Countries as Clubs

Today’s dose of dealism comes from Willem Buiter, professor of European Political Economy at the London School of Economics, in his post, “Immigration as a Human Right.”

As an aspiring and ultimately unsuccessful immigrant, having gotten prized and rare four-year Australian visa, but unable to pass the hurdles needed to obtain permanent residence, I am very much in agreement with Buiter’s views. It is particularly peculiar that in America, a nation of immigrants, many are keen to close the gate behind them. I am bothered by the way illegal immigrants are demonized. They tend to be stereotyped as net drains on government resources, when the reverse is usually true. The ones I know first and second hand pay taxes and are afraid to use public services precisely because they risk being deported.

I don’t recall where I read the tidbit, most likely in one of Niall Ferguson’s works, but the beginning of the 20th century was the time of the greatest labor mobility in the history of the world. Countries may erect fences to restrict immigration, but with modern telecommunications and capital mobility, the jobs get offshored instead, so the benefits of immigration restrictions appear to accrue more to the politicians who promote them than to the citizens they represent.

From the Buiter via the Financial Times:

I have to declare an interest in the subject of immigration. I am an immigrant (born in the Netherlands), and so are my wife (USA), my son (Peru) and my daughter (Bolivia). We have currently 8 operational passports between the four of us (two British, two Dutch and four American). Even our two cats are foreign breeds – Maine Coon and Norwegian forest cat. Only the newts in our garden pond are truly British (I think).

I feel about nationalities/citizenship and passports the way I feel about underwear: always carry plenty of it, and change it regularly. I have been fortunate indeed in that nationality or citizenship have never been a constraint on what I have been able to do. I served as an external member of the Monetary Policy Committee of the Bank of England before I became a British citizen. I became Chair of the Netherlands Council of Economics Advisers when I no longer held Dutch citizenship.
From a normative point of view, I am with Philippe Legrain who believes that freedom of movement is a human right. For me, when it comes to the rights of nations and countries, libertarian political instincts combine with religious convictions: “The earth is the LORD’s, and the fullness thereof; the world, and they that dwell therein”. Not: Britain for the British or Scotland for the Scots, or even British jobs for British workers. I do not recognise national property rights.

Indeed, I would go further than that, and admit to a visceral dislike of and contempt for all forms of nationalism and patriotism. I consider them regrettable historical accidents – manifestations of communal mental corruption that has too often exploded into collective madness, including violent confrontations and war. I recognise the historical reality and continuing significance of the nation state and the notion of ‘country’, just as I recognise the reality and continuing significance of the HIV virus and of AIDS. I allow for their existence, while hoping for and striving for their elimination.
I disagree with Martin when he says that a country is not just a set of institutions, but also a home, and that people have a right to decide who enters their (collective) home. I view a country as a club with a set of institutions and membership rules. The rules cannot be different for those born in the country (or related through kinship to people born in or resident in the country) than for those contemplating emigrating to that country. Anyone who is willing to abide by the membership rules has the right to join. Anyone also has the right to leave and to join any other club.

Under certain circumstances, exit taxes may be appropriate. These are, however, easily abused for opportunistic political ends, or to abrogate the right to leave. It is clear that, despite remittances and the prospect of eventual return to the country of origin, certain forms of emigration (a brain drain, the departure of qualified doctors and nurses, the exit of the most dynamic and youthful age cohorts) can do serious damage to the rights of those left behind. Whether compensation is due from the emigrant or from the government of the destination country is an interesting question.

Citizenship is, in my view, purely residence-based, and residence is a personal choice. It clearly makes sense, to avoid certain obvious free-rider or collective action problems, to link entitlement to some of the benefits of citizenship in a country to the duration of one’s residence there and/or to the magnitude of the contributions in cash (taxes) or in kind (compulsory military service, jury duty) one has made to the country.

I disagree with Mr. Legrain as regards some of his positive or factual statements about the consequences of immigration on the native population. There are certainly plenty of instances where these effects can be negative. Unskilled immigration into the UK may well bring in labour that is complementary to the labour of native skilled workers; it is likely to lower the wages of native unskilled workers, or to displace them altogether if wages are rigid downwards.

When immigrants are different from natives in appearance or speech, the diversity they bring can as easily become a problem as a benefit. On the Isle of Dogs in the London Borough of Tower Hamlets, where I lived for many years, the old native population, working class white Englanders left behind and marginalised when the docks left, co-existed badly with the large Bangladeshi immigrant community. The resulting resentment let to the first election of a BNP Councillor in a local election (in the ward where I lived, Millwall, in 1993). The two communities are brought together only by their shared dislike of the affluent yuppies that are the most recent immigrants into the area.

This is a huge topic and there are many loose ends. A key question for the ‘countries as open clubs’ view concerns the kind of membership rules that are legitimate. Clearly a rule for citizenship in a country that reproduced the BNP’s party membership requirement – restricting it to “indigenous British ethnic groups deriving from the class of ‘Indigenous Caucasian’” – would not be my cup of tea. I would begin by accepting only those clubs as legitimate whose membership rules (in theory and practice) respect the 1948 Universal Declaration of Human Rights. Beyond that, as long as immigrants impose no adverse rights externalities on natives (that is, as long as they do not infringe these same human rights), they should have the right to settle in the country. Absence of negative rights externalities is compatible with negative conventional externalities (adverse effects on the standard of living of natives, for instance). So it would not be an argument against immigration that it makes (some or even all) natives worse off. I recognise that, given the political governance realities of nation states, this moral argument will carry little practical weight.

If this policy of free migration were adopted by the EU, this could mean that, say, 150 million people might be queuing up to escape the low-lying areas of the Indian subcontinent and move to western Europe in less than a decade or so. In addition to great cultural gains and economic benefits for some of the natives (European landlords and those native European workers with skills complementary to those of the newcomers), this would no doubt also create massive disruption, congestion, overcrowding, urban decay and growth of shanty towns in parts of Western Europe, and to drastic declines in the standards of living of native European workers whose skills are rival with those of the immigrants. The immigrants themselves would on average be significantly better off, or they would not choose to come.

My position that the wellbeing and rights of actual and potential immigrants count neither more nor less than those of the native-born is of course not exactly the brick with which the house of modern nationhood is built. In the UK, as in the Netherlands and the US, vile and virulent anti-foreigner and anti-immigrant sentiment is never far from the surface. The pages of most of the UK tabloids drip with poison when they address immigration-related matters. The flames of xenophobia, racism, anti-foreigner hysteria and anti-immigrant psychosis are also regularly fanned by opportunistic and spineless politicians from both government and opposition parties, oblivious of the damage they do to the social fabric. Large-scale immigration has often provoked communal violence, and at times enduring civil conflict (as in Northern Ireland, Palestine/Israel, Sri Lanka, Tibet, and Assam).

Peaceful coexistence and mutual tolerance among diverse communities, and a significant degree of integration and assimilation are necessary for a ‘country as an open club’ to thrive. The British and Dutch models of multiculturalism, which have encouraged ethnic and religious apartheid, have failed. Something closer to the original American melting pot model is more likely to be successful.

Despite the shock and horror about the recent UK immigration numbers (and yes, it is a scandal that the data are so poor), the scale of recent immigration into the UK (4.8 million gross and 1.6 million net over the last 10 years according to the (unreliable) official figures) has certainly been manageable from the point of view of the natives. The net immigration of about 2.1 million expected between 2006 and 2016 also looks manageable, although it will exacerbate pressure on certain key scarce resources (housing, transportation infrastructure, health and education). We will have to pay somewhat higher taxes to provide the necessary infrastructure and public goods and services.

Immigration has made London the most interesting, diverse, exciting and creative city in the world. It is no longer be an English city, a British city, or even a European city in anything except a geographical sense, but it is the first true ‘worldcity’ or global city – an open city which belongs to all the people of the world. This is no doubt why the enemies of the open society, including the suicide bombers that have targeted it and may to so again, hate it so much. Those who don’t like what immigration has done and will continue to do to London or who feel threatened by it can, of course, under the ‘countries as open clubs model’, always move somewhere else in the European Union.

The late Harry Johnson, professor of economics at the LSE and the University of Chicago, used to say that the whole ‘aid vs. trade’ debate about how to promote development and eliminate poverty was just shadow boxing. If the rich, economically developed countries were serious about development and the elimination of global poverty, they would simply open their borders to all comers. He was right.

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  1. Brock

    Americans do not want to “close the gate” behind them. They want a sensible immigration policy and an end to the organized dysfunction that exists today. 13-30 million illegals is not a sensible policy in any way/shape/form.

    Open borders is a non-starter. Sure, some poor Indian dude from Calcutta has the same rights to be not poor as do I, but my country can’t adopt a policy of forced-poverty for citizens via open borders. Besides the fact that it is simply politically unfeasible, I do wonder how oppressive of a government would be needed to preside over such a profound and sustained decrease in the aggregate standard of living for reasons of “the rights” of so-and-so.

    In addition, I do find is somewhat curious that the only countries that ever come up are (or were) “white”. Why never a discussion of explicitly racist Japanese/Korean (2nd and 11th largest economies, respectively) immigration policies? Why only England, America, EU etc? Are Asian states not held to the same level of moral responsibly? If not, why? And what does that tell us about the openborders crew?

  2. Yves Smith


    You probably don’t listen to people like Rush Limbaugh or Anne Coulter. There are plenty of very loud, very xenophobic spokesmen who appear to have a following.

    Also, as one of the few people I know who attempted to emigrate on my own (ie, no spouse, family, or employer to ease the way), it is hugely daunting and costly. America is not at risk of large numbers of Indians showing up on its doorstep.

    Buiter did not say “open the borders,” he said “set rules for club membership.” Adequate language competence and reasonable prospects for employment, and sufficient cash to see one through the job/residence acquisition process would screen out the poor unwashed you seem afraid of. But I must note those were precisely the sort of immigrants America once welcomed. It was also typical that the preceding wave of immigrants was the most hostile to newcomers, since their economic hold was most precarious

    The number is not 15-30 million. In 2006, both the Pew HIspanic Center and the GAO put the total at between 11.5 and 12 million, with roughly 57% Mexicans.

    You have not made an argument as to what is wrong with these immigrants, or with a Buiter-style approach. Saying it is “not sensible policy” is an assertion.

    I haven’t seen any evidence that illegal immigrants pose a crime risk, and I have seen evidence that in aggregate, they pay taxes and (despite the claims of scaremongers) do not represent a drain on social services. In fact, the efforts to clamp down on them has created havoc in agriculture and in meat processing plants. Like it or not, they appear to be a vital element in our economy.

    And I am curious. Do you know any illegal immigrants personally? Your attitude might be different if you had some direct exposure. I know both illegals and Hispanics who have gone through the hoops to obtain citizenship.

    As for Korea, I don’t know a lot of people who want to emigrate there (and having gone there on a business trip, I can see why). I agree that the Japanese racism is unfortunate, and in contradiction to Buiter’s views, but the fact is that independent of their xenophobia, it is also extremely difficult to adapt to their culture and to speak the language fluently (rudimentary Japanese, by contrast, is pretty easy). Their communication places much greater weight on non-verbal communication, so if you did not grow up in that culture and learn the clues, you are often lost.

    And frankly, like Korea, the quality of life in Japan is pretty poor. Apartments are small and costly, public amenities limited, more pollution. That is why people want to move to the US and Europe. I’d take any European country over Japan in that regard .

  3. Yves Smith


    BTW, sorry if I sounded a bit churlish. I lived in a lot of different places when I was growing up, and therefore have never understood the tribal impulse. So like Buiter, I see it as more negative than positive.

    And I think when you cut through all the arguments, where people stand often has a lot to do with how they feel about having an open community. I find on balance it is a big plus, but other people find it uncomfortable.

  4. Brock

    Well, since we are playing the “I’ve lived it game”.

    I was born in Canada and am engaged to an American who was born in Peru and illegally immigrated to the United States when she was 9 (now a citizen). I’ve lived in South Korea, Turkey, the USA and Canada. I live in Singapore now. I’m in the end stages of immigrating to the United States now. I’m in the system.

    I have fully zero ideological opposition to human migration. That said, it should be done through the formal processes set forth by governments. 13 million (whatever the number) people without any form of documentation may not be a “criminal threat” or whatever, but it is, in this day and age, not smart. By the by, the people who are harmed most from illegal immigrants (whose comparative advantage is being able to work lower than the min wage) are blacks, which makes all these white-folks talking about how painless this all is a tad rich. The US needs a pathway by which people can enter and exit, formally, the American labour market.

    I am a native English speaker with a gradate degree from a top school in a quantitative discipline. I have no criminal record and heaps of ambition. Yet, it is taking me almost 7 months to migrate to the USA. While I wait, 300k or so (should the 50k/month) illegals will simply enter and begin their lives. This is irrational to an extreme degree. Not because I should be able to go and them not, but because it is all such a mess. The American system should resemble the Singaporean. Here in Singapore there is easily accessible ways for businesses to bring in outside labour (who are then protected by labour law). If you are a “professional” you can even get a pre-visa visa that says you are able to get a visa. My employment pass took 2 weeks to get and I received smiles all the way from exceedingly helpful government employees. Family unification is also very easy. The system works. Those who come in are made sure to be who/what they say there are, and while here all are protected by Singaporean law. This is what immigration should look like. Not millions crossing a desert in search of 4$/hr construction jobs (which are all gone now anyways).

    About Korea/Japan. Most Western people have absolutely no idea how good the Asian middle class has it. You’re one (not to be a dick). The Japanese have an extremely high standard of living, among the best diets on earth, best public transit, amazingly low crime and the Koreans quickly catching up. Sure, I live in a small apartment. But I don’t need to get in a car to buy some lunch. I absolutely adored living in Korea (and do in Singapore now too).

    At any rate, I find your elitism a tad insufferable in this instance. Like I said on the Ron Paul thread, this is among my favorite blogs. But, the idea that I must not know any immigrants or am not in favor of an open society, simply because I reject open borders is a tad, well, leftist of you. Broaden your horizons beyond people who agree with you, eh?

  5. Yves Smith


    I don’t mean to sound argumentative, but you have still not told me any harm that results from the messy US system, beyond that it hurts blacks.

    I am not saying the status quo is good, but it seems that the ones that are harmed the most are the illegals, since they can be exploited by their employers (wages withheld, substandard working conditions, illegal pay). Yet most of the arguments made against the illegals, and whether to legalize them or not, appear to rest on some inchoate, unstated, and largely unproven fears about harm to America.

    As for blacks being harmed (or rather low wage workers) that isn’t clear cut either. For domestic jobs, like gardeners and housekeepers in California and the South, yes. But the agricultural workers and the meatpacking plant workers are not readily replaced. The meatpacking plants pay reasonable wages, but the work is so backbreaking that most new native workers quit in a couple of weeks.

    And I am not saying to have no system, neither was Buiter, so I am perplexed that you are attributing that position to me. I am saying it should be a lot easier, closer to a registration process that makes sure the entrants meet some minimal standards that are frankly in their interest too (language competence being one) than ones largely designed to restrict entry. He and I are saying the barriers should be much lower.

    And I don’t think you answered my question. Do you know any illegal immigrants?

    As for Japan, we must agree to disagree. Having worked in a Japanese company, as much as I was intrigued by the culture, and enjoy their aesthetic, I think they have a terrible lifestyle (and I think Americans have come to have a terrible lifestyle too, but foreigners think it is far better than it is thanks to movies and TV).

    They are expected to work very long hours, whether there is work to do or not, they are required to go out with their work group and drink at night, they commute home drunk late at night, and typically they have long commutes, and they go back and do it again the next day. And the ones that have steady jobs are now considered lucky. There is a cohort of young people “freeters” who are freelancers, which means underemployed. Some estimates put them as high as 10 million. In a society like Japan, that places great stock on group membership, being unrooted has a psychic as well as economic cost.

    I am not at all an outdoors person, but even I find the lack of trees in most areas of Tokyo disturbing. The fact that the Japanese are committed to being a society without great disparities of wealth, however, is a big plus relative to America.

  6. Brock

    Read? I said “I’m engaged to an American who was born in Peru and immigrated ILLEGALLY to the US when she was 9”. Her whole family (my future in laws) is still illegal (less her mom). The majority of her/our friends in Miami (where we are settling) are illegal. Her family would benefit greatly from a sane system. Her uncle has not seen his son in 14 years cause he is afraid he won’t get back in and the Americans denied his boy a visa to visit. The system harms migrants. Again, it is a tad rich that white-folk talk about how painless it all is. I think you are making very typical American-liberal assumptions about who you are speaking with.

    I do not know/care if you are on Team Open Borders. But that article you posted made some rather big claims that can only, in the end, lead to open borders. Such as:

    “Beyond that, as long as immigrants impose no adverse rights externalities on natives (that is, as long as they do not infringe these same human rights), they should have the right to settle in the country.”

    “impost no adverse rights” is an interesting way of phrasing it. Does driving down the price of labour for sake of fuzzy feelings of “rights” and “diversity” count?

    Again, I’m merely defending the right of a country to decide if/who/when/quantity of immigration. In Canada (to your north) we’ve had varying levels of immigration since the 60’s. Sometimes the government raises the number and sometimes they lower it. I suspect it will be lowered in the future, and then raised 5-10 years later. This is our sovereign right to do. Canada is a sovereign country. Not an NGO.

    Besides that, the notion that a people cannot choose the kind of country they have is absurd. If 30 million muslims wanted to immigrate to Canada, making it a muslim-majority state, would Canadians not have a “right” to oppose this? I suppose that would be xenophobic, eh. But as I said “I have no ideological opposition to human migration”, which I think you missed in your rush to assume American-liberalish platitudes about me. But I’m going to retract that. I do have some opposition to human migration. I’m against open borders.

    About blacks. I’m afraid that you’re wrong. Tossing aside the truth that there is an aggressive race-war between illegal Mexicans and Blacks in Los Angeles, where blacks are being randomly shot on the streets to ensure the ethnic cleansing of certain neighborhoods (no criminal threat, huh? ms13 are all on NATA TN visas, i’m sure), it is the case, by factor of logic, that introducing millions of people willing to work for below min wage essentially abolishes the min wage.
    If I were to advocate abolishing the minimum wage, how long do you think it would take before someone (maybe even on this site) would accuse me of potentially harming blacks?

    Even though you don’t know a dammed thing about Japan beyond a few NYT articles about economic insecurity, by even addressing your claim that “who wants to immigrate there anyways” I’ve let you off the hook. I said that the open borders crew only focuses on “white” nations and ignores wealthy Asian ones. I’m implying that the open borders crew (read that carefully, I didn’t say “all who favour immigration” but the “open borders crew”) has an innate hatred of Western civilization and ultimately want it abolished (consult your neighborhood sociology faculty for evidence). You said, basically, “who cares, nobody wants to move there anyhow”. That is a surprising reply, isn’t it? You would be surprised at the number of people who would like to migrate to Japan/Korea. Korea has a problem with illegal immigration. The Koreans are moving towards a nation of more immigration and the Japanese want to build robots. And I think that both are fully entitled to those decisions and that they are not to be held to warm and fuzzy Western notions of “rights”.

    The interesting thing about our world is that there exist people who aren’t Western, that want to better themselves. Perhaps you’ve been to Eastern China? Do you think some of those destitute people might want to trade up to Seoul/Osaka? Not everybody wants to move to the West. I think you’re being a tad Euro/American centric here, no?

    And the harm of the American “system”? It is both economically nonsensical (both skilled and unskilled have almost zero pathways to employment, with some exceptions ..TN, H1 etc) hard on families (years to bring family members) and leads to a polluted social discourse about migration (as we clearly see).

  7. Anonymous

    Even though you two may not agree, you are obviously both first-rate intellects. I appreciate the discussion.

    The 3 major corrosive effects of large-scale immigration are:

    1) Lowers the standard of living for middle class (more labour competition for jobs)

    2) Causes breakdown in cultural coherence (no sense of meaning)

    3) Increased population congestion (lower quality of life)

    Large-scale immigration is gradually destroying both the standard of living and quality of life in North America.

    People fail to recognize these effects, because they are gradual. People tend to only respond to sudden changes. If you want to change the world, above all, do it gradually. The powers that be know this and that is what they have been doing. As such, after many years our society has been greatly transformed for the worse and it is only getting worse.

  8. minka

    An immigration raid aids blacks for a time
    Wednesday, January 17, 2007
    By Evan Perez and Corey Dade, The Wall Street Journal
    STILLMORE, Ga. — After a wave of raids by federal immigration agents on Labor Day weekend, a local chicken-processing company called Crider Inc. lost 75 percent of its mostly Hispanic 900-member work force. The crackdown threatened to cripple the economic anchor of this fading rural town.

    But for local African-Americans, the dramatic appearance of federal agents presented an unexpected opportunity. Crider suddenly raised pay at the plant. An advertisement in the weekly Forest-Blade newspaper blared “Increased Wages” at Crider, starting at $7 to $9 an hour — more than a dollar above what the company had paid many immigrant workers. The company began offering free transportation from nearby towns and free rooms in a company-owned dormitory near to the plant. For the first time in years, local officials say, Crider aggressively sought workers from the area’s state-funded employment office — a key avenue for low-skilled workers to find jobs. Of 400 candidates sent to Crider — most of them black — the plant hired about 200.

  9. minka

    The Associated Press
    STILLMORE, Ga. — A south Georgia poultry plant is busing in felons on probation and homeless men to fill jobs left vacant when federal immigration agents arrested illegal Mexican immigrants in raids two months ago.
    Each day, about 40 convicted felons from the Macon Diversion Center are bused in to work at the Crider Poultry plant here. Sixteen men from the Garden City Rescue Mission in Augusta have worked in the plant, and the mission is looking to send more.

    Crider President David Purtle said that’s just a drop in the bucket for a plant operating at 450 employees, less than half of the 1,000 workers there before the raid.

    To fill the gap, Crider also has been outsourcing jobs in its raw deboning plant to Alabama, has raised wages to attract new workers and has turned to an outside company to hire about 100 cleaning workers.

  10. minka

    The glut of illegal immigration in the USA and the open borders ‘line’ is yet another aspect of globalization which is about elite privilege. Since elites make more $$ and also get cheaper domestic help when our economy is overloaded with illegals, we have illegals. It matters not that the working and middle classes are hammered.

    The working and middle classes are not totally dominated by corporations in the EU. That is the only reason the EU is not glutted with illegals, as is the USA, where the the political culture is corporatist. The job market in the USA for unskilled Blacks has been harshly impacted, and that effects the culture and crime of our cities, etc.

  11. Lune

    I think one of the main fears about “open borders” is that all of our standards of living will soon equalize, with immigrants from poor countries getting a significant boost and natives from rich countries getting a significant drop. But I’m not entirely convinced that that will happen.

    Instead of focusing on the world, we can use the USA as a microcosm. Assume each state is a “country” within the federation of the USA. There is completely open immigration policies between states, a single currency, minimal language barriers (barring different accents, I guess), etc etc. And certain states like California, NY, etc. are larger than most countries, whether you measure by population, land mass, or GDP. So what’s the end result? There are still vast differences in the per capita income, standard of living, etc. between say California and Alabama. It’s interesting to ask why, and I’m not sure of the entire answer, though I suspect it’s a combination of a few factors:
    1) People don’t make the decision to immigrate based entirely on economic factors. Some people want to live in Alabama even if they could get a better job in CA because they like the local culture, have family and historical ties, etc.
    2) In the USA, there’s a means to redistribute some of the income from CA to AL in the form of federal taxes and federal benefit programs.
    3) Differences in investment in things like infrastructure, education, etc. that lead to a better environment for certain jobs (e.g. Silicon Valley thrives in CA thanks to the pool of talent from Stanford and Berkeley, while commercial hog farms get started in Kansas due to lower environmental regulations)

    The bottomline is that if you look at the USA, it’s not clear that open borders would lead to a complete equalization of standards of living. Of course, there will be some equalization, since CA and AL are a lot closer in standard of living than the USA and Mexico. But there will still be plenty of opportunity to advance your local community without all your gains being overwhelmed by outside immigration.

    As an aside, I think looking at differences in standard of living between countries masks the real problem which is the differences within countries, e.g. between rural and urban areas, or between educated and uneducated people, or other divisions. I think these divisions are far higher than the differences between countries. For example, there are people that live like royalty in Manhattan and Bombay, with standards of living far beyond most people’s dreams. And there are people without access to running water in West Virginia and rural India.

    So I guess what I’m saying is that “open borders” won’t solve as many problems as its proponents believe (after all, how better is life as a rural farmer in Mexico vs. a day laborer on a fruit farm in California? I’m sure it’s somewhat better, but not much, certainly not in comparison to the difference between a native-born working class high school grad and a hedge fund manager), and it won’t debase the standard of living of the host country’s native population as much as detractors fear.

  12. Yves Smith


    I am very much surprised at the anger in your comments. I asked you a question as to the basis for your views. I get vituperation back. I did not address you in that fashion, and it isn’t merited in reply. You had started out making assertions, and I asked you for some factual/logical backup. That isn’t an unreasonable request.

    As to “I don’t know anything about Japan,” I was one of the first Westerners to have an executive level job a top Japanese company. I was specifically hired into the Japanese hierarchy, which was and still largely is unheard of. Although foreigners were and are common, they are hired into a completely different hierarchy (the term is usually “local staff”). I was told more than once that I was famous in Japan, although I think that was a big exaggeration.

    I spent a great deal of time there on the Japanese side of the table. I was an insider in their business culture, a status Westerners rarely achieve. Yes, I probably don’t have much insight into the bottom end of the labor market in Japan. But to assert that I know nothing about the country is factually inaccurate.

    I was specifically responding to your comment (effectively) of how good the middle class life have it in Japan and why wasn’t there more criticism in the Western/world press of Japan’s and Korea’s immigration policies. I will admit I went a bit into a personal rant. However, the point I had started to make was that middle class life in Japan isn’t what it is cracked up to be. You had talked before about labor policies establishing a pathway to middle class life. From a US/EU perspective, the end game is not great, and I don’t see foreigners ever becoming integrated into Japanese society. In Japan, even if they open things up more, the immigrants will remain guest workers in a gaijin ghetto. Yes, if you are a laborer from, say, rural China or Southeast Asia, low level work in Japan probably looks like a big step up.

    As to the “blacks versus lower income,” yes I am bothered by the comment that immigration hurts blacks, because it has the effect of equating blacks with lower income and/or lack of skills. While it is true that black incomes are lower than Caucasian, and they are therefore disproportionately represented in those groups, there are still more poor whites than poor blacks. You can call it a liberal hobby horse, but I am sensitive to overgeneralizations about blacks just as I am to ones about women (the Larry Summers science fracas, for instance. While the tempest was overblown, and it was probably unfortunate that that was the proximate cause for his ouster, when tensions had been brewing for some time, the reaction was directionally correct).

    Having said that, I will grant you that poor blacks suffer more than other lower income groups from households without a parent that has steady work. The lack of role modeling (and let’s face it, the stress of struggling with basis survival getting in the way of parenting) too often has the effect of creating and perpetuating an impoverished subclass. It’s a tragedy for them, and reinforces stereotypes about blacks generally.

  13. Yves Smith


    Another section of the WSJ article proves a point I made earlier, that illegal workers weren’t always taking jobs Americans were willing to perform:

    But in the months since Crider began hiring hundreds of African-Americans, the answer has become more complex. The plant has struggled with high turnover among black workers, lower productivity and pay disputes between the new employees and labor contractors. The allure of compliant Latino workers willing to accept grueling conditions despite rock-bottom pay has proved a difficult habit for Crider to shake, particularly because the local, native-born workers who replaced them are more likely to complain about working conditions and aggressively assert what they believe to be legal pay and workplace rights.

    Americans avoid such labor because “they can’t live on those wages, and refuse to,” says Debra Sabia, a professor at nearby Georgia Southern University who founded a social-service organization for the area’s Latino immigrants. “If you gave a survey to Americans and asked them where they’d want to work, a slaughterhouse would not be on the list. These are not jobs we aspire for our children to take.”

    Now if you have read my other posts, I am a big advocate of higher minimum wages. It is a disgrace in this country that someone making the minimum wage can’t support himself independently in most places in the US. And in case it isn’t clear, I am not a proponent of having US businesses hire illegal workers to skirt US labor laws.

    But the meat processing plant illustrates a messy reality. Americans are not as hungry, literally and metaphorically, as in this case, migrant Hispanic worker are. Now the problem may be comparatively small, but companies that can will shift their operations into Mexico if they lose access to cheaper labor.

    It’s a long-winded way of saying that don’t assume that jobs taking now by illegal immigrants will necessarily be filled by Americans. They may go unfilled or go away.

    As for you comment “EU is less corporate and therefore anti-immigration” I caution you here. France has a very large Muslim population, and Germany has many Turks. I’ll admit that my inputs are limited, but the comments I get from Europeans seems to be that they are more bothered by the fact that some (many?) are not assimilating than by their impact on wages (I’ll admit my contacts are middle class and therefore may not be directly affected).

    The refusal to let Turkey in has more to do with it being Muslim than being a cheap labor pool. Poland was admitted a few years ago, despite the considerable fears of what “Polish plumbers” and other comparatively low wage Polish workers would do to wages. (It was a sufficiently large concern that the British imposed restrictions that were adopted right before Poland joined the EU. Dunno the details, but EU passport holders can somehow get work permits in the UK).

    And despite the foregoing I have trouble with the arguments about culture and values. These same arguments were made in America, particularly in reaction to Irish and German immigration. The Irish were Catholic. That was seen as a big danger to Protestant America. The German’s didn’t speak the language. And both competed with the native working class. Yet most people look back and see the welcoming of those immigrants, as well as other groups that came (Italians, Scandanavians, Poles, etc) as having been a win-win situation.

    To me, this points to an erosion of the key structure in promoting cultural norms, and providing a route to the middle class, namely, public education. A strong and effective educational system goes a long way towards maintaining a culture.

    To a lesser degree, I think the fear has to do with an erosion of community in America (my colleague, Doug Smith, no relation, has written an excellent book on this topic, On Value and Values).

    France, for example, once had a public education system that was a model for the Western world. The same lesson would be taught, say to third graders at 3:00 pm, throughout the country. A poor person who was smart and applied himself could get to the elite French universities, which in turn were the source of the top bureaucrats who ran the country.

    It was also once true that public education in America, while not centrally directed, was less inconsistent in quality than it is today. Two generations ago, promoting kids who were failing wasn’t done. Another example: City College of New York, which was where smart working class people from New York City could get a higher education, was once a highly regarded institution. But the tracks for the poor and lower middle class to get into the middle-upper middle class are fewer and fewer. Recent income data also confirms lower class mobility in the US.

    I know way way too many people who come from lower-middle income backgrounds who as adults have as much smarts and hustle as people I know who went to elite schools, but never got on the right educational track, and are working at jobs that are considerably below their potential. You will never have an equitable society, but the disparities are so apparent and frequent as to undermine faith in its fairness.

    The fact that home schooling generally produces better results that public education is an indictment of our current process. I’d rather that home schooling were not permitted. If there is something wrong with or deficient about public education, letting people opt out is a poor remedy.

    And as for attributing the erosion in values in our society to immigrants, I am curious to know what values you see threatened by immigration. In fact, per the meatpacking plant example above, the migrant workers are harder working than Americans.

    The erosion in values that I find the most troubling is the widespread “might makes right” and “ways justify the means” attitudes, particularly as regards making money. Anything is OK if it increases the personal or corporate bottom line, provided you don’t get caught. You can’t pin that on immigrants. That comes from Any Rand and her followers. She basically said social values are irrelevant, all that counts is the individual getting his way.

    Look at Japan. Culturally, it is not an open society. They have made some tough choices to preserve a cohesive culture. That has included enduring a long period of low growth to avoid the dislocation of mass unemployment after the end of their bubble years. They now have a major demographic problem due to their inability to integrate newcomers.

    Conversely, the US in the 1990s was expected to show a declining population for that decade. It was a big surprise to demographers in the early 2000s to learn that, unlike most other advanced economies, our population had grown. Three factors explained the difference. Women had deferred having children, rather than not having them, so that the decline in birthrates in the 1980s was in part due to that shift. But other factors were an increase in immigration (11 million versus the anticipated 7-8 million) and higher birthrates among Hispanics versus Caucasians.

  14. bob


    I’m all for legal immigration. I like living/working in a country where others can come and contribute and innovate.

    But the illegals have got to stop – this is yet another unstustainable trend. It is well known that the construction industry hires many illegals, to do jobs which, once upon a time, not too long ago, paid good wages and paid them to people who are here legally.

    The illegals do add additional strain to hospitals and schools which are not allowed to turn them away.

    A nation with no borders and no laws is not a nation.

    I’m sorry that the rest of the world is mostly very poor. But the answer is not for all of them to come here.

  15. Yves Smith


    Thanks for your comment, but with all the to-ing and fro-ing, the point has gotten obscured.

    I am not advocating the status quo. What I am advocating is a much easier immigration process. I will confess to not having thought about it deeply enough to have a well formulated proposal, but I suggested some minimal hurdles as a starting point, such as a basic level of language competence, and if they don’t have a job lined up, demonstration that they have enough financial resources to pay for the time it will likely take them to find work, plus a large margin (say at least 3X). That will have the effect of keeping out the poor who would have difficulty of finding work or might never find work.

    The reason for the lengthy discussion of illegals is that I think the issues surrounding them and their impact on the economy are more complex than most people acknowledge. Those threads have gotten mixed up with other issues.

    It isn’t as simple as “they are taking jobs from Americans” or “they are a burden on the state.” If anything, from what I can tell, they are hurt by the current system more than is commonly depicted, and the damage suffered by Americans, even lower income Americans, appears to be overstated.

    Precisely because by definition most operate in a cash economy, it is hard to have confidence in the data that people present about them. Therefore anecdotes play a big role, which clouds debate.

    And as I said, I am a fan of higher minimum wages and of stricter enforcement of labor laws.

  16. Yves Smith


    Forgot to address your point more specifically about illegals use of state services. It is often forgotten that many pay taxes. Some have Social Security numbers and pay all their taxes, others have unscrupulous employers who claim to withhold taxes and simply keep the dough. They pay sales taxes in states that have sales taxes.

    My perception is that illegals are cautious about using government services, including emergency rooms, precisely due to the risk of detection and deportation. So I am not convinced, net/net, that they cost more than they contribute in revenues (although some states may come out losers). Again, I think there is a lot of fear mongering by people who stand to gain from this line of thought. It’s an argument that plays well in the media, for instance.

    I haven’t seen any good analysis, so it you know of any, it would be very much appreciated.

  17. bob


    Actually, I like what you propose re: language competence and job/reserves. It make sense. Based on that, easing the legal process for legal immigration could make some sense.

    But to do that, we will need borders that are secured and laws that are enforced.

    Right now we have neither.

    I’m actually pretty aggravated about this issue. I’ve voted solidly Democrat for 25+ years, but I find that only really conservative Republicans, whom I never otherwise agree with, stand in the way of various amnesty arrangments. (Just to be clear, *anything* that gives any legal status to an illegal is amnesty in my view. It’s not about citizenship – once they have legal status of any sort they just won the lottery.)

  18. minka

    I don’t think the notion that these dirty poorly paid jobs might go to Mexico is a reason to let illegals from Mexico flood the country.

    I don’t see how your advocacy of a higher minimum wage addresses this issue – those employers who might leave if cheap and exploitable illegals weren’t available might also leave if the minimum wage were higher.

    I no longer believe that the economists and financial professionals are good sources of advice. We’ve done what they said and the middle class is collapsing. We’ve tried your way – now let’s try closed borders and tariffs. Let employers send the jobs to Mexico, and make them pay tariffs to get their goods back in.

    I don’t see how the additional material that you pulled from the article proves your point. I think it proves mine.

    My point is that 12 million illegals in the USA has made a worse job market for Americans, driven down wages or held them down, and worsened working conditions. That fact that Americans agitate for better conditions and wages after illegals are out of the local job market shows the merit in my view.

  19. Yves Smith


    The article said the entire workforce had turned over three times since the immigration raids, which means that the average employee lasted three months, they were still 300 workers short, and were looking to bring Laotian Hmong in from Minnesota. This is hardly a picture of jobs being taken from Americans. Slaughterhouse work is simply dreadful, and even Americans who lack other choices can’t stomach the work.

    Wage competition at the bottom of the bottom 20% of jobs is not destroying the middle class. The far bigger culprit is the shift in the distribution of returns away from labor and towards capital. That suggest if you want to help both lower and middle income workers, unions and tax policies are the better way to go.

    What good does imposing tariffs do when, as Alan Blinder tells us, 30 to 40 million US jobs are offshorable? You now see good white collar jobs going overseas. If you are worried about the middle classes, this is a far bigger deal than wetbacks picking crops or acting as housemaids or gardeners.

    I suggest you read this post, this post, which discusses the breakdown of the post war social contract, and this one on role of wage and tax policy.

    I am sympathetic to the eroding position of the middle class, but it has far more to to with how much more the people at the top are taking than the impact of immigration, whether legal or not.

  20. Anonymous


    To Yves’ point, take Stan O’Neal’s $161 million exit package. Divide that by $6,00 an hour (the wages at the plant in the article), then 40 for 40 hours a week, then 50 for 50 work weeks a year.

    Stan’s package is worth 13,417 man years at that plant. The top end of the food chain is taking a lot more out of the middle class than the bottom.

  21. minka

    “What good does imposing tariffs do when, as Alan Blinder tells us, 30 to 40 million US jobs are offshorable?”

    Well, the prospective savings of offshoring have to be balanced against the cost of tariffs.

    The idea is to attach a cost to offshoring.

    I think it’s inevitable, and not just for the labor market, but possibly more urgently, for the environment. Even a Republican e.g. Schwarzenegger was quoted a few weeks ago musing that countries that severely pollute need to face tariff consequences. This is a method of attaching a cost to the race to the bottom not only wrt labor, but also to pollution and the environment.

    “Free” trade is used to undercut all the standards of liberal democracy, including that of a sustainable environment.

  22. Yves Smith


    With all due respect, I don’t see that happening. How can you prohibit a company from having customer service reps overseas? From law firms sending routine work to India, particularly when the clients demand it? The US firms will just sent their legal work to London and get it offshored to India from there. Is that a plus? We have never had tariffs on services, and most of the jobs being offshored are service jobs.

    Having the dollar fall is similar to imposing tariffs. It makes foreign goods more costly. But everything I have read indicates it will not lead to a repatriation of jobs. We have sent entire industries, such as shoe manufacture and textiles, overseas. They aren’t coming back. We no longer have the infrastructure or the skills. You might get a wee bit of high end, craft work, but that’s about it.

    Did you read the posts to which I provided the links in my reply to your last post? Tariffs and trade policy are not the linchpin to this problem. It’s about the objectives of commerce. As long as the mission is defined as serving investors and shareholders, there is no way labor/the middle classes will come out ahead. There will be empty symbolic protectionist moves and things will continue much as they are now.

    William Greider had an excellent article a few years ago in which he pointed out that our system was not of free trade, but of managed trade. We play the game to promote the interests of our corporations. Other countries are more interested in workers’ wages and in having trade surpluses. So the problem isn’t trade, its’ our objectives in our trade negotiations.

  23. Yves Smith

    PS I don’t disagree with respect to tariffs for pollution (n fact I wrote about the need to point out that Chinese goods are cheap because they have worse externalities, namely pollution and lousy product safety, than just about anywhere). We’d have more cred in doing that if we also taxed gas more heavily. But again, I don’t see that ever happening either, or only a teeny weenie symbolic bit. We are too afraid of Chinese ire to do anything radical enough to make a difference.

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