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What Shaun Kenney Forgot About Immigration

There are many Americans who are greatly concerned about the security risk from our current immigration non-policy. I happen to be one of them, and based on my conversations with Shaun Kenney on the matter, so is he. What Kenney can not stand is rank nativism [1] within those who would restrict immigration. In fact, it upsets him so much he never gets to the economics of the issue, which are also bad. No worries, Shaun, I’ll take it from here.

The economic restrictionist argument basically focuses on the labor market: with a greater supply of workers, wages go down. That’s it; that’s the entire argument. It’s freshman-level economics, and it’s utterly static. To be fair, the antirestrictionist economic argument usually isn’t much better – straight Keynesian nonsense about Aggregate Demand and higher consumer spending. It’s as if everyone suddenly forgets about supply-side economics when “immigration” is mentioned.

Yes, increased labor supply means nominal wages are lowered, but it doesn’t mean real wages are lowered. Lower wages means lower cost to the businesses doing the hiring, which increases overall supply and lowers prices. This is supply-driven deflation, and before the Great Depression gave our nation’s capital deflation-phobia, supply-driven price reductions were a common part of American economic history.

Sadly, we’ve forgotten all about that (thanks in no small part to the Federal Reserve, but also other idiotic policies which deliberately [2] raise [3] the prices [4] of goods [5] and services [6] in this country). Now we just assume price increases are inevitable, and try to jigger wage rates to keep up.

Illegal immigration is still a security issue, but the economics of immigration are a constant reminder that in microeconomics, we’re doing it wrong. Our policies shouldn’t be focused on artificially raising nominal wage rates, but encouraging natural price reductions which will raise real wage rates, and from this perspective, immigration is helpful, not harmful.

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