January 25, 2005

A Progressive Indictment: Immigration Policy and Corporate Welfare

[Recently by Randall Burns: The Jobs Crunch: A Progressive Indictment Of Immigration—And Both Parties]

[Vdare.com note: Randall Burns is a self-described “progressive,” which proves once again that Vdare.com values diversity—or, more importantly, it proves that immigration affects everyone. The case against it is as good from the political left, as from the right.]

By Randall Burns

There is a fundamental contradiction between advocating open borders and claiming to favor containment of corporate power and the defense of New Deal reforms. It is high time American progressives examined this issue seriously.

Conservatives often point out the fundamental contradiction between the existence of a Social Welfare State and mass immigration.

But the reality is much more serious: United States immigration policy is a key part of a Corporate Welfare State. Immigration policy helps protect established interests from democratic control—and from market competition.

Corporate Welfare as defined by Ralph Nader involves use of a public asset for private purposes—"a program is considered Corporate Welfare if its public cost outweighs its public benefits."

A classic example of Corporate Welfare: allowing broadcasting networks and corporations to use the airwaves without paying the fair market value that could be obtained at public auction.

Corporate Welfare practices are typically defended politically by wealthy interests. It typically ensures a substantial profit for wealthy or politically influential interests. Less well-capitalized or well-connected concerns will not get the same consideration from political authorities.

The point for progressives: immigration policy is generally a form of Corporate Welfare.

One example: First-World countries like the US have a history of fairly uniform rights of citizenship. Citizenship has been coupled in recent decades with substantial growth of the welfare state and an increasing wage differential between wealthy and developing nations.

That means US citizenship (or legal permanent residency) has real economic value. If one could purchase US citizenship or residency on the open market (as is possible with some countries), its value would be substantial.

We don’t really have "markets" in U.S. immigration rights. But India does. In the Indian dowry market, an Indian IT worker can expect the dowry from the bride's family to double when he acquires an H-1b visa (which also confers barely a 50% chance of attaining citizenship).

The bride’s family is paying for US citizenship for their grandchildren—and a chance for other family members to take advantage of chain migration practices.

In raw terms, this means a young H-1b applicant can expect an additional $50-$70,000 soon after obtaining an H-1b visa.

In turn, this means that the H-1b expansion legislation granted corporations the chance to lure employees with the equivalent of a $50,000 sign-on bonus—using a publicly provided resource.

There were about 1.2 Million H-1b visas issued over the last 6 years. That was in effect a subsidy of over $60B to corporate interests—obtained at a cost of little more than $113M in campaign donations.

Another example: H-1b expansion also helps companies to operate "outside the rules."  For example, Enron engaged in a technically complex, fundamentally illegal business. An H-1b worker has strong incentive to cooperate with such an employer until he obtains permanent residency rights. An employer can also whisk an H-1b holder out of the country at will if anything happens that prompts the attention of investigators.

However the most extreme example of passing costs onto the public may be not requiring corporate interests to pay anything close to a reasonable amount for the increases in risk associated with "open borders."

For example, if extreme mobility across borders creates a health crisis—or accelerates the next viral pandemic, or causes billions of dollars in terrorism damage—the public—not the corporations who profited—will bear these costs.

For these corporations, the government has assumed the role of insurer of last resort.

Illegal immigration also has a Corporate Welfare aspect. Many illegal immigrants eventually obtain residency through amnesty, asylum or marriage to a US citizen. Most of these mechanisms require maintaining residency in the US. This provides employers of illegal aliens an enormously compliant, inexpensive workforce driven by a chance at permanent residency—a plum so big there are even "game shows" built around that goal. Of course, illegal immigration increases crime and law enforcement expenses—and public health risk.

Especially insidious is illegal immigration’s interaction with the broad-based US tax system that—I would argue—is lax on taxation of concentration of wealth or monopoly influence. Employers can avoid taxes by hiring illegal alien workers who can easily get out of the reach of the IRS if anything goes wrong.

The result: US citizens are forced into the most "protected" and monopolistic aspects of the economy, while becoming dependent for basic services on others who live like serfs.

Ultimately, the costs of excessive immigration are human. For example, corporate agricultural interests played a major role in making sure that mass importation of illegal alien farm workers would continue. That gave many of the larger farms in the West a marked advantage in terms of labor costs - playing a major role in the 1980s Midwestern farm crisis which displaced hundreds of thousands of Americans and destroyed whole communities.

Even Republican economists like Milton Friedman accept that current immigration practices are "subsidies." High current levels of immigration are associated with economic deterioration. To work well, free market systems fundamentally require that all costs be reflected in consumer prices. That just isn’t happening in US today.

Legal and illegal immigration is a weapon in a vicious class war. Corporate America and elites have supported the restoration of a form of indentured servitude in America, which helps concentrate economic power.

These spoiled owners of capital now enjoy all the rights of both a free society and a slave society—with the responsibilities of neither.