Immigration Amnesty is Racist, Sexist, Classist and destructive to the environment

There is a lot of talk about immigration right now. It is a teaching moment. Political candidates who want to be President are talking a lot of nonsense.

Start with the basic facts:

The U.S. is overpopulated and creates more ecological destruction per human than any other country on earth (yes, including China).

The economy can not be expanded infinitely.

There has been growing economic inequality.

Immigration amnesties lead to further illegal immigration.

Illegal immigrants mostly compete for the lowest paying jobs. Even legal immigrants tend to compete for entry level jobs, though some are wealthy or educated enough to join the upper class or upple middle class as soon as they get here.

Who else competes for the lowest paying jobs in America? High-school dropouts, and even graduates, of course. That means mainly children of people who themselves are marginally employed or work regularly, but for low wages. Working class and welfare class women. And, disproportionately, people who have traditionally been discriminated against, including African-Americans, American Indians, etc.

The people who advocate for immigration amnesty, and hence for unlimited future immigration to the U.S., are well-intended. They see it as a human rights issue.

And there are long-term benefits to immigration for the economy. More people means more demand and more workers, and so more GDP. Legalized immigrants can better match their talents to the job markets. That is why the Republican establishment used to lead in advocating for more immigration, including immigration amnesty. That is why the largest single amnesty was put in place in 1986 under President Ronald Reagan.

The immediate impact of new immigrants, whether legal or illegal, is pressure on those jobs that require little skill to perform. They are often hard jobs. This includes childcare, cleaning services, and unskilled physical labor. These are exactly the jobs that unskilled citizens, including poor white, black, and hispanic citizens also want. The competition for these jobs pushes down wages, often to below the official minimum wages. It makes finding full time work difficult, except perhaps during brief economic booms. It makes it even harder for families that have been in the United States for generations to accumulate the resources necessary to climb out of the bottom of the working class.

That is why labor unions, otherwise pretty liberal and supporters of the Democratic Party, have traditionally been for minimal immigration.

The effect on the U.S. and global environment is also negative. Most illegal immigrants come here because they are greedy and want to have a higher standard of living than they would have in their native nation. To the extent they achieve that they are using more energy and other natural resources. They are generating more greenhouse gasses, and they are speeding up global warming.

In an ideal world the idea that "all men are created equal" might mean that men and women could move freely, to live wherever they want. We don't live in an ideal world. We live on a dying earth where most nations are already populated beyond what is sustainable. That is particularly true of the United States.

What we really need is a one-child policy in the United States. Mexico needs a one-child policy. So does Canada. So does nearly every nation on earth.

So what is wrong with my dear liberal and leftist friends? They are mostly herd animals, and they are not much for thinking for themselves. They "buy" a package of positions on issues that make them feel good about themselves. They want an environmentalist merit badge and a human rights merit badge. On many issues those badges are quite compatible.

But not for immigration. Increasing immigration and anything that encourages illegal immigration are positions that have practical consquences. They help rich white employers and bankers. They hurt working class men and women, and disproportionately hurt black workers. And they hurt the environment.

Congress should change the immigration law to allow in a number of immigrants each year that will not have a negative impact on employment for unskilled citizens. Congress should not grant amnesty to illegal immigrants.

Raise The Medicare Contribution Rate

If Medicare and Medicaid will need more funding in the future, the logical and fair thing to do would be to raise the contribution rates. These raises could be small and gradual, say a quarter percent (0.25%) per year until contributions come in line with projected future expenditures.

The Medicare payroll deduction is not a tax. It is an compulsory insurance premium. It is currently 2.9%. For wage slaves the accounting of the 2.9% is that 1.45% is paid by the employer, and 1.45% paid by the employee. (Self-employed people pay both halves). In reality employers pay the full amount, of which half appears as a deduction when employees get the accounting for their pay check. For the history of this arrangement see Medicare History.

I think it would be a good thing to account for any rate increase on the worker side. Most businesses are profitable, and so most workers create more value than they are paid for, the difference going to management's usually bloated salaries and the profits of the owner. Capitalist apologists (who complain endlessly for their suffering rich clients) say that increased taxes on business discourage hiring. By placing the increase on the worker side of the paycheck it raises awareness that this is a necessary expense to pay for health care in your old age.

How would paychecks change? The most commonly paid wage in America is the federal minimum wage, currently $7.25 per hour. Assuming a 40 hour work week, raw wages are then $290.00 per week. At the current 2.9% rate, employers turn over $8.41 to the federal tax authority. Of that $4.205 appears as a payroll deduction to the workers. Each 0.25% increase would deduct a further $0.725 per week.

That does not sound like much (unless $0.73 is the difference between making your rent or not), but over time it should add up to enough to keep the nation's Medicare budget balanced. It takes a lot of years of saving to prepare for almost-free medical care beyond the age of 65.

A different way to look at the problem is to admit that the medical profession has not come up with inexpensive ways to keep large numbers of people healthy once they are old. A person who never made more than $15,000 a year in their lifetime may cost the Medicare system over $100,000 a year for as long as they can be kept alive.

It almost seems as if the health system for seniors is mainly designed to extract the last penny from their pockets and from the Medicare system.

Everyone thinks medical costs need to be capped, but no one (except maybe me) wants to be accused of letting a senior die for lack of medical treatment, no matter how expensive.

The only events that could fix the system are catastrophes. A disease with high mortality that affects seniors more than working-age people would perform actuarial wonders.

We could take a lesson from the Roman Republic, upon which so much of our original system was based. Seniors could buck up and pledge to refuse treatments that do not prolong a healthy, mobile, and fully conscious life. We could make opium smoking available to seniors who can't stand pain, and let nature takes its (inexpensive) course.

Unless we are willing to take a far harder line on capping expenses, we need to raise the Medicare contribution rate.

Where are the Jobs?

Yesterday a friend called up, highly distressed. Her last short term job had been as a census worker in 2010, and her jobless benefits ran out this May. She is about to become homeless, although that probably means she will start couch surfing, not living in the street. I know she has not been diligent looking for work. Like some of my acquaintances, she enjoys a prolonged, taxpayer-funded vacation from the stress of work. Nevertheless, she has done some looking, and if jobs were more plentiful here is California, she would probably being going to work on Monday instead of facing an eviction notice.

Multiply that by about 14 million, and you have a nation filled with capable people who are not employed. The lucky ones are getting unemployment compensation. State benefits typically last six months; the Federal government extends that to a full two years during times of high unemployment.

There is no one cause of unemployment, but there are a few key factors at play. There are two big holes in the economy right now. One is construction, with its attendant employment of realtors and of workers that produce products that normally go into building like wood, cement, glass, and metal.

The other is government, particularly state and local governments. Ever since the economy turned up from the depths of the recession, private employers have been hiring, if not as quickly as we would like. June brought another wave of layoff notices for public employees like teachers, bureaucrats, and police. The net has been very few jobs.

In 2008 the Republicans and Democrats united briefly to save Wall Street, the banking system, and the big American automobile manufacturers. That done, they fell to quarrelling. The Republicans quarrel among themselves, Tea Party people against the old school. Almost no one listens to Barack Obama, whose lack of leadership qualities were disguised by his rhetorical abilities until he actually became President.

But high unemployment is not Barack Obama's fault. It is not anybody's fault. It evolved over time, and our politics have not yet evolved to the point where we can deal with the new reality.

Let's start by putting on our thinking caps. Why not use the money that is paid out in unemployment to pay people to do real work? In the most appalling cases, public school teachers are laid off, so they can sit on their butts for two years while the few remaining teachers take on ever more students. Can you spell S-T-U-P-I-D? But the same is true in the private sector. Some people get worked to death during a depression and almost wish they had been lucky enough to be aid off.

The problem is that our economic rules and regulations, and even business culture, are "fighting the last war." That is, they were designed to fix problems that might be the same on the surface, but that have different causes than in the past. So the fixes don't work any more, at least not as well as they should. We are feeding leaded gasoline to cars designed for unleaded, then acting surprised when the engines die.

Most of the programs we now have to deal with recessions and unemployment were initiated during the Great Depression (with bipartisan support, I might add. Go look at the Congressional Record if you don't believe me). Some pre-date that, like the Federal Reserve System. The Great Depression itself had no one cause; it was the perfect storm of changes in the global economy and American culture and politics. Hoover did not have the tools in place to deal with it, and even the New Deal did not work well. If Hitler had not started World War II (causing everyone to start ordering arms and grain from the U.S.), the Depression might have lasted even longer than it did.

Some people thought that war spending was the ticket, after that experience. The problem is that while the U.S. benefited economically from the war, the economies of Great Britain, Germany, France, Italy, Russia, China and Japan were essentially destroyed. The U.S. make out best when other nations fight. Other nations make out best when they remain neutral and the U.S. fights the evil villain of the decade. The only defense spending that really helps the U.S. economy is when it is just a fig leaf for civilian spending, like the Federal Defense Highway System. Built to move tanks around the nation quickly and make road contractors rich, that defense effort is now what we call Interstate Highways.

Some people think China is to blame (two decades ago they said the same about Japan). As late as 1750 China had the world's largest economy, then it was ripped to shreds by the Great Powers (including the U.S.) and had a third world economy by 1950 when the Communists took over. I don't see how we can honestly blame China for unemployment in the U.S. In fact, if not for China buying U.S. products, we would have even more unemployment. China would buy more products if we produced them. We don't produce more products because over 10% of our workforce are loafing when they'd be willing to work if they were offered a job and their unemployment checks were cut off.

Unemployment insurance was designed to provide temporary relief to workers, allowing them to find new jobs and stay productive. During recessions it also answers as a counter-cyclical measure, keeping demand up until the business cycle gets going again. It is not a jobs program. We had no real jobs programs during the Great Recession. Some extra money was spent on infrastructure, but infrastructure work is highly mechanized and the money goes for cement and diesel fuel for bulldozers and cranes. Only a fraction is used to hire workers.

Aside from government stupidity, which is ageless and unlikely to change, the root cause of joblessness is inefficient allocation of capital, which is a function of capitalist stupidity. Let me be clear: American capitalists are rapidly becoming world class idiots, and I don't just mean Donald Trump. Not all of them are dysfunctional, there is a spectrum, but a significant proportion of our capitalist class are seriously screwing things up for all of us.

There have always been some stupid capitalists, in particular heirs to capital have a way of regressing towards not being much smarter than the average joe. Over time that sort of ordinary ineptitude sorts itself out, as their heirs of the Carnegies and Fords lose their dough to the up and coming Bill Gates and Mark Zuckerbergs.

Nevertheless, the American capitalist class as a whole has seriously ossified during the last 30 years. They want sure things; they are risk averse. Hiring people for existing businesses is a risk. Starting a new business is very risky. Sure there are people who still do that, like venture capital firms, but they are the exception.

Government could do something about joblessness, but won't. It isn't that the Republicans are standing in the way of the Democrats. Ever since George McGovern failed to get elected President the Democrats have been quite capable of standing in their own way.

The good news is that we are still at the beginning of an economic up cycle. As the economy improves, our capitalists will feel safer, and want to use their money to make more money, rather than just hoarding it. To do that, they will have to hire more store clerks, maybe even begin making housing loans again, and paying workers to repair homes so people can move back into them.

If the capitalists were really smart, they would fire their $10 million + a year corporate CEOs and hire equally competent, probably more competent men at a fraction of the cost. The fact that they can't be bothered to do that shows just how bad they have become at allocating capital.

Adobe and the Capitalist Firing Squad

Did you hear about the leftist firing squad?

Everybody stands in a circle and fires at each other.

So now lets talk about the capitalist firing squad. They are in a circle now, blazing away, and hoping the government will intervene to

They are not firing bullets (yet); they are firing people.

I thought of this because I listened to Adobe (the software makers of Acrobat and Flash fame) management do their analyst conference yesterday. You can read my financial commentary on Adobe at Dissecting the Bull. Here I want to remind people about how selfishness can be negative even for the selfish (in contrast to the Adam Smith inspired sentiment that greed is good for society).

Adobe is immensely profitable. In the latest quarter they had profits of $320 million on revenues (sales) of $915 million. They say they would have done better if we were not in a recession.

So what are they going to do? Their profits were up 10% from a year-earlier, at a time when a lot of people and companies are in a world of hurt. But their response is to fire a large percentage of their employees. Actually, apparently the pink slips went out at the beginning of December.

Those employees will respond to their own personal situations by cutting their spending. Joining other laid-off workers, they will contribute to a macroeconomic spending downturn. Other companies, feeling less demand, will do another round of layoffs. Perhaps compelling Adobe itself to lay off more workers in 2009.

You can understand layoffs when a company is losing money. But Adobe is not the only company that is firing people just to keep its stock price up. Practically every profitable company I have paid attention to has done the same. They have absolutely no loyalty to their workers. If the past is any indicator, corporations will lay off some of their best workers and keep the ones whose main characteristics are lip puckering and back stabbing.

I believe we are actually in a fairly typical cyclical economic downturn. For the usual reasons, probably in 2009 we will realize that the bottom is behind us. Companies will start hiring again. The capitalist firing squad will go back to its usual anarchistic ways. Housing led us into the recession and will probably lead us out of the recession. Very few new homes are being built right now, and with interest rates and housing prices low, excess inventory is beginning to be sucked up (except when it was built in the middle of nowhere) [See California Housing Dynamics]

On the other hand, if the capitalists close their circle tighter and shoot more accurately than I expect, there is still a possibility that they can turn a recession into a depression. Then it will be the leftists turn to go hunting among the disillusioned and hungry.