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Hot Topic (More than 10 Replies) On the Free Movement of Labor vs Capital (Read 141 times)
TowardLiberty
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On the Free Movement of Labor vs Capital
Aug 13th, 2019 at 3:04pm
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We have created an international system that allows more or less free trade in capital but not for labor, and then we wonder why the gains of the former have tended to outpace the gains of the latter.

The potential wealth destroyed by the lack of international labor mobility is simply astronomical, and quite possibly exceeds all other costs of government combined. It is comparable to, and maybe even greater than, the massive leap in global prosperity that international free trade in goods made possible. While we had free and open migration, it took the United States from frontier backwater to global economic powerhouse. That’s what we’re sacrificing on the farcical altar of insisting people should be forcibly consigned to live out their lives within the arbitrary borders of a single nation-state not of their choosing.

The gains to be had from liberalizing restrictions on freedom of movement make repealing the Corn Laws look like an irrelevant trifle. The only silver lining is that the ever-decreasing costs of transportation make it a truly futile policy in the long run. We will one day have international freedom of movement, the only question is how many people we’re going to needlessly harm, how many people we’re going to pointlessly impoverish, until we concede the inevitable. -Andy Craig


The first sentence caught my attention. If people like Thomas Piketty are right about ever increasing returns to capital and stagnation in wages, then perhaps we should free up the movement of labor so it can enjoy the same kind of returns fostered by the free movement of capital.

Maybe our income inequality problem can be mitigated with open borders (which is about as far from a leftwing solution to that problem that one can imagine).

I'd also like to know how my anti-open-immigration friends feel about the claim that the era of free and open migration took the US from a "frontier backwater" to a "global economic powerhouse."

You can argue correlation is not causation, but, you would still be implicitly admitting that free and open migration is not incompatible with robust economic development.

And there are many economic arguments, ready to be pulled off the shelf, which suggest a causal link between migration and growth and that theory seems confirmed time and time again.

« Last Edit: Aug 13th, 2019 at 3:34pm by TowardLiberty »  

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"It was the union of the anticapitalist forces of the Right and of the Left, the fusion of radical and conservative socialism, which drove out from Germany everything that was liberal.” F A Hayek
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petep
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Re: On the Free Movement of Labor vs Capital
Reply #1 - Aug 13th, 2019 at 3:57pm
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TowardLiberty wrote on Aug 13th, 2019 at 3:04pm:
The first sentence caught my attention. If people like Thomas Piketty are right about ever increasing returns to capital and stagnation in wages, then perhaps we should free up the movement of labor so it can enjoy the same kind of returns fostered by the free movement of capital.

Maybe our income inequality problem can be mitigated with open borders (which is about as far from a leftwing solution to that problem that one can imagine).

I'd also like to know how my anti-open-immigration friends feel about the claim that the era of free and open migration took the US from a "frontier backwater" to a "global economic powerhouse."

You can argue correlation is not causation, but, you would still be implicitly admitting that free and open migration is not incompatible with robust economic development.

And there are many economic arguments, ready to be pulled off the shelf, which suggest a causal link between migration and growth and that theory seems confirmed time and time again.



Anytime you buy a product made in a place that offers a better overall value for you, you are buying and supporting the labor wherever the product is made. Physically moving labor to production May be perhaps the worst use of labor.

If land in the states is x dollars per acres to farm a crop and it’s 1/2x in another country. If the labor is cheaper there and I can buy oranges cheaper grown there that is the optimal solution for the consumer. Other things equal.

Now if illegal labor at cheaper slave like labor conditions is an option without punishment and my competitor is nearby paying legal fair wages and there is no enforcement. Well I’ve just joined the ranks of the illegal slave trade. Since there is a legal option available to both me and the person illegally crossing.
  
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TowardLiberty
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Re: On the Free Movement of Labor vs Capital
Reply #2 - Aug 13th, 2019 at 4:25pm
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petep wrote on Aug 13th, 2019 at 3:57pm:
Anytime you buy a product made in a place that offers a better overall value for you, you are buying and supporting the labor wherever the product is made. Physically moving labor to production May be perhaps the worst use of labor.


"There is a large body of evidence indicating that cross-country differences in income levels are associated with differences in productivity. If workers are much more productive in one country than in another, restrictions on immigration lead to large efficiency losses. The estimated gains from removing immigration restrictions are huge. Using a simple static model of migration costs, the estimated net gains from open borders are about the same as the gains from a growth miracle that more than doubles the income level in less-developed countries." https://www.nber.org/papers/w18307

The free movement of both capital and labor enhances economic growth and living standard gains. That's basic economics- the sort of stuff Fee makes it a point to impart on their members and readers.

Quote:
If land in the states is x dollars per acres to farm a crop and it’s 1/2x in another country. If the labor is cheaper there and I can buy oranges cheaper grown there that is the optimal solution for the consumer. Other things equal.

Now if illegal labor at cheaper slave like labor conditions is an option without punishment and my competitor is nearby paying legal fair wages and there is no enforcement. Well I’ve just joined the ranks of the illegal slave trade. Since there is a legal option available to both me and the person illegally crossing.

Open borders means there are no illegal people.

Your comments about hiring undocumented people being akin to the slave trade is laughable, to be honest and hardly something you would expect to hear from someone with libertarian or free market sympathies.
  

Open Trade, Open Borders, Taco Trucks on Every Corner

"It was the union of the anticapitalist forces of the Right and of the Left, the fusion of radical and conservative socialism, which drove out from Germany everything that was liberal.” F A Hayek
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Ulysses
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Re: On the Free Movement of Labor vs Capital
Reply #3 - Aug 13th, 2019 at 4:26pm
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I'm against moving the nation's or state's capitol for no good reason. It's a huge waste of tax dollars.
  

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TowardLiberty
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Re: On the Free Movement of Labor vs Capital
Reply #4 - Aug 13th, 2019 at 4:26pm
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Ulysses wrote on Aug 13th, 2019 at 4:26pm:
I'm against moving the nation's or state's capitol for no good reason. It's a huge waste of tax dollars.

lol okay
  

Open Trade, Open Borders, Taco Trucks on Every Corner

"It was the union of the anticapitalist forces of the Right and of the Left, the fusion of radical and conservative socialism, which drove out from Germany everything that was liberal.” F A Hayek
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petep
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Re: On the Free Movement of Labor vs Capital
Reply #5 - Aug 13th, 2019 at 4:35pm
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So if labor moves and is such a boon to the recipient, it follows the country losing the body loses by the same amount

Meaning the more people who leave Mexico and Central America to come here, the worse those countries become by an equal and opposite amount?
  
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TowardLiberty
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Re: On the Free Movement of Labor vs Capital
Reply #6 - Aug 13th, 2019 at 4:45pm
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petep wrote on Aug 13th, 2019 at 4:35pm:
So if labor moves and is such a boon to the recipient, it follows the country losing the body loses by the same amount

Meaning the more people who leave Mexico and Central America to come here, the worse those countries become by an equal and opposite amount?

Actually, no, it's not a loss by the same amount for the country they leave because in those countries labor simply is not as productive. The loss is much lower.

An hour of labor by someone in New York is much more productive than the same hour, by the same person, in Haiti, for example.

The loss is great only if the person never leaves Haiti.

In fact, when people leave a nation in significant numbers this creates an incentive on the part of the government to change because that is their tax base fleeing. So the incentive is to liberalize and attract labor and capital. Ergo emigration can ultimately be beneficial as it can incentive growth enhancing reforms.

The same "foot with your feet" theory helps discipline state governments in the US.
  

Open Trade, Open Borders, Taco Trucks on Every Corner

"It was the union of the anticapitalist forces of the Right and of the Left, the fusion of radical and conservative socialism, which drove out from Germany everything that was liberal.” F A Hayek
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Re: On the Free Movement of Labor vs Capital
Reply #7 - Aug 13th, 2019 at 4:49pm
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TowardLiberty wrote on Aug 13th, 2019 at 3:04pm:
The first sentence caught my attention. If people like Thomas Piketty are right about ever increasing returns to capital and stagnation in wages, then perhaps we should free up the movement of labor so it can enjoy the same kind of returns fostered by the free movement of capital.

Maybe our income inequality problem can be mitigated with open borders (which is about as far from a leftwing solution to that problem that one can imagine).

I'd also like to know how my anti-open-immigration friends feel about the claim that the era of free and open migration took the US from a "frontier backwater" to a "global economic powerhouse."

You can argue correlation is not causation, but, you would still be implicitly admitting that free and open migration is not incompatible with robust economic development.

And there are many economic arguments, ready to be pulled off the shelf, which suggest a causal link between migration and growth and that theory seems confirmed time and time again.


Trump has told his loyalist that the jobs are taken from them by migrant labor.  So I guess the meat packing industry will have plenty of American workers taking those jobs in Tennessee
  

PaleoCon wrote on Jul 17th, 2019 at 10:18am:
No blacks will buy that cap.  Look at the bill! It's all curved like normal people wear. The bill of the hat is supposed to be flat with a shiny goofy looking sticker in the middle of it.

No self respecting thug would be without his sticker!

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Re: On the Free Movement of Labor vs Capital
Reply #8 - Aug 13th, 2019 at 5:02pm
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TowardLiberty wrote on Aug 13th, 2019 at 4:45pm:
Actually, no, it's not a loss by the same amount for the country they leave because in those countries labor simply is not as productive. The loss is much lower.

An hour of labor by someone in New York is much more productive than the same hour, by the same person, in Haiti, for example.

The loss is great only if the person never leaves Haiti.

In fact, when people leave a nation in significant numbers this creates an incentive on the part of the government to change because that is their tax base fleeing. So the incentive is to liberalize and attract labor and capital. Ergo emigration can ultimately be beneficial as it can incentive growth enhancing reforms.

The same "foot with your feet" theory helps discipline state governments in the US.


I don’t think the facts support that. If that were the case places with large negative immigration numbers would be great. Mexico and Central America should be shining stars after decades and decades and decades of departing people

I’ve seen people pick the same crops in their native land and here. They pick at the exact same rate during cycle season changes.  It just costs more here, due to land costs, taxes, regs etc in the states. Plus the huge costs of moving people.
  
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TowardLiberty
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Re: On the Free Movement of Labor vs Capital
Reply #9 - Aug 13th, 2019 at 7:47pm
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petep wrote on Aug 13th, 2019 at 5:02pm:
I don’t think the facts support that. If that were the case places with large negative immigration numbers would be great. Mexico and Central America should be shining stars after decades and decades and decades of departing people.


Take a look. Don't just guess!

You will see the facts confirm what I am saying.

"While the effects of immigration on the receiving country have received a great deal of attention, less has been paid to its affects on the sending country. The available data suggest that, on net, emigration has a positive effect on the sending country. For example, by decreasing the labor pool in the sending country, emigration helps to alleviate unemployment and increase the incomes of the remaining workers. Also, emigres often send money home, enhancing their families' standards of living and thereby contributing both to the home economy and the nations' trade balance."

https://www.rand.org/pubs/monograph_reports/MR244.html

AND there is also evidence that emigration tends to improve the institutions of the sending nation:

"The number of immigrants from developing countries living in richer, more developed countries has increased substantially during the last decades. At the same time, the quality of institutions in developing countries has also improved. The data thus suggest a close positive correlation between average emigration rates and institutional quality. Recent empirical literature investigates whether international migration can be an important factor for institutional development. Overall, the findings indicate that emigration to institutionally developed countries induces a positive effect on home-country institutions."

https://wol.iza.org/articles/effect-of-emigration-on-home-country-political-inst...
Quote:
I’ve seen people pick the same crops in their native land and here. They pick at the exact same rate during cycle season changes.  It just costs more here, due to land costs, taxes, regs etc in the states. Plus the huge costs of moving people.


It almost sounds like you are saying it is not economic for inputs (whether labor or capital) to move from low productivity employments to better.

If I may be so bold, it seems like you are saying *ALL* allocations of resources are equally efficient and productive.

Tell me this is a mis-read on my part, Pete! Say it isn't so!
« Last Edit: Aug 13th, 2019 at 9:37pm by TowardLiberty »  

Open Trade, Open Borders, Taco Trucks on Every Corner

"It was the union of the anticapitalist forces of the Right and of the Left, the fusion of radical and conservative socialism, which drove out from Germany everything that was liberal.” F A Hayek
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