Last month, the House of Representatives voted to pass H.R. 2, the “Secure the Border Act.” 219 Republicans in the House of Representatives voted in favor; 211 Democrats and 2 Republicans voted against. One of its provisions, as noted by the Congressional Budget Office, is that it would “Require all U.S. employers to use E-Verify, the federal web-based system for confirming eligibility to work.” That one provision would hobble one of the best features of the U.S. economy, the relatively free market in labor.
If this bill passes in the Senate and is signed by the President, then when employers want to hire someone not currently working for them, they must make sure that the person is eligible to work. That would mean, presumably, that the worker is a U.S. citizen or a permanent resident. When I met with my Congressman, Sam Farr, a few years ago (he’s now retired), he said he opposed such a provision but his opposition was based on how it would hurt Latinos in his and other Congressmen’s districts. I pointed out to him that it would hurt everyone. The employer who wants to hire anyone, Latino or not, would have to check with the federal government first.
You might say that this is no big deal because if you have a green card or are an American citizen, you’ll pass the test. But to that, I have two answers, one short run and one long run.
In the short run, a relevant question is: Does the federal government ever make mistakes? Can we be sure that every green card holder or U.S. citizen will be in the data base? The answer is no. There will be people in those categories who won’t be able to get the job. How many? Admittedly, not many. So it would slow the labor market a little.
The bigger problem is in the long run. Governments often promise to keep a program small and rarely keep their promises. To take one example, when the USA PATRIOT act was passed, the federal government was given tools to go after terrorists. Does it ever use those powers against people who are clearly not terrorists? Yes.
Here’s how my Hoover colleague John Cochrane put it in a 2013 op/ed in the Wall Street Journal:
E-Verify might seem harmless now, but missions always creep and bureaucracies expand. Suppose that someone convicted of viewing child pornography is found teaching. There’s a media hoopla. The government has this pre-employment check system. Surely we should link E-Verify to the criminal records of pedophiles? And why not all criminal records? We don’t want alcoholic airline pilots, disbarred doctors, fraudster bankers and so on sneaking through.
Next, E-Verify will be attractive as a way to enforce hundreds of other employment laws and regulations. In the age of big data, the government can easily E-Verify age, union membership, education, employment history, and whether you’ve paid income taxes and signed up for health insurance.
How about this idea? Let’s allow more legal immigrants. We gain and they gain. And, as a side benefit, we especially need them now that the Social Security Trust Fund will likely be out of money in 2033. Remember that the vast majority of immigrants are young. Letting them in would buy us a few years.
READER COMMENTS
John hare
Jun 2 2023 at 1:14pm
In the meantime, crops are rotting in Florida. My wife is from Mexico and she hears of many people leaving rather than deal with it. My employees are from Mexico, Haiti, and Brazil and I hear more. If citizens don’t want to do work that is too hot or too hard, maybe they should back off on people that see those horrible jobs as opportunities.
Mentioned before that I have guys from Mexico that dropped out of elementary school and have their houses and rental property paid for. In their 40s and didn’t have it donated to them either.
Warren Platts
Jun 2 2023 at 3:19pm
“Regular Americans” will do those jobs — you just have to pay them enough. A lot of places in this country are 98.5% white people whose families have lived here for generations. Yet, somehow, they manage get their crops in, their lawns mowed, their concrete poured, and their cattle slaughtered.
John hare
Jun 2 2023 at 4:41pm
You literally have no idea of the situation.
Warren Platts
Jun 2 2023 at 6:19pm
Not sure what “the situation” refers to. In Florida, the ag sector is in trouble, but not because of a labor shortage: there are various blights going around that have devastated the state’s citrus and strawberry crops. Farm workers there are getting laid off.
john hare
Jun 3 2023 at 1:53am
White and black people used to pick fruit and work the fields as well as do construction. Citrus has been hammered by greening. Other crops will rot unless immigrants pick them.
Anyone that claims more pay will get citizens back into the fields has not tried to hire people for physical labor lately. That is in addition to staffing problems in construction, warehouses, retail, and even auto mechanics. More money may lure people from a different trade, it won’t motivate those that feel entitled.
There is no pot of gold to pay super high wages unless you as consumer want to pay several times the current price for produce.
Jon Murphy
Jun 3 2023 at 11:12am
Good points, John. To elaborate on the point you raise here, given that labor is a scarce resource, wages in the agricultural sector would have to rise, not just higher, but higher than their next reasonable alternative. For most Americans, that alternative are things like: finance, education, medical, manufacturing, etc. Since wages ultimately equal marginal product of labor, the value of agricultural products would have to skyrocket to justify such wages. Such increase in food prices would crush most Americans, and especially the poorest.
Plus, such a move would lead to actual de-industrialization of the US (as opposed to faux de-industrialization most industrial planners worry about now) as now there would be fewer workers for non-agrarian sectors.
Warren Platts
Jun 3 2023 at 4:12pm
Right. And they don’t anymore because the real wages in those sectors have declined precisely because of immigration. My old professor has documented than in the meat packing industry that used to be composed largely of white & black unionized workers, real wages have been cut by fully 50%. Similarly, Borjas likes to point to the example of the chicken processing plant in Arkansas had 75% of its work force ran off by ICE. The next day the firm ran ads saying they were increasing wages & managed to stay in business.
How Many Is Too Many?: The Progressive Argument for Reducing Immigration into the United States, Cafaro (uchicago.edu)
Well, then why can’t the laid off citrus workers pick up the slack — if there is any. Because of that new law DeSantis signed, there’s been a lot of predictions of crops that will rot in the fields, but no stories of actual rotting (other than that caused by blights) that I can find.
Try offering $30 per hour — which was the inflation adjusted average manufacturing wage in the 1960s.
Which consumers are you talking about? Wealthy consumers of course will be made worse off (but since they’re wealthy, they will be able to adjust), but working class consumers will be better off because they will see their real wage levels increase.
john hare
Jun 3 2023 at 5:45pm
@Warren 4:12 pm
We are paying $30.00 an hour and still can’t get enough help.
All consumers would suffer from increased prices caused by paying much higher wages in agriculture. The poorest quintile most of all. I have worked for $2.00 an hour and struggled but made it through. Now people start at multiples of that and feel entitled to more, even when nonskilled and an actual liability rather than asset.
Part of our disconnect is that I am not an academic. I am a business owner in construction. You really need to get out where the problems are and see in person. Talk to people that have tried to get citizens to do the hard work. Look them in the eye and explain what they are doing wrong.
It’s not just money. It’s an attitude that so many have that they shouldn’t have to work that hard. Many think they shouldn’t have to work at all. Way too many stories for a blog comment.
Warren Platts
Jun 4 2023 at 12:04pm
I guess it depends a lot on where you live. You’re in California, right? Out here in rural west Pennsylvania, construction laborers get maybe $16/hour. However, I know several guys from here who travel to the east coast to do physical labor building sewer tunnels in Baltimore for $70 an hour to start.
I respectfully disagree. If the lower quintile’s real wage levels increase due to a tight labor market, then by definition, they are being helped even if prices for labor intensive goods increase. Nor does it inevitably follow that an increase in labor costs must necessarily lead to a proportionate rise in price levels: owners & managers, for one thing, could accept a lower share of the value added; secondly, high wages provides a powerful incentive to invest in labor-saving devices, whereas low wages have the opposite effect: it’s cheaper just to throw more labor at a problem.
For some reason I was thinking you were in the aerospace business. Didn’t you used to write blog posts for Selenianboondocks.com?
john hare
Jun 4 2023 at 3:47pm
@Warren 12:04,
I’m in central Florida where $30.00 is something many claim to want but few are willing to perform for. If I were in California, the $30.00 would be cause for derision I’m sure.
I still occasionally post aerospace stuff at Selenian Boondocks. It is clear to me now as it wasn’t a decade ago that people do not beat your door down if you offer ideas (the quality of which is not for me to decide). Unless I have personal money to invest, or get an investor, I won’t make any serious contributions to that field.
I’ll definitely give you the point on labor saving methods and devices. Some years ago I hired a summer intern to put some remote controls on small equipment. That’s how I learned that college interns are often not productive. We keep our eyes open for anything that helps. One of our company expressions is “there’s only one pot of gravy on this job, and the more biscuits there are out here, the less gravy on each biscuit. And I like a lot of gravy on my biscuit.” Meaning the more people on the job. the less wages per are available. We have equipment that could keep 20 people busy and there are 5 in the company.
I do push back on the idea that there is a large sum to be had by cutting compensation for owners and managers. For the majority of companies I know, owners are making a bit more than employees, not a lot more. There are a few that make your point, often noted by low moral and productivity.
JFA
Jun 2 2023 at 1:59pm
I can’t comment on how onerous it would be to have universal E-Verify, but those couple of paragraphs from Cochrane don’t really paint a dystopian future. “We don’t want alcoholic airline pilots, disbarred doctors, fraudster bankers and so on sneaking through.” Ummm… I don’t think we do. It would seem a good thing if employers could screen on relevant characteristics, like child care centers and schools verifying its applicants are not, in fact, pedophiles. Plus, employers already do background checks for criminal history, and I think employers (and their customers) are happy to be able to check that kind of info. Being able to verify you’ve paid income taxes? I’m not seeing how that’s a bad thing, many companies will check applicants credit history. Employers already request education and employment history. It doesn’t seem that E-Verify is at odds with increasing legal immigration and potentially could have been complimentary to that goal.
David Henderson
Jun 2 2023 at 3:30pm
You write:
It is a good thing. But that’s not what this is about. E-Verify is not simply an information device to give relevant information to potential employers. E-Verify, if Cochrane’s fears came true, would not allow those employers to assess the information and make a hiring decision on that basis. Instead, it would prevent the employers from hiring.
James Merritt
Jun 2 2023 at 4:23pm
Yes, call it what it is: Government’s demand that you get its permission before being allowed to sustain yourself through voluntary exchange of labor for valuable consideration. Government’s edict that, for employers, at least, some potential workers can be declared “untouchables” for arbitrary reasons. I remember when Reagan’s Amnesty deal was being shoved through Congress as hard as supporters could push. I said then that I was against the war on unapproved people, especially if the cost, going forward, included requiring actual citizens and legal residents to prove their “right to work.” As far as I am concerned, that is a natural right, every bit as fundamental as the right to self-defense, and a government that not only fails to secure such rights, but actively strips a disfavored caste of them, is unquestionably illegitimate and un-American.
Warren Platts
Jun 2 2023 at 3:27pm
A political decision to allow more legal immigrants is itself an attempt to regulate and manage the labor market. In a free labor market, we would allow the labor market itself (aka parents) determine the number of workers that should be supplied. The fact that the U.S. birth rate is now below replacement level is prima facie evidence that there are too many workers and wages are too low (cf. Ricardo’s chapter on wages) . We should avoid the relentless pressure by owners to drive down wages because lowering wages reduces labor productivity and eventually lowers aggregate demand thus slowing the real GDP/capita growth rate.
Mark Brady
Jun 2 2023 at 5:47pm
“How about this idea? Let’s allow more legal immigrants. We gain and they gain. And, as a side benefit, we especially need them now that the Social Security Trust Fund will likely be out of money in 2033. Remember that the vast majority of immigrants are young. Letting them in would buy us a few years.”
Yes, it would buy the Federal government a few more years of an accounting fiction, for that is the reality of the Social Security Trust Fund.
Ceteris paribus, if it had not existed, the surplus on the Social Security Trust Fund would have lowered the budget deficit and lowered the national debt beyond what it would have been.
Despite the name, the Social Security Trust Fund is not what is meant by a funded pension scheme, to which so many of us choose to contribute.
David Henderson
Jun 2 2023 at 6:15pm
All true.
But it’s not just an accounting fiction. It’s a Ponzi scheme. And so younger immigrants will be taxed to pay off Social Security recipients like you and me.
Do I favor Social Security? Of course not. I would like to see it abolished. But letting more immigrants in who pay Social Security taxes is close to a Pareto improvement. They are better off by being let in and paying those taxes and people a few years younger than us (and maybe you and me if we live more than 10 years more) would be better off.
Jon Murphy
Jun 2 2023 at 8:22pm
It’s not clear to me what a mandated E-Verify would do. I mean, as it is employers already have to fill out I-9s.
Roberto Enrique Benitez el Segundo
Jun 2 2023 at 11:55pm
Could it be that the seemingly abysmal failure of enforcement of the I-9 program is one reason for many, such as myself admittedly, favoring the E-Verify proposition? Might a genuine enforcement of the I-9 requirements, with serious penalties for illegals and draconian penalties for employers who knowingly evade it, eliminate the need for another behemoth government program?
Otherwise, would a careful crafting of an E-Verify law specifically stating specific criteria for eligibility to work and very explicitly restricting other information gathering suffice?
By the way, do we really want an enormous illegal immigrant (invader) population ineligible to work legally so as to eventually increase a voting population with a certain voting predisposition?
Jon Murphy
Jun 3 2023 at 12:34pm
Maybe, but given E-Verify is built off I-9 data, if I-9 is flawed then E-Verify will necessarily be flawed as well.
BC
Jun 3 2023 at 2:15pm
I think it’s like the difference between requiring employers to check employees’ vaccination cards (I-9 like) vs. requiring employers to check a federal database of vaccination records (E-Verify). The second is far more burdensome. With the I-9 system, employers file paperwork and it’s up to the government to find violators and enforce the law. With the E-Verify system, it’s up to employers and employees to identify errors in the database and (somehow?) get the government to fix them.
Jon Murphy
Jun 4 2023 at 9:29am
Perhaps, but I don’t see how that solves the problem I mentioned above. E-Verify is based on I-9 data. If there is I-9 fraud, how would E-Verify solve it considering it relies on the same data? Given that E-Verify missed about 80% of illegal hires, I think my point is strong.
john hare
Jun 3 2023 at 1:55am
So, more underground economy and high profits to those that figure out how to game the system.
Thomas Hutcheson
Jun 3 2023 at 8:18am
SS revenue is a silly reason to allow in more immigrants. Just shift the financing to a VAT whose rate can be adjusted up or down with demographic changes. It would be a better bases for health and unemployment insurance, too.
Jon Murphy
Jun 3 2023 at 9:28am
I don’t know if your proposal would pass a cost-benefit analysis. Such a move to a flexible VAT would have extremely high administration costs, not to mention that Congress would need to vote every time the VAT would need to be adjusted, and it is open (perhaps more so than E-Verify) to mission creep. With more immigration, you get more contributions to the SS fund and all the benefits from increased labor in the economy. The VAT you don’t get those benefits.
A VAT may be better than other alternatives, but I don’t see it as a viable alternative for immigration on the SS issue.
David Henderson
Jun 3 2023 at 10:27am
Excellent answer.
Warren Platts
Jun 3 2023 at 4:00pm
OK fine, but I wish you Libertarians would realize that is a form of government intervention in the national economy: it is the government, and not the labor market itself, that is deciding how much labor should be supplied.
Jon Murphy
Jun 3 2023 at 4:04pm
Only if we redefine “intervention” in an Orwellian manner.
Warren Platts
Jun 3 2023 at 4:24pm
lol Jon! That’s exactly what you’re doing. You’re calling governmental intervention governmental non-intervention. If the government decided we need more soybeans in this country and thus began subsidizing Brazilian soybean imports, American soybean farmers would rightly complain that is a government intervention that’s lowering the price they’re getting for their soybeans. But when it comes to labor, the Orwellian Newspeak takes over and open border policies are declared non-interventions.
Jon Murphy
Jun 3 2023 at 4:34pm
Precisely point to the intervention in open borders. In your example of soybeans, it’s subsidies.
Warren Platts
Jun 3 2023 at 6:06pm
Interesting. Thus, if it could be shown that the U.S. government subsidizes migrant labor, then you would admit that large immigration quotas amounts to a governmental intervention in the labor market.
Well, there are of course direct costs the government provides for housing, food, transportation, medical care, law enforcement. After all, we are not importing mere soy beans — we are importing people. Furthermore, if tickets to the U.S. labor market were auctioned, we could probably get at least $50,000 per person, thus a quota of 2 million people would generate $100 billion per year; thus, that forgone opportunity represents another subsidy.
Jon Murphy
Jun 3 2023 at 8:09pm
Sure. There would be two there:
First, the subsidies. Second, the existence of quotas. Eliminating one or the other would be a move toward a less interventionist market. Eliminating both (through open borders) would move toward a free market.
None of those support your claim.
No, it doesn’t. It represents a cost to the government for not implementing that intervention, but not a subsidy. It’s no more a subsidy than New Hampshire not taxing income represents a subsidy. A subsidy is not defined as a lack of a tax.
Warren Platts
Jun 4 2023 at 12:38pm
Never mind that open borders would be a political decision to destroy the American free market in favor of rigged global market. The fact remains that that would amount to a political decision rammed through by special interests who decided for everyone that, within the U.S., wages are too high & that, therefore, we need to increase the labor supply. No different from some technocrat deciding we need to increase the soybean supply.
The net fiscal impact of illegal immigration is a negative $150 billion per year. This amounts to about $10,000 per illegal immigrant. That’s a subsidy by any non-Orwellian definition.
A good point, Jon, but only half true. I’ll stipulate that a lack of a state income tax does not count as a subsidy. However, income tax deductions for mortgage interest payments or local property tax breaks for new factories or box stores are common and uncontroversial examples of government subsidies.
Jon Murphy
Jun 4 2023 at 1:07pm
All that is what I am trying to get you to provide evidence for. As of right now, you just have mere assertions.
No, that’s not a subsidy (and entirely irrelevant to the point besides).
True but irrelevant to the point.
Jon Murphy
Jun 4 2023 at 1:24pm
As an aside, if a technocrat were to advocate for open borders because they want to lower wages, they’ll be disappointed. Immigration acts as a compliment for domestic labor, not a substitute, and thus tends to increase domestic wages (especially in construction and agriculture, the industries under consideration). Immigrants tend to lower wages for other immigrants, and even then just in the short term.*
*As an aside to this aside, my coauthor and I hypothesize this reason is why Donald Trump has enjoyed relatively high popularity among naturalized voters. Join us at the SEA meetings in New Orleans for our talk on our findings.
Jon Murphy
Jun 4 2023 at 1:30pm
To clarify a point that was implicit in my initial response:
Ti object to something just because a hypothetical technocrat might desire its goal is no more than an ad hominum. To go to your example, the fact that a technocrat wishes to increase soybean production is not in and of itself objectionable nor prima facie evidence of a government intervention in the market. It is the subsidy that makes it objectionable. If, rather, the technocrat liberalized trade, then that is not objectionable and makes the market more liberal.
In other words, the means, not the ends or the person, matter in determining whether a market is more or less free
Warren Platts
Jun 5 2023 at 12:23pm
That’s the whole point of immigration: that they will perform labor at lower wages than native born workers will. Cf. Jon Hare’s posts above. Bryan Caplan’s book says the same thing.
That’s only because immigrants have cornered and displaced entire sectors of the economy in many, but not all regions within the U.S. This supply shock definitely was a harm to many and probably most displaced native-born workers.
That is a nice bit of theory. Unfortunately, it’s been empirically falsified. As my old professor documented, just in the meat packing sector, the real wages of the latino workers now are 50% lower than they were for the native-born white and black workers that used to dominate the meat packing industry. The black working class especially has been devastated. I’ve seen this myself happen in real time. The results are predictable: broken families, addiction, out of control crime & mass incarceration.
Jon Murphy
Jun 5 2023 at 1:17pm
That’s news to me. And, I’d imagine, news to John Hare and Bryan Caplan, who say no such thing.
Well, here we have a contradiction. If immigration is a complement (as you say it is), then increased demand for immigration necessarily raises domestic wages; that’s the definition of a complement.
As an aside, it has not been empirically falsified, but empirically proven, not just in the US but in Europe and other countries as well. See, for example, Viseth 2020, Wolla 2014, Ottaviano & Peri 2011, Manacorda, Manning, & Wadsworth 2011, just to name a few. For a complete lit review, come to the SEA meetings in New Orleans this November and see my talk.
Jon Murphy
Jun 5 2023 at 1:30pm
Of course, all this is beside the point. I am still waiting for support for your assertion that open borders is a government intervention.
Warren Platts
Jun 5 2023 at 2:46pm
This I agree with 100% — as far as it goes. Just because Hitler liked VW Bugs, that in itself doesn’t make Bugs objectionable. However, if he used slave labor to produce the Bugs, that would be objectionable.
The argument here is semantical. If the government mailed annually a bank debit card worth $10,000 to every undocumented person, then I presume you’d call that a subsidy. But if the government spends a net amount equivalent to $10,000 per year on goods and services that undocumented persons consume, you don’t want to call that a subsidy. OK fine: I’m not arguing over the meaning of a word. The effect is the same as a subsidy even if you don’t want to call it a subsidy: potential migrants know that if only they can get across the border, they’ll have access to decent medical care, won’t have to worry about enough food to eat, and their children will be guaranteed a good education even if they don’t work a lick. That is still an encouragement or inducement to emigrate that would not be there otherwise. Something that was entirely lacking back in the Jamestown or even Ellis Island days when you had better be prepared to carry your own weight before even thinking about crossing over.
Again, this argument is also semantical. You’re trying to say that the American labor market either doesn’t exist or doesn’t matter because the real labor market is the global labor market. Therefore, any attempt to set a quota less than 300 million people per year (the number I’ve seen out of the world population who would move here next year if they could) amounts to state intervention in the real labor market akin to China’s internal limitations on travel. And again, I say, fair enough. Your argument valid, but its soundness depends on the premise that the American labor market doesn’t exist or is not important — and that’s highly debatable.
However, your objection fails to address my main point that is a Public Choice argument. The right to control who crosses the border is a plenary power; a complete and absolute power to take action on a particular issue, with no limitations. The Supreme Court has ruled repeatedly that only federal government has that power. So if the immigration quota is zero or 10 billion, it has to be set by a government Public Choice, and thus falls prey to the dynamic where a small benefits lobbies and gets implemented a policy that serves their self interest rather than the public at large.
Thus if the policy is open borders, we should ask who wants it? The answer is if you read the papers, its “the business community” and the economists they fund. They are the ones, in the main, who say we need to increase the labor supply.
But what would be the empirical signs that the labor market is excessively tight? Well, we would see things like: (1) USA would have the highest working class wages in the world; (2) the share of the national income going to labor would breakout to historically unprecedented highs; (3) income inequality would be reduced to historic lows; (4) labor productivity would be skyrocketing as business invested huge amounts into automation to avoid high labor costs; and (5) we might even experience a baby boom like in the 1950s. But in fact we observe the opposite of all these indicators.
Therefore, a decision to increase the labor supply through immigration can’t be justified on objective economic grounds, and can than thus only be explained as self-dealing by special interests.
Jon Murphy
Jun 5 2023 at 4:09pm
You haven’t really taken all sides of the issue, so much as have it completely surrounded.
Warren Platts
Jun 5 2023 at 8:01pm
All sides? This is the issue:
All sides would include all costs as well. A naive reader could read your statement and easily conclude that more immigration is Pareto improving.
However, “the issue” is your theory that moving the American labor supply curve to the right would be for the undefined best (to your credit, you at least admit there are costs to the migrants that are already here).
Now, I consider myself a conservative who believes that if there is no need to change, there is a need not to change.
Therefore, I believe it is entirely reasonable to ask you: What is the evidence for your claim that the quantity of labor supplied by the American labor market is inadequate, and therefore, we need to move the labor supply curve to the right?
Warren Platts
Jun 6 2023 at 1:16pm
The link you provided says complentary goods prices move in tandem. So if the demand for golf clubs goes up, driving up golf club prices, then the prices for golf balls will likely go up as well.
But for complementary wages, the effect is the opposite: low-wage servants allow a household of married lawyers to raise a family while both parents are working overtime thus raising their household income. In general, lower wages for the working class entail higher wages for the laptop class. In other words, complementary labor is just a fancy restatement of the truism that income inequality favors the upper classes.
Meantime, the idea that low wages for low-skilled immigrants translates into higher wages for low-skilled, native-born workers is false because of the Baumal effect. For example, in Mexico extremely low wages for ag workers translates into low wages for Mexican factory workers. Therefore, the same process must happen in the United States: low wages paid to immigrant ag workers puts downward pressure native-born manufacturing wages, even as the income for managers, owners, and the laptop class increase.
The real question is what all this does to the GDP/capita growth rate. It is not at all clear that the gains to the upper class outweigh the losses to the lower class. In fact, it’s likely the opposite: low wages for the working class (aka the vast majority of the citizens of the country) translates into lower consumer demand from the working class and that has to slow down GDP growth. This (combined with massive trade deficits) no doubt accounts for the anemic economic growth during the so-called free trade era.
And what does “increased demand for immigration” mean? There hasn’t been a market for immigrants since 1807. 😉
PS do you have link to a pre-print for your New Orleans presentation? I (and I’m sure others) would be very interested in checking it out.
Warren Platts
Jun 3 2023 at 3:55pm
Agree a VAT probably isn’t a bad idea. Most of the rest of Planet Earth employs VATs. USA is very exceptional in this regard. As for administrative costs, income taxes also generate administrative costs and there are endless debates about what the rates should be and what deductions/credits should be allowed. Not clear that VATs would be worse.
Also, it’s interesting to note that VATs were adopted by most countries at about the same time they lowered their import tariffs. I wonder why that is?
Jon Murphy
Jun 3 2023 at 4:24pm
All that’s fine but irrelevant to the point
Warren Platts
Jun 4 2023 at 1:00pm
I think the point is that the pyramid scheme should be fixed now, rather than by kicking the can down the road by making the pyramid even bigger. If you have a better idea than a VAT, then we’d love to hear it. But certainly, “We need more immigrants in order to keep the Ponzi Scheme going” is about the least persuasive argument for increased immigration imaginable!
Jon Murphy
Jun 4 2023 at 1:10pm
Well, the point is that immigration will make the pyramid smaller (since immigrants pay in but many of them probably will not be eligible to receive, as well as the economic growth one gets from immigration), allowing it to be fixed. Plus we get the benefits of immigration. The VAT, from a cost-benefit point of view, makes the pyramid larger and we don’t get the benefits from immigration.
BC
Jun 3 2023 at 2:43pm
I think, historically, Republicans more so than Dems have opposed national ID systems for the inherent privacy concerns that accompany any federal, centralized database. I’m not sure how mandatory E-Verify can work without a federal, centralized database of all Americans, or at least all Americans that want to work. Right now, an American that never leaves the country never has to apply for a passport. If he works in his neighbor’s militia compound for cash, the federal government might never know about him. (Birth certificates and drivers licenses are state and local matters.) The concern about tax enforcement has traditionally been more of a Democratic concern.
Republicans have also been more opposed to vaccine passports, especially when enforced by querying a central database (as opposed to just checking someone’s paper vaccine card). They’ve understood that, once one needs to ask federal government permission to work or enter some public place, then the list of conditions for granting permission as well as the scenarios for which one needs permission can easily be expanded. See Chinese social credit system. If one must query a federal database for work status, one can just as easily be required to query that database for vaccination status or permission to sell or buy a gun. One could even imagine including one’s non-woke history in the database under the guise that hiring non-woke persons contributes to hostile work environments. What a great way to enforce universal cancel culture!
But, throw in the possibility of making life more difficult for foreigners and, suddenly, Republicans forget all the reasons for their healthy mistrust of Big Brother. I would hope that one would value one’s own privacy more than the possibility of making it incrementally easier to stop some unknown foreigner somewhere from working.
BC
Jun 3 2023 at 3:00pm
Also, if one has to query a federal database every time one hires a new employee, one could just as easily be required to enter the new employee’s race and gender. That gives the federal government an auditable record of every firm’s hiring statistics. It’s only a short leap from there to require that every firm whose hiring of minorities and/or women falls below certain thresholds, even small family businesses, to file reports explaining why they haven’t hired more minorities and/or women, what DEI processes they’ve instituted to recruit more minorities and women, and what they plan to do differently in the future.
But, again, one must weigh all of that against the prospect of being able to stop unspecified firms in far away states from hiring anonymous foreigners.
Comments are closed.