One of the issues left out of our so-called “trade negotiations” is migration. I say so-called because these deals long ago stopped being just about trade and have become mechanisms of economic harmonization and integration. That is a logical step — but we should face up to that face and quite characterizing them as only about trade. Migration is a key point. One of the reasons why the US economy is so powerful and adaptive is because of our huge and geographically integrated labor market. Workers move to where the jobs are; companies move to where the workers are. Imaging the situation if someone from New England had to get a work visa to move to California? (I know, some may argue that this would be a good thing.)
But on an international level, we deal with the movement of goods and services. We deal with the movement of capital. We even deal with the movement of codified knowledge (Intellectual Property Rights). We deliberately leave out the movement of tacit knowledge and skills.
The result has been a less than optimal outcome for poor countries, as a recent Wall Street Journal story “Trade Liberalization Earns Mixed Marks As Fighter of Poverty” points out:
A different policy would help: opening the borders of wealthy nations to more temporary workers. More work visas would equal more wealth for the world’s poor. If rich countries allowed in enough temporary workers to increase their overall work force by 3%, that would raise global income by $150 billion annually, with the bulk of the gain going to low-income workers, according to calculations by World Bank economist L. Alan Winters. “Even a relatively small change in labor mobility is worth at least as much as any reduction in quotas and tariffs,” he says.
. . .
Migration helps the poor in a number of ways. Even when migrant laborers take dead-end U.S. jobs, they earn far more than they did at home. The North American Free Trade Agreement helped lift average Mexican wages by about 10%, says Gordon Hanson, an economist at the University of California at San Diego. But a Mexican who finds work in the U.S. earns, on average, about 2.5 times as much as he did in Mexico.
Migrant workers wire some of their salaries to their families, increasing spending and consumption in poor nations. Overall, migrant workers remit about $100 billion a year, the International Monetary Fund estimates, a sum that dwarfs foreign aid.
Some migrants also use the skills and outlooks they learn in wealthy countries to start businesses back home. Romania’s strawberry-export business owes a lot to Romanians who once labored in Spanish fields, Harvard economist Devesh Kapur says.
But migration is a difficult issue:
The gains from migration come at a cost, of course. Many of those who leave poor nations never go back, draining talent from home nations. Families are separated for long periods of time when men migrate and their wives and children don’t. Some families get so used to receiving checks from abroad that it can breed a welfare mentality.
A migration surge would also further undermine wages for low-skilled native workers in the U.S. and Europe, who compete for low-end jobs. That’s one reason that political opposition to increased migration is fierce.
The story goes on to propose ways to solve this problem by making sure temporary workers don’t become permanent illegal residents.
These might make sense if one is focusing only on migration as the movement of low-skilled labor – a very Industrial Age viewpoint. But if one is thinking of migration of skills, creativity and tacit knowledge of those workers, then migration become a positive flow of information, not just a source of cheap labor. And out immigration policies need to find a way to harness that positive flow.
The American economy was built by immigrants. And immigrants have constantly enriched the flow of innovation and entrepreneurship in this country — a point Richard Florida stress in his new book, “Flight of the Creative Class.” As the economist Julian Simon (a conservative by the way – see Stephen Moore’s tribute) argued years ago in his book (The Ultimate Resource – a critique of the limits to growth thesis), people are the ultimate resource. Then, why do we want to block off the flow of people?
[By the way, while I respected Simon’s point about human ingenuity being able to solve environmental problems, I never agreed with what I saw as his over-optimistic view that “technology” (using that term broadly) would save us. I am less convinced of that thesis as I read Jarred Diamonds new book Collapse. But that is a different discussion.]