Right wing economic spin: $270 Billion To Low Skill Immigrants

Via PrestoPundit comes The Heritage Foundation's latest propaganda piece:

At $19,588, the average annual fiscal deficit for low-skill immigrant households was nearly twice the amount of taxes paid. In order for the average low-skill household to be fiscally solvent (taxes paid equaling immediate benefits received), it would be necessary to eliminate Social Security and Medicare, all means-tested welfare, and to cut expenditures on public education roughly in half.

I didn't try to verify their figures, so lets assume they're correct. What The Heritage Foundation has discovered is that rich people pay more taxes, and poor people benefit more from transfer payments. The net effect is a transfer from the rich to the poor. Since the U.S. has many low-skilled immigrants, this is spun as "immigrants cost us money".

What The Heritage Foundation conveniently forgets is that poor people also contribute to the economy, and to society in general. Low-wage workers clean your buildings, serve you at McDonalds, take care of your children, and so on. They also support the existence of higher-wage workers. Doctors need patients, lawyers need clients, businessmen need employees and customers. If these workers were suddenly shipped out of the country, what would happen?

There would be two effects: 1) the supply of low-skilled workers would go down, thus increasing low-skilled workers' wages. Higher skilled workers would find their real-wages decline due to inflation. 2) Higher skilled workers would find themselves in a very tough job market, and some would be driven down the socio-economic ladder and forced to take low-skilled jobs.

The bottom line is that the low-wage workers are a net benefit to society. If you're trying to find people who are a net drain on society, it would be better to look at those (mostly native born) who will collect benefits as they age, but don't raise enough children to support those benefits. Or those who were born wealthy and live off of their investments.

Illegal immigrants in particular (singled out specially by The Heritage Foundation) don't have access to unemployment insurance and most other government benefits. It's hard to imagine any circumstance under which people who contribute labour, but have no social safety net, could be a drain on society.

The real deceit in The Heritage Foundation's article isn't so much that they overlook the role of low-skilled workers in the economy, but rather that they separate out immigrants as if their contribution is worth less than low-skilled non-immigrants. Unless you also think the U.S. would be better off if the poorest native-born Americans left en masse, there's no reason to assume this is true of poor immigrants.

If you don't like immigrants then be honest about it, don't try to hide behind faulty economic analysis.

Back by popular demand!

Actually, just Stryker and Indy as far as I know, but if you guys are dedicated (or bored) enough to still check back here every now and then after six months, I should be able to get my act together and post something.

In fact, I really do want to get into the habit of writing something regularly, if only because it will help immensely when it comes time to write my thesis, so thanks for pestering me about it and making me feel like I should get started.

My plans for this summer are far less exotic than last year. I'm going to stay in Finland, enjoy the truly amazing summer here, and finally knuckle down and learn Finnish. In August I will have been here for six years, and it's a disgrace that my Finnish is as bad as it is.

I haven't been following U.S. politics much lately, although I'm glad that the U.S. public finally seems to have figured out what the rest of the world has known for a while about the Bush administration. I guess there's hope for democracy yet. It's unfortunate that so many innocent people had to die in the meantime.

A couple of years ago I had predicted that the U.S. economy would go into recession in 2006, and that obviously didn't happen, so I should take the advice of more experienced economists and just give up on predicting that sort of thing. On the other hand, I've confirmed what wiser people told me before: it's not hard to predict what will happen, but almost impossible to predict when.

The current slowdown in the U.S. was triggered by the collapse of the housing market, and looks like it will be exasperated by the high amount of consumer debt. It's unfolding exactly as I (and almost everybody else) thought it would, but much later than I predicted.

The problem with the U.S. right now is that the Fed has no room to maneuver. Loose monetary policy will keep savings low, hurt the dollar, and cause inflation. Tight monetary policy will not only hurt growth, but also impact debt-burdened consumers more than in previous economic cycles.

The end of this economic cycle will be an interesting test for Ben Bernanke.