Friday, June 13, 2014

Chaos of the Masses

The young Lebanese woman, eight months pregnant, was desperate. While trying to join her husband in the Land of the Free, she had suffered a cruel disappointment...she had been turned away by officials at Ellis Island in New York City and returned to the turmoil of Beirut. Her husband had sent her money from his job in the rail car plant in Michigan City, Indiana, and she was now making a rougher, more dangerous journey to the promised land...through the back door, that is, the back streets of Juarez, Mexico. She had given most of her money to a man who had gotten her from Panama City, Panama, where she had relatives, to Juarez, and now her jewelry was going to another stranger who was smuggling her across the border into El Paso, Texas. Her hope was that, once on the American side, she would meet one of her husband's relatives who would take her on the long bus trip to Indiana.

She made it just in time. On October 12, 1917, my grandmother was born in a small shack in Michigan City, the first generation of my mother's family to be American by birth. I don't know if my great grandmother ever became a legal immigrant, or not.

This was all brought back to me by some events of the past week here in my neighborhood.

I was walking the floor mop Sunday afternoon, and as I passed the high school soccer fields, stopped to watch a large group of Hispanics playing soccer. Many were decked out in soccer jerseys, all were shouting in Spanish, and they were good. Real good. Better than I was used to seeing here from our local kids.

It was notable to me because this was the first time I had seen such a thing in the neighborhood. I made mention of it to The Wife when I got home, telling her, in fact, that it was bringing back some nice memories of our time in Diboll, Texas. Hispanics are common in Diboll, home to a large, old sawmill since the turn of the last century. Old folks in town used to tell me that Mexicans used to travel across Texas, and the only two towns they knew of were San Antonio and Diboll, because of the number of jobs there. So now, Diboll, along with most of the rest of Texas, has a large population of Hispanics, many whose families have been there since long before the fall of the Alamo. And some who have come more recently, say, yesterday.

But Hispanics are not too common in Central Pennsylvania. Pittsburgh, Philly, Reading, Allentown, yes. But immigration controversies are rare in State College, other than the visa difficulties graduate students may have during their time at Penn State.

So it came as a surprise when I heard sirens in the neighborhood yesterday morning...and then this.


What made this event very personal was that it was close to home. Literally, close to home...the restaurants in the video are about two blocks from my house. The Wife and I eat at them frequently, and even know the owner by name. That was because he is (was?) a neighbor of ours. He owns several of the Chinese food establishments in town and about half of the ones that were raided yesterday.

He purchased the house next to ours about a year ago, and was using it as sort of a halfway house for his employees. I see some of them on my nightly walks, they walking home from work every night. The Wife took them cookies once, and said that the Chinese are on one floor and the Hispanics are on the other.

I should make a note here that the food in the establishments is great, the employees are real friendly...but we had a suspicion that at least some of them were illegal. Not being able to speak English is a tip-off.

But I've worked with and around illegal aliens all of my life. First as a dishwasher in a high-end Houston restaurant, where all the dishwashers were Hispanic except me. I especially remember one guy named Juan, who had fled the civil wars in Nicaragua, who didn't say much and didn't like me for some reason. Maybe I asked too many questions.

Later, as a construction superintendent for a large Houston home builder, I shared in the barbequed pigs-head lunches (weird, but tasty) brought out to the Hispanic foundation crews by their crew chief, who was by the way, the only one who could speak English. I remember wondering if they were all illegal aliens, but since they were sub-contractors, hired by superintendents like me on site, it never seemed to be an issue. All the concrete crews were Hispanic, so it was just an accepted thing. Don't ask, don't tell, before that policy was even heard of.

Then as I moved into the wood products industry, I found that there were certain types of operations that had more suspect workers than others. The wood components industries, like truss plants, and pallet operations, in particular, seemed to have more than their share of non-English speakers. Not surprisingly, these industries have some of the toughest jobs out there. If you've ever seen workers standing on their feet at a station tearing apart old pallets for eight hours a day, at about one pallet per minute, you'd understand that there are certain jobs out there that most Americans just won't do.

You may remember the most high-profile illegal worker case, a raid on several operations and the arrest of several managers of the Houston-based pallet company IFCO in 2006. Again, I was pretty close to those folks...they had cooperated with me on a large industry study on supply chain costs I conducted in 2005. When the raids came down, I remember wondering why, this particular company, now? I could think of dozens of companies in several industries that operated basically the same way with their employee supply.  Finally, I concluded that some company had to be selected to raid, and a few had to go to prison, to remind folks that our new Homeland Security folks were still on the job.

I know, that's a cynical viewpoint, but for a guy who's the product of at least one illegal alien, and who's basically been surrounded by them for most of this life, I just look at our immigration policy and enforcement as a counter-productive farce with multiple hurtful unintended consequences. Now, I'm not saying that we should have stricter or more open borders...I'm just saying, what we do now doesn't work well and hasn't for a long, long time.

You probably wouldn't be surprised to know that some economics professors have figured that eliminating restrictions on the flow of migration (i.e., "open borders") is by far the best way to go. In their paper entitled "Productivity differences and the dynamic effects of labor movements" professors Klein and Ventura state..
"...a powerful case can be made that regulation of labor movements is one of the most severe distortions facing the world today. Taking the results of the applied general equilibrium literature seriously, hardly any policy reform at a global scale, either drastic trade liberalization or worldwide tax reforms, would deliver comparable output gains. Hence, in order to defend current restrictions on labor mobility on efficiency grounds one would need to come up with some very powerful arguments indeed. Clearly, arguments to restrict labor mobility do exist (e.g. congestion of some public goods, burden on the welfare state), but it seems doubtful whether they are powerful enough to make a case for the severity of current restrictions.
The analysis of this paper illustrates the need to design and study the effects of alternative migration and transfer policies in dynamic frameworks. Although the removal of migration barriers generates long-run output gains that are sizeable, there are winners and losers in the short run. An open challenge is then how to capture these gains while making nobody worse off."
Ahh, that's the trick, isn't it? Because in the same paper, they find that...
"... the oldest individuals in the rich...location gain when barriers are removed, while the opposite occurs in the poor...location. This is straightforward: as natives of the rich location hold all land in this location and the oldest individuals have mostly asset income, lifting barriers to the movement of labor will lead to gains for these people if the value of their land increases. This is precisely what occurs as the increase in the labor input in the rich location increases the future marginal product of land, which in turn leads to an upward jump in the price of land in the rich location at t0. Of course, the reverse happens in the poor location.
Second, individuals born at t0 gain in the poor location and lose in the rich location, and the smaller are idiosyncratic moving costs on average, the greater the welfare gain (loss) for natives of the poor (rich) location. Notice, in particular, that individuals in the poor location gain substantially on average even when only a small fraction of them eventually moves to the rich location. This is accounted for by the fact that prices change in a favorable direction for newborns in the poor location as wage rates there increase over time.
Overall, the removal of barriers to labor mobility has non-trivial consequences for welfare, but these consequences differ substantially across locations and cohorts. At the date when restrictions are removed (t=t0) old and middle-aged rich location natives gain, while young rich location natives lose."
And they become members of the Occupy Movement, and go on food stamps.

I think it boils down to, one way or another, everyone working in our country ought to be legal residents, abide by the same laws, and pay the same taxes. How we get that to be, is the debate that seems to have been with us since the founding of our country. And lately, we seem to be making things worse, not better. "Comprehensive immigration reform" sounds to me like another iteration of increased ineffective bureaucracy at ridiculous expense. A wise man once said...

"If you have ten thousand regulations you destroy all respect for the law.”
- Winston Churchill 
Hmmm...I know a few folks who can relate to that.
Seems to me that we must already have some "comprehensive" laws in place. Well, whaddya know...

The Immigration and Nationality Act of 1952 

It's even revised as of 2013. So it doesn't sound to me like we need "comprehensive reform"...just a better and more even-handed way to carry out the law, and to revise it when necessary. There's a novel concept.

In a day where the government is supposedly monitoring everything we think, do and say (at least, on-line) there ought to be a way to enforce one consistent set of laws without starting over from scratch. I'm guessing that it would require more resources in both processing applications and border enforcement. And in analyzing the economic and human impacts of labor flows. How tough can it be?

Even Mr. Churchill would think that we'll eventually get it right. He once also said this...
“The Americans will always do the right thing… after they’ve exhausted all the alternatives.”
In the mean time, the good folks of State College, Pennsylvania will have to do without our Chinese food.

4 comments:

Anonymous said...

Chuck,
I have some empathy with the first part of your story (my wife's grandfather was a Finnish sailor who jumped ship in Seattle) though all of my Norwegian relatives came here legally. However, I have no problem with deporting many of the current illegal aliens in our country. Many people cite "fairness" and claim that all of these people need to be give amnesty. What about "fairness" for all the immigrants who followed the law and entered legally? It make them look like dupes and devalues all of the effort they made to get here.

I also am dubious of the claims of your university econ professors, given the overwhelming leftist slant in that venue. Before I accept that open borders would improve things, please show me some statistical evidence, not opinion. For instance, please list all the countries in the world that have open borders (unfettered immigration) and show how their economies have benefitted as a result.
I agree that our immigration laws do not need wholesale change, just even-handed enforcement, but in the meantime, the problem is getting worse. The current crisis in Texas and Arizona, huge numbers of children entering illegally, is the result of our politicos making "children" a part of every political statement (nobody will vote against children). The people in Central America have figured that out - Americans will never deport children, it just would not be "fair". What do you suppose the cost to the border state (and the people who live there) if this continues?

It is not an easy problem, but just opening the borders is not the easy fix that it might seem.

Jerry Finch

Mandt Lofthaug said...

Having Grown up on a farm, I'm beginning to believe that building fences has worked its way into our DNA.

roger sauerborn said...

Chuck,
A few years ago a large farmer had 800 undocumented workers removed from his Nash County,NC farm by the Feds-during the growing season. I called up the local NC Employment Security Office a couple weeks later and asked him. "How many of those vacancies did you fill with unemployed local folks?" His answer,"Zero". Go figure...
Roger Sauerborn
PS
All my grandparents came over on the boat

Haddock said...

Agree with what Winston Churchill said.