The Free Market Case For More Immigration

The most liberal person in the world says there is no tech skill shortage, implying that the h-1b visa cap shouldn’t be raised. But the tech shortage is real. According to a study conducted by CareerBuilder, IT jobs in the U.S. grew by 13 percent from 2002 to 2013, but the number of people who graduated with IT degrees in 2013 was 11 percent lower than it was in 2002.

Many ‘tolerant’ liberals are just protectionists that want all the overpaid jobs and social welfare programs to themselves. Immigration should be controlled, of course, but some immigrants bring value that current citizens don’t provide. Consider that 40% of S&P 500 companies were founded by immigrants or their children. Or that according to the National Science Foundation, 25% of the total tech workforce is made up of U.S. immigrants; furthermore, 42% of doctoral engineering and science workers as well as 34% of master’s degrees holders in the U.S. are foreigners. Immigrants can fill the tech skill shortage , but have a greater propensity to consume than regular citizens. They help reduce operating costs because American labor is too expensive for America to live to its full competitive potential. The free market is the best path to prosperity, so why are so many liberals (and some republicans) opposed to certain parts of it, like immigration and lower wages?

The left would rather have sluggish economic growth and less innovation in exchange for higher wages. In a meritocracy wages are determined supply and demand. This is in accordance to the Neoclassical microeconomics models. Whereas most markets have a point of equilibrium without excess surplus or demand, the labor market is expected to have a persistent level of unemployment. The left wants to interfere with the free market by discouraging immigration so that companies have to hire more overpaid workers, in a futile effort to have full employment.

The push towards lower wages isn’t motivated by greed. It’s looking after the best interest of shareholders and consumers to keep costs as low as possible. The benefits of cheap labor outweigh the potential externalities. Apple can hire overseas labor because those people will never have enough money to buy an iPhone anyway. The Americans that could have hypothetically been hired by Apple will look elsewhere for work. The savings from outsourcing far exceeds what Apple could earn from the increased purchasing power from US apple employees if some of those employees had slightly more money in their pocket to buy apple products. Boeing, for example, knows that average Americans won’t be buying its planes, so they can outsource with impunity knowing that it won’t hurt demand for their planes. The added profit means Boeing can sell its planes for less money, and this eventually translates into cheaper airline tickets for everyone else or lower freight shipping cots, etc.

As market libertarian, we should favor more h1-b visas for high tech workers, to make America more competitive. More skilled immigration will help businesses and possibly make everyone better off. We cannot have a large social safety net and more immigrants, so good bi-partisan compromise is to cut back entitlement spending for more immigration.