Greenspan`s Contradictory Views on Equality and Immigration
April 09, 2008, 12:37 AM
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In his saner moments, Alan Greenspan says things about economic inequality that are fairly reasonable:
As I`ve often said... this [increasing income inequality] is not the type of thing which a democratic society—a capitalist democratic society—can really accept without addressing. - Alan Greenspan, June 2005 �

Alan Greenspan has also called income inequality a "very disturbing trend."

However, Dan Stein points out, this is part of a contradictory view on the part of Greenspan:
But former Federal Reserve Chairman Alan Greenspan recently admitted the real agenda: "Significantly opening up immigration to skilled workers … would compete with high-income people, driving more income equality." In 2007, he further opined that, "Our skilled wages are higher than anywhere in the world. If we open up a significant window for skilled (foreign) workers, that would suppress the skilled-wage level and end the concentration of income
Now, there are some basic problems here. Many of the countries that have the least inequality of wealth and income have rather restrictive immigration policies. Japan is a good example.

Furthermore, many of these "skilled worker" visas apply to jobs that aren`t widely well paying. The profession most impacted by skilled worker visas has been computer professionals. The median income for computer professionals in 2003 was 60,350-and the median income for H-1b workers was $53000. That level of income would not have put either group into the upper 20% for Americans in that year(median income was $43,318 and the upper 20% had income of $86,000.

There are other important factors here too. Many IT professional-particularly those on the upper income end, work in areas like New York City, Washington, DC, or Silicon Valley with exceptionally high cost of living (and in the case of Silicon Valley, the hidden cost of a community with more men per capita than Alaska). Thus, for many technical workers, a higher than average income isn`t necessarily a ticket to obtaining substantial assets—or even getting in a position to support a family comfortably.

What has been driving economic inequality in the US hasn`t been the income of workers in that band from the top 20% though the top 5%. Rather economic inequality in the US has been driven by the increased wealth and income of folks in the upper 1%.

Now, a big chunk of those folks in the upper 1% do it with income from property. According to Ed Wolff, at NYU, about 1% of American families have assets above $5 Million. Now, income from that level of property would be at least $150,000/year even if invested instruments that are carefully protected from inflation. That means about 20% of the top 5% of US worker get to that income level purely by ownership of property. Now others do a mix of activities-they work, but they do work that you have to have property as a ticket into the game (i.e. like people who buy a seat in the stock exchange or commercial realtors who trade substantial properties). Another big chunk of high income earners have direct personal relationships with the wealthy.

Some of the skills most likely to get someone into that upper 5% or 1% are hard to get outside the USA. A Yale Law degree or Harvard MBA don`t really have any foreign equivalents. For that matter, just getting licensed to practice law or accountancy in the US would be hard for folks to do without coming to the US.

What skilled worker visas mean is that wealthy interests in the US can pay employees by mining the value of the citizenship of specific groups of Americans-those that have invested in the "human capital" of the affected careers. US citizenship is valuable-and there are lot of folks willing to work to obtain that value. Thus, the shareholders of large companies-and those individuals with the wealth to directly hire such benefit inordinately-not the mythical consumer.

What this all means, is that skilled worker immigration may actually be making income inequality—and other forms of economic inequality in the US worse rather than better. If you want to address economic inequality, you need to get to the root of the problem. Wealth is more unequal in its distribution than income. If our goal is to contain economic inequality, it would make more sense to tax wealth directly as proposed by Huey Long decades ago—and more recently supported by Ralph Nader—than to target folks slightly more successful than average via predatory immigration policies.

All open borders can ultimately do is make economic conditions in the US more closely reflect that of the rest of the world. Now, as a whole, the world is a pretty oligarchical place with political and economic power concentrated in a few hands. The existence of a democratic republic like the US is a rarity by global standards-and something that will require real care to maintain.