Tag: free-markets

The Economic Argument Against Immigration is Pretty Gross

The economic argument against immigration is especially disgusting.

You might think cultural arguments about keeping a country “pure” or safety arguments claiming all immigrants are criminals are more offensive.  But let’s examine what the economic argument against immigration really means.

The idea of forcibly preventing individuals from crossing a border in order to give an economic advantage to those on the other side of the line is barbaric when you ponder it.  Immigration restriction for the purpose of “protecting jobs” really means the violent prevention of people born in certain places from trying to earn a living.

Imagine you want a certain job.  So does your neighbor.  Would you slash his tires to keep him from getting to the interview?  Would you build a wall around his house preventing him from leaving because he might compete with you in the market?  Would you shoot him if he tried to scale it for the chance of landing the job?

If you knew a person living in horrible conditions, whose children may well die of an entirely preventable disease, and they just need a decent job to be able to afford better environs for their family, would you feel proud for sending armed thugs to follow that person around and ensure they never left their crappy neighborhood to apply for jobs elsewhere?  Even if it meant grinding poverty and possible sickness and death for the family?  Would you cheer and say, “Yeah!  I’m protecting my job opportunities!”

If you support immigration restrictions that’s exactly what you’re doing.

Economies are best served with open competition.  No one thinks forcibly shutting down competitors or collaborators is a good move or morally permissible…unless those competitors and collaborators happened to be born in certain places.

Can you think of more blatantly bigoted behavior?  The belief that certain individuals should be violently prevented from even trying to get certain jobs or live in certain places based purely on the piece of land on which they happened to be born is no less reprehensible than Jim Crow, Apartheid, or any of the other universally condemned forms of legal economic oppression.

Leave aside the fact that immigration restrictions are bad for the economy as a whole, and that far more people in the restrictive country are harmed by being unable to hire or buy from vast swaths of humanity.  Even if it were true that immigration restrictions made native born citizens better off they would be no less disturbing and morally bankrupt.

If I paid armed agents to keep every potential competitor for jobs or customers under house arrest you wouldn’t forgive me if I could prove that the practice helped me economically.  You’d call me a cold-hearted psychopath.  Even if border patrols gave you an edge by keeping some potential competition behind barbed wire it wouldn’t make your advocacy of them honorable.  “Hey look, I can get ahead by keeping this poor person from trying!” is not the cry of an honorable person.  “People who weren’t born where I was shouldn’t be allowed to apply for jobs!” isn’t a belief to boast about.

All arguments against the free and peaceful movement of people are bad.  Arguing it’s to protect your economic interests reveals a level of moral bankruptcy that is truly unsettling.

The Beautiful Language of Prices

Prices are a language.

The beauty of this reality hit me while on a walk.  I had my phone so I recorded my thoughts in the moment of delight.  I’m often overcome by how beautiful markets are.  It’s almost a spiritual experience when you ponder long enough.

 

Why Pool Attendants Are Better Than Bureaucrats

Originally published in the Freeman, and there is also a mini podcast version below.

“We’re not checking IDs today,” the pool attendant told me.

We have a nice pool for the neighborhood, maintained with HOA dues. The homeowners association has tried different methods of monitoring who comes in to keep nonresidents from filling up the pool and squeezing out dues-paying members. A few times last summer, this was a problem. This year, a new company was hired to issue IDs and ensure that only residents use the pool. But not today.

Today the water was a bit cold and the pool wasn’t busy. The attendant realized this and didn’t hassle swimmers and sunbathers with an ID check. When he uttered those words it hit me in a flash just how profound it was. The ease with which he used common sense to bend the rules was a beautiful moment. Maybe you think I’m being dramatic, but let me offer a contrast.

A few years, ago I was in the security line at the airport with my wife. She removed her plastic baggy of size-approved liquids and gels and placed it in the container. The TSA agent picked it up and grunted, “Uh-uh.” Bewildered, I asked what the problem was. She said my wife needed to remove an item from the bag. I objected that every item was within the approved size and the bag was a recommended part of the procedure. The agent said that, according to regulations, the items are supposed to fit “comfortably” in the bag. They were pushing against the sides, ever so slightly stretching the plastic. We had to remove one. I asked her which individual item was a threat to security. She told us it didn’t matter which item was removed. The absurdity of the situation was beyond parody. There is no conceivable world in which a too-snug plastic bag of harmless toiletries could pose any possible threat to security. But it was the rule. Every bureaucrat knows rules must be followed without question.

If you’ve ever gotten a speeding ticket, as I have, for going 10 over at 3:00 a.m. on a five-lane road with no traffic, or for running a red light in a sleepy town with no cars for miles, you’ve felt the same. It’s clear that the reason for the rule — to keep drivers and pedestrians safe — is no possible explanation for its enforcement in these situations. Indeed, enforcement itself makes roads less safe due to police vehicles sticking out into the road and blocking other potential drivers. Meter maids handing out tickets for 2 minutes over in a lot surrounded by empty spaces is just as crazy. Parking meters and tickets are there to ensure spaces are available in high-demand times. What’s the point of ticketing when ample parking is available? Carding geriatrics for buying alcohol and so very many other examples of this silliness abound.

I posted a complaint to Facebook after the TSA incident. One of the commenters said, “Sure, following the letter of arbitrary laws in bad contexts is a pain, but would you rather have those agents doing whatever they want and using their own discretion on the spot?” The question becomes more poignant when you consider not just the bureaucrats armed with bad attitudes like those at the DMV but the ones armed with guns on the police force. Rule following is paramount in a bureaucracy because the alternative is also frightening.

It’s easy in the public sphere to get caught up in such debates. Is it more practical and just for government agents to use discretion in the moment when applying regulations, or for across-the-board universal application? It seems vexing: a problem without a solution. Whatever side of the debate you take feels uncomfortable. The letter of the law is oppressive and in some cases downright crazy, certainly counterproductive with respect to the law’s intended purpose; but discretion is a scary proposition as well, as many cases of selectively enforced law attest.

Outside of government, however, this is a nonproblem. When something is moved from the private, voluntary sphere to the public, coercive sphere, debates and division arise where none previously existed. The real problem is not rule following or flexibility; it’s monopoly. The absence of competition in the government sphere and all the attendant incentive problems create this unnecessary quandary.

It’s not that the police officers and TSA agents are worse people than my pool attendant; it’s that they face worse incentives. There is no metric for them to determine customer satisfaction or the value of their actions, because there is no profit-and-loss signal and no fear of losing our business. We are legally obliged to pay for and receive their service (or disservice.)

The pool attendant can be flexible with the rules when applying them strictly would annoy customers. He can become stringent when things get busy and residents complain about freeloaders. His company knows that at any time, they could lose the contract, and the only reason they are hired is to make residents happy and solve a problem. It’s the outcome that matters, and all procedures, policies, and rules are measured against that. This leaves ample room for experimentation and adaptation, with immediate feedback and accountability.

The public sector has no such flexibility because it faces no competition. The political sphere can make social and economic problems that have already been solved with incredible nuance seem unsolvable. It offers only yes-or-no, either/or, once-and-for-all-and-everywhere solutions, applied and enforced by people with almost limitless job security. It is a blunt tool, and incredibly unresponsive. It is unconcerned with outcomes and measures effectiveness only by inputs, intentions, and actions — not results.

Whether the letter of the law or individual discretion is preferable is the wrong question. Both are to be feared with state monopolized services. Neither is to be feared in competition because the choice is no longer binary but an ongoing dance of pluralistic discovery.

We’re not checking IDs today. Those five simple words reveal the beauty, complexity, and humanity of the voluntary market order.

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I recorded an audio version of this first, live on-the-spot at the pool using my iPhone.  I’m experimenting with some mini podcast episodes like this.

How to Keep the Young and Poor from Succeeding

Let’s face it. I’m not that young anymore. I’m also not poor anymore, and I live a comfortable middle-class American life. Most older, better-off middle-classers like me got where we are through the dynamic market process. The trouble is, now that we’re doing pretty well, that same dynamic process is a threat. I don’t want some young whippersnapper or poor immigrant to outwork me. What if they succeed faster than I do? What if they create more value than I can, and so outcompete me for a job?

Take heart, well-heeled middle-agers. I have a plan. My scheme for keeping younger and poorer people from succeeding—and possibly making us have to work harder to stay on top—is two-pronged: We’ve got to affect both supply and demand.

We need to restrict the supply of economic opportunities. We need to make those opportunities more costly and thus out of the reach of many young and poor. We also need to suppress the demand for jobs and entrepreneurial ventures. We need to make it more beneficial to stay out of the market than to participate in it.

Let’s get to some specifics.

Restrict the supply of opportunities

The biggest advantages young and poor people have over us are very low opportunity costs and a low-cost lifestyle. This means they don’t have to give up much to work a job, and they don’t need to earn much to cover their expenses. Because of these major advantages, they can work for very low wages, and thus become attractive for employers to hire and train. At low wages, they’ll always find work, and worse yet, they’ll be constantly learning and improving—adding to their stock of human capital.

The obvious solution is to make it illegal to work for low wages. Working for free is absolutely out of the question. If young and poor people could simply offer to work for little or no pay, they’d soon be gaining valuable skills and competing with us for jobs! Let’s cut that first rung off the ladder, lest they climb over us some day.

Young and inexperienced workers don’t have a lot of expertise. They make mistakes. Of course, if they’re allowed to participate in the trial-and-error process of the market, the incentives will soon drive them to develop expertise and be reliable suppliers of goods and services. That would be a travesty for us. We need to keep them unskilled and unreliable. The solution is to create a labyrinthine web of licenses and regulations that make it illegal for anyone but experts to sell goods or offer services. Since we’ve already banned working for low wages or apprenticing for free, it will be almost impossible for these novices to learn from a seasoned expert until they gain the necessary skill. We can make it even harder by adding lots of fees and costly training sessions to obtain licenses.

There needn’t be just one law making low wages illegal or just one licensing and regulatory regime. We need a wide variety of complex and ever-changing barriers. High taxes on productivity and profit, union dues and demands, work restrictions, rigid job categories, seniority bias, massive credential requirements, health and safety rules to cripple upstarts, consumer protection laws to hamper smaller producers, no access to capital or ability to stay in line with the law without costly lawyers and accountants, etc., etc., ad nauseam.

My recommendations are myriad, but they all boil down to a simple principle: Do anything we can to make economic opportunities more costly and rare. This reserves most of said opportunities for us.

Now for the second prong.

Reward non-participation

We don’t want to seem callous and cold toward those less comfortably situated. Indeed, we harbor no ill will toward the young and poor. We just don’t want them to compete with or catch us.

Since we care—and especially because we want people to believe that we care—we can’t be all “stick.” We need some “carrot,” too. It’s not enough to restrict the supply of opportunities, because some people will break the rules or work around them. We also need to suppress demand by offering some sweet incentives for young workers to stay unproductive and uncompetitive. We need to make non-participation in the market more attractive than participation.

First, I recommend a strict policy of forced education for the first few decades of life. We’ve already discussed making it illegal for the young to work or the poor to work for low wages. But we also need to make it mandatory that they do something else, and something that won’t make them more likely to compete with us now or later. We should create giant institutions where we send them all day to follow rules and do what they’re told without question. We don’t want them becoming innovative, or pursuing passions and interests that they might become experts in and thus supplant us in the market. They must only learn what the bureaucrats who run the system tell them to. (Oh, and the people who run the system should only be those who don’t really know much about competing in the market, because we wouldn’t want them passing on such knowledge.)

We can’t just make school mandatory. Many would still play hooky if it cost too much. We also need to hide the cost by paying for the whole thing through taxes and borrowing. We need to subsidize it so much that alternatives can’t compete. We need to weave a narrative about its glory so that no one wants to opt out.

But 18 years isn’t enough. We need to keep these young, hungry individuals out of our way as long as possible. I say we artificially lower the cost of otherwise very expensive degree programs and advanced studies. We can guarantee low-interest loans, throw a lot of grants and subsidies around, and always, always parrot powerful propaganda about the inestimable value of classroom learning. Let’s make the most attractive option—socially and economically—the one that keeps them from the commercial world as long as possible.

The longer we can make the education process, the better for us. Defer, defer, defer the time at which young people start entering the productive sector. The more loans they take on in the process, the better. Maybe they’ll even get married, get a nice house (we can incentivize the buying of expensive consumer goods via debt as well!), and have kids. All of these things are good because they take away one of the major advantages the young have in the workforce—their low cost of living and hence ability to bid for lower starting wages. We want them saddled with so much debt that they have to earn high wages to get by, and thus have to compete with workers who are a lot more experienced for those higher wage jobs. We need them coming out of college looking for salaries that don’t comport with their skill levels. This increases the odds that older workers like us will win.

We’ll need to address those too old or too poor for school as well. We need basic income guarantees, food stamps, and all manner of welfare to cover the costs of low-income life such that no part-time entry-level job could pay quite as much. Again, we need to make not working worth more than working.

The best part

Here’s the best part: By the time these young and poor find themselves unable to compete, with costly lifestyles and loans to maintain and little skill or experience, they’ll be older. They’ll join our ranks. They’ll lobby for even harsher restrictions on those even less experienced and less well-off than they are. They’ll demand to get the low-skill jobs they’re qualified for, but demand the pay be raised to high-skill wages. They’ll make the list of degrees and credentials they’ve accumulated the new barrier to entry to artificially raise their market value. They’ll help us perpetuate the very policies that caused their plight!

As with the first prong, these are but a few examples. Ideally a massive and shifting bundle of incentives to not enter the market as a producer can be put together: education mandates and subsidies, tax incentives to spend rather than save and to purchase education rather than other goods or business tools, housing and healthcare as long as you don’t work, and rewards for any activity that makes one less likely to try to compete with us in the market.

These policies will subtly turn the attention of nearly everyone away from value creation, innovation, and serving customers—all of which might threaten our dormancy. It will turn everyone’s attention and energy to fighting over the details of these policies and programs, to who gets which slice of the artificially limited pie and at whose expense. Some of us can really take advantage by running for political office and dividing up the warring interests we’ve created by promising them more restrictions and subsidies.

Above all, with both prongs of this strategy, we need a narrative that calls these policies noble, compassionate, and wise. We need them to be perceived as humanitarian aid to the young and poor, not as ways to keep them from succeeding. We need to make these programs universal values in themselves—regardless of the outcomes they produce. Who could oppose better wages? Who could oppose more education? Who could oppose more loans for homes or college? Who could oppose work rules and consumer safety regulations? Middle-aged, middle-class people certainly won’t, if we know what’s good for us.

We cannot abide an America in which plucky newcomers outperform us at every turn. Join me in securing our future.

Originally published in The Freeman.

Protect Us From ‘Consumer Protection’

Back in 2007, I wrote a short piece for the Mackinac Center that showed, through a hypothetical story, how occupational licensing laws come about. It was published in a few local newspapers, and elicited its fair share of responses – primarily because shortly after I wrote it interior designers, who I chose for my example, began lobbying for exactly the kind of thing I discussed. Good timing I guess.

I responded to several angry emails, and I recently rediscovered one of my responses. I probably would say a few things differently today, but I still thought it was a fun exchange and I was reminded of it after discussing a current effort afoot in Minnesota to require interior designers to be licensed. The idea is as stupid now as it was then, no matter what state it’s in.

Below is the original article, followed by the response letter and my reply. The names have been changed to protect the innocent interested.

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Article originally posted here.

Michigan ranks sixth in the nation when it comes to occupational licensing, with 116 different occupations requiring state approval, according to a recent Reason Foundation report.

Michigan even has a license for reptile catchers. You’d think with only one native venomous snake, the Massasauga Rattlesnake — and a relatively benign one at that — we might not need to rank so highly in this area of policy. Apparently not.

So, why do we have all of these licenses? Who comes up with them? Here’s a hypothetical example of how such policies come about:

A lawmaker meets with lobbyists representing an association of interior designers. The lobbyists say interior designers contribute $10 million annually to the state economy and provide more than 10,000 good paying jobs. Interior designers work hard to have a good reputation, say the lobbyists, but all of that is in danger. Rogue designers who are not members of the association have been undercutting prices and providing shoddy workmanship that damages all designers’ reputations. The lobbyists tell of one such designer who made a cheap shelving unit that collapsed, injuring the customer.

To remedy this, the association proposes requiring all interior designers to be registered with the state. They propose a course of study (provided by the association, to members only) and a test administered by a state panel of design experts (largely representatives of the association). Applicants must pay a $500 fee to cover the cost of the course, the test, the panel and all other related activities. Fee money would also be used to investigate and prosecute any unlicensed designers — including levying a $500 fine for first time offenders and $1,000 for repeats.

The lawmaker likes the idea of “protecting” his constituents and introduces a package of bills, mostly drafted by design association lawyers. The legislation passes the Legislature and is signed by the governor with little fanfare, as the association lines up members to testify in favor of it and the media reprints their supportive statements on this “consumer protection” package.

That’s the side of the story that is easy for everyone to see. Here’s another side:

Jane Citizen works 40-plus hours per week to sustain her family, and because of her interest in it, started her own interior design business. She has no formal training in design, and neither time nor money to pay for it. Her customers are happy, and her business has been steadily growing by word-of-mouth. Jane has never been a member of any design associations and doesn’t have time to attend conferences or read their publications, nor does she have extra cash to pay their dues.

The new “consumer protection” act goes into effect without Jane’s knowledge. She is soon approached on the job by a bureaucrat asking to see her registration. He informs her that she is violating the law and must pay a $500 fine and cease plying her trade immediately. She must become registered or face additional fines and/or legal action. Jane doesn’t have the extra $500, nor does she have the time to take the state-required course or the money to pay for it. She has unknowingly violated the law and must cease earning her living.

Lawmakers received short-lived but positive press for “protecting consumers.” But who was protected? Jane and those depending on her income were not protected by the new law. Her happy customers who lost her skills and competitive prices were not protected. The design association was the only party protected. They eliminated competitors who drove down prices. They protected their monopoly and damaged the marketplace.

Under such a law Jane and her willing customers are “protected” from an honest and mutually satisfactory transaction. Free exchange ceases to be a natural right protected by government; instead it becomes a privilege bestowed by government. No longer can market competition ensure the best services at the best price; instead a trade monopoly, using the force of government, ensures the highest price for their service. No longer do free people choose what constitutes a fair price, a fair wage and good design; instead a government panel decides for them.

The next time you hear about “consumer protection” legislation that requires yet more licensing, check to see who it really protects. When government uses force to create and protect industry monopolies for “public safety,” it subverts our natural rights. That’s more dangerous than a room full of collapsing shelves.

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Dear Mr. Morehouse,

I am writing in reference to your Thursday, December 13, 2007 article “Consumer protection often isn’t”. It seems to me you have on [sic] idea what a [sic] educated Interior Designer has to learn before they should be able to call themselves a professional. I have a Bachelor of Science Degree from Michigan State University and almost a second degree in Art History. All of these I paid for myself working two or three jobs while taking a full load of course. I have no sympathy for your Jane Citizen!

There are university extension classes and night sessions available. She obviously wants a free ride. Thank God she didn’t want to be a BRAIN SURGEON!!!! I believe you should visit two or three of the fifteen colleges or universities in our state with Interior Design programs before you ridicule a profession. May I suggest M.S.U., Wayne State, Eastern Michigan or Kendall. All have excellent programs. If the educational aspects of a profession do not concern you why haven’t you gone after Attorneys, Architects, Doctors, Plumbers, Etc? They are all licensees.

All Interior Designers want is the recognition of time spent getting the proper credentials for practicing their profession so they can serve their clients properly thus protecting their safety and welfare.

Mr. Doe

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Dear Mr. Doe,

Thank you for your comments on my article. It seems, however, that you have misunderstood its very simple point. I made no attempt to single out any one profession in occupational licensing (I could’ve used anything as an example), nor was I attempting to besmirch the hard work and training many interior designers go through.

I have no doubt that you have worked hard, and are very talented at your profession as a result; and I have absolutely no problem with occupational licensing or certification that is voluntary. What my article warned against is licensure by force. Whenever the state acts, it backs up its laws with force.

I do not believe anyone should be forced or threatened with the use of force for choosing to not get a certain amount of training in a profession. If Jane citizen wants to offer her services, that is her business. Consumers should be free to hire whomever they choose. I have no doubt that voluntary certifications would (and do in some professions) abound, and many consumers would choose only to hire those with a consumer report stamp of approval (for example). However, the choice should be up to the individual, not for the state to impose upon individuals by force.

All state-forced occupational licensing is in effect a barrier to entry for entry-level workers and a protection for well-entrenched industry lobbies. I have no doubt that your design skills can stand on their own in a free-market, and I do not believe you need the blunt force of government to coerce customers into hiring you over a less qualified competitor. I wish you had as much confidence.

Sincerely,

Isaac M. Morehouse