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Immigration and Social Welfare |
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Monday, 11 February 2008 |
Listen, I have great respect for people who immigrate to America. My mom is from South Korea originally - my girlfriend of seven years is from Ireland. Now both my mom's side of the family and my girlfriend's family both have HUGE rates of home and business ownership. Trust me, if anything, I'm biased in favor of immigration. I look at U.S. history and the anecdotal evidence available in my life and I think a huge part of what made America so wealthy and powerful was its ability to attract ambitious immigrants with a strong work ethic and big dreams. But there's a problem with immigration in America - and no one can deny it, not even the most rabid supporter and admirer of immigrantion like myself.
The Cost (And Odds) of Immigrating Legally are Absurd
The process to becoming a legal immigrant is absurd. We're
talking about several forms costing more than a thousand dollars each -
multiple appointments at a DHS office that's locked down like a
fortress - and the fact that the number of available "legal" spots is
extremely limited.
The opportunity cost of becoming legal is
approaching ten thousand dollars, even before you get the "priveledge"
of paying taxes like a good legal resident. Because of this cost, the reward associated with illegal immigration is trending to surpass the risks. Illegal (By definition) Creates an Underground Economy
By indirectly encouraging illegal immigration, the
government is unintentially encouraging an underground economy. Some
analysts and consultants make a fortune arranging human resources
accounts for industries relying on illegal immigrants for labor. They
provide false social security numbers, legal representation - and they
will even fix the tax and payroll books to keep the operation under
scrutiny.
Of course, price floors in the labor market (minimum
wage) create the demand for underground labor markets: Illegal
immigrants are just the mechanism by which supply and demand reach
equilibrium by ignoring or intentionally sabotaging the government's
legislated demands. When the government demands that markets act in
irrational ways, only brute force like imprisonment and property
seizure can prevent the economy from disregarding the government's rule.
Social Welfare Attracts Entitlement Mentality
The immigrants I know were encouraged by several factors:
Low barriers to entry in business; low marginal tax rates; availability
of employment; and of course a desire to stay close to immigrating
family members.
Yet every day we see reports of welfare fraud,
over-burdened medical systems, and identity theft for the sake of
drawing more government assistance. The economy we create influences
the types of immigrants that come here, and it completely changes the motivating factors behind immigration.
As the social welfare system grows, it naturally displaces
opportunity in building a business. Whereas many nations (even in
western Europe) are slashing business tax rates, we are contemplating
new ways to "tax the evil corporations" and "force small business
owners to provide benefits x, y, and z."
A new immigrant isn't going to come here to start a
business if they know they can't afford to hire cheap labor and they
have to pay a higher tax rate just to finance government enforcement of
the regulations that drive costs through the roof. Instead, we'll have
immigrants attracted to the promise of minimums. High minimum wage,
high minimum benefits, high quality public assistance - we're turning into an economy that attracts those looking for the most reward for the least effort.
Immigrants: From Greatest Resource to Greatest Liability The nature of a social welfare state is that everyone pitches in for everyone's benefit. It is beautiful in theory and it even works well in some small, resource-rich, culturally homogenous states in Europe. But it requires rationing of space. A new member has to be able to afford the contribution aspect of social welfare. Immigration is inevitably limited because they represent a great risk if they are unable to provide their "fair share." When there is no "fair share" to speak of, or it is kept as low as possible, immigrants can be a great resource. Unfortunately, the good intentions of social welfare reverse this and turn them into an investment risk that is slightly less attractive than a subprime mortgage portfolio. As America moves toward more social welfare, the supply of immigrants will need to be drastically reduced. Legal residents can only be allowed to enter if they are already wealthy - there's just no room for hard working poor people with big dreams. Its a shame - and in time, it will backfire.
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Last Updated ( Monday, 05 May 2008 )
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