11 ms·

It’s no secret; tight labor markets produce higher wages. The deleterious effects of labor gluts are felt most profoundly at the bottom: the greater the number

It’s no secret; tight labor markets produce higher wages. The deleterious effects of labor gluts are felt most profoundly at the bottom: the greater the number of people seeking unskilled labor, the lower the wages for “those who need it most”. Hence, the solution to low wages is to stop importing poor foreigners who undercut American wages. Couple that with the elimination of corporate taxes, and there will be no incentive for offshoring or inverting. Become the world's biggest tax haven, and incomes will skyrocket. The laws of economics cannot be wished away, and the lesson is clear: cut taxes, close the borders, and prosperity will result. If we could, now, substantially cut social spending – with all these people working, it should be possible to seriously reduce handouts – then we could afford to cut taxes AND pay for the sort of infrastructure program (exclusively projects of national importance) while reducing the deficit.

blfr 7y ago
This is a completely reasonable comment. Why would you downvote it without a response?
- sbzodnsbd 7y ago
  Because that’s hard.
- scarejunba 7y ago
  Two people are sufficient to grey out a comment early on. Probably not worth the meta-discussion over.
- drewblaisdell 7y ago
  Because it isn’t reasonable - it is confidently worded nonsense.
- 542458 7y ago
  The comment was probably poorly received because it presents a lot of things as economic fact, when in reality the evidence is much less conclusive. Many studies have shown the the labor market is far from a simple supply/demand system, and predicting the impact of many policies - looser immigration, minimum wage - is difficult, and quite often runs contrary to the simpler models.
- learc83 7y ago
  It's not a reasonable response. It's overconfident, unjustified opinion masquerading as fact.
- knowaveragejoe 7y ago
  If I had to wager a guess, it's because it smacks of Trumpist pseudo-economics
mikeash 7y ago
I thought the laws of economics told us that immigration and international trade increase prosperity.
- Mikeb85 7y ago
  The 'laws' of economics are based on supply and demand. The effects of migration and trade are based on a slew of factors, including supply/demand for labour in both the host country and the home country, wages, benefits in both countries, etc... Trade effects depend a lot on tariffs, costs in countries on each side of the trade, and those in turn are largely the effect of supply/demand both for goods and labour in countries on both sides of the trade.
- rukittenme 7y ago
  In absolute terms immigration does increase prosperity. But lower income, domestic laborers would suffer in the near term. Its a matter of priorities I suppose.
  - akvadrako 7y ago
    That’s not what we see. Only certain kinds of immigrants during certain periods result in prosperity - it’s not a rule.
- deogeo 7y ago
  Those 'laws' are untainted by contact with reality. From https://en.wikipedia.org/wiki/Comparative_advantage https://en.wikipedia.org/wiki/Comparative_advantage: " ... none of the world's most successful trading regions, including Japan, Korea, Taiwan, and now mainland China, reached their current status by adopting neoliberal trading rules."
  - mehrdadn 7y ago
    > Those 'laws' are untainted by contact with reality. From https://en.wikipedia.org/wiki/Comparative_advantage https://en.wikipedia.org/wiki/Comparative_advantage: " ... none of the world's most successful trading regions, including Japan, Korea, Taiwan, and now mainland China, reached their current status by adopting neoliberal trading rules." What a gross way to misrepresent that article, the source of that quote, and the established consensus. That quote is not "from Wikipedia" any more than it is from yourself (or from HN for that matter) just because you happened to copy-paste it here. That quote is from one critic whom Wikipedia happens to cite just for the sake of illustrating what counterclaims exist out there. If you really want to quote Wikipedia, why not quote the couple paragraphs before, which actually address what the consensus is: Several arguments have been advanced against using comparative advantage as a justification for advocating free trade, and they have gained an audience among economists. [...] However, the overwhelming consensus of the economics profession remains that while these arguments are theoretically valid under certain assumptions, these assumptions do not usually hold and should not be used to guide trade policy. Gregory Mankiw, chairman of the Harvard Economics Department, has said: ″Few propositions command as much consensus among professional economists as that open world trade increases economic growth and raises living standards.″ Now your quote doesn't look so much like an established fact, does it?
drewblaisdell 7y ago
> Hence, the solution to low wages is to stop importing poor foreigners who undercut American wages. Couple that with the elimination of corporate taxes, and there will be no incentive for offshoring or inverting. You forgot to mention that we’ll also need to kill the minimum wage and a slew of laws regarding safe working conditions.
- rukittenme 7y ago
  Eliminating the minimum wage would increase the labor supply. I'm not sure how you think that would increase wages.
  - drewblaisdell 7y ago
    That was re: corporate incentives. The lack of/lower minimum wage abroad is a major incentive for moving labor out of the country.
    - fucking_tragedy 7y ago
      > The lack of/lower minimum wage abroad is a major incentive for moving labor out of the country. And sanctions, tariffs, penalties, fees, fines, lawsuits, and prison time are major incentives not to move labor out of the country.
  - Mikeb85 7y ago
    No it wouldn't. Higher wages increase labour supply.
    - rukittenme 7y ago
      You're thinking about the problem from the wrong perspective. Higher prices do encourage people to sell more (in this case their labor). But a price floor excludes a whole category of people (the young, unskilled, or transient) from the market. Its this category of people that would now be eligible to compete in the labor market
soulofmischief 7y ago
> If we could, now, substantially cut social spending – with all these people working, it should be possible to seriously reduce handouts What a fantastic argument in which you completely ignore the gargantuan shadow of the US War budget against our social spending programs. Cutting the programs will never come close to the money saved by producing just a few less bombs and aircraft a year. Ask yourself, if not for market regulation + social programs, what the heck is our government even here for? If you ask me, it's certainly not to siphon tax money out of the War budget and into politician's pockets at the expense of the general welfare of its people while engaging in a full-on disinformation campaign against them. That's such a Middle Ages approach to running a kingdom.
- deleted 7y ago
  [deleted]
- creato 7y ago
  > What a fantastic argument in which you completely ignore the gargantuan shadow of the US War budget against our social spending programs. Cutting the programs will never come close to the money saved by producing just a few less bombs and aircraft a year. https://en.wikipedia.org/wiki/Government_spending_in_the_United_States https://en.wikipedia.org/wiki/Government_spending_in_the_Uni... In 2018, the "war budget" was 12% of the total. For comparison, education spending was 15%, health care 23%. I don't think the "war budget" piggy bank will go as far as you think it does.
  - deleted 7y ago
    [deleted]
  - zuminator 7y ago
    The difference is that if taxes didn't pay for education and health care, people would still have to foot those costs out of pocket. But fewer bombs and aircraft carriers is pure cost cutting.
    - fjsolwmv 7y ago
platz 7y ago
> cut taxes, close the borders, and prosperity will result That leads to a hot house. Targeting full employment and keeping capital local allows workers to bid up wages, which will create inflation, and investors will go on an "investment strike". It happened in the 70s. Otoh, Open borders and targeting price stability allows capital to seek it's global return - inflation stays low, but inequality grows. Pick one. * explain yourselves, downvoters
- CBLT 7y ago
  >allows workers to bid up wages, which will create inflation Is this phrase suggesting higher wages for workers is bad? Care to spell out your argument in a few more sentences?
  - platz 7y ago
    I'm not moralizing w/r/t good or bad. I pointed out conditions in which folks with significant assets start freaking out. It's not "higher wages" - it's the combination of targeting full employment and preventing unrestricted global capital flows. Wages will simply go up in that regime (in full employment, the highest workers/earners have no downside to negotiate and can leave any given job). Companies don't have a good counter. So employees win - yay. But employer/employee in not the only game in town. Since wages go up, if global capital flows are restricted (closed borders), inflation also goes up. The other game in town is what the folks with real serious assets want, and they absolutely hate high inflation, so there will be some political battle to decide how the situation is resolved. in the 70's it was resolved by the investor class winning the political battle, and switching the economy to neoliberalism - price stability over full employment, and globalizing capital to allow it to seek it's highest return.
    - CBLT 7y ago
      Thanks, I think I misread your original comment slightly. I appreciate your clarification.
andrekandre 7y ago
> Hence, the solution to low wages is to stop importing poor foreigners who undercut American wages. Couple that with the elimination of corporate taxes, and there will be no incentive for offshoring or inverting. Become the world's biggest tax haven, and incomes will skyrocket. what happens when you cut taxes to zero and you can’t cut anymore? wouldn’t the effect be that they would STILL outsource to countries that have effectively zero tax rate AND lower wages? > The laws of economics cannot be wished away... laws of which humans have created and are hence entirely under the control of what we want to do with them... economics is not physics, and i would argue a race to the bottom is, in the end, what that type of thinking is unfortunately arguing for. [edit] formatting, grammar
- jlawson 7y ago
  Lots of jobs can't really be moved offshore. Millions of these jobs are filled by illegal immigrants at illegally low wages. Farm workers. Domestic workers. Child care. Food service. Retail. Drivers. Massive portions of the labor force. Current pro-illegal implicit policy is a subsidy to capital at the expense of both the illegals and displaced American workers.
  - andrekandre 7y ago
    that is definitely true, though i would argue ai and robotization will take huge swaths of those industries out of people’s reach in the near future it is also absolutely true also that pro-illegal immigration only helps the business interests, but my original point was, that just blocking immigration (legal or otherwise) won’t necessarily solve everything because corporations have many options at their disposal
- burfog 7y ago
  If they still outsource, tariffs will stop it. It's only been about a century that we've had an income tax. Prior to that, we funded the federal government on tariffs. It built the nation. People who buy local goods are unaffected. People wealthy enough to insist on exotic foreign things must pay the tariffs and thus fund our government.
jhayward 7y ago
This argument isn't even a little bit consistent with the facts. We don't "import poor foreigners who undercut American wages", we import products produced in countries where labor, along with human life, is valued at vanishingly low prices for abuse by capital. Evidence is that the vast majority of immigrant labor, both skilled and unskilled, are net positives economically. There is some modest abuse in a couple of highly specialized cases where the very top end of the labor market is probably priced lower than it might be otherwise, but those are not statistically affecting the national economy.
- davidf18 7y ago
  > "Evidence is that the vast majority of immigrant labor, both skilled and unskilled, are net positives economically." Since this is a forum with a lot of engineers I would expect people to do their research instead of simply making statements. Exporting labor to cheaper countries (primarily China and Mexico) and importing cheap labor (through both legal and illegal immigration from low-income countries such as Mexico) and STEM imports through H1-B Visa abuses depresses wages for the working class in the former situation and among highly skilled professionals in the later. There is a term for this: global labor arbitrage Of course, there is a number of working class jobs replaced by automation, but in spite of automation, global labor arbitrage still exists as an independent phenomena to depress wages. In 2001 China joined the World Trade Org (WTO) but "did not play by the rules." with the result that many Americans in working class jobs lost those jobs or ended up receiving depressed wage rates. NAFTA has been an issue with Mexico. The H1-B Visa abuse has been substantial with a number of organizations importing H1-B Visa labor to replace Americans (e.g. Disney, Southern CA Edison, UC San Francisco,...). Trump has been working to stop illegal immigration as well as stemming H1-B Visa abuse. A result is that there are "labor shortages" resulting in a rising wage rate. Another major factor impacting wage growth has been the increasing costs of healthcare which is generally paid for by employers. Higher benefits costs result in lower wages. BTW, there are some companies that complain that they can't find workers but generally that is because 1) they are not offering market level wages and 2) they are not located in a place where people want to live. Generally, these firms, if they are willing to locate where people want to live and if they offer market wages, they will be able to find employees.
caconym_ 7y ago
> the lesson is clear Bullshit. So much vague hand-waving here but one thing in particular strikes me as especially ridiculous: I don't know why you think corporations have to buy their labor in the same country(ies) where they keep their money. They'll buy it wherever it's cheapest to do so. Are you suggesting that we close the borders to corporate capital and imports and exports, as well as immigrants? I think that ship has probably sailed, and as much as I dislike certain aspects of globalism I don't think sticking our heads in the sand is a sustainable path forward. You haven't addressed any of these tricky second-order questions, and even through a lens of basic economics (not to mention history) what you're saying is vague and problematic. There's nothing "clear" about it, at all.
- jlawson 7y ago
  Lots of jobs can't be offshored: domestic workers, farm workers, retail, drivers, food service, janitorial, hospitality etc. These are huge portions of the workforce. Not every job is manufacturing or call centers.
  - caconym_ 7y ago
    You are correct. You will notice that my comment was only meant to address "one thing in particular" about what he wrote, and I referred to the rest as "vague hand-waving". The issue you bring up fell into the latter category. In 2018 immigrants made up about 17% of the labor force in America. These jobs are primarily the sort of thing you mention: services, agriculture, lower-end industrial and manufacturing. These jobs occupy the low end of the earnings spectrum. If there are no more immigrants then they will be filled by Americans or not at all. So, say we close the borders. Eventually everyone doing these jobs is an American, i.e. born here. Maybe they are making a little bit more than the immigrants who held these jobs before, because there is a new constraint on the labor supply. In an instantaneous view, some of these jobs will disappear because they no longer make economic sense with the increased cost of labor. So what have we changed? These people will not be big earners. In today's America they would not "prosper". Overall wages do not "skyrocket". We have moved the needle, sure—we've made a real change. Realistically, what second-order effects can we expect to see? This is not an easy question. The "lesson" is not "clear". GGP, whatever fragments of truth may appear in his comment, is full of shit, and pointing that out is why I posted.
pvelagal 7y ago
“Stop importing foreign workers.. ... cut taxes... close borders.... prosperity will result... “ - so how about importing goods from china or other countries ? Will you recommend stopping imports ? Practically everything is made in china.. almost all manufacturing jobs have moved to china or asian countries.. i hardly see anything made in USA in target or walmart or any store in any malls.. - cut taxes. Is a strong dollar a curse for unskilled/low skilled workers .. Because.. you have every company getting stuff made in china.. and you propose cutting taxes .. why would any CEO make stuff in USA when it is ridiculously cheap to make in china ? would you recommend dollar to go down ? Your statements dont consider any of these factors... if politicians dont get back manufacturing jobs or stop importing cheap products there will be no real solution to unemployment or wage increases..
derriz 7y ago
There is little or no evidence to support the statement that immigrants lower the wages for "those who need it most" in any way significantly - most research suggests immigration has a zero or very small negative effect on host employment and income with some papers even suggesting a very small positive effect. This is because immigrants also create demand - for housing, food/consumables, transport, services, entertainment/leisure, etc. This demand raises prices in those areas. Immigrants are also more likely to be "complementary" - e.g. agricultural laborers or software engineers, for that matter, are more likely to migrate to somewhere where there are too few workers of their type available. Most of the wealthiest countries sustain high immigration. If immigration impoverished the lower paid of the host countries, then this effect should be observable but it isn't. For example, Switzerland has over 3 times the US rate of immigration yet has one of the highest bottom quintile incomes in world.
- roenxi 7y ago
  I think the argument is right, but the evidence you cite isn't very supportive. > Most of the wealthiest countries sustain high immigration ... Switzerland has over 3 times the US rate of immigration yet has one of the highest bottom quintile incomes in world. Obviously economic migrants aren't going to migrate somewhere with no opportunities. It is hypothetically possible that low-skilled they choose the country to migrate to by picking the one with the highest bottom quintile income (some proxy of, given they wouldn't actually review the stats). If the host country has immigration limits the economic state of the hosting country would change slowly so the migration wouldn't immediately normalise the host countries economy with the rest of the world. Basically, we'd expect to see that statistic even if migrants did lower the income of their quintile. They don't, but the evidence of that is a separate thing.
- hnaccy 7y ago
  >Wage trends over the past half-century suggest that a 10 percent increase in the number of workers with a particular set of skills probably lowers the wage of that group by at least 3 percent. Even after the economy has fully adjusted, those skill groups that received the most immigrants will still offer lower pay relative to those that received fewer immigrants. >Immigration redistributes wealth from those who compete with immigrants to those who use immigrants—from the employee to the employer. And the additional profits are so large that the economic pie accruing to all natives actually grows... But behind that calculation is a much larger shift from one group of Americans to another: The total wealth redistribution from the native losers to the native winners is enormous, roughly a half-trillion dollars a year. Immigrants, too, gain substantially; their total earnings far exceed what their income would have been had they not migrated. https://www.politico.com/magazine/story/2016/09/trump-clinton-immigration-economy-unemployment-jobs-214216 https://www.politico.com/magazine/story/2016/09/trump-clinto...
rndmize 7y ago
This is some classic conservative dogma, here. Of course, though much of it has been demonstrated to be wrong for at least 40 years, people continue to repeat it. For the most current example, we can look at the recent tax cuts, which lowered corporate taxes significantly. We heard no end of promises of reinvestment in the US, higher wages, etc. We got stock buybacks instead. No need to believe all the left economists like Krugman that said this would happen - the ratings agencies predicted it as well [1]. Skyrocketing incomes indeed - for the owner class. You advise closing the borders, which not only goes against American principles, but would reduce business creation - > “Immigrants are about twice as likely as natives to start new businesses,” says Arnobio Morelix, an analyst at the Kauffman Foundation, which promotes entrepreneurship. [2] > 216 companies on the Fortune 500 were founded by immigrants or their children [3] Frankly, I would expect that one of America's continuing strengths is that the people willing to make the journey here are driven folk, willing to travel hundreds or thousands of miles to start a new life in an unfamiliar place, even if they have to work endlessly when they get here. And truly, I am confused why zeroing corporate taxes would reduce offshoring. If I can pay someone in a different country 1/10 of what I need to pay here to make my goods, corporate tax rates have no impact that I can see on this calculation, and the offshoring would be done regardless. Is there a reason we need to reduce social spending? Or reduce taxes, as was demonstrated to have little effect in 2001, and 2009 [4], and 2017 [1]? Perhaps if you clarified what you meant by handouts, we could get to some kind of useful discussion - but then it seems frequent that "handouts" is used for a catch-all with no real meaning, and when it comes to nuts-and-bolts changes to government spending, people that advocate for reductions never seem to actually pull it off - I think we can look at Paul Ryan as the most recent example (tax cuts now, we'll figure out spending cuts later, or maybe never). [1] https://www.axios.com/trump-tax-cuts-companies-stock-buybacks-67ac9b3d-1427-4312-80ac-335ee38dcad6.html https://www.axios.com/trump-tax-cuts-companies-stock-buyback... [2] https://www.apnews.com/ab44ff583d194070a5eae431231c4450 https://www.apnews.com/ab44ff583d194070a5eae431231c4450 [3] https://qz.com/1151689/216-companies-on-the-fortune-500-were-founded-by-immigrants-or-their-children/ https://qz.com/1151689/216-companies-on-the-fortune-500-were... [4] https://www.americanprogress.org/issues/economy/reports/2011/09/08/10304/government-spending-versus-tax-cuts/ https://www.americanprogress.org/issues/economy/reports/2011...
- 7y ago
hedvig 7y ago
I guess I should stop being be shocked at the kind of ideas the users on this forum continue to sincerely represent
- orthecreedence 7y ago
  Yeah, wow, holy shit. "Stop taxing corporations and wages will skyrocket!" We all know what corporations do when they get huge tax breaks. They buy back their own stock. Great. Also, if corporations didn't want to be taxed on profit, they would just pay that money to their workers already because they already aren't taxed on expenses.
- dang 7y ago
  Any time people say things about HN, it's good to ask whether the same would be true of any sufficiently large group of humans in general. HN consists of millions of people; of course we're going to get all kinds of ideas here, good, bad, nuts, whatever. Making that into a generalization about "this forum" adds no information.
deleted 7y ago
[deleted]
Ari_Rahikkala 7y ago
This turned out to be quite an angry post, so a quick preface: All of this is a knee-jerk response to a single sentence in your post. So, you know, please take with a grain of salt, not personally, etc.. I have to admit, it's a little bit depressing to see someone just use a straight-out lump of labor argument against immigration. I can deal with people who believe immigrants tend to be criminal and who are concerned for their family's safety - they're wrong, but they're afraid, and fear's got a way of overriding statistical reason. I can deal with people who believe immigrants will bring poor institutions from their countries of origin - I think their evidence is weak, but I realize there's a lot at stake in keeping the global North rich and well-run, so I can see at least some reason for caution. I can even deal with the racists by letting my eyes glaze over for a while. People who think that brain drain hurts the country of origin too much... believe in a greater amount of responsibility that individuals have for their nations of birth than I do, but okay, at least they're coming from what they believe is a position of compassion. And so forth - I can sympathize with, understand, or at least ignore most arguments against more open immigration, even if I disagree with them. But just "stop importing poor foreigners who undercut American wages"? What do you think makes your work valuable in the first place? I mean, I assume that like with most people in a modern economy, very little of what you consume comes from what you yourself produced. Your work is valuable because other people have demand for its results, and will exchange some of their own surplus for it. The more surplus there is to go around, the more there is for you to get. You might have to specialize more to compete in a bigger market, but you're surely capable of it. Even the poor generally are. If nothing else, in case of immigration to the USA, the natives tend to have the distinct advantage of being literate and generally conversable in English. So please at least have the rational selfishness to ask for more surplus! Yes, the one guy who moves in to your tiny geographic area and works in the minuscule sliver of what you produce in the economy will make your life more complicated, because now you'll have to compete with them. But for that guy, there'll be thousands of others whose greater productivity you will now get to enjoy. Maybe if you were the Immigration Czar, you could be very selfish and decide that that person doesn't get to move in but everyone else does. But if you want to make a policy that lets all selfish people benefit, then you have to let everyone face more competition and get more surplus. To in fact not undercut my own point: I'm not claiming that that's the whole story. You might believe that maybe there will in fact be less surplus overall in the long run if you open up immigration, or you might believe that the fruits of greater productivity will go to people who don't deserve them. Again, those are concerns that I can in fact see reason in. Not that many people actually believe that they live in a world where the only difference between labor in a rich country and labor in a poor country is that the former are more productive because of where they live. In more advanced territory, I might even have to deploy moral arguments, like how unconscionable it is to not let people - individuals of just as much moral worth and agency as you or I, or indeed us behind the veil of ignorance - work in your country because they were born on the wrong side of a border. But I won't do it for lump-of-labor. It doesn't show enough understanding of economics to be worth a moral argument.

blfr 7y ago

This is a completely reasonable comment. Why would you downvote it without a response?

sbzodnsbd 7y ago
Because that’s hard.
scarejunba 7y ago
Two people are sufficient to grey out a comment early on. Probably not worth the meta-discussion over.
drewblaisdell 7y ago
Because it isn’t reasonable - it is confidently worded nonsense.
542458 7y ago
The comment was probably poorly received because it presents a lot of things as economic fact, when in reality the evidence is much less conclusive. Many studies have shown the the labor market is far from a simple supply/demand system, and predicting the impact of many policies - looser immigration, minimum wage - is difficult, and quite often runs contrary to the simpler models.
learc83 7y ago
It's not a reasonable response. It's overconfident, unjustified opinion masquerading as fact.
knowaveragejoe 7y ago
If I had to wager a guess, it's because it smacks of Trumpist pseudo-economics

mikeash 7y ago

I thought the laws of economics told us that immigration and international trade increase prosperity.

Mikeb85 7y ago
The 'laws' of economics are based on supply and demand. The effects of migration and trade are based on a slew of factors, including supply/demand for labour in both the host country and the home country, wages, benefits in both countries, etc... Trade effects depend a lot on tariffs, costs in countries on each side of the trade, and those in turn are largely the effect of supply/demand both for goods and labour in countries on both sides of the trade.
rukittenme 7y ago
In absolute terms immigration does increase prosperity. But lower income, domestic laborers would suffer in the near term. Its a matter of priorities I suppose.
- akvadrako 7y ago
  That’s not what we see. Only certain kinds of immigrants during certain periods result in prosperity - it’s not a rule.
deogeo 7y ago
Those 'laws' are untainted by contact with reality. From https://en.wikipedia.org/wiki/Comparative_advantage https://en.wikipedia.org/wiki/Comparative_advantage: " ... none of the world's most successful trading regions, including Japan, Korea, Taiwan, and now mainland China, reached their current status by adopting neoliberal trading rules."
- mehrdadn 7y ago
  > Those 'laws' are untainted by contact with reality. From https://en.wikipedia.org/wiki/Comparative_advantage https://en.wikipedia.org/wiki/Comparative_advantage: " ... none of the world's most successful trading regions, including Japan, Korea, Taiwan, and now mainland China, reached their current status by adopting neoliberal trading rules." What a gross way to misrepresent that article, the source of that quote, and the established consensus. That quote is not "from Wikipedia" any more than it is from yourself (or from HN for that matter) just because you happened to copy-paste it here. That quote is from one critic whom Wikipedia happens to cite just for the sake of illustrating what counterclaims exist out there. If you really want to quote Wikipedia, why not quote the couple paragraphs before, which actually address what the consensus is: Several arguments have been advanced against using comparative advantage as a justification for advocating free trade, and they have gained an audience among economists. [...] However, the overwhelming consensus of the economics profession remains that while these arguments are theoretically valid under certain assumptions, these assumptions do not usually hold and should not be used to guide trade policy. Gregory Mankiw, chairman of the Harvard Economics Department, has said: ″Few propositions command as much consensus among professional economists as that open world trade increases economic growth and raises living standards.″ Now your quote doesn't look so much like an established fact, does it?

drewblaisdell 7y ago

> Hence, the solution to low wages is to stop importing poor foreigners who undercut American wages. Couple that with the elimination of corporate taxes, and there will be no incentive for offshoring or inverting. You forgot to mention that we’ll also need to kill the minimum wage and a slew of laws regarding safe working conditions.

rukittenme 7y ago
Eliminating the minimum wage would increase the labor supply. I'm not sure how you think that would increase wages.
- drewblaisdell 7y ago
  That was re: corporate incentives. The lack of/lower minimum wage abroad is a major incentive for moving labor out of the country.
  - fucking_tragedy 7y ago
    > The lack of/lower minimum wage abroad is a major incentive for moving labor out of the country. And sanctions, tariffs, penalties, fees, fines, lawsuits, and prison time are major incentives not to move labor out of the country.
- Mikeb85 7y ago
  No it wouldn't. Higher wages increase labour supply.
  - rukittenme 7y ago
    You're thinking about the problem from the wrong perspective. Higher prices do encourage people to sell more (in this case their labor). But a price floor excludes a whole category of people (the young, unskilled, or transient) from the market. Its this category of people that would now be eligible to compete in the labor market

soulofmischief 7y ago

> If we could, now, substantially cut social spending – with all these people working, it should be possible to seriously reduce handouts What a fantastic argument in which you completely ignore the gargantuan shadow of the US War budget against our social spending programs. Cutting the programs will never come close to the money saved by producing just a few less bombs and aircraft a year. Ask yourself, if not for market regulation + social programs, what the heck is our government even here for? If you ask me, it's certainly not to siphon tax money out of the War budget and into politician's pockets at the expense of the general welfare of its people while engaging in a full-on disinformation campaign against them. That's such a Middle Ages approach to running a kingdom.

deleted 7y ago
[deleted]
creato 7y ago
> What a fantastic argument in which you completely ignore the gargantuan shadow of the US War budget against our social spending programs. Cutting the programs will never come close to the money saved by producing just a few less bombs and aircraft a year. https://en.wikipedia.org/wiki/Government_spending_in_the_United_States https://en.wikipedia.org/wiki/Government_spending_in_the_Uni... In 2018, the "war budget" was 12% of the total. For comparison, education spending was 15%, health care 23%. I don't think the "war budget" piggy bank will go as far as you think it does.
- deleted 7y ago
  [deleted]
- zuminator 7y ago
  The difference is that if taxes didn't pay for education and health care, people would still have to foot those costs out of pocket. But fewer bombs and aircraft carriers is pure cost cutting.
  - fjsolwmv 7y ago

platz 7y ago

> cut taxes, close the borders, and prosperity will result That leads to a hot house. Targeting full employment and keeping capital local allows workers to bid up wages, which will create inflation, and investors will go on an "investment strike". It happened in the 70s. Otoh, Open borders and targeting price stability allows capital to seek it's global return - inflation stays low, but inequality grows. Pick one. * explain yourselves, downvoters

CBLT 7y ago
>allows workers to bid up wages, which will create inflation Is this phrase suggesting higher wages for workers is bad? Care to spell out your argument in a few more sentences?
- platz 7y ago
  I'm not moralizing w/r/t good or bad. I pointed out conditions in which folks with significant assets start freaking out. It's not "higher wages" - it's the combination of targeting full employment and preventing unrestricted global capital flows. Wages will simply go up in that regime (in full employment, the highest workers/earners have no downside to negotiate and can leave any given job). Companies don't have a good counter. So employees win - yay. But employer/employee in not the only game in town. Since wages go up, if global capital flows are restricted (closed borders), inflation also goes up. The other game in town is what the folks with real serious assets want, and they absolutely hate high inflation, so there will be some political battle to decide how the situation is resolved. in the 70's it was resolved by the investor class winning the political battle, and switching the economy to neoliberalism - price stability over full employment, and globalizing capital to allow it to seek it's highest return.
  - CBLT 7y ago
    Thanks, I think I misread your original comment slightly. I appreciate your clarification.

andrekandre 7y ago

> Hence, the solution to low wages is to stop importing poor foreigners who undercut American wages. Couple that with the elimination of corporate taxes, and there will be no incentive for offshoring or inverting. Become the world's biggest tax haven, and incomes will skyrocket. what happens when you cut taxes to zero and you can’t cut anymore? wouldn’t the effect be that they would STILL outsource to countries that have effectively zero tax rate AND lower wages? > The laws of economics cannot be wished away... laws of which humans have created and are hence entirely under the control of what we want to do with them... economics is not physics, and i would argue a race to the bottom is, in the end, what that type of thinking is unfortunately arguing for. [edit] formatting, grammar

jlawson 7y ago
Lots of jobs can't really be moved offshore. Millions of these jobs are filled by illegal immigrants at illegally low wages. Farm workers. Domestic workers. Child care. Food service. Retail. Drivers. Massive portions of the labor force. Current pro-illegal implicit policy is a subsidy to capital at the expense of both the illegals and displaced American workers.
- andrekandre 7y ago
  that is definitely true, though i would argue ai and robotization will take huge swaths of those industries out of people’s reach in the near future it is also absolutely true also that pro-illegal immigration only helps the business interests, but my original point was, that just blocking immigration (legal or otherwise) won’t necessarily solve everything because corporations have many options at their disposal
burfog 7y ago
If they still outsource, tariffs will stop it. It's only been about a century that we've had an income tax. Prior to that, we funded the federal government on tariffs. It built the nation. People who buy local goods are unaffected. People wealthy enough to insist on exotic foreign things must pay the tariffs and thus fund our government.

jhayward 7y ago

This argument isn't even a little bit consistent with the facts. We don't "import poor foreigners who undercut American wages", we import products produced in countries where labor, along with human life, is valued at vanishingly low prices for abuse by capital. Evidence is that the vast majority of immigrant labor, both skilled and unskilled, are net positives economically. There is some modest abuse in a couple of highly specialized cases where the very top end of the labor market is probably priced lower than it might be otherwise, but those are not statistically affecting the national economy.

davidf18 7y ago
> "Evidence is that the vast majority of immigrant labor, both skilled and unskilled, are net positives economically." Since this is a forum with a lot of engineers I would expect people to do their research instead of simply making statements. Exporting labor to cheaper countries (primarily China and Mexico) and importing cheap labor (through both legal and illegal immigration from low-income countries such as Mexico) and STEM imports through H1-B Visa abuses depresses wages for the working class in the former situation and among highly skilled professionals in the later. There is a term for this: global labor arbitrage Of course, there is a number of working class jobs replaced by automation, but in spite of automation, global labor arbitrage still exists as an independent phenomena to depress wages. In 2001 China joined the World Trade Org (WTO) but "did not play by the rules." with the result that many Americans in working class jobs lost those jobs or ended up receiving depressed wage rates. NAFTA has been an issue with Mexico. The H1-B Visa abuse has been substantial with a number of organizations importing H1-B Visa labor to replace Americans (e.g. Disney, Southern CA Edison, UC San Francisco,...). Trump has been working to stop illegal immigration as well as stemming H1-B Visa abuse. A result is that there are "labor shortages" resulting in a rising wage rate. Another major factor impacting wage growth has been the increasing costs of healthcare which is generally paid for by employers. Higher benefits costs result in lower wages. BTW, there are some companies that complain that they can't find workers but generally that is because 1) they are not offering market level wages and 2) they are not located in a place where people want to live. Generally, these firms, if they are willing to locate where people want to live and if they offer market wages, they will be able to find employees.

caconym_ 7y ago

> the lesson is clear Bullshit. So much vague hand-waving here but one thing in particular strikes me as especially ridiculous: I don't know why you think corporations have to buy their labor in the same country(ies) where they keep their money. They'll buy it wherever it's cheapest to do so. Are you suggesting that we close the borders to corporate capital and imports and exports, as well as immigrants? I think that ship has probably sailed, and as much as I dislike certain aspects of globalism I don't think sticking our heads in the sand is a sustainable path forward. You haven't addressed any of these tricky second-order questions, and even through a lens of basic economics (not to mention history) what you're saying is vague and problematic. There's nothing "clear" about it, at all.

jlawson 7y ago
Lots of jobs can't be offshored: domestic workers, farm workers, retail, drivers, food service, janitorial, hospitality etc. These are huge portions of the workforce. Not every job is manufacturing or call centers.
- caconym_ 7y ago
  You are correct. You will notice that my comment was only meant to address "one thing in particular" about what he wrote, and I referred to the rest as "vague hand-waving". The issue you bring up fell into the latter category. In 2018 immigrants made up about 17% of the labor force in America. These jobs are primarily the sort of thing you mention: services, agriculture, lower-end industrial and manufacturing. These jobs occupy the low end of the earnings spectrum. If there are no more immigrants then they will be filled by Americans or not at all. So, say we close the borders. Eventually everyone doing these jobs is an American, i.e. born here. Maybe they are making a little bit more than the immigrants who held these jobs before, because there is a new constraint on the labor supply. In an instantaneous view, some of these jobs will disappear because they no longer make economic sense with the increased cost of labor. So what have we changed? These people will not be big earners. In today's America they would not "prosper". Overall wages do not "skyrocket". We have moved the needle, sure—we've made a real change. Realistically, what second-order effects can we expect to see? This is not an easy question. The "lesson" is not "clear". GGP, whatever fragments of truth may appear in his comment, is full of shit, and pointing that out is why I posted.

pvelagal 7y ago

“Stop importing foreign workers.. ... cut taxes... close borders.... prosperity will result... “ - so how about importing goods from china or other countries ? Will you recommend stopping imports ? Practically everything is made in china.. almost all manufacturing jobs have moved to china or asian countries.. i hardly see anything made in USA in target or walmart or any store in any malls.. - cut taxes. Is a strong dollar a curse for unskilled/low skilled workers .. Because.. you have every company getting stuff made in china.. and you propose cutting taxes .. why would any CEO make stuff in USA when it is ridiculously cheap to make in china ? would you recommend dollar to go down ? Your statements dont consider any of these factors... if politicians dont get back manufacturing jobs or stop importing cheap products there will be no real solution to unemployment or wage increases..

derriz 7y ago

There is little or no evidence to support the statement that immigrants lower the wages for "those who need it most" in any way significantly - most research suggests immigration has a zero or very small negative effect on host employment and income with some papers even suggesting a very small positive effect. This is because immigrants also create demand - for housing, food/consumables, transport, services, entertainment/leisure, etc. This demand raises prices in those areas. Immigrants are also more likely to be "complementary" - e.g. agricultural laborers or software engineers, for that matter, are more likely to migrate to somewhere where there are too few workers of their type available. Most of the wealthiest countries sustain high immigration. If immigration impoverished the lower paid of the host countries, then this effect should be observable but it isn't. For example, Switzerland has over 3 times the US rate of immigration yet has one of the highest bottom quintile incomes in world.

roenxi 7y ago
I think the argument is right, but the evidence you cite isn't very supportive. > Most of the wealthiest countries sustain high immigration ... Switzerland has over 3 times the US rate of immigration yet has one of the highest bottom quintile incomes in world. Obviously economic migrants aren't going to migrate somewhere with no opportunities. It is hypothetically possible that low-skilled they choose the country to migrate to by picking the one with the highest bottom quintile income (some proxy of, given they wouldn't actually review the stats). If the host country has immigration limits the economic state of the hosting country would change slowly so the migration wouldn't immediately normalise the host countries economy with the rest of the world. Basically, we'd expect to see that statistic even if migrants did lower the income of their quintile. They don't, but the evidence of that is a separate thing.
hnaccy 7y ago
>Wage trends over the past half-century suggest that a 10 percent increase in the number of workers with a particular set of skills probably lowers the wage of that group by at least 3 percent. Even after the economy has fully adjusted, those skill groups that received the most immigrants will still offer lower pay relative to those that received fewer immigrants. >Immigration redistributes wealth from those who compete with immigrants to those who use immigrants—from the employee to the employer. And the additional profits are so large that the economic pie accruing to all natives actually grows... But behind that calculation is a much larger shift from one group of Americans to another: The total wealth redistribution from the native losers to the native winners is enormous, roughly a half-trillion dollars a year. Immigrants, too, gain substantially; their total earnings far exceed what their income would have been had they not migrated. https://www.politico.com/magazine/story/2016/09/trump-clinton-immigration-economy-unemployment-jobs-214216 https://www.politico.com/magazine/story/2016/09/trump-clinto...

rndmize 7y ago

This is some classic conservative dogma, here. Of course, though much of it has been demonstrated to be wrong for at least 40 years, people continue to repeat it. For the most current example, we can look at the recent tax cuts, which lowered corporate taxes significantly. We heard no end of promises of reinvestment in the US, higher wages, etc. We got stock buybacks instead. No need to believe all the left economists like Krugman that said this would happen - the ratings agencies predicted it as well [1]. Skyrocketing incomes indeed - for the owner class. You advise closing the borders, which not only goes against American principles, but would reduce business creation - > “Immigrants are about twice as likely as natives to start new businesses,” says Arnobio Morelix, an analyst at the Kauffman Foundation, which promotes entrepreneurship. [2] > 216 companies on the Fortune 500 were founded by immigrants or their children [3] Frankly, I would expect that one of America's continuing strengths is that the people willing to make the journey here are driven folk, willing to travel hundreds or thousands of miles to start a new life in an unfamiliar place, even if they have to work endlessly when they get here. And truly, I am confused why zeroing corporate taxes would reduce offshoring. If I can pay someone in a different country 1/10 of what I need to pay here to make my goods, corporate tax rates have no impact that I can see on this calculation, and the offshoring would be done regardless. Is there a reason we need to reduce social spending? Or reduce taxes, as was demonstrated to have little effect in 2001, and 2009 [4], and 2017 [1]? Perhaps if you clarified what you meant by handouts, we could get to some kind of useful discussion - but then it seems frequent that "handouts" is used for a catch-all with no real meaning, and when it comes to nuts-and-bolts changes to government spending, people that advocate for reductions never seem to actually pull it off - I think we can look at Paul Ryan as the most recent example (tax cuts now, we'll figure out spending cuts later, or maybe never). [1] https://www.axios.com/trump-tax-cuts-companies-stock-buybacks-67ac9b3d-1427-4312-80ac-335ee38dcad6.html https://www.axios.com/trump-tax-cuts-companies-stock-buyback... [2] https://www.apnews.com/ab44ff583d194070a5eae431231c4450 https://www.apnews.com/ab44ff583d194070a5eae431231c4450 [3] https://qz.com/1151689/216-companies-on-the-fortune-500-were-founded-by-immigrants-or-their-children/ https://qz.com/1151689/216-companies-on-the-fortune-500-were... [4] https://www.americanprogress.org/issues/economy/reports/2011/09/08/10304/government-spending-versus-tax-cuts/ https://www.americanprogress.org/issues/economy/reports/2011...

7y ago

hedvig 7y ago

I guess I should stop being be shocked at the kind of ideas the users on this forum continue to sincerely represent

orthecreedence 7y ago
Yeah, wow, holy shit. "Stop taxing corporations and wages will skyrocket!" We all know what corporations do when they get huge tax breaks. They buy back their own stock. Great. Also, if corporations didn't want to be taxed on profit, they would just pay that money to their workers already because they already aren't taxed on expenses.
dang 7y ago
Any time people say things about HN, it's good to ask whether the same would be true of any sufficiently large group of humans in general. HN consists of millions of people; of course we're going to get all kinds of ideas here, good, bad, nuts, whatever. Making that into a generalization about "this forum" adds no information.

deleted 7y ago

[deleted]

Ari_Rahikkala 7y ago

This turned out to be quite an angry post, so a quick preface: All of this is a knee-jerk response to a single sentence in your post. So, you know, please take with a grain of salt, not personally, etc.. I have to admit, it's a little bit depressing to see someone just use a straight-out lump of labor argument against immigration. I can deal with people who believe immigrants tend to be criminal and who are concerned for their family's safety - they're wrong, but they're afraid, and fear's got a way of overriding statistical reason. I can deal with people who believe immigrants will bring poor institutions from their countries of origin - I think their evidence is weak, but I realize there's a lot at stake in keeping the global North rich and well-run, so I can see at least some reason for caution. I can even deal with the racists by letting my eyes glaze over for a while. People who think that brain drain hurts the country of origin too much... believe in a greater amount of responsibility that individuals have for their nations of birth than I do, but okay, at least they're coming from what they believe is a position of compassion. And so forth - I can sympathize with, understand, or at least ignore most arguments against more open immigration, even if I disagree with them. But just "stop importing poor foreigners who undercut American wages"? What do you think makes your work valuable in the first place? I mean, I assume that like with most people in a modern economy, very little of what you consume comes from what you yourself produced. Your work is valuable because other people have demand for its results, and will exchange some of their own surplus for it. The more surplus there is to go around, the more there is for you to get. You might have to specialize more to compete in a bigger market, but you're surely capable of it. Even the poor generally are. If nothing else, in case of immigration to the USA, the natives tend to have the distinct advantage of being literate and generally conversable in English. So please at least have the rational selfishness to ask for more surplus! Yes, the one guy who moves in to your tiny geographic area and works in the minuscule sliver of what you produce in the economy will make your life more complicated, because now you'll have to compete with them. But for that guy, there'll be thousands of others whose greater productivity you will now get to enjoy. Maybe if you were the Immigration Czar, you could be very selfish and decide that that person doesn't get to move in but everyone else does. But if you want to make a policy that lets all selfish people benefit, then you have to let everyone face more competition and get more surplus. To in fact not undercut my own point: I'm not claiming that that's the whole story. You might believe that maybe there will in fact be less surplus overall in the long run if you open up immigration, or you might believe that the fruits of greater productivity will go to people who don't deserve them. Again, those are concerns that I can in fact see reason in. Not that many people actually believe that they live in a world where the only difference between labor in a rich country and labor in a poor country is that the former are more productive because of where they live. In more advanced territory, I might even have to deploy moral arguments, like how unconscionable it is to not let people - individuals of just as much moral worth and agency as you or I, or indeed us behind the veil of ignorance - work in your country because they were born on the wrong side of a border. But I won't do it for lump-of-labor. It doesn't show enough understanding of economics to be worth a moral argument.