Tuesday, April 25, 2006

Unforeseen consequences:

In this morning FT, Marc Levinson writes an article about the “most powerful law in economics”, the law of “unanticipated consequences”. Mr. Levinson’s article is about the invention and growth of the shipping container and its affect on the world. I found the article interesting but more important it go me rethinking about something I thought about last night.

Last night myself and several other YR’s from the club went to a reception and fundraiser for Pete Ricketts here in Manhattan. Pete Ricketts is running for Senator of Nebraska taking on the incumbent, Ben Nelson. Senator Nelson holds on to the most vulnerable seat for Democrats and stands a good chance to loose to Ricketts considering Nebraska is a conservative state where Republicans have a commanding lead in voter registration.

Pete Ricketts is an impressive candidate; he’s a University of Chicago graduate and an executive at Ameritrade. His business experience is a great asset to the American people, as he understands what’s needed to continue to grow the economy. Also living through and surviving the Internet crash as an executive of an Internet company gives much needed experience at a time when our government has a major spending problem. As Pete Ricketts stated last nigh, “our government doesn’t have a tax receipt problem”, mentioning how tax receipts have gone up since the President’s tax cuts but instead it has a “spending problem”. A problem he plans on using his experience to fix.

Overall I was impressed with Pete Ricketts and thought his Q&A session with the crowd went really well. He answered all the questions as expected but did it with confidence and a belief in his eyes that he meant what he was saying. There was one answer though that had me thinking which relates to my opening paragraph above. One of the questions asked was about immigration. Pete Ricketts gave the usual response about how we need to secure our borders and start making it easier for people to come into this country the right way. He did give a little twist to the response mentioning how we need to exploit modern technology to make the process more efficient telling a story of a U.S. citizen who had to wait on line for four days at the U.S. Consulate in Mexico so he could get back into his own country.

What had me thinking about his answer and everyone else’s is that the response on immigration always stops at stopping the flow. In the spirit of “unforeseen consequences” there is something I wish our elected officials would answer. The reason for immigration in this country is not because employers are looking for cheap labor but they are looking for labor period. If you believe in free markets you would understand that wages are a reflection of education and the skill needed to do the job at hand. With that said, no one can expect someone who picks grapes to be paid the same as someone who spent $100K on a college education. Our unskilled labor force gets paid what they do because that’s how wages and labor works.

This leads to the problem at hand. Say our government was successful at stopping the flow of immigration, what is the governments plan to handle the possible “unforeseen consequence” of any labor shortage that may ensue in industries like agriculture. Our government can’t expect that if they stop immigration all of a sudden current Americans will line up and start taking jobs picking grapes in a field or busing tables at a local restaurant. On the surface it’s always easy to play politics and cater to the emotions of the American people who view immigration as a threat. The problem is the threat to the country economically is not having illegal immigration, it’s how would we handle it as a country without it. Maybe one day our elected officials will take the question one step further.

Links to this post:

Create a Link

<< Home