The economics of Immigration

["ÁÎ×Ó¹â HenryC.K.Liu ¹ù¤l¥ú" <hliu@xxxxxxxxxxxxxx>]

Greenspan:  (Humphrey-Hawkins Testimony - February 2000)

Imbalances in the labor markets perhaps may have even more serious
implications for inflation pressures. While the pool of officially
unemployed and those otherwise willing to work may continue to shrink,
as it has persistently over the past seven years, there is an effective
limit to new hiring, unless immigration is uncapped. At some point in
the continuous reduction in the number of available workers willing to
take jobs, short of the repeal of the law of supply and demand, wage
increases must rise above even impressive gains in
productivity. This would intensify inflationary pressures or squeeze
profit margins, with either outcome capable of bringing our growing
prosperity to an end.

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 The political dynamite: "unless immigration is uncapped."

I have always noticed the logic gap in globalization.  If it is good for
capital to free flow, why is it bad for labor to free flow.  It is
happneing.  Many governments trying to promote the new economy is
adopting automatic work visa for high tech workers.  For the past
decade. professionals, including economists, have enjoyed the world as
one single market for their skills and services, why not less skill
workers. Surly, the 70 million households in the US, most of which will
eventually be two earner families, can benefit from affordable and legal
household help.
In the days before the financial big bang, when under Bretton Woods,
international movement of capital was considered both undesirable and
dangerous, there was an economic argument for curbs on immigration.
Trade then was defined as movement and exchange of goods manufactured by
a regime of international deivision of labor.

But surely, as Greenspan said, the immobility of labor is a drag on the
new economy.  His point of immigration, buried quietly in his testimony,
did not escape unnoticed by committee members.

Henry C.K. Liu