Pete Boettke recently asked this puzzling question along with another tough one: “why does capitalism produce yet fail to inspire, while socialism inspires, yet fails to produce?” in class and blog.
I’m in the midst of reading Property and Freedom by Richard Pipes as part of an upcoming Liberty Fund conference. I think his first 60 pages is relevant to these questions. Pipes begins the text by surveying how several different thinkers have understood and explained the phenomenon of private property through history.
In different historical contexts people think of property positively and negatively in turn. When held in a negative light, thinkers are less concerned with the nature of property rights so much as they are concerned with the allocation and distribution of property throughout society.
With this in mind I’d like to put forward a theory: the costs of identifying a hypothetical counter factual is higher than attributing an observed scenario as a relevant counter factual. Let me explain. We like to say that a rising tide lifts all ships. In other words the poor may be worse off compared to the rich today, but over time the benefits of free-trade have made today’s lower classes enjoy levels of wealth unreachable by even the most wealthy citizens of the past. What if the overly romantic notions of socialism and the pessimistic attitudes towards capitalism can be explained by the fact that poor people face a marginally different cost when they are looking for a basis to compare themselves with. It seems cheaper in terms of thinking energy to look at the wealthy classes and say “why couldn’t that be me?” rather than learn about past populations and realize “that would have likely been me.”

The Agitator linked to this Drew Carey video about the conditions of America’s middle class. I was unsatisfied with how the video explained the decline in morale among the economically thriving middle class. It seems to blame the media – misery sells. I thought it was worth the time to summarize John Nye’s explanation that I heard at this past summer’s IHS Social Change Workshop. I put the following comment up at the Agitator:
John Nye has one of the most compelling explanations for the paradox of happiness. At one point in time the wealthier people report higher levels of happiness than the poorer, but over time despite being wealthier, people in general report less happiness. We seem to yearn for the good ol’ days. This is different from being barraged by pessimistic news stories. Nye claims that the relative prices of the most luxurious or “positionary” goods have gotten more expensive. Yes general items are more accessible to everyone, but there’s only so much land space in Maui or Beverly Hills to go around. Some portion of the economy is subject to scarcity inherently more than the rest. These are positionary goods, goods whose value is held high specifically because they are scarce. When we are young we can think about how cheap buying a car will be by the time we are fifty, but we fail to realize how much more we may have to pay for the beach house of our dreams because so many other people can afford it too.

When I watch the news or read debates on certain issues I get frustrated when people use rhetorical catch phrases rather than express the real implications of their policy opinions. Far too often we hear that someone is not “against immigration” instead they are “against illegal immigration.” But what does this mean? This is an empty catch phrase when it comes to real immigration policy. What’s worse, is that it has sparked an equally vapid response from the other side of the political spectrum. Pro-immigration and open border advocates now present an attitude that they are against anyone who is anti-illegal immigration. This is not where the debate should be focused. Immigration policy should not be focused around whether to punish detected illegal immigrants it should be focused on understanding and effecting the incentives that create large populations of “illegal” immigrants.
Let me be clear, I support completely unregulated open borders. But I also agree with Milton Friedman’s observation that an open border policy is incompatible with a welfare state. I support open borders because I recognize the benefits of a larger labor force. A greater labor supply drives down wages resulting in cheaper goods and services for consumers. The standard of living for the average person goes up because the basket of goods and services he consumes gets bigger at a lower price.
I do not support open borders because of a rights-based argument. I’m not arguing that foreign laborers have a right to work or have a right to access the jobs that are available (though they might, I just don’t care). My opinion concerning immigration policy rests on what I assume to be its real consequences. In other words if I believed an open borders policy would decrease people’s standard of living then I would be against it.
When someone says “I’m not anti-immigration, I’m anti-illegal-immigration,” I assume that they, like me, mean something about the quality of the real world. I assume that they would prefer a world where people did not jump fences or swim across rivers to get into the country. They would prefer a world without fence jumping and river swimming of this sort. I assume that they prefer a world where there is no underground market for labor. Today illegal immigrants earn low wages under the table because they can’t enter legitimate labor contracts at higher rates and better conditions. I assume anti-illegal immigration-ists prefer a world without under the table labor markets. If these real world implications are what they mean then we are in full agreement. I too prefer a world without these social ills. But what policy could get us there?
There are three ways to completely eliminate the problems described above. 1) Build a giant wall and publically punish anyone who gets over, under, or around it. 2) Allow anyone who wants, a social security number and legitimate authority to work freely in the United States. And 3) Instead of a wall line the entire border between the United States and Mexico with retail outlets that accepted foreign currencies and were allowed to employ foreign citizens. I think we should choose the lowest cost of these three # 2 then 3. One is obscenely costly and likely unsuccessful.