Friday, March 31, 2006

Jane Galt: Modern Day Paul Erlich?   posted by TangoMan @ 3/31/2006 11:06:00 PM

Jane Galt comments on the immigration debate and is convinced by the argument put forth by Bryan Caplan:

Suppose we have an isolated society in which everyone is a genius. Let's call them the Brains. Who takes out the garbage? A Brain, obviously. Who does the farming? Again, Brains.

Now what happens if the geniuses come into contact with a society where everyone is of average intelligence at best? Let's call them the Brawns. If the Brains allow the Brawns to join their society, the average genetic quality of the Brains' society plummets. But everyone is better off as a result! Now the Brains can specialize in jobs that require high intelligence, and the Brawns can take over the menial labor. Total production goes up.

When I read this analysis I couldn't help but think that Jane and Bryan are backing the Paul Erlich position in the Erlich-Simon Bet while those who favor rational immigration are backing the Julian Simon side. Now what's odd here is that Erlich, the biologist, lost the bet against Simon, the economist, because he didn't account for the role of technology and now we have two economics bloggers endorsing an analysis which also takes no account of the substitution effect of technology for unskilled labor.

Galt and Caplan are arguing that comparative advantage of offering a lifetime subsidy of $89,000 per unskilled immigrant without a high school education will free up labor to more productive uses and that the subsidy for unskilled labor is preferred to the technological substitution that we see in Japan with the rise of robots substituting for unskilled labor.

Another point that they neglect to consider in opposing what they call "Eugenic Immigration" are the externalities associated with importing and subsidizing unskilled immigration. Randall Parker goes into some of those externalities in this post.

Seeing how they're mooting the question of Eugenic Immigration let me offer another proposition - by opposing an immigration policy Galt and Caplan set up a dynamic to enhance dysgenic trends because the US, with a mean IQ of 100, has the misfortune to be flooded with illegal immigrants with a mean IQ of 90. China, on the other hand, has a substantially homogeneous population with a mean IQ of 105, and they're already instituting neo-eugenic policies. The rise of China is an issue that is already on the rader screens of our economic analysts - now let them factor divergent IQ trends into the mix in order to get a better picture of how the future plays out.

What I don't understand is how the net present value of a taxpayer subsidy of almost $1.1 trillion for the 12 million illegals in our midst compares favorably to the labor substitution effect and the economic activity that is generated from the development, manufacture and maintenance of a robotic infrastructure and how supporting a dysgenic trend in an era of lowered social mobility can be considered a winning bet. Robert Samuelson sees the storm clouds on the horizon:

The most lunatic notion is that admitting more poor Latino workers would ease the labor market strains of retiring baby boomers. The two aren't close substitutes for each other.

And so does Paul Krugman: (discussed here)

Finally, ... our social safety net has more holes in it than it should - and low-skill immigrants threaten to unravel that safety net. ... Unfortunately, low-skill immigrants don't pay enough taxes to cover the cost of the benefits they receive.

Further, our two econo-bloggers ignore the decline in worker/population ratio from 2000 to 2005: (Bureau of Labor Statistics)

White Men: 74.9% to 73.5%
White Women: 58.5% to 57.4%
White Teens: 50.1% to 40.7%

Black Men: 68.4% to 65.2%
Black Women: 61.7% to 59.2%
Black Teens: 31.2% tp 25.3%

and the concomitant rise (20% in 4 years) in Social Security Disability Income recipients from 6,000,000 in 2000 to 7,200,000 in 2004. A good many of these recipients are discouraged workers looking for more reliable incomes than can be found competing against wage depressing illegals.

I just don't see how the analysis works to the favor of the Galt-Caplan position, be it an economic or eugenic frame of reference. I wonder if they've read Amy Chua's World on Fire for they seem to be drawing out the long-run blueprint to a US version of a market dominant minority.

See this report for more on discouraged workers.

Update: Randall Parker has more on this topic.