A World Of Free Movement Would Be $78 Trillion Richer

[Kyle M]

But I have to ask why all the hostility? It’s seems like you have a hard time engaging with people who have different opinions than you. Would you rather we all just agree with you without question? Unfortunately if you look through the thread there are a lot of other people who disagree with you. Could it be that it is you who is wedded to your ideology of Anarcho-Capitalism like a religion, and are not looking at the facts with an open mind? Ideologies rarely, if ever, work in the real world and it is a much better idea to evaluate the strength of any idea based on its results.

You have taken a superior tone on these issues with me before on the forum, and are obviously ignorant of any of the writings of the school of thought I follow. That is an annoying and insincere combination.

 

[Kyle M]

One curious point about this argument is that I am not necessarily for open borders of a nation is all circumstances, I subscribe to the Hoppean view of "physical removal" of communist and other violent coercion agitators from a libertarian social order. I simply disagree, factually speaking, that the free movement of goods and labors harms the standard of living of the most at risk, lower classes. Now, government stooges that are causing standards of living to go down because of their regulations and cartels may also be for increasing immigration for purposes of vote-buying, and that could be bad, but strictly speaking in a relatively free society people moving in to work do not harm the native population.

That's another aspect that isn't being looked at, one of the big problems is that here, and especially in Europe, many of the economic migrants aren't working but are getting coercive state welfare that is directly impoverishing the host country. That is 100% diametrically the opposite of them getting jobs and contributing to the production of salable goods and services in the host country.

If the only issue is taking jobs, then would you support migrants that would sign a pledge never to work to produce anything, but only to consume things that are produced by native workers?

 

[managing]

Don't you find it interesting that a quasi-record number of people are participating in the so-called labor market, and you're saying that the danger is that fewer jobs will be available to them? Perhaps the problem is not a binary of A) fixed numbers of "jobs" and B) labor pool participants? Maybe the real world is more complex, and new ways (when liberty is allowed) to interact in the market can solve these problems better than a top down approach to simply limit the second term (B) I listed above?

Of course there are no examples of today's exact situation that support what I'm saying, but equally so there is no example of today's economic conditions that support yours. That is for the simple reason that there is no direct historical comparison to today's economic conditions. You are using that to attack my assertions and arguments, while buttressing yours. Why?

The only consistent example in economic history is that when markets are liberalized, the standard of living of lower class people goes up, and when markets are socialized or cartelized by the state, they stagnate or decrease for those people. No historical situation is the same as ours is, or the same as any other historical situation, but mercantilism has never made a nation richer. See the Corn Laws, American tariffs in the Progressive Era, Chinese Great Wall, etc.. Do you have an example of mercantilism (tariffs, rules against importing goods and/or laborers, and so on) making the standard of living for lower class people higher in a nation?

The simplest underlying argument would be that an influx of laborers expands the market for things/services. This is certainly true over time with lots of caveats about overcrowding, natural resources, etc.

I think the thing missing in this discussion so far is, what happens, over time, to the rest of the world when there is free movement. This is, after all, a thought experiment. What happens in the rest of the world on Day 1? Year 1? Year 20? Year 100? etc.

 

[Queequeg]

Don't you find it interesting that a quasi-record number of people are participating in the so-called labor market, and you're saying that the danger is that fewer jobs will be available to them? Perhaps the problem is not a binary of A) fixed numbers of "jobs" and B) labor pool participants? Maybe the real world is more complex, and new ways (when liberty is allowed) to interact in the market can solve these problems better than a top down approach to simply limit the second term (B) I listed above?

Just about every measure in the world is at a quasi record high only because human population is at a record high. The absolute number of people working is meaningless. There are also a quasi record number of people not working. The relevant statistic is the percentage of people physically able to work that are not working. And this is too is at a quasi record high. That is the problem.

You keep claiming that my view of the world is too simplistic yet you can’t offer any evidence that the world is any more complex than what I am saying. An increase in the supply of labor, like any other commodity, lowers the price of that commodity. Do we have to argue basic supply and demand economics.

Since you didn't reply to my refutation of your idea that lower prices have compensated the working classes more than their lower wages, I'll assume that you no longer hold that opinion.

Of course there are no examples of today's exact situation that support what I'm saying, but equally so there is no example of today's economic conditions that support yours. That is for the simple reason that there is no direct historical comparison to today's economic conditions. You are using that to attack my assertions and arguments, while buttressing yours. Why?

Sorry but there is nothing new under the Sun. Our economy still works by the same principles as economies have throughout time. The fact that you can’t find one example from thousands of years of recorded history should tell you that there is something wrong with your theory.

The only consistent example in economic history is that when markets are liberalized, the standard of living of lower class people goes up, and when markets are socialized or cartelized by the state, they stagnate or decrease for those people.

Open borders is a completely different issue than liberalized markets.

No historical situation is the same as ours is, or the same as any other historical situation, but mercantilism has never made a nation richer. See the Corn Laws, American tariffs in the Progressive Era, Chinese Great Wall, etc.. Do you have an example of mercantilism (tariffs, rules against importing goods and/or laborers, and so on) making the standard of living for lower class people higher in a nation?

Not true. The wealth of many great countries, including our own, have been built on protective tariffs and mercantilism. Developing countries are better off protecting their emerging industrial base or risk never properly industrializing. This is exactly what China and the rest of the developing world are doing to us right now. Do you really think China is engaged in free trade? Or Japan before it?

 

[Queequeg]

You have taken a superior tone on these issues with me before on the forum, and are obviously ignorant of any of the writings of the school of thought I follow. That is an annoying and insincere combination.

Seems like you have been carrying a chip on your shoulder for quite a while. I'll leave it to others to decide who is the ignorant one on these issues.

One curious point about this argument is that I am not necessarily for open borders of a nation is all circumstances, I subscribe to the Hoppean view of "physical removal" of communist and other violent coercion agitators from a libertarian social order.

Yeah the physical removal of those with different ideological viewpoints than yours sounds like a good idea. What could possibly go wrong with that strategy?

I simply disagree, factually speaking, that the free movement of goods and labors harms the standard of living of the most at risk, lower classes. Now, government stooges that are causing standards of living to go down because of their regulations and cartels may also be for increasing immigration for purposes of vote-buying, and that could be bad, but strictly speaking in a relatively free society people moving in to work do not harm the native population.

There are a lot of assumptions required for free trade to equally benefit both countries and these are not even close to being true with many of our trade deals today.

That's another aspect that isn't being looked at, one of the big problems is that here, and especially in Europe, many of the economic migrants aren't working but are getting coercive state welfare that is directly impoverishing the host country. That is 100% diametrically the opposite of them getting jobs and contributing to the production of salable goods and services in the host country.

That is just one example of the differences between real world economics and fantasy utopian theories like that in the Economist article. In the words of a famous non-Austrian economist, “You can have a welfare state or you can have open borders; but you can’t have both.”

If the only issue is taking jobs, then would you support migrants that would sign a pledge never to work to produce anything, but only to consume things that are produced by native workers?

Are you seriously asking me to help build your strawman?

 

[Kyle M]

Yes a greater supply of workers lowers the price of current workers wages, but that is one side of the equation. Hazlett's "Economics in One Lesson" would be useful here. You are looking at the bridge being built by tax money, not what the money could have done if it wasn't taxed in the first place. Specifically, you aren't taking into account the vast increase in demand for goods and services that new workers bring in. Those goods and services have to be produced by...you guessed it...work (ie jobs).

 

[Kyle M]

Yeah the physical removal of those with different ideological viewpoints than yours sounds like a good idea. What could possibly go wrong with that strategy?

Physical removal is simply an extrapolation of property rights. If someone walks into your house and says that they advocate that they be allowed to take your TV and your dining set, and proceed to do so, what are your rights in that situation? How is that different than a libertarian social order where property is privatized? Also, communists are not simply ideologically different, but advocating for theft. If the Mafia comes into a neighborhood and institutes a new order whereby all businesses and households pay them 10% "protection money," is that simply an ideological difference that should be accepted in the name of tolerance?

 

[Kyle M]

There are a lot of assumptions required for free trade to equally benefit both countries and these are not even close to being true with many of our trade deals today.

The term "trade deals" and "free trade" are mutually exclusive. Are you aware that free trade, by definition, cannot contain a state-managed deal between the nations involved, or else it is (again, by definition) managed trade? These are the kinds of mistakes or simple ignorances that show me you have no breadth of reading in economics.

To continue, trade benefits both parties (the traders) or else they wouldn't engage in it. The parties relevant to the benefit equation aren't whole nations, as in managed trade, but individuals. If I trade $500 to an Italian cordwainer for a nice pair of leather shows, by engaging in the transaction I am showing that I value the shoes more than the $500, and vice versa for the cordwainer. That is the end of the analysis, since we are both free people who direct out property as meets our ends. There is also shipping cost, and the cost that the cordwainer takes on himself to change the USD to EU (or lyra years ago) but that is also part of the calculation we both make.

How is any transaction, that isn't managed by the states of the nations involved, any different kinetically/morally than the above described? You are the one straw-manning, using the definition and examples of managed trade that is simply misnamed free trade (falling for a government name is pretty bad, patriot act, operation Iraqi freedom, these things are obviously Orwellian double speak) is 100% a straw man. Free trade does not require a thousand page deal between countries explaining the rules and regulations, it requires one sentence: "from this date on no tariffs, sanctions, regulations or controls will be imposed on parties exchanging goods/services between nations "X" and "Y."" Anything more than that is not, be definition, free trade.

 

[Kyle M]

The simplest underlying argument would be that an influx of laborers expands the market for things/services. This is certainly true over time with lots of caveats about overcrowding, natural resources, etc.

I think the thing missing in this discussion so far is, what happens, over time, to the rest of the world when there is free movement. This is, after all, a thought experiment. What happens in the rest of the world on Day 1? Year 1? Year 20? Year 100? etc.

It is complex, because part of a free movement world would be free deployment of capital, where (provided the host countries had good property rights) investors would begin to invest in low-capital nations and start to bring up their productivity (and hence their wages) towards those of higher-capital nations.

The problem is that people see what is happening now: government managed trade, importation of economic migrants with state welfare, and an overall regulated and cartelized Western economy, and think that is "free trade" and "open borders." It's like blaming Islam for terrorism and putting your head in the sand of the nearly 100 years of British and then American imperialism in the region, and how that kind of imperialism in any part of the world throughout history created terrorism in response. It's funny how the media and academics can get people to focus on one part of a question and be convinced that is the only handle by which the phenomenon is turned, when if they just tilted their head slightly they would see numerous other handles with hands vigorously pumping at them.

 

[Queequeg]

Yes a greater supply of workers lowers the price of current workers wages, but that is one side of the equation. Hazlett's "Economics in One Lesson" would be useful here. You are looking at the bridge being built by tax money, not what the money could have done if it wasn't taxed in the first place. Specifically, you aren't taking into account the vast increase in demand for goods and services that new workers bring in. Those goods and services have to be produced by...you guessed it...work (ie jobs).

This is just nonsensical and reminds me of a non-engineer trying to describe a perpetual motion machine. Yes I am sure flooding a country with low skilled workers and their families will be a boon to the economy and not the drain on social services that we are currently experiencing. I am sure all the social workers appreciate the new found clients but the net effect on the economy is not positive when the new arrivals consume much more than they produce. Stop buying into the pro-immigration BS.

 

[Queequeg]

Physical removal is simply an extrapolation of property rights. If someone walks into your house and says that they advocate that they be allowed to take your TV and your dining set, and proceed to do so, what are your rights in that situation? How is that different than a libertarian social order where property is privatized? Also, communists are not simply ideologically different, but advocating for theft. If the Mafia comes into a neighborhood and institutes a new order whereby all businesses and households pay them 10% "protection money," is that simply an ideological difference that should be accepted in the name of tolerance?

More false analogies and rationalizations. I am sure you could justify Stalin's Gulags with that kind of thinking.

 

[Kyle M]

This is just nonsensical and reminds me of a non-engineer trying to describe a perpetual motion machine. Yes I am sure flooding a country with low skilled workers and their families will be a boon to the economy and not the drain on social services that we are currently experiencing. I am sure all the social workers appreciate the new found clients but the net effect on the economy is not positive when the new arrivals consume much more than they produce. Stop buying into the pro-immigration BS.

"drain on social services."

Yes, exactly, the problem is that these people are being lured (one may even say imported by a particular political party) by give aways. Without the state social services system, and incoming people have to provide value to the peoples of the host nation in order to consume goods and services.

You are taking the current system of welfare and social workers, which is not even 100 years old, as a perpetual given in your calculations and philosophy on this topic. That would be like taking the nutritional guide pyramid as a given that we must follow, and then trying to apply alternative dietary ideas, and when you have bad results blaming the alternative dietary ideas that you were able to squeeze in within the food guide paradigm. You are ascribing causation to the wrong thing.

 

[Kyle M]

More false analogies and rationalizations. I am sure you could justify Stalin's Gulags with that kind of thinking.

Stalin's Gulag is exactly the kind of thing physical removal was theorized to avoid. I'm sure you must realize that Stalin and his Gulag were communist, not libertarian?

What analogy did I use that you consider false, and how is it false?

 

[Queequeg]

The term "trade deals" and "free trade" are mutually exclusive. Are you aware that free trade, by definition, cannot contain a state-managed deal between the nations involved, or else it is (again, by definition) managed trade? These are the kinds of mistakes or simple ignorances that show me you have no breadth of reading in economics.

To continue, trade benefits both parties (the traders) or else they wouldn't engage in it. The parties relevant to the benefit equation aren't whole nations, as in managed trade, but individuals. If I trade $500 to an Italian cordwainer for a nice pair of leather shows, by engaging in the transaction I am showing that I value the shoes more than the $500, and vice versa for the cordwainer. That is the end of the analysis, since we are both free people who direct out property as meets our ends. There is also shipping cost, and the cost that the cordwainer takes on himself to change the USD to EU (or lyra years ago) but that is also part of the calculation we both make.

How is any transaction, that isn't managed by the states of the nations involved, any different kinetically/morally than the above described? You are the one straw-manning, using the definition and examples of managed trade that is simply misnamed free trade (falling for a government name is pretty bad, patriot act, operation Iraqi freedom, these things are obviously Orwellian double speak) is 100% a straw man. Free trade does not require a thousand page deal between countries explaining the rules and regulations, it requires one sentence: "from this date on no tariffs, sanctions, regulations or controls will be imposed on parties exchanging goods/services between nations "X" and "Y."" Anything more than that is not, be definition, free trade.

If you are going to continue to ignore most of my rebuttals and just cherry pick the ones you respond to, you should at least pick subject areas you understand. Obviously Free Trade is not one of them. Free Trade is not a government term but is an economic theory that goes far beyond your simplistic ideas of individuals engaged in voluntary transactions. In the area of Free Trade I would suggest you start at the beginning with David Ricardo and the five or so assumptions required for the benefits of Comparative Advantage to accrue. There is more to economics than what you may have learned on the Mises Institute website or in Hazllit's introductory economics text. And yes as long as we have Nation States and borders, trade deals are required to establish the trade rules that both nations need to abide by. It’s ironic that you keep calling me ignorant when it’s you who are so unclear on so many basic Economic concepts.

 

[managing]

It is complex, because part of a free movement world would be free deployment of capital, where (provided the host countries had good property rights) investors would begin to invest in low-capital nations and start to bring up their productivity (and hence their wages) towards those of higher-capital nations.

The problem is that people see what is happening now: government managed trade, importation of economic migrants with state welfare, and an overall regulated and cartelized Western economy, and think that is "free trade" and "open borders." It's like blaming Islam for terrorism and putting your head in the sand of the nearly 100 years of British and then American imperialism in the region, and how that kind of imperialism in any part of the world throughout history created terrorism in response. It's funny how the media and academics can get people to focus on one part of a question and be convinced that is the only handle by which the phenomenon is turned, when if they just tilted their head slightly they would see numerous other handles with hands vigorously pumping at them.

I think that is why this idea is so hard to swallow. Its real easy to see the pain and problem that this would bring on Day 1. @Queequeg is absolutely right about that. Change always is disruptive. Disruption can be painful. And even if its painful for others but not me, this is not something any conscientious person can look away from.

The question is, is it inevitable that the world moves in this direction (open borders/trade). I believe it is. If I am right, then this exact moment is just a retrenchment. In any disruption retrenchments are inevitable.

But if I am right, the pressing question is not how do we fight it, but how can we minimize the pain of disruption? That is a much bigger conversation. And although I have some vague, initial thoughts, that is something that can only be answered and managed with ongoing dialogue.

I also don't believe this direction is some grand conspiracy of oligarchies or diversity enthusiasts.

The world is smaller. It used to be unthinkable to marry somebody from the tribe 5 miles downstream. Today the entire world is more accessible than that tribe 5 miles down river was mere hundreds of years ago. Some people see a trend of "eliminating cultural differences" but I think if you look closely you just see change, not depletion.

Oligarchies have existed throughout this process of the world getting smaller and more accessible. Literally for centuries, millenia. They will find a way to exploit any economy or ideology. They must be addressed head on.

 

[Kyle M]

If you are going to continue to ignore most of my rebuttals and just cherry pick the ones you respond to, you should at least pick subject areas you understand. Obviously Free Trade is not one of them. Free Trade is not a government term but is an economic theory that goes far beyond your simplistic ideas of individuals engaged in voluntary transactions. In the area of Free Trade I would suggest you start at the beginning with David Ricardo and the five or so assumptions required for the benefits of Comparative Advantage to accrue. There is more to economics than what you may have learned on the Mises Institute website or in Hazllit's introductory economics text. And yes as long as we have Nation States and borders, trade deals are required to establish the trade rules that both nations need to abide by. It’s ironic that you keep calling me ignorant when it’s you who are so unclear on so many basic Economic concepts.

The Mises Institute has a lot of resources on Ricardo, Smith, and contemporaries. As well as Spanish Scholastics and French economists (Bastiat, de Molinari) who actually beat a lot of the British economists to their ideas.

Since then, however, Ricardo and Smith have been superseded and the case for free trade on an individual level has been made very well by many people. Again, if you are going to argue against free trade, you can't just take managed trade as a prerequisite. What you are really arguing about is whether certain sanctions/tariffs/regulations should be lifted while others remain, right? We can probably agree on some of that. You are not making a case for managed trade vs. free trade, however.

 

[Kyle M]

I think that is why this idea is so hard to swallow. Its real easy to see the pain and problem that this would bring on Day 1. @Queequeg is absolutely right about that. Change always is disruptive. Disruption can be painful. And even if its painful for others but not me, this is not something any conscientious person can look away from.

The question is, is it inevitable that the world moves in this direction (open borders/trade). I believe it is. If I am right, then this exact moment is just a retrenchment. In any disruption retrenchments are inevitable.

But if I am right, the pressing question is not how do we fight it, but how can we minimize the pain of disruption? That is a much bigger conversation. And although I have some vague, initial thoughts, that is something that can only be answered and managed with ongoing dialogue.

I also don't believe this direction is some grand conspiracy of oligarchies or diversity enthusiasts.

The world is smaller. It used to be unthinkable to marry somebody from the tribe 5 miles downstream. Today the entire world is more accessible than that tribe 5 miles down river was mere hundreds of years ago. Some people see a trend of "eliminating cultural differences" but I think if you look closely you just see change, not depletion.

Oligarchies have existed throughout this process of the world getting smaller and more accessible. Literally for centuries, millenia. They will find a way to exploit any economy or ideology. They must be addressed head on.

Don't you think fighting the "pain of disruption" as you say just causes more pain in the future? Consider the housing bubble, by trying to fight the recession from all of that malinvestment with more state-sponsored malinvestment, the pain has been extended and multiplied. There is a very good theoretical as well as empirical case to be made for allowing the market to go through the changes it desires as quickly or slowly as it desires, and not trying to artificially speed them up or slow them down. The economic pain of innovation is like a bandaid, the faster you rip it off the faster everyone can reevaluate their personal situations in light of the new variables. As long as you try to keep parts of the bandaid on while cutting off other parts, the uncertainty of that alone causes massive disruption of markets and losses of wealth.

 

[managing]

Don't you think fighting the "pain of disruption" as you say just causes more pain in the future? Consider the housing bubble, by trying to fight the recession from all of that malinvestment with more state-sponsored malinvestment, the pain has been extended and multiplied. There is a very good theoretical as well as empirical case to be made for allowing the market to go through the changes it desires as quickly or slowly as it desires, and not trying to artificially speed them up or slow them down. The economic pain of innovation is like a bandaid, the faster you rip it off the faster everyone can reevaluate their personal situations in light of the new variables. As long as you try to keep parts of the bandaid on while cutting off other parts, the uncertainty of that alone causes massive disruption of markets and losses of wealth.

Well, yes. But economic theory doesn't care about individuals. I do. The pain and suffering is real. I'm not advocating fight against the change that is driving it (although throttling it is sometimes a viable strategy). I am advocating a forward thinking and humane policy making apparatus that minimizes the pain w/o opposing change per se.

Its a tiny example, but exactly the sort of thing I mean. In the 90s lots of defense industry jobs were lost due to cutbacks in defense spending. This was easy to see coming, so along with it came an extension of benefits for qualifying "displaced workers" and extensive (and well-funded) retraining programs and general educational stipends. It was relatively short term and for a specific purpose. I'm sure it didn't eliminate the pain for every single person who lost a job, but it is widely regarded as successful, even by those effected.

Not all of the pain is foreseeable like this was. Sometimes it has to be reactionary. I want to repeat that I am FAR from able to telegraph what this looks like comprehensively. But exactly this sort of change management needs to happen, no matter what the future holds.

 

[Kyle M]

Well, yes. But economic theory doesn't care about individuals. I do. The pain and suffering is real. I'm not advocating fight against the change that is driving it (although throttling it is sometimes a viable strategy). I am advocating a forward thinking and humane policy making apparatus that minimizes the pain w/o opposing change per se.

Its a tiny example, but exactly the sort of thing I mean. In the 90s lots of defense industry jobs were lost due to cutbacks in defense spending. This was easy to see coming, so along with it came an extension of benefits for qualifying "displaced workers" and extensive (and well-funded) retraining programs and general educational stipends. It was relatively short term and for a specific purpose. I'm sure it didn't eliminate the pain for every single person who lost a job, but it is widely regarded as successful, even by those effected.

Not all of the pain is foreseeable like this was. Sometimes it has to be reactionary. I want to repeat that I am FAR from able to telegraph what this looks like comprehensively. But exactly this sort of change management needs to happen, no matter what the future holds.

Aren't you just looking at one side of the equation though? You can easily *see* the people who get laid off when, for example, the USA military is largely demobilized following WWII. There was a whole school of doom and gloom thought that if the government didn't do something to prevent the largest re-influx of working age men into the economy we would have massive unemployment. What happened? The government slashed spending across the board, and the post-WWII economy had the strongest private growth of any period in USA history...

So when you see people get displaced, and think "we need to do something about that," what I see is the person getting displaced or never getting an opportunity they *would have gotten* because of the resources you took to help the first person being displaced. Does that make sense? Those resources come from somewhere, namely the economy at large, and they would be doing something else if they weren't redistributed. The people being displaced may well be better off and sooner if not for the state shuffling the deck furniture around during a large change.

The problem is that it takes a scientific imagination to *see* that effect, whereas the guy losing his job takes no understanding to see, it's right in your face. They are both equally real, however.

P.S - it's actually mildly insulting to assume that I don't care about people, as you do, because I have a different opinion on how people are best helped. Not that I'm an overly sensitive loser who gets upset at things like that on the internet, but you might want to consider why you thought that in the first place, that "economic theory doesn't care about individuals as you do." Is it not instead that you *only* care about the individuals you can easily perceive, and not the ones being equally affected by things that you don't perceive?

 

[Hugh Johnson]

To what end? What is the motivation for this?

To make the rich richer, the powerful more so, and to keep the poor poor.

Adam Smith famously recommended that the newly formed USA should take advantage of its comparative advantage as a producer of primary resources and not invest in industrialization. But the founding fathers, being neither traitors nor idiots ignored him, put up trade barriers and an industrial policy. The result was the strongest, richests and most industrialized nation on Earth.

Free trade, though that is a misnomer, is supported by the powerful because under free trade they are mobile but the labour is not. So they can play different nations and populations against each other, and enrich themselves while impoverishing the population. They use lies, specious studies, the lie that "free trade has lifted hundreds of millions out of poverty" (no, that was China, and they never had free trade), and the lie that free trade made the world rich, even though Swiss are the only case this is true with and the Golden Age of Capitalism was characterized by capital controls, managed trade, stringent financial regulation etc.