Economic Nationalism Alert

by Will Wilkinson on April 2, 2008

Of H1-B visas, Dean Baker writes:

By increasing the supply of highly skilled workers, the H1-B program undoubtedly reduces the wages for the most affected occupations. According to standard trade theory, this is precisely the point of the program. Allowing firms to get lower paid workers will reduce their cost and increase the economy’s potential output. It is the same argument that is used for the gains from getting cheap textiles or steel from foreign producers.

The argument from high-tech employers, that they simply can’t get enough high tech workers in the United States is ridiculous on its face. If these jobs paid millions of dollars per year (like jobs at Wall Street investment banks), then highly skilled workers would leave other occupations and develop the skills necessary to work in high tech occupations. Obviously, Bill Gates and the other high tech employers cited in this article want to be able to employ high tech workers at lower wages. The issue is wages, not a shortage.

It must be hard to know what you want. I imagine Baker wants to reduce national inequality. But increasing the supply of skilled labor would directly counteract the main economic cause of increasing inequality. So why isn’t this notable egalitarian doing cartwheels trying get the government to print H1-Bs like Mugabe prints money? Oh, because the people getting those jobs don’t already have American citizenship.

It seems that improving the material welfare of a great number of skilled foreign-born workers while at the same time lowering American income inequality would be quite appealing to certain people. But hey, screw reducing inequality if it helps foreigners! Much better to exacerbate national inequality by using immigration restrictions to reduce the relevant labor supply and increase the wage premium for skill. Then, when inequality surges further, we can lay the blame on the rich people who would have liked to welcome more high-skilled immigrants and then tax the crap out of them and the now-even-richer domestic tech workers whose wages we are subsidizing through immigration controls. Brilliant!

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    If these jobs paid millions of dollars per year (like jobs at Wall Street investment banks), then highly skilled workers would leave other occupations and develop the skills necessary to work in high tech occupations.

    Funny, Wall Street is one of the industries trying to get more "fehrners" in, moving ops to the UK because of lack of skilled rocket scientists here.

    Curious how foreign workers lucky enough to have an H1B, and who should thus be interested in more protectionism, are amongst the ones most in favor of lowering the barriers, even at the cost of lower personal affluence. An evil plan to take over the country? You got us! (Yep, I'm one of 'em.) Solidarity? Perhaps. But I would suspect it's simpler, that we are, as a group, skewed towards libertarian ideas; after all, we did leave our countries to pursue the "American dream", which, whatever else it might mean, rings of some loose mapping from personal responsibility to effort to reward.
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    Will, I'm curious why you assume Baker is against more visas. He might be, but he certainly doesn't say so himself, and from his previous writings on similar issues, I'm not convinced he would be.

    I mean, I know you've got a thing going at the moment about the "left" not caring about foreigners, but you've got be careful that the people you're criticizing actually think this way, because it's certainly not true of all of the left.
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    whoops. should have read the next post before commenting. sorry! damn feedreader.

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