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Posted by adam.dada on November 8th, 2006
For the past few years, the conservative line on immigration was twofold: halt the legal immigration of aliens, and also work on deporting and cutting back on those illegal immigrants who are currently in the country. A good number of U.S. citizens supported this thought — if laws were broken, those who broke the laws should be penalized, many say.
The problem with trying to fight immigration from a conservative line is that it is virtually impossible. There is no Constitutional way to identify a person on the street: to ask for ID or to demand that they acknowledge their citizenship is Constitionally illegal, and also crossing the line towards fascism. As humans, we inherently have the right to travel freely without being asked for where we’re going and why. The big reason why conservative politicians took a fight-immigration (both legal and illegal) line was because it is a great pork product: when fighting immigration is supported by the populace, all a country needs to do is hire more police officers, more technology and increase government bureaucracy to make it seem like something is being done. In reality, nothing changes.
The bigger problem the country is facing is run-away inflation: as the Federal Reserve worked to create more dollars in circulation, the new dollars made many items more expensive. When we see inflation (the creation of new money), we see wages go up, but nowhere near as quickly as the cost of some goods go up. Inflation creates stock market bubbles, it also creates housing market bubbles and oil price bubbles. Inflation is the most evil form of silent taxation: the dollars you have in your bank are worth less and less over time.
With the Democrats taking control of the House of Representatives, and basically taking over the Senate on paper, I believe we will see a new direction that will allow the Democrats to reinvigorate the dollar printing presses while trying to mask the inflation that normally comes along with it: more legal immigration. When you increase the amount of dollars in circulation, you see inflation affect products, UNLESS you can also increase the demand for those new products. The best way to increase demand is to increase the number of people who want items: people who need houses, cars, oil, jobs, and consumer goods. By allowing more people into the country, legally, and by providing amnesty for those illegally living in the U.S., the Democrats can increase the easy credit we’ve lived with for years by providing a bigger supply of consumers.
That is why I coined the term immigflation — inflation hidden through immigration.
Discuss this article at the immigflation forum.
November 13th, 2006 at 11:00 am
“When you increase the amount of dollars in circulation, you see inflation affect products, UNLESS you can also increase the demand for those new products.”
That doesn’t make any sense. When the amount of money is increased, the demand for products (goods and services) increases, prices go up and voila you have inflation.
The only way to avoid that is by increasing PRODUCTION (i.e. supply of goods and services) along with the money, so demand will be balanced with supply.
I really can’t see how by “being more” (in population) could stop inflation.
November 13th, 2006 at 11:03 am
Dario: I’m not saying it would stop price inflation as the amount of currency goes up, but I do think they can mask inflation by increases the supply of labor and the demand of services.
By the way, I forgot to disable comments on this new blog, we have a discussion forum which is easier to talk at. Oops. I’ll leave comments open for this post, but I will close comments on future ones to move people to the forum.
I am going to post the economic theory behind immigflation tomorrow or so, please visit again to debate it further. I came up with this idea just out of conversation and debate, so I could be completely wrong, but the capitalist in me says that I have an idea that isn’t discussed often if ever.
November 13th, 2006 at 11:36 am
Hang on, inflation is what you get when the momentum (velocity * quantity) of money exceeds the flow of goods. If you’ve got a larger flow of goods (though greater demand resulting from a greater populous), printing money is essential unless the velocoity of money changes to compensate. The right amount of cash is simply greater: everything scales up.
I will use an analogy to clarify my argument. If two nations, neither of which suffer inflation, were to suddenly make the currency of the other nation legal tender, there’s no reason why inflation would suddenly rise. Now imagine that the central banks merge. From the perspective of either, the amount of cash in the economy has massively increased, as has the populous. Why should inflation occur?
November 14th, 2006 at 1:58 pm
I’ll have to take issue with your faulty theory (politely).
Firstly, GWB has already been running the printing presses fullsteam ahead to produce more cash for the war. Qhile they may be handing out a few billion, unaccounted, to Iraqis, the vast majority is going to the US economy. Military suppliers get most, and the working troops get a small dribble too.
If the money supply expands by 10%, then by your theory, the immigration has to go up by 10% to “suck up” that money so the per capita dollars are the same. the flaw here is that the immigration has to go up 10% of TOTAL POPULATION, not of total immigration. If the money supply has doubled in 10 years, then half the population is immigrants who’ve arrived in the last 10 years, and the population is double what it was 10 years ago. In the words of the immortal Toolman’s Sidekick, “I don’t think so, Tim.”
A very low level of immigration (about 10% of pop. or so over the last 15 years?) has been used instead to keep WAGES down, to force the bottom end, low-margin workers to accept less. Compare with Canada, which is basically a close demographic of the USA, but without the massive illegal Mexican workforce. In most areas of the country that have any economic activity, there is a shortage of capable workers and jobs like waiter, kitchen help, Wal-Mart stocker - all go for a significant premium over already high Canadian minimum wage. And, Canada is running a good surplus on it’s government budget, so this is not a situation where a flood of dollars is driving up prices.
Immigrant wage suppression also has side effects. The restaurant that cannot find dishwashers to scrub in the sink will spend big bucks on a mechanized dishwasher. The store with a shortage of stockboys will buy forklifts and electric carts to do the heavy lifting for its clerks. it’s no coincidence that the most extreme examples of automation gadgets come from Japan, where labour is in very short supply and immigrants legal or not are strongly discouraged (and easy to spot).
I’ve though the solution to the immigration mess in the States is simple - institute a “guest worker” program. Migrant workers are allowed in 6 months of each year. Their families are not. Anyone who works for 10 years in this program can then apply for a green card, and in 3 years (so 13 years total) become an American. Anyone caught breaking the rules (staying too long, sneaking in family) is automatically permanently ineligible for guest or immigrant status.
6 months in and out, and no family, discourages the employer relying on the person over an American. The “no cheating or else” rule encourages compliance. The number of guests allowed goes up and down depending on unemployment levels, so that they can’t be accused of taking American jobs.
Once American passports have ID chips in them you can’t fake US citizenship that easily. A central registry of guest workers would be set up - any employer can check credentials against it, and anyone who hires an illegal faces a hefty fine.
The tragedy of the US economy verus many others, is that in a First World nation, a flood of third world peons are dragging down employment standards and wages for the bottom layer of society, the people who most need the incentive to improve themselves.
As for where the money is really going - the rich are socking it away, but mainly the Chinese are buying American government bonds (that they know they’ll never get full value for). They do this to prop up their own economy and develop their country. So America is borrowing from its grandkids to pay for the development of China. You’d think the least we could do is develop Mexico instead, so they wouldn’t sneak into the USA.
November 14th, 2006 at 2:02 pm
Thanks for replying — consider reposting this in our discussion forum (link provided above) where more people will see it.
I’ll reply to your reply in a blog post certainly because you do bring up SOME valid points, but here is one I definitely disagree:
“the rich are socking it away” Where do the rich sock away money? Under their mattress? If they’re putting it into the stock market or even a money market account, that money is immediately invested or loaned out and back in the market. You can’t really hoard dollars unless you DO put it into the bed mattress or into a non-investing savings account.
December 6th, 2006 at 12:19 pm
The money is being shipped to Mexico’s economy, not staying within the US.
Millions of immigrants times thousands of dollars each immigrant = Thousands of Millions of Dollars leaving the US Economy and catalyzing the Mexican Economy.