Control of immigration

Dan Kohn dan@dankohn.com
Sun, 28 Oct 2001 03:14:18 -0800


>A merchant who can sell his wares to any of a hundred people can keep
>his prices higher than a merchant who can sell his wares to any of
>ten.  A buyer who can buy goods from any of ten merchants can find a
>lower price than a buyer who must buy his goods from one of two.

Kragen, this is wrong on it's face, and so is therefore everything that
follows it.  When a market has very few buyers AND those buyers collude
(this is known as an oligopsony), the seller is disadvantaged.  But no
obvious real life examples come to mind.  There are very few carriers
for telecoms manufacturers to sell to but that doesn't mean the price
goes down at all.  In fact, price far more often behaves opposite to
what you suggest, where the more buyers, the more mass production comes
into play (i.e., declining marginal costs), and the lower prices (and
margins) go.  Think of the price and margin for DRAM (many customers)
vs. the price and margin for the Joint Strike Fighter (2 customers, the
US and Britain).

I think that this statement of yours represents one of the great
fallacies of our age:

>Capital mobility will tend to decrease wages and
>worsen working conditions everywhere.

On the more general issue of labor exploitation, please, please, please
read these two essays by Krugman:

http://slate.msn.com/?id=1918
http://slate.msn.com/?id=56497

You could never have enough workers move to the West to measurably
effect Nike's labor pool in the developing world.  By contrast, nothing
is more central to Nike's long term strategy than having the kids of
those sneaker factory workers get an education, get better jobs, and
have the disposable income to buy Nike's.  This is exactly what has
already happened in Taiwan, South Korea, and Chile, and has a real
possibility of continuing elsewhere if well-meaning but fuzzy-thinking
Westerners don't shut down the engines of progress.

For more of my thoughts on the subject, see
<http://www.dankohn.com/itbusiness.html>.

Finally, your suggestion of labor and capital being in conflict is a
rehashing of Marx's labor theory of value, approximately 150 years since
that theory has been conclusively shown to be wrong.
<http://www.libertarianworld.com/labortheory.html>

Sorry to do this to you Kragen (since I know your email was well
meaning, but I need to pull out the heavy guns of a Keynes quote on you:

"The ideas of economists and political philosophers both when they are
right and when they are wrong, are more powerful than is commonly
understood. Indeed, the world is ruled by little else. Practical men,
who believe themselves to be quite exempt from any intellectual
influences, are usually the slaves of some defunct economist. Madmen in
authority, who hear voices in the air, are distilling their frenzy from
some academic scribbler of a few years back. I am sure that the power of
vested interest is vastly exaggerated compared with the gradual
encroachment of ideas."

		- dan
--
Dan Kohn <mailto:dan@dankohn.com>
<http://www.dankohn.com/>  <tel:+1-650-327-2600>
Essays announced on <mailto:dankohn-subscribe@yahoogroups.com>

-----Original Message-----
From: fork-admin@xent.com [mailto:fork-admin@xent.com] On Behalf Of
Kragen Sitaker
Sent: Sunday, October 28, 2001 02:01
To: fork@xent.com
Subject: Re: Control of immigration


Paul Prescod writes:
> That's obvious. My only concern is the assertion that Nike's
> shareholders *want them to stay where they are* for economic reasons.
> Shareholders of large western companies do not benefit from the
> immigration status quo because it somehow skews the market for labour
in
> a way that keeps salaries down. Salaries are low because there are a
> hell of a lot of poor people in the world and global mobility is not a
> cure for that. There is no more reason to link freedom of capital
> mobility and freedom of labour mobility as to link freedom of speech
and
> freedom of labour mobility. All three are good things, together or as
a
> package.

I disagree.  Let me elaborate.

A merchant who can sell his wares to any of a hundred people can keep
his prices higher than a merchant who can sell his wares to any of
ten.  A buyer who can buy goods from any of ten merchants can find a
lower price than a buyer who must buy his goods from one of two.

The larger the market you have access to, the better off you are ---
the more people have to compete to get your business.  You have more
power with a larger market.  It need hardly be said that with this
power, you can extract concessions other than better prices --- you can
demand warranties, sell in bigger quantities to reduce your transaction
costs, provide poorer customer service, and break laws with impunity.

Making a business mobile, giving it access to more labor markets, makes
it able to find better labor "prices" --- lower wages, longer hours, no
unions, etc.  Making labor mobile, giving it access to more labor
markets, makes it able to find better labor prices --- higher wages,
shorter hours, unions, etc.

The view that the world consists of capital and labor, separate and in
conflict, is surely not the whole truth.  But to the extent that this
view is true, increasing capital mobility without increasing labor
mobility is a very significant event in this conflict --- it is a major
victory for capital against labor.

To return to your statements, Paul:

Nike's shareholders want Nike's (contractors') workers to stay where
they are for economic reasons; if Nike's (contractors') workers were to
move to the US, they would cost Nike ('s contractors) several times as
much money in wages and would not be nearly as docile.

Shareholders of large companies, western or eastern, benefit from the
immigration status quo, because it makes it harder for their workers to
comparison-shop for employment, while making it easier for them to
comparison-shop for workers.

Salaries are low because there are a hell of a lot of poor people in
the world, it's true.  One reason there are so many poor people in the
world is that most people have nothing to sell but their labor, and
most people's market for their labor is pretty restricted; immigration
laws are a significant factor in limiting this market.

There is good reason to link freedom of capital mobility and freedom of
immigration.  Capital mobility brings power to capital when it makes
deals with labor; labor mobility brings power to labor when it makes
deals with capital.  Capital mobility will tend to decrease wages and
worsen working conditions everywhere; labor mobility will tend to
increase wages and improve working conditions.

Do you still disagree?

-- 
<kragen@pobox.com>       Kragen Sitaker
<http://www.pobox.com/~kragen/>
Perilous to all of us are the devices of an art deeper than we possess
ourselves.
       -- Gandalf the White [J.R.R. Tolkien, "The Two Towers", Bk 3, Ch.
XI]



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