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The Whitehouse has announced that they, Senate Democrats and Republicans have negotiated a comprehensive immigration reform proposal (link). The proposal is considerably better than I expected; it includes a lot of the policy changes that the Cato institute has called for (link). The proposal has four zmain parts: more funding for border security, the creation of a temporary worker program, the creation of a path to legality for illegal immigrants currently in the country, and an increase in the number of several visa types. The proposal has been introduced in the Senate as the STRIVE Act (link to summary).

The temporary worker program is a good idea; first, because it eases restrictions on immigration, putting labor into the set of markets being liberalized, and second because it reflects the nature of immigration from Mexico; the majority of immigrants from Mexico return after some time. Most Mexican immigrants come to work for a relatively short time and then go back to their home country. Harsh border enforcement without a legal avenue for such a work pattern means that immigrants who do make it into the country illegally, tend to stay. Even so, the proposal does include a path to citizenship for temporary workers.

The proposal does not tie temporary work visas to a specific employer which is important because visa tying would give employers leverage over temporary workers and undoubtedly lead to abuses. Guest workers must be free to fully participate in the labor market. The abuses associated with the, guest-worker like, Bracero program which resulted largely from tying visas to employers eventually lead to the demise of the program.

Providing a path to legalization for the 12 million or so of illegal immigrants already in the nited States will also have several positive effects. First, it will stop a lot of resources from being wasted as they are now. U.S. immigration officials will stop using resources to find and deport productive members of society, and currently illegal immigrants will stop using resources to evade those officials. Second, currently illegal immigrants will find it much easier to travel back and forth between Mexico and the U.S. to see their families, which will undoubtedly improve their quality of life. Third, legalization will eliminate the ability of employers to threaten immigrant employees with deportation. Eliminating that threat will improve working conditions and pay for immigrants by improving their bargaining position.

I am somewhat concerned about some of the details of the proposal. President Bush stated that the proposal includes making English the official language of the United States. I don’t think making it official will really change much, but doing so seems unnecessary and makes me very uncomfortable. The proposal will also change the criteria for immigration from family based to skill based; I am not sure how I feel about this.

Overall, this proposal seems to be very good, and would dramatically improve our immigration policy. I have written before (link) about the need to liberalize immigration policy in order to be intellectually honest about pushing for other trade liberalization, and this is a step in that direction; visa cap increases, amnesty for current illegal immigrants and the temporary worker program all reduce migration restrictions. I hope that both the House and Senate enact a plan similar to this.

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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.