Consider three leading explanations for the current weak economic conditions. First, a new paper from James Stock and Mark Watson identifies demographic shifts as an important determinant of poor current economic conditions, and a likely problem going forward:
…barring a new increase in female labor force participation or a significant increase in the growth rate of the population, these demographic factors point towards a further decline in trend growth of employment and hours in the coming decades. Applying this demographic view to recessions and recoveries suggests that the future recessions with historically typical cyclical behavior will have steeper declines and slower recoveries in output and employment.
Second, as Karl has argued, the economy is waiting for “the kick” of an increase in sales of durables like housing and autos. Third, you have low house prices in holding back the economy by weakening household balance sheets.
My question is this: do not all of these factors point towards more immigration to drive both a recovery now and a recovery from the decline in the long term economic trends? In The Great Stagnation, Tyler Cowen identified lots of immigration as one of the three main kinds of low hanging fruit that helped drive our earlier growth:
“In a figurative sense, the American economy has enjoyed lots of low-hanging fruit since at least the seventeenth century, whether it be free land, lots of immigrant labor, or powerful new technologies. Yet during the last forty years, that low-hanging fruit started disappearing, and we started pretending it was still there.”
But this low hanging fruit has not gone away. We have simply stopped grabbing it.
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Friday ~ March 30th, 2012 at 9:19 am
curtd59
Karl,
1) Immigration creates defensive polarization in all forms of life, including politics.
2) Polarization leads to increases in polarization.
3) Integration decreases polarization and leads to decreases in polarization.
4) There is a maximum NUMERIC rate of immigration that is possible within any heterogenous polity.
5) This maximum rate is only EXTENSIBLE through INTEGRATION. (reduction of the cost of fighting competing norms, access to power, and signaling.)
6) The rate of integration is only increased through EDUCATION (Indoctrination).
7) Education must homogenize the non-aesthetic VALUES of the diverse groups in order to create integration.
8) The necessary tools of integration are a) religion (the religion of enlightened secularism), mythology (political values), a common language, and prohibitions on consanguinity (the nuclear family).
You cannot extend Keynesian spending FOREVER because of misallocation of human capital. You cannot extend immigration FOREVER because of competition for signaling, status and power. Because immigration and growth are limited by the homogeneity necessary for political action.
I’m happy that James Stock and Mark Watson have caught up with the 19th century conservatives. It is too bad that progressive positivism is a century behind conservative natural law.
Well, heck. More like three hundred years. But who’s counting.
Now If we can just get you out of the dark ages of DENIAL.
Oh. Wait. But, that’s right. You make a LIVING getting paid by the expansionary states, and so it’s not only against your cognitive biases, but against your self interest to catch up to conservatives.
Love you anyway.
You’re the best analyst out there. You’re the best communicator out there. You’re the most honest communicator out there — which is why I admire you so. The only thing stopping you from being the most valuable public intellectual in economics of your generation is your DENIAL of these objective realities. People who create BRIDGES forge avenues for political cooperation. They become heroes. You could create those bridges if you were not so entrenched in DENIAL.
Conservatives will tolerate BOTH immigration and Keynesian spending IF YOU INDOCTRINATE, via education, people into the social values of NATURAL LAW, and articulate the superiority of western culture’s core causal differences: competition, science and reason, the balance of powers, the nuclear family, history-as-ritual, and the common language. Because that will create a polity that persists the underlying accuracy of their understanding of human nature, and persists the balance of powers.
But as the progressive psychologist Jonathan Haidt has recently demonstrated, progressives have an INCORRECT understanding of human nature. And conservatives have a CORRECT understanding of human nature. And he has shown that progressives actively deny scientific realities that are contrary to their ideology. (The IQ controversy being the most recent.)
Conservatives use absurd language and reasoning but have an intuitive non-rational grasp of human nature and politics embedded in their irrational mythology. Progressives use superior and rational language but have a false grasp of human nature, and actively deny evidence that is counter to it — making them no better than conservatives.
But we Austrians knew that already.
“You’re the only hope, Luke” The world needs you Karl. If you’ll only grow enough to serve it.
(a method to my madness)
Monday ~ April 2nd, 2012 at 12:21 am
What we need for economic recovery | Brucetheeconomist's Blog
[...] What we need for economic recoveryAdam OzimekFri, 30 Mar 2012 12:23:00 GMT Share this:EmailFacebookLike this:LikeBe the first to like this post. This entry was posted in immigration. Bookmark the permalink. ← Cadbury Eggs [...]
Wednesday ~ April 4th, 2012 at 12:03 pm
TomGrey
The best policy would be open immigration for all those who speak English and have X$ to invest in buying a new home (including borrowing from companies and families, but NOT from banks using the home as collateral).
I think X = 1/2 median taxpayer wage would be a good formula (about $40k/2 = $20k).
For illegal aliens, the price would be twice as high: $40k (but only $20k if they go back to their home country and apply to be legal, there.)
This would be especially attractive to successful 3rd world professionals in countries with even worse gov’ts than the US.
The USA needs more legal, productive immigration, and better incentives to get rid of illegals/ discourage them.