes, I am most grateful to managers for doing their jobs – especially given all the abuse that intellectuals and activists have heaped upon them.

2. In rich countries, non-work is the main cause of severe poverty.  A small percentage of non-workers are seriously disabled or genuinely can’t find a job.  The overwhelming reason for non-work, though, is behavior that intuitively seems highly irresponsible.  Such as?  Not searching for a job.  Not showing up for work on time – or at all.  Having impulsive sex.  Committing crimes.   Sloth (“laziness”) is one poverty-inducing vice, but don’t forget lust and wrath.

3. There are, of course, many full-time workers who – like Ehrenreich and most of her co-workers – end up moderately poor.  How is this possible?  I endorse the standard economic explanation: low-paid workers are, on average, low-skilled.  Since they aren’t very productive, employers don’t bid much for their services.

4. Why, though, do low-skilled workers endure such unpleasant working conditions?  Again, I endorse the standard economic explanation: making work more pleasant costs money – and low-income workers don’t want to take a pay cut to get more pleasant working conditions.

5. Rod apparently rejects both textbook stories.  Instead, he blames the government for using “taxes, fees, licenses, and regulations” to prevent the poor from “starting their own businesses rather than working for others.”  While I would be happy to see “taxes, fees, licenses, and regulations” go away, I’m afraid there’s little reason to think this would sharply increase the poor’s rates of self-employment or small business ownership.  Why not?  Because  it’s far from clear that regulation on net penalizes small businesses relative to big businesses.  Yes, some regulations impose fixed costs, which discourage small business and self-employment.  However, many regulations specifically exempt small business.  Furthermore, it is much easier for small business to evade regulation.  I wouldn’t be shocked if self-employment and small business became somewhat bigger under laissez-faire, but Rod’s confidence that this effect would be big is wishful thinking.

6. I totally agree with Rod’s view that government hurts the poor by suppressing economic growth.  Because government hurts almost everyone by suppressing economic growth.

7. I’m honestly puzzled by Rod’s desire to see the poor start their own businesses.  Romantic thinking aside, most people lack the competence for self-employment. With or without regulation, it’s incredibly hard.  I get that Rod has seen the ugly side of low-skilled employment first-hand.  But what about the ugly side of low-skilled self-employment?  Instead of bosses mistreating you, you’re mistreated directly by customers.  If you can actually get some customers, which is like pulling teeth.  Imagine how bleak Ehrenreich’s book would have been if, instead of trying to find a bunch of low-skilled jobs, she tried to found a bunch of low-skilled businesses!  Without her savings, she probably would have ended up homeless.

8. I’m even more puzzled by Rod’s desire to “build worker solidarity” and support for unions.  The standard economic story says that unions are labor cartels; they improve wages and working conditions for members at the expense of other workers and the rest of society.  While I’ll defend the legality of unions on libertarian grounds, they’re nothing to celebrate.  The best I can say is that without government help, very few people will belong to unions.  Indeed, even with hefty pro-union regulations on their side, private sector unions have almost disappeared in the U.S.  But isn’t solidarity nice?  Not solidarity with large, unselective groups like “workers” – and not when you build solidarity by scapegoating employers as exploiters and managers as bullies.

9. General observation: If you know a little social science and a lot of libertarianism, Rod Long’s story sounds great.  If you want to sell libertarianism to leftists, his approach is plausibly more persuasive than mine.  Alas, if you take the time to learn more social science, Rod’s story isn’t tenable.

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The Roots of Inertia

Bryan Caplan

Why don’t low-skilled workers try harder to better their condition?  While this might seem a neoliberal question, it weighs on Barbara Ehrenreich’s mind:

I was baffled, initially, by what seemed like a certain lack of get-up-and-go on the part of my fellow workers. Why didn’t they just leave for a better-paying job, as I did when I moved from the Hearthside to Jerry’s?

She starts with some textbook economic answers.  There’s transaction costs:

Part of the answer is that actual humans experience a little more “friction” than marbles do, and the poorer they are, the more constrained their mobility usually is. Low-wage people who don’t have cars are often dependent on a relative who is willing to drop them off and pick them up again each day, sometimes on a route that includes the babysitter’s house or the child care center… I have mentioned, too, the general reluctance to exchange the devil you know for one that you don’t know, even when the latter is tempting you with a better wage-benefit package. At each new job, you have to start all over, clueless and friendless.

And information costs:

There is another way that low-income workers differ from “economic man.” For the laws of economics to work, the “players” need to be well informed about their options…

But there are no Palm Pilots, cable channels, or Web sites to advise the low-wage job seeker. She has only the help-wanted signs and the want ads to go on, and most of these coyly refrain from mentioning numbers. So information about who earns what and where has to travel by word of mouth, and for inexplicable cultural reasons, this is a very slow and unreliable route…

Soon, however, she appeals to industrial psychology.  Employers win workers hearts and minds – what Ehrenreich calls, “the co-optative power of management, illustrated by such euphemisms as associate and team member.”  And don’t forget learned helplessness:

Drug testing is another routine indignity. Civil libertarians see it as a violation of our Fourth Amendment freedom from “unreasonable search”; most jobholders and applicants find it simply embarrassing…

There are other, more direct ways of keeping low-wage employees in their place. Rules against “gossip,” or even “talking,” make it hard to air your grievances to peers or-should you be so daring-to enlist other workers in a group effort to bring about change, through a union organizing drive, for example. Those who do step out of line often face little unexplained punishments, such as having their schedules or their work assignments unilaterally changed. Or you may be fired…

The big picture, though, is that the capitalist system breaks workers’ spirits:

So if low-wage workers do not always behave in an economically rational way, that is, as free agents within a capitalist democracy, it is because they dwell in a place that is neither free nor in any way democratic. When you enter the low-wage workplace-and many of the medium-wage workplaces as well- you check your civil liberties at the door, leave America and all it supposedly stands for behind, and learn to zip your lips for the duration of the shift. The consequences of this routine surrender go beyond the issues of wages and poverty. We can hardly pride ourselves on being the world’s preeminent democracy, after all, if large numbers of citizens spend half their waking hours in what amounts, in plain terms, to a dictatorship.

The obvious response to all of these stories, however, is: “Why don’t the same factors prevent high-skill workers from trying to better their condition?”  Let’s consider each in turn.

Transaction costs.  While high-skilled workers have fewer problems with transportation and child-care, they also have much more specific skills.  This seriously impedes job search.  To find a new job, most nuclear engineers – and many professors – would have to not just sell their homes, but move to a new city.  The high-skilled are also more likely to be in two-earner families, which makes relocation doubly disruptive.

Information costs.  Firms often publicly advertise low-skilled wages.  This is much less true for high-skilled jobs.

Hearts and minds.  High-skilled workers seem much more likely to identify with their employer – and to define themselves in terms of their work.

Learned helplessness.  Again, the indignities required for starting a high-skilled job probably exceed those for low-skilled employment, especially if you’re a government contractor.  Once hired, however, the petty indignities high-skill workers endure are admittedly lower.  (Here’s why).

The capitalist system. Almost no employer cares for kvetching, but high-skill workers probably feel freer to speak up on the job.  Off the job, however, they are probably more worried about offending bosses, co-workers, or clients.  Who cares what a waiter posts on Facebook?  In any case, why should lack of voice reduce enthusiasm for exit?

So why then don’t low-skill workers try harder to better their condition?  All of Ehrenreich’s answers prove too much.  The better story is simply that there is a distribution of desire to better your condition.  In short, human beings have heterogeneous ambition. Some burn to rise; others take life as it comes; most lie somewhere in the middle.  And though mere desire hardly ensures success, ambition usually works in the long-run.  The more you want to better your condition, the better your condition eventually tends to become.

Like Ehrenreich’s story, my story explains why low-skill workers seem “stuck.”  Unlike her, however, I can also explains why high-skill workers seem mobile.  In short, what my “heterogeneous ambition” story lacks in Social Desirability Bias, it makes up for by explaining mobility and inertia, rather than inertia alone.

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