Mercantilism and intolerance, hard at work

March 10, 2009

Word is out that the economic stimulus may – horror of horrors – let undocumented immigrant workers fill as many as 300,000 jobs. As USA Today reports,

Studies by two conservative think tanks estimate immigrants in the United States illegally could take 300,000 construction jobs, or 15% of the 2 million jobs that new taxpayer-financed projects are predicted to create.

They fault Congress for failing to require that employers certify legal immigration status of workers before hiring by using a Department of Homeland Security program called E-Verify. The program allows employers to check the validity of Social Security numbers provided by new hires. It is available to employers on a voluntary basis.

This news comes hot on the heels of Republican accusations that illegal immigrants would be eligible to receive stimulus checks. Predictably, conservatives are crying foul. Their disapproval seems to rest on two pillars: a bastardized mercantilism, and a lingering resentment of immigrants in general.

The first conservative objection to seeing stimulus money go to (illegal) immigrants is the more surprising one. Michelle Malkin got an early start on making this argument:

What will the illegal aliens do with their rebates? Remittances, baby, remittances.

“This package will stimulate one thing for certain: more illegal immigration,” said [Rep. Tom] Tancredo. “It’s just the latest unfortunate example of American workers footing the bill for illegal aliens.”

The bill would allow so-called “Resident Aliens” to receive rebate checks. The Treasury department classifies someone as a “Resident Alien” based on how much time that person has spent in the United States. No proof of legal presence, however, is required. The IRS’ explanation of the term can be found at:

“Worse, a large portion of this money will just be sent back to the home countries of illegal aliens,” concluded Tancredo. “So it might stimulate someone’s economy – just not ours.”

I am genuinely surprised that mercantilism, an economic theory left for dead in the 19th century, is making a resurgence of sorts in conservatives’ critique of immigration. To be fair, there is big money in remittances, not only from migrant workers in the US but also from immigrants around the globe. The fear that (illegal) immigrants will send “American” money from their stimulus checks/wages to Mexico is not, therefore, completely illogical. What is illogical is the conclusion that Americans would never see that money again.

Mercantilism turned out to be wrong in the first place because the amount of trade in the world economy isn’t fixed, and because trade flows turned out to be much more complex and circular than mercantilists could imagine. In the present context, a dollar sent in remittance to a household in Mexico might be used to purchase Chinese goods sold in Tucson, Arizona. Or, more realistically, it might be used in such a way that it frees up other money – in Mexico or elsewhere – to flow back into the American economy.

Meanwhile, the internal mercantilism of sorts that has conservatives railing against immigrant workers in the first place is just as misguided. Suppose those 300,000 illegal immigrants materialized to take up “American” jobs. This does not mean that 300,000 Americans will have been put out of work. Illegal immigrants, as any workers, require the services of retailers, professionals, small businesses of every description, workers in the skilled trades, in manufacturing, in government, and so on. Employing any 300,000 people will create or sustain many jobs, including many which could accommodate Americans who are now unemployed. The number of jobs in a country, as the volume of international trade, is never a fixed amount.

Employing undocumented workers – even sending them tax rebate checks – will eventually have some stimulative effect on the U.S. economy. Opponents of either approach would do well to move beyond claims of a permanent job shortage and a remittance pipeline draining money from America to other countries. Of course, that would probably require them to move on from the second pillar of anti-immigrant sentiment. I hope no one is surprised at the revelation that this pillar consists of simple racial intolerance.

Yet efforts to prevent (illegal) immigrants from seeing one cent of the recovery package are not built on intolerance alone. They are built on intolerance and questionable economics.


One Response to “Mercantilism and intolerance, hard at work”

  1. […] – what is obvious to one is questionable to another, and impossible to a third. In economics, mercantilism was an innovative theory that became obvious and was later discarded. How many of the […]

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