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December 28, 2010

Want To Reduce Inequality of Income? Okay, Well Crack Down On Illegal Immigration

Mickey Kaus argues against liberals... as usual.

Kaus sets up Brazil as the situation liberals don't want -- incredible wealth at the top, desperate scrabbling poverty (poverty-poverty, as Whoopi Goldberg might say) at the bottom -- and goes from there.

But, hey, whatever. Let's assume the problem is income inequality. And none of us wants Brazil.

The question is then what makes Brazil Brazil. Is it wild riches at the top, or extreme poverty at the bottom? It seems pretty obvious, from what little I know of Brazil, that the problem is the bottom, not the top. We worry about Brazil because of the favelas, the huge impoverished shantytowns, and the crime coming out of them. We worry because it's hard to believe that if you're a poor Brazilian squatting in a shanty you can think of yourself as the social equal of a tycoon across town. And across town, thanks to all that crime, it seems impossible to lead a normal, American-style socially-egalitarian middle class life, at least without a full-time bodyguard. You're not about to go sit in the cheap seats at a soccer match or wander near your local favela while shopping. I had an affluent Brazilian friend who moved to New York City and would only consider living in Trump buildings, on the grounds that only they would have adequate security for someone of her class. I finally convinced her that no, this was America. You could really live almost anywhere you wanted. You didn't need a guard with a gun on every floor. And you could walk around.

If you're worried about incomes at the bottom, though, one solution leaps out at you. It's a solution that worked, at least in the late 1990s under Bill Clinton, when wages at the low end of the income ladder rose fairly dramatically. The solution is tight labor markets. Get employers bidding for scarce workers and you'll see incomes rise across the board without the need for government aid programs or tax redistribution. A major enemy of tight labor markets at the bottom is also fairly clear: unchecked immigration by undocumented low-skilled workers. It's hard for a day laborer to command $18 an hour in the market if there are illegals hanging out on the corner willing to work for $7. Even experts who claim illlegal immigration is good for Americans overall admit that it's not good for Americans at the bottom. In other words, it's not good for income equality.

If you want to help Americans at the bottom, you can improve their wages by making unskilled labor more valuable, by reducing competition -- or in this case, simply preventing new competition from forever entering the market.

Liberals never understand that the "problem" of income inequality, to the extent its a problem, is not a two-sided problem. The problem is not the very poor and the very rich. The very rich are not the problem, and just taking from them is not the solution. The problem is just the poor, and whether they are advancing or not. And that can't be done just be increasing tax rates and giving handouts. Handouts only create a dependent, cynical underclass, with far greater ills than the working poor would ever experience.

Since Brazil has been brought up, check out this 60 Minutes piece on Brazil from a few weeks ago. The joke was that "Brazil is the country of the future-- and always will be." That is, it would never actually make it to first tier status, just threaten to, before Latin economics and Latin politics would sabotage it yet again.

But this time... maybe so.

Two points: One, Brazil is getting rich partly over its newish oil discoveries. Gee, wouldn't it be nice if somewhere in America there were potential oil fields that maybe rivaled Brazil's that we could tap.

Two, Krofft talks here with a lot of wealthy people. Ultra-tycoons. And he takes them -- as anyone who's not a twit would -- as evidence that Brazil is doing well, not that Brazil is doing poorly.

This just reinforces the point that these people are not the problem. Other people did not become poor so that they could become rich. The poor have largely stayed poor; the rich and ultra-rich get that way because of new wealth, not wealth hijacked from the poor.

Who the hell robs a poor person? There's no percentage in it.

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posted by Ace at 04:40 PM

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