Facebook and Immigration

December 3rs’s WSJ started an article on immigration as follows:

“The Trump administration has sued Facebook Inc., accusing the social-media company of illegally reserving high-paying jobs for immigrant workers it was sponsoring for permanent residence, rather than searching adequately for available U.S. workers who could fill the positions.

The lawsuit reflects a continuing Trump administration push to crack down on alleged displacement of American workers.”  “Trump administration claims Facebook improperly reserved jobs for H1-b workers”

Immigration policy is a complex issue with many aspects. The economic aspects, however, should be straight forward and simple. https://wcoats.blog/2018/03/03/econ-101-trade-in-very-simple-terms/  https://wcoats.blog/2018/03/24/econ-101-trade-deficits-another-bite/  https://wcoats.blog/2018/09/28/trade-protection-and-corruption/ A free market in goods and labor increases productivity and output making the world wealthier. The cost for this extraordinary benefit is that some firms may go out of business and some workers may lose their existing jobs when someone else does better what the firm or worker were doing. They will need to move on to other activities or jobs.  It is wise and appropriate social policy to help those displaced by competition find alternative uses of their resources and skills.

It might seem rather harmless to protect existing firms and jobs from competition (aside from its afront to our individual freedom) but overtime the cost in reduced income growth will become greater and greater. What if such policies had been imposed a hundred years ago? Where would we be now?

If there are American workers who can perform the same job for the same wage Facebook needs, it has every financial incentive to hire them over sponsoring foreign workers. They don’t need laws to push them to do so. The good old profit incentive works just fine. It is fortunate that the exercise of our individual freedom to invent, invest, and work where we please also produces the most efficient (i.e. productive, thus profitable) use of our talents and resources. Talk about win-win. Those displaced when I come up with a better idea (i.e., something the rest of you like better) should be discouraged from stopping such progress with an effective economic safety net. “Replacing Social Security with a Universal Basic Income”

About wcoats

I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy.  I joined the International Monetary Fund in 1975 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989.  After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017.  Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75.  I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise.  In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.”  My most recent book is One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon.
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8 Responses to Facebook and Immigration

  1. Jim Roumasset says:

    Immigration policy should be “high-fence/wide-gate”–a metaphor for increasing legal immigration and decreasing illegal immigration (whether by wall or other means).

  2. GWest says:

    “A free market in goods and labor increases productivity and output making the world wealthier.”
    Of course, I don’t dispute this basic economic fact. I do, however, focus my primary concern not on the world’s wealth and the well-being of the foreign worker but on American’s wealth and the well-being of the American worker. The American government’s duty is to the American people, not to foreign nationals or multi-national corporations.

    We should be willing to forgo a slight increase in productivity, output, and global wealth if it means better overall well-being for the American worker, which is why I don’t support the displacement of American workers by cheaper foreign labor to the benefit of billion dollar companies and GDP. I’m a conservative, but I don’t worship at the feet of GDP or free markets. We need to reorient our political focus from growth for its own sake to widely shared economic development that sustains vital social institutions. We need to set a course for a country in which families can achieve self-sufficiency, contribute productively to their communities, and prepare the next generation for the same.

    • wcoats says:

      Our forefathers came here to be free, each one of us and our families individually. Masters in Washington DC limiting who we trade with or work for contributes to neither our freedom or our wealth.

      • GWest says:

        Yes, and the masters in Silicon Valley limiting American job opportunities by (allegedly) illegally reserving these open positions for H-1B workers is an affront to the very freedom you talk about. It’s hardly a “free market” if Facebook is not even letting Americans compete for these positions.

        Lastly, we should not let a libertarian notion of “freedom” impede individual agency and prosperity. In the case above, we are limiting the freedom and agency of the American worker to apply for a job by maximizing the freedom and agency of the corporation. Freedoms and rights often come in conflict, so some freedoms may have to be limited so that other freedoms can be exercised. I’ll champion individual freedoms over corporate freedoms any day of the week.

  3. wcoats says:

    GWest: My freedom to seek employment does not and should not include a right for force Facebook to hire me. I do not wish to live in a society run by Big Brother. My individual agency is to make my own decisions including joint decisions with others (Facebook) who are equally free to accept or reject my offers.

    • GWest says:

      I, too, do not wish to live in a society run by Big Brother. I’d also prefer not to live in a society run by Big Business or Big Tech. We often become so concerned about the government’s power over us that we limit it’s ability to keep a check on other institutions of power in our society that may exert undue influence and tyranny over American lives—one of those institutions of power is Big Tech.

      • wcoats says:

        Unless government steps in to protect them, “Big Business” rarely monopolize an industry. IBM once “monopolized” computing. Where are they now? Market forces discipline Big Business better than governments, which more often protect them via trade and tax policies. Though it would have been better not to allow Facebook to buy up some of its competitors (Instigram, WhatsApp, etc). Facebook is a trivial and unimportant employer in the total labor market.

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