In Defense of the Law

The great French economist and philosopher Frederic Bastiat wrote in The Law:

The mission of law is not to oppress persons and plunder them of their property, even thought the law may be acting in a philanthropic spirit. Its mission is to protect property.

The law is justice — simple and clear, precise and bounded. Every eye can see it, and every mind can grasp it; for justice is measurable, immutable, and unchangeable. Justice is neither more than this nor less than this. If you exceed this proper limit — if you attempt to make the law religious, fraternal, equalizing, philanthropic, industrial, literary, or artistic — you will then be lost in an uncharted territory, in vagueness and uncertainty, in a forced utopia or, even worse, in a multitude of utopias, each striving to seize the law and impose it upon you. This is true because fraternity and philanthropy, unlike justice, do not have precise limits. Once started, where will you stop? And where will the law stop itself?

Bastiat’s point, that the law exists to serve justice and nothing more, is the essence of the rule of law.  The rule of law is the idea that no one is above the law, but also no one is beneath the law.  Many people remember the first part, but conveniently forget the second.

Over the past few years, and especially since the election of Donald Trump, the law has come under attack, both by those on the Left and the Right.  Both want to carve out exceptions to the law, either by eliminating protections under the law for disliked groups (the Left for the alt-right, the Right for immigrants and Muslims) or by giving themselves greater share of “legal plunder” (tariffs, welfare, subsidies, etc etc).  As a classical liberal, it disheartens me to see my country, one founded on (if not always practiced) the ideals of justice, liberty, and the rule of law so willingly and vehemently attack these very ideals for the sake of political virtue-signalling or simple spite.

Justice is blind.  That means she sees not the devils nor the angels of our nature.  She hears only the circumstances, and defends the wronged party.  Whether that party is black, white, Hispanic, Republican, Democrat, Christian, atheist, Muslim, of the “right” mind, of the “wrong” mind, it doesn’t matter.  Justice defends them all.  This must mean that, yes, we must give the Devil himself the benefit of the law for the sake of justice.

A couple of examples.  First, here is a NYT story explaining the jubilation many had after Richard Spencer (the notorious neo-Nazi) was attacked.  Second, this story from Reason responding to the Republican (and sometimes right-libertarian) argument that immigration should be restricted because immigrants tend to vote Democrat.  In both cases, we have an ‘in-group’ trying to carve out exceptions to the law (in the first case freedom of speech, in the second case freedom of migration and protection under the law) for an ‘out-group’ who thinks differently from the in-group.  In both cases, the in-groups are making a mockery of the law.

As a classical liberal, I will defend the rights of both out-groups, indeed all out-groups, because Justice cares not whether one is in or out, and the law shouldn’t either.  I will defend them, not because of any sympathies to neo-nazis (of which I have none) or particular love of immigrants but for my own safety’s sake.  If we weaken the protection of the law for out-groups, what happens when we find ourselves the out-group?  To borrow the language from A Man For All Seasons, if we cut down every law to apprehend the Devil, what will protect us when the Devil turns on us?  Yes, I would give the Devil the benefit of the law for my own safety’s sake!

Tyrants rarely run roughshod over the law, but rather use precedence set by those before them (this precedence, although itself a mockery of the law, gives the illusion that the tyrant’s actions are lawful).  Exceptions to the law, granted by angles to pursue angelic ends, then become the tools of the devil to pursue devilish ends.  Vast presidential powers, handed over by Congress to the Executive Branch, now lay in the hands of Trump.  A vast regulatory government, once in the hands of relatively moderates now exists in the hands of an ignorant, egomaniac populist.  When the moderates were in power and wanted more and more leeway, the classical liberals objected; like More in the clip above, we refused to cut down the law to pursue the Devil for the exact reason that now is in our face: the Devil has turned ’round upon us and many laws have been cut down.

We must defend the rule of law and its protections for all people, including the Devil himself.  Once the door is opened that people who have “wrong” opinions do not deserve the same protections and liberties as people with “right” opinions, then it’s damn near impossible to close that door.

Some More Thoughts On Immigration

Many people will complain that, so long as the institution of welfare and voting exist in this nation, we cannot have open borders in regard to immigrants.  They claim the immigrants will just come here and become welfare queens and vote away our democratic institutions for their socialist ones.  Ignoring the factual issues with these complaints (Immigrants use welfare at lower rates than domestic citizens and naturalized-immigrant voting patterns and policy views don’t differ much from Americans), there are larger issues at play here.

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Regime Uncertianty: NBA Edition

President Trump’s executive order last week banning entry into the nation from several predominantly Muslim countries can best be described as a charlie-foxtrot.  Among those caught in the wave of uncertainty following the order was the National Basketball Association.  From nba.com:

The NBA, its players and its coaches have waded into political waters in the months before and since the November election. But this week politics bled into the NBA when President Donald Trump signed an executive order temporarily limiting immigration from seven Muslim-majority countries.

Milwaukee Bucks rookie Thon Maker and Los Angeles Lakers veteran Luol Deng both are natives of Sudan, one of the countries subject to the temporary ban along with Iran, Iraq, Libya, Somalia, Syria and Yemen.

The Bucks were concerned about Maker’s ability to travel freely with the team back to the United States from its game Friday in Toronto. The NBA released a statement saying it has contacted the State Department for information on how the restriction might affect personnel from the seven countries.

Fortunately, there were no initial negative consequences for the Bucks.  From ESPN:

Bucks coach Jason Kidd, in announcing Saturday that Maker would start, confirmed that Maker had made it to Milwaukee without incident. Maker scored eight points and grabbed two rebounds in eight minutes in Friday night’s 102-86 loss at Toronto, where he had lived for two years prior to being drafted in 2016 by Milwaukee.

However, the fact that Maker was able to re-enter the country from Toronto does not mean there are any losses involved.  Indeed, there were many unseen consequences from the executive order:

  1. Coach Kidd had to spend time devising an emergency game plan in case Maker was detained.  This subtracted from his time focusing on a “true” game plan where all his players can be used.  This may have contributed to their 112-108 loss to Boston on Saturday.
  2. NBA and team lawyers have been scurrying to get clarification on the new rules, detracting from other duties
  3. State Department officials have been scurrying to answer the questions poised by the NBA and team lawyers, detracting from other duties
  4. Maker himself (and likely his teammates) were distracted by this non-basketball issue, diverting attention away from practice and game planning (again, possibly contributing to the loss on Saturday).

The list above is hardly exhaustive.  Further, we can imagine this uncertainty, and similar costs, multiplied across the nation for all kinds of industries and employers.  These disruptions, while perhaps at a cost of only a few thousand dollars each (a number I arbitrarily made up.  Could be higher/lower), multiplied across millions of individuals becomes a great sum.

One final NBA-specific point: 90 days (the length of the ban) seems small in the scheme of things.  But, for the NBA, that is half their season.  This ban is no small thing for the Association.

On (Im)Perfect Subsitution

Another Econ 101 mistake people make, especially with regard to immigration and international trade, is some form of “foreigners (immigrants) can do all the work we do but for much lower prices!  Without subsidies/tariffs/minimum wage, they’re just going to take all our jobs!”  Other versions of this include “if a bunch of immigrants enter the nation, they’ll drive down wages!  Law of Supply and Demand!”

Both the above arguments make the same mistake, namely they assume foreign labor is a perfect substitute for domestic labor.  They treat all labor (or all low-skilled labor) as a homogeneous blob, one part easily replaceable with another.  But, alas, that is not the case, as price theory can show us.

Looking simply at the wages of laborers, we should ask the question “why do immigrants/foreigners command lower prices than domestic workers?” The fact that there hasn’t been wholesale replacement of domestic labor with foreign means we can rule out any cultural/biological/cost-of-living reasons such as “lower cost of living in 3rd world” or “they have a lower standard of life and thus demand lower pay” etc.  If this were indeed the case, domestic companies could just pack everything up and ship it overseas (that is, stuff that can’t be staffed by immigrants) and make tons of profits (while I have no doubt some people believe that is what is happening, the data say otherwise).

What’s more likely is that foreign workers and immigrants are simply less productive than domestic workers.  Immigrants coming into the country, legal or otherwise, face major barriers, not the least of which is the language barrier.  The manager at McDonalds cannot simply fire an American order-taker making minimum wage and hire a foreign worker for half the cost. The foreigner, simply by virtue of not knowing the language, will be less productive, thus his lower salary.  A similar argument for offshoring can be made: foreign workers, by virtue of less capital augmentation, will be less productive and thus command lower salaries.

In short, foreign workers/immigrants are not perfect substitutions for domestic labor!

It may make sense for some firms to replace/augment domestic labor with foreign labor, but the mere fact it is cheaper is not the reason why.  David Ricardo’s powerful idea shows there are times it is prudent to replace more productive resources with less productive resources, but to do so on a large scale with disregard to opportunity cost is a recipe for disaster, and why firms and individuals do not do it.

Trump’s Immigration Plan Cannot Make America Great Again

The other day, I wrote how Trump’s tariff plan cannot make America great again.  In that post, I promised a follow-up on immigration.  This is that post.

A quick note before I begin: many people will likely object to this post because of various social problems immigration may bring (they’ll vote away our freedoms, they’re violent, they suck welfare, etc).  I, and many others far smarter than I, have addressed those myths in the past and I will not reiterate those arguments here.  This post will focus on the economics of immigration.

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Illegal Immigration Follows The Laws of Supply and Demand. Who Knew?

Writing at CATO, David Bier has an excellent article on illegal immigration.  The whole thing is worth a read, but there are two particular points I want to focus on:

Border patrols and deportations were increased to stop the flow of unauthorized immigrants, but they had little effect. “I’ve no doubt whatever that the man finally deported is back here,” the Assistant Secretary of Labor told the Times. “Easily 50 per cent of them return.” In July 1929, Congress gave in and provided “amnesty” or citizenship to the undocumented immigrants. Then, the Great Depression dried up demand for workers, temporarily resolving the issue.  When the economy finally picked up again following World War II, illegal immigration returned.

Illegal immigration finally nosedived after the housing bubble burst, and the illegal population shrunk from 2007 to 2014.

[Emphasis Added]

Lest I be accused of cherry-picking, the trend of immigration tapering off during recessions and increasing during booms holds throughout history (obviously, the more severe the recession, the more pronounced the decline in immigration).

This pattern is exactly what one would expect: when the economy is growing, labor demand is growing, and the wage rate (the cost of labor) is increasing, more supply (immigration) is attracted to the market.  When the economy is shrinking, labor demand is shrinking, and thus the wage rate is falling, supply is repulsed from the market.  Just a simple analysis of the labor market.

There Is Still No Difference Between Immigration and Free Trade

At Cafe Hayek, Don Boudreaux posts his prepared remarks from a recent talk given in Atlanta. The whole thing is worth a read, especially if you want a quick summation of Econ 101.

However, I want to call attention to one point in particular, spoken by Don but also by my professor Walter Williams:

I here, at the last minute, add an eleventh point to the elemental case for free trade.  I was reminded of this point just this morning by an e-mail from my great colleague Walter Williams.  Walter asked me to remind you that countries don’t trade with each other; people trade with each other.  China doesn’t trade with America.  Individuals who reside on that part of the earth that we today call “China” choose to trade with other individuals who reside on that part of the earth that we today call “America” and who choose to trade with people in China. [original emphasis]

The concept that economics is just human action is vitally important to understanding.  All too often, people will make the mistake of forgetting this vital, yet simple, fact.  When people trade in goods, it is the owners of goods swapping.  In other words, people.  When people trade in labor, it is the owners of labor swapping.  In other words, people.

I hear far too often from many people who are nominally free trade that we can’t have free trade of labor (that is, free movement of labor across borders, not just within) because labor is people and people can corrupt (or be corrupted).  But this is no different than the false argument “demand analysis doesn’t apply to minimum wage because these people are workers not commodities!”  Both statements are wrong.  The owners of capital, people, are just as likely to subvert liberal values than laborers (who do you think calls for protectionist tariffs?  Subsidies?  Regulations?).  In fact, I’d argue the owners of capital are more likely to subvert liberal values because they, unlike immigrants, can actually vote and participate in the political process.

Does increased immigration run the risk of importing people hostile to liberal culture (or creating a “Trump effect” backlash against liberalism by natives)?  Yes.  But that danger is not unique to immigration.  It holds just as true for capital.  Economics is human action.