The obvious reason is just to enhance their bargaining power against their employees. Increasing the supply of potential employees enhances the relative position of labor’s buy-side. It’s cheaper to bribe politicians to open up the borders than it is to raise the prices that they pay to labor.
Furthermore, corporate leaders only bear some of the costs of increasing immigration and diversity: the state handles those costs. The gangster sons of immigrant fruit-pickers are the government’s problem — not so much the problem of the agribusiness which lobbied to import them.
Much of corporate culture — especially in the era of public companies with mandatory disclosure laws which emerged in the first half of the 20th century — is focused on short term performance. Managers are only temporary. Maintaining and encouraging the growth of a local community requires a long term alignment of incentives which mass-democratic-impersonal business culture discourages severely.
Entitlements and other taxes on labor effectively make buying that labor both more risky and more expensive. This puts employers in a position to which they need to find methods to counteract that political pressure on the labor market — and they need to pursue short term rather than long term solutions to keep their jobs.
Additionally, the artificially high cost of living caused by a perpetually bailed-out, credit-infused, state-supported housing market makes it so that companies have to pay significantly higher wages than was either historically normal or that would need to be paid absent all of those interventions.
The way that these institutions have adapted to these conditions, at least domestically, has been to work with the egalitarian state to push wages back down. There are a few ways to increase the labor supply: put children on the market, hire overseas laborers, push women into the market, improve the profitability of the existing labor force, encourage workers to have more children, invest in capital equipment to reduce reliance on labor, lobby for protection, and socialize some of the labor costs.
In practice, public corporate managers tend to push all of the most effective short term solutions to the hilt. They do this, or they get replaced — whether by another competitor, or another firm.
States, rather than individual corporations, create the competitive conditions under which those corporations live. If a government elects to import enormous numbers of new workers, that’s the new competitive reality to which all companies need to adapt to. If some companies cheat on immigration law and don’t get caught, it puts pressure on companies to either formalize the loophole or to join in on the cheating — because to do otherwise means losing out in terms of competitive positioning. Uneven enforcement of law encourages corrupt behavior.
Inflationary monetary policy also encourages companies to “run as fast as they can” just to stay in place. Because holding cash means effectively losing more than the prevailing interest rate on that cash, it encourages companies to aim to expand always. It’s easier to fuel that expansion when you can import more labor and have other people pay for the training of that labor — namely, your own heavily-taxed workforce.
To end the corrupting pressure which encourages business leaders to forego investment in local communities in favor of importing a new labor force, the sources of those pressures need to be addressed. While it’s a good idea to change the law, just changing the law would not have a magical effect — you’d also have to address the corrupting pressures that encourage the flouting of the law.
So:
- We have to rethink the entire concept of the ‘public’ company with its mandatory reporting requirements (encouraging quarterly short-termism) and insider trading laws (which encourages reliance on accounting snow rather than real investigation of companies)
- Limit the extent to which companies can slough labor, training, & education costs onto the state
- Scrap much of the education system — forcing parents, organized religion, community organizations, and businesses to bear the costs of education/training
- Limit citizenship and immigration; change who can be a full citizen
- End the short-termist approach to growing the labor supply (“Lean in” rather than following the only tried-and-true method of producing productive, law-abiding people)
- Reform banking and the central bank
- Permit civil society to re-grow
Is any of that likely to happen any time soon in the US? Nope. The US is utterly committed to a program of capital consumption — human, physical, and civilizational. Others will have to learn from the collapse.
Economists often talk about “externalities.” Pollution is often used as an example. When a company lures in an immigrant and pays them X, they dump the social costs on the taxpayers. We don’t hear much about these examples as externalities.
I saw a video of a city council meeting in Wilmar MN. The speaker noted that the Somalis imported to work at the local meat packing plant often had large families. He also noted that the Somalis were not supporting a family of four (or more) on $10/hour. He stated that the taxpayers were supporting them and that the city should make future projections. of these growing expenses.
Uruguay imported some Syrian immigrants around 2014 and offered the jobs, etc. Many now want out because ‘the cost of living is high’ and they cannot support their large families. So they want to go to Germany (obviously not a low cost country). He means the German welfare system pays more.
http://news.yahoo.com/syrian-refugees-protest-because-want-leave-uruguay-153023351.html
If employers have to pay $3 more per hour to hire a US citizen they would rather import an immigrant. Before there was 1 US citizen, likely low skilled, receiving public benefits, and paying no net taxes for sure. After the immigrant arrives the US citizen is still poor but now there is the addition of the immigrant and his family, also a net drag on the economy.
I don’t have mush hope but some things have a chance of helping.
1. Somehow showing the public that the importation of many (not all) immigrants is a net loss to taxpayers. When Chicago Public School teachers realize that they will not collect their pensions while they are importing more tax sucking immigrants they might realize there are choices to be made.
2. Reducing federal and state aid can make #1 clearer. A city council can do the math and realize the local meat packing plant pays $X in taxes but the city pays out twice that to support the immigrants imported to work. When the state sends in aid money that is ‘free money’ to the city so the economics are blurred. Chicago teachers now want to suck IL dry, as the city has already has been.
3. Show that business owners benefit but they are not the same as the entire community. Get some of that old fashioned leftist religion going.
4. Realize that some low wage industries are not viable in the US (without govt subsidies) and let them leave.
It gets more complex when you take into account that the *states* are also eager to externalize their costs to the Federal government.
There are also some perverse incentives there, where states can get funding from the Feds to do things like import refugees. The state may not care that those Somalis are getting Section 8 — that’s an indirect transfer from the Feds to the state government. So that fiscal separation between local, state, and Federal governments creates more opportunities for people to externalize their costs onto unaccountable bureaucracies.
So the Somali laborer may actually be costing a whole lot more than $8/hour, especially if you factor in the harm to real estate values and damage done to civic cohesion. The meatpacking plant would have to be run on sounder principles to be able to afford to pay $11/hour for a citizen, but the calculation would be more precise were it not actually a complex muddle.
I will add #5 is to retransition the banking system to full reserve banking given fractional reserve banking is predicated on continual growth in order to sustain itself as well as increasing untenable money as debt.
As well as the abolition of the central bank which lends out money to the government and to the economy which is also fractional in nature to either be replaced by the government mint or to allow various competing currencies.
You’re offering some excellent economic and political commentary. Most alt-right wingers know nothing about economics. Its just “those immigrants are taking our jobs”. That’s mindless populism. What you’re getting it is at the core of why America is destroying itself and going the way of Rome.
BTW, are you influenced by the Austrians?
Yes, I’ve read a stack of books and papers by the big names in Austrian econ. I’m light on Böhm von Bawerk and Menger and could probably use more time studying them.
Most alt-righters try to downplay economics, but you can use economics to make better arguments for immigration restriction.
The general tack taken is
1. Get lots of people mad
2. Angle for power or attention, surfing on a wave of anger
3. ?????
4. Mystic utopia!
Waving away #3 is not a great way to handle things. I don’t believe in raising up anything I’m not able to put down.
Very sound and sane viewpoint.
“but you can use economics to make better arguments for immigration restriction”
I’ve just discovered your blog, but have you written anything on this?
Not really. I haven’t spent much time on it because it can be like preaching to the choir.
Everyone is missing the real reason both sides seem to be pushing for more immigration…..its the insolvency of Social Security. The more illegal immigrants pay into SS with little possibility of collecting benefits the better. Democrats don’t want to admit it and Republicans are afraid to address the underlying problem. SS is going broke its a giant Ponzi scheme. Without the new payers the system will go broke much sooner.
They do often collect, though,.
As hard as this may be to remember, leftism was actually founded in order to protect farmers and factory workers from bourgeois, decadent, effete, overeducated, libertine urbanized elites. That’s why its symbol was a workman’s hammer and a farmer’s sickle. As one might have expected from a philosophy so ignorant of both economics and human nature, leftism ended up doing the exact opposite of what it set out to do; it ended up being used as a weapon by the people it deplored against the people it was trying to help. The working class has been abandoned. The Republicans never cared about them, and the Democrats were last seen even pretending to care about them in a Dick Gephardt speech sometime around 1983. The face of modern leftism is upper-middle-class white women with Master’s degrees in economically useless fields complaining about the content of video games, while what used to be the native-born working class sinks deeper into poverty, hopelessness, purposelessness, welfare dependency, oxycontin and/or methamphetamine abuse, and self-destructive sexual irresponsibility.
But hey, at least the next Tomb Raider game will likely star a black transsexual atheist feminist otherkin. That’s progress for you.
I think there is a couple of defining elements behind what your saying Mr. Dampier that are lost to the many, which are existential threats to the state and capitol cronyism.
Unfettered economic freedom for one.
Audacity and motive power of liberty.
Seems to me these things are so closely intertwined as to inseparable, but my point here speaks to the unfettered aspect of economic freedom, where I believe prosperity and intrinsic wealth is created. Everything else, the state, corporate fascism, administrative tyranny of the federal nomenklaturer/corporate slave class, the corporate and free shit army welfare class, etc, is basically a giant blood sucker living off the wealth created by the productive people, those that still exist.
What all those economic and political leeches all have in common is essentially they produce nothing and steal from others or enslave others to exist.
It is now a game of diminishing returns. The low hanging fruit of other peoples money is gone, the intrinsic wealth in the form of property like homes, industrial plant, savings and the like, have been strip mined six ways to Sunday of their real worth, and what’s left is as a nation and people that can squeezed of every last buck, is our seed corn.
So in effect, now that we have been fleeced of our elemental wealth and prosperity, we as in people who have labored through our lives to create our little bit of prosperity and happiness, the fruit and reward our labor, has been strip mined of its value, the fuckers, and I say fuckers because they are the worst kind of greedy shitty nasty self serving crooks thieves money changers and politicians in human history, they are opening our borders and flooding our homeland, with a new kind of serf and slave.
This is the kind of ruling class crap that causes very bad revolutions. Not one of secession, or political ideology, but one of survival. The kind of revolutions where extinction of one side or another in the conflict is the only resolution.
I am a worker’s compensation attorney in Los Angeles. 90% of my depositions are of Latin/Mexican Americans who don’t have a grade school education and an interpreter is necessary.
Applicant is 48 year old illegal alien single mom, worked as a maid for a national hotel chain for 8 years. (She can’t or won’t tell me what she did/how she survived the first 7 years in America.) She complains of low back pain.(and of course a psychiatric overlay to her orthopedic complaints
Her income as a maid/housekeeper was minimum wage no benefits.
That is LESS than what the chain would have had to pay if she was a slave. If they had slave labor they would have to provide slave quarters, a slave cafeteria and at least third century AD healthcare. Plus overseers to keep the slaves in line.I Imagine that having a dozen maids as actual slave labor would be more expensive than paying $8.00 an hour and no benefits
She has had 4 kids in America, 3 girls and 1 boy.
At 14 the first two girls start running around the streets. At 16 they both have a kid and are living in government housing with welfare, food stamps and Medi-Cal. And the gang banger dad is living with them providing sex and companionship in return for living off the food and housing we are providing for the kid. More kids are starting to roll. in.
And the third girl is now 14 and starting to run around.
The illiterate illegal mom with the 2nd grade education is so proud.(See-my girls, they all have their own place-they made it!)
(These people are the immigrant economic powerhouse politicians like Marco Rubio tells us about.)
Anyway, she is paid less than the cost for slave labor. But she needs more. So she takes. it. Her and her compadres have swamped and destroyed Los Angeles School District. If you are American both parents have to work overtime to send their kids to private school because LAUSD has become just a warehouse for kids on their way to welfare or jail. We as taxpayers see something similar with our hospital and healthcare. (The company and the worker aren’t paying for it so raise our taxes). (Go to an ER around here and see the crowd of uninsured Mexican moms with multiple kids and one with the sniffles.) And huge parts of Los Angeles are uninhabitable for English speaking American.
So the national chain gets a maid for 8 years for less than slave labor costs. And replace her with an 18 year old illegal immigrant school when she gets hurt.
And all the rest of us in California are taxed to provide her and her kids with everything they need.She needs more than minimum wage no benefits, especially if she decides to pump out 5 or more kids,and she is going to take it from the rest of us
I counted 7 people living in America on welfare as a result of this illegal alien. A big corporation gets 8 years of work for less than it would cost to own a slave. And she will be replaced by an 18 year old undocumented worker who probably won’t cause any problems for a couple decades.
And the rest of us see our schools destroyed and huge sections of the city informally off limits to English speaking Americans. Plus we pay for all the needs and services required by the worker that aren’t covered by minimum wage, along with all her offspring. (Question: what benefit are we as a society going to get from those kids born on welfare to a 15 year old mom knocked up by a gangbanger-how many of them are going to be a net plus for America?)
So the employers do get a benefit, along with the benefit to politicians who cater to illegals. It’s just that the rest of America has to pay the real price.
Yes. Great (if terrible) story.
Well this is all wonderful, but there is two fallacies in your argument: 1) the notion that historically enterprises were ever chiefly concerned with “the long term”, 2) the congruent (and perhaps implicit) notion that “private companies” today, that is, unlisted companies with completely private ownership, are somehow more focused with the “long term”.
Neither of these notions seem to be objectively true. In the first case, examples abound that contradict the assumption: In the 19th century the American Railroad business in the USA, or organizations such as the British East India Company come to mind, but one can keep going farther back in time: the carry trade in Asia and the Caribbean in the 18th Century, the spice business in the 17th Century, and etc. It is true that these enterprises sought strategic “networks”, market and market positions, and it is true that their “tactical” approaches might e larger than a Quarter, but this can be said of “public companies” today. Amazon or Apple (yes, Apple) are examples here.
As to the second case, anyone that has worked in a few small or medium sized privately held companies would tell you that often they are concerned with next week, not the next quarter, and they would also tell you that there is little respect for employees. Owners deciding to cash out and retire, and thus leaving employees hi and dry are notorious in this segment–and remember most of these firms are not high tech firms with options, and all that–they often in areas like “moving companies”, or real estate management. Not all of these people are high minded epigones of Andrew Carnegie out to build long term value.
All of this is ot to say that you are wrong to point out that there is something deeply wrong with our “corporate structure”–of course you are not. It is to say, however, that we really cannot rely on some of your assumption. If we are to restructure, we are heading out into new ground, so far as market incentives as applied to corporate governance goes..
Clearly, there were forces, incentives and impulses in the past that worked against the destructive effects and attitudes that concern you, but they might come form other places than you imagine here in these two point.s
One can also point out that the insidious aspect of immigration you mentioned could well be considered “thinking long term”–the idea of long term in commerce hardly means that businesses will “think about social consequences”, or at least think about them the way you would hope the would.
The problem may be that these people are hostile to the sort of wholesome and balanced community that you would desire for us, not that they do not have time for it due to reporting pressures.
This is a good retort — I should have been more focused on shoring up and specifying that point. Businesses will tend to externalize costs for the same reason that everyone does — better that someone else eats the cost than the person who caused it. What’s key is making that parasitical behavior either illegal or at least more expensive.
While you cite some great points, I dispute your argument that corporations and politicians were forced to turn to immigration because of taxes and rising home costs. I would like to understand your basis for this point because I could be uninformed.
Instead, I see corporations turning to immigration purely because its more profitable in the short term. Its also profitable for politicians in the short term.
Refuting that rising home costs meant rising labor costs:
http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-wages-have-barely-budged-for-decades/
I think the growth of real wealth of actual value has been on the decline. The focus of short term profit (cost cutting, marginal improvements, creative book keeping, etc) has been pursued out of the necessity for faux growth. The creation of the first automobile seems more valuable to me than the creation of the next dotcom that saves you a few dollars on X product.
Maybe it is because we are waiting for the next age after the Information Age and cost cutting is the current best option? I don’t know, but I tend to be more cynical and believe that it is a result of the human nature to prefer the easy, short term greed and power.
Cost of living has skyrocketed, which makes it so wage earners must demand a higher wage to afford it. At the same time, the Great Society came in to offer greater cash/food/housing assistance which makes low wage labor less competitive and adds strength to the buy side of living essentials that wouldn’t be there otherwise.
If anything the Pew chart supports my argument. Cost of living is too high to support many jobs. Cost of living gets propped up by the state through the credit creation mechanism (housing, education, medical costs have skyrocketed).
To make effective wage increases more feasible again, work needs to be made more desirable and cost of living needs to be allowed to plummet to the natural level.
Also forced immigration increases overall cost of living by putting more pressure on the same scarce classes of goods. If people were allowed to exclude the immigrants, there would be less pressure on cost of living and more pressure to raise wages and productivity per worker.