I have been listening to a few talks given by Noam Chomsky, and while I disagree with a lot of what he says, he does bring up a few good points. For instance, in this talk on globalization, he brings up the point that modern globalization in large part does not involve increased freedom of immigration from poor countries to wealthy countries. This is pretty hypocritical because any intellectually honest argument for trade liberalization must also be an argument for labor trade liberalization.

Immigration restrictions are very similar to unions; a group of insider laborers has the power to keep outsider laborers from competing in some segment of the labor market. In the case of immigration restrictions, voters in a country have the political power to restrict foreign laborers from entering the country to compete in the domestic labor market despite the willingness of domestic firms and foreign laborers to engage in trade. The result is that laborers in more productive countries raise their own wages at the expense of the wages of laborers in less productive countries.

The same potential gains from fewer restrictions international trade in goods also exist for fewer restrictions on international trade in labor. The gain in wages by foreign laborers must be greater than the loss in wages by domestic laborers, otherwise domestic laborers could pay foreign laborers not to work in their market and still come out ahead, so laborers as a group are better off with fewer restrictions. Likewise, the reduction of costs for domestic employers must be greater than the increase in costs for foreign employers, otherwise foreign employers could pay domestic employers not to hire their workers and still come out ahead, so employers as a group are also better off with fewer restrictions. Since both laborers as a group and employers as a group are better off with fewer restrictions, there has been a net gain.

Protectionism for domestic laborers is just as destructive as protectionism for domestic producers. The large unrealized gains from labor globalization are evident by the great pressure on borders; Between 400,000 and 700,000 people each year immigrate into the US illegally.

Interestingly, the current Republican administration has been somewhat consistent about this. The Bush administration has shown a desire to liberalize both trade in goods and immigration. Twice the Bush administration has unsuccessfully pushed for a Temporary Worker Program, which would liberalize labor trade to a small extent. The administration has also negotiated a free trade treaty with South Korea, which has not been approved by congress yet but would liberalize trade to a small extent.