Monday, May 22, 2006

The economics of immigration: And why Razor is a "hotheaded, conservative populist." Oh, okay, not really. I admit there's a worthwhile distinction between illegal and legal immigration, which seems to be Razor's gripe. Do it legally and we've got no problem, sneak in and skirt the law and taxes, and woe betide all ye dusky heathen. But Larry Kudlow at NRO makes a good argument that a lot of people need to cool down on the immigration debate.
Wage differentials between Mexico and the U.S. are huge — largely because of Mexico’s failure to liberalize its economy. So, as long as American job opportunities and higher wages beckon, immigrants in search of a better life will stream northward into the U.S. — fence or no fence. This has always been the heart of the problem.


Due to the demographic shift being caused by the baby boomers, the ratio of working-age persons in the U.S. to retirees aged 65 and over will drop like a stone from the current 4.7:1 ratio to 3.5:1 by 2030, and 2.6:1 by 2040. With the Social Security and Medicare trust funds going bankrupt, how will we manage with so few workers per retiree? Will we let our whole economy stagnate like France, Germany, Italy, or even Japan? All of these countries suffer from shrinking workforces and top-heavy government taxation.

Well, the U.S. could maintain a 4:1 ratio of workers to retirees by admitting an additional 57.5 million workers over the next nineteen years, according to analyst William Kucewicz. This would result in an average annual population increase of less than 1 percent and a total of only 16.4 percent more than the 350 million projected by the Census Bureau for 2025.

I've got a couple points, although I generally agree with his viewpoint. One, these immigrants need to be legal in order for us to collect the taxes needed to make the math work. Two, doesn't this say a lot about the hole we've dug ourselves in the arena of entitlement spending?

Immigration policy needs serious reform, and I don't think fences and guard troops are the way to go, but if it's helps set the stage for making legal immigration more efficient, then it's a tolerable step.

Lastly, it's tough being stuck between smart guys like Robert Samuelson and Larry Kudlow, especially since it's not very often they disagree. Maybe I just side with Kudlow because he's the better dresser.

1 comment:

Razor said...

What about the Candadians? Don't they want to come to the land of plenty? I suppose it's the fear of watered-down Molson that does it. Plus, the absence of Roy Hortons -- right Eno?