Micky Kaus grapples with income inequality and immigration reform.
Like all research results, the conclusions of these papers may have to be revised in the light of future research. But I’m afraid that the three negative conclusions I stressed in the column are fairly robust.
First, the benefits of immigration to the population already here are small. The reason is that immigrant workers are, at least roughly speaking, paid their “marginal product”: an immigrant worker is paid roughly the value of the additional goods and services he or she enables the U.S. economy to produce. That means that there isn’t anything left over to increase the income of the people already here.
Krugman notes that most of the benefit accrues to the immigrant himself, whose income has almost surely risen. That is an important point which shuld not be minimized.
My second negative point is that immigration reduces the wages of domestic workers who compete with immigrants. That’s just supply and demand: we’re talking about large increases in the number of low-skill workers relative to other inputs into production, so it’s inevitable that this means a fall in wages.
My guess is that the Democratic coalition finesses this with the promise that one day all these immigrants will join unions and vote for greater benefits for all.
Finally, the fiscal burden of low-wage immigrants is also pretty clear. Mr. Hanson uses some estimates from the National Research Council to get a specific number, around 0.25 percent of G.D.P. Again, I think that you’d be hard pressed to find any set of assumptions under which Mexican immigrants are a net fiscal plus, but equally hard pressed to make the burden more than a fraction of a percent of G.D.P.
In a different blog post Krugman expands on this with a bit of liberal Conventional Wisdom we find puzzling (my emphasis):
Paul Krugman: My reading of the research on this is that the legality of immigrants isn’t as big an issue as you might think for tax purposes; even illegals pay taxes, for the most part. The point instead is that a low-skill, low-wage worker, wherever that worker was born, will on average receive more benefits than he or she pays in taxes. There’s nothing wrong with that – on the contrary, it’s the way a just society should work – but it means that low-skill immigrants place some burden on our system.
A "just society" should just shower benefits on the poor? Does it matter why they are poor, or where they came from? Someone here illegally should be subsidized? Someone who never troubled to graduate from high school deserves a check? Where is the tough love?
Moving on, a year back Ross Douthat explained why Democrats were going to rail about income inequality but accomplish little - in short, they weren't going to reform our schools or control our borders, and taxing the rich won't reverse the tide.