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I don't know why you think that the wealth circulates in their own community - they buy goods and services like any other Americans. Cognizant H1Bs aren't getting haircuts from other Cognizant employees.
They do send remittances, but what's wrong with that? Taking money out of circulation in America reduces the price level.
It's my understanding that taking money out of circulation is bad for the nation's economy, but I am open to explanation as to how it's actually good for billions of dollars to be earned in the US and sent to other countries.
What's your view on fiscal multipliers from local consumer spending?
The basic premise of the multiplier effect is that the benefit to GDP is larger than the actual amount of currency spent, and while there are different types / uses / implications, a basic point is that the value gained from the local spending by the remittance-sender can be more than the actual dollars spent. The UN estimates that on average migrants send only about 15% of their income back home as remittances. Of that remaining 85%, if you have a multiplier effect of 1.2 you're at 102%- i.e. not only not losing net money, but even still ahead.
Of course, that assumes a global standard of remittance %, but it also assumes a low multiplier effect of only 1.2, as opposed to something lower... or considerably higher. In the US I've seen variations as high as 2, as in a dollar spent is doubling in value of the economy. While there are general theories for the variations- local spending has higher multiplier effects thanks to more immediate reuse than spending on international chains where the money goes away- it's generally understood to be positive.
As long as it is positive, however, you have to have some very wonky dynamics for the addition of a migrant- and thus an additional job to the economy- to produce less net multiplier benefit than the job sans the migrant.
Say you have a net-value job worth net-1, standard benefit to the economy. Even if the remittance-migrant taking the job lowers the net benefit to net-0.5, the person who the migrant-taking-the-job affects (displaces) has to go from a net-1 job to a sub net-0.5 to provide a worse net effect... as opposed to a worse-paying net-0.8 job (new net gain of 1.3 versus 1), or an-even-better net-1.1 job enabled by the migrant (now net 1.6).
This is, uh, not the common economic case over time. It's not impossible for it to happen- if people are permanently unemployed and don't re-enter the workforce- but for that to happen at a systemic level you're probably talking far more along the lines of 'barbarians have sacked civilization and are enslaving the artisans' than 'remittance-migrants are undercutting salaries.'
Returning to the remittance, though- as long as the balance of the relationship is favorable (more benefit than harm), then you're just seeing a cost tied to a net-benefit. As long as that holds true- as long it remains a net benefit- then you want to scale up, not down, that cost, because the scaling of the cost is also scaling the benefit.
For example, go back to our UN % of remittances as 15% of income. Wiki estimates the US was the world's largest source of remittances at 148 billion in 2017. For simplicity, let's round that to 150 billion in remittance outflow.
If we take that UN 15%, that means that 150 billion of outflow is a result of 850 billion not outflowing. Which, in turn, means $850 billion for spending on the normal things that already eat up the %s of income, like taxes / housing / food / transportation / healthcare / and so on.
Since the outflows (remittances) and inflows (everything else) are tied to the same entity (the migrant with both categories attached to them), 'saving' $150 billion by blocking the worker from arriving in the first place also means not gaining- also known as losing- the $850 billion they weren't sending out of the country.
That's not impossible to be the 'right play,' but it's making some serious assumptions.
If you don't make new assumptions though- then as long as the ratios and relationship hold true, the bigger the cost, then by consequence the greater the net benefit.
If remittances stay at 15% and the remittance relationship is net positive 150 billion < 850 billion is not as good as 150 trillion < 850 trillion
It doesn't actually matter how big the outflow goes, because what matters isn't the absolute cost, but the relative relationship. You could argue the merits of tweaking the relationship- it'd be better if the remittances were a lower percent over time- but that already occurs. It's called generational turnover, which corresponds with both assimilation (migrants establishing roots) and generational turnover (people being more willing to send to still-living parents than dead ones, and less willing to send money to cousins than siblings).
that entire paragraph sounds to me like there is an assumption of infinite jobs up for the taking, something that is not true. The displaced 25 years old coder has to work in McDonalds now that they were replaced from their job by a HB-1 and thus a teenager than in other circumstances would have occupied that position spends the rest of his time playing videogames. How do you square that?
EDIT.-
checking your source one problem I see is that their source looks to be themselves and isn't available to peruse and the last bit of "is re-ingested into the local economy, or saved." what they fail to say is that the saved wealth goes with the migrant worker to his country of origin when he leaves, be it permanently or during vacations.
By questioning an economic model where the next-best job for a coder is a McD's, but then noting you just made the economic case for migration more compelling, not less, by increasing the relative net-gain for the economy by the implication of the relative value equivalence of the two jobs.
First, there do not need to be infinite job openings for Coder to just undercut the entire market of existing coders equivalent to himself by accepting paycuts. The fewer job openings the stronger this angle is, because there doesn't need to be a new job opening for Coder to displace some other Coder-employee in the work force. The reason Coder wouldn't do this (beyond skill issue) is that Coder's self-interest is that the paycut will still be preferable to the McD's job until the McD's job is preferable to a coder-with-paycut.
If you present a model where a coder's next-best-job is as a mcdonald's clerk, and not a as a coder-with-a-paycut, then you're presenting a model where the economic value of the coder and the mcdonald's clerk are both roughly equivalent. There are a lot of jobs that are IRL inbetween the value / income spectrum of software coder and McD's employee, and if the coder wasn't already taking them for his own self-interest, that would indicate they weren't options because they were over his/her value threshold. That implies the Coder's value of net-1 is closer to the value of Mc'D's job than Coder-with-paycut.
Just the setup of the premise requires that Coder > McDonald's Clerk > Coder-with-paycut. If that coder-with-a-paycut was 20% reduction and that was still worse, then that would mean C = 1 > McD > 0.8, meaning McD is somewhere between 1 and 0.8 net value. Coder wouldn't take the McD job over the Coder-with-cut transition otherwise.
But that means the McD net value is greater than net 0.8. For the economy to get a net less from this transition when Migrant-Remittancer comes in, the net-value of the migrant-remittancer would need to be 0.2 or less. If Migrant was 'just' 0.7, that would mean the two of them together are 1.5, which is great net gain of 50% over Coder pre-migrant. If Migrant was 'just' 0.3, it'd still be a net gain. For this to be actively negative- when the next-best job is McD's paycheck level- you have to start having some really weird or extreme issues... and if those are true but Coder's former employer still prefers the migrant to them, that implies bad things about Coder's actual and absolute value.
In the real world, if someone's next-best job from a technical specialist position is entry-level menial labor like McD's, that starts to imply that Coder was incompetent and over-paid, and possibly only employed as a coder in the first place as a result of some form of corruption.
It doesn't actually matter what the exact numbers are for the relationship to be valid. You're confusing a demonstration that was explicitly simplified with a foundational claim.
The 15% remittance rate was used as a baseline, not a dependent claim, to demonstrate that a modest multiplier effect (1.2 for a 15% remittance rate, when multipliers can range far higher) would address the argument of net value leaving the economy from allowing migrants in the first place. If you change that remittance rate up or down X%, then all that means is that the multiplier rate requirement for that relationship to stay valid would go up and down. But the argument doesn't rest on a claim of what the multiplier actually is, and so contesting the remittance rate (which could just as well be lower- remittances are after essential expenses, which take %s of poorer people's income) doesn't contest the argument.
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This makes the opposite error in assuming that there is a fixed number of jobs.
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Speaking personally, I don't have a view on "fiscal multipliers from local consumer spending". I'm not confident I could even define what that is.
What general group of people is in charge of measuring "fiscal multipliers on local consumer spending"?
What level of credibility do you personally assign to their measurements?
What legible consequences do you observe accruing to this group of people when they get this sort of question wrong?
If it turns out that their estimates are wrong, what follows?
We've had lots and lots of immigration over the last few decades. Can you point to the effect of "fiscal multipliers from local consumer spending" in the historical economic data?
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Thanks. That does indeed shift my opinion a bit, though I am still not convinced that immigration (and especially our current H1B program) is overall a net good. The discourse from the pro-immigration side on Twitter (and your analysis, if I am reading you correctly) is that more immigrants = more people working = more net GDP, thus a net gain to everyone. But what if individually it results in a loss on average (e.g., the average native-born American goes from a net-1 job to a net 0.8 job? "An-even-better net-1.1 job enabled by the migrant (now net 1.6)" seems very optimistic.)
I am not a nativist, not entirely persuaded by pure culture war arguments, and like most folks who grew up in the "colorblindness is good" and "America is a melting pot" beforetimes, I really want to believe that infinity immigrants (or infinity minus the fig leaf we use to supposedly filter out those who will be a pure drag on the economy) will benefit us overall. But I have to admit, I am coming around to the anti-immigrationist position. You seem to be saying that the arguments Elon and Vivik are getting ratioed for on Twitter are actually correct?
Then we're shifting the goalposts of whether the standard of success is harm to the economy, or the average current worker. Rather than a criticism, though, I am very sympathetic for that concern! The neoliberal consensus cracked because the advocates argued there would be no losers, and then stood by as regions were devastated because the multiplicative effect worked in reverse as industrial areas de-industrialized and saw money leave. Nations have a responsibility, or at least a compelling electoral interest, to the losers of economic disruption. We are in the midst of an ongoing political realignment of American class-politics, and new alliances are being made / tested that couldn't have credibly tried before.
But that's a social/political argument, not an economic argument, even though it was initially provided in the form of an economic argument. This is part of why the 'nativist' arguments against migration also get discredited- because they try and seize various mottes ('immigration is bad for the economy') which is relatively easily cracked. (Another one is 'migrants don't pay taxes'- the amount of tax-capture of even undocumented migrants is quite high, because many of the methods of undocumented migrant hiring don't involve evading things like payroll taxes or sales taxes and so on.)
The harder argument is whether migration lowers average jobs. This is also a much older argument in which the American cultural acceptance of capitalistic costs / lower social cohesion / constant churn that leads to a general view on how wealth is generated to make those net-1 jobs in the first place. Net-1 jobs are a result, not the start, of a system process, and that system is constantly raising and lowering the net-benefit of jobs based on market demands. Regulations to protect established interests- like people who want to avoid competition- are the same as regulations that raise costs for consumers who could benefit from not only primary actor savings (the consumer charged more due to input costs), but secondary market benefits (the consumer who is charged less, can now spend more on other people's other things).
Like, say that formally net-1 job is now a net 0.8 job. So what, if that transition (lower employment costs) can translate into second order benefits beyond those two participants (say by raising 20 other jobs by net +0.01). Then we're quibling over division of spoils, not net loss. Which goes back to being a social/political rather than economic argument.
But this argument gets very convoluted, hard to explain in clear terms, harder to prove, and politically difficult at best compared to simpler and stronger (even if wrong) memes.
I am... neutral on the position of a platform I make a point to avoid? I'm not familiar with their specific arguments, and I don't consider myself enough of an expert in the relevant policy fields to have a strong option. I certainly wouldn't be surprised if politically contentious people were being ratioed for politically contentious views, especially if other actors (including those with bot nets) had an incentive to maximize the impression of opposition. I wouldn't be surprised if they got ratioed regardlless of correctness.
I will say that arguments that appeal to per-unit quality over volume are quite often wrong, and more so when there's a self-serving interest on the part of the person making them (which is almost always true if they can't compete with volume). From a system / population performance level, 'better' is often less important than 'good enough', and as long as you have 'good enough' then more is generally better. This applies in system engineering (not over-engineering to raise costs), manpower (you don't need the best person in the world, only the best person who is good enough and available), ethics (demands of moral perfection obstructing imperfect improvements), information (overly complicated long-form arguments are less compelling than floods of simple-but-generally-sound constructs), and so on. This was long a regular refrain for why Chinese manufacturing wasn't a long-term industrial threat- because China wouldn't be able to compete on quality. Well, China has quality-enough that a lot of quality and more expensive producers went out of the business or went out of the country.
Part of the issue with the visa issue is that economic benefit is a necessary component of the advocates of either direction not coming off as selfish, as their position of advocacy probably really does benefit them. Someone is urging more a more distorted form of the 'ideal' market. This is where general market theory would go into consumer surplus / savings concepts, where artificially higher restrictions- such as maintaining a cartel dynamic- creates market inefficiencies that rob the consumers of market efficiencies.
And this creates the issue that employees resisting HB1 visas are not consumers in this model- they are producers, and their employers are their customers, and the HB1 visa market debate is a debate of how many producers/suppliers of labor should be allowed in the market. As a supply principle, ease of entry into a market increases supply, thus lowering costs and increasing quantity provided. Which is why labor unions exist- as a measure to restrain supply.
Historically the American labor movements have lost that fight, or at best had only conditional support. I have no strong feeling how it will turn this time, in part because (a) I don't think it matters on economic truth, and (b) I think some of the controversy is just an extension of politics.
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I don't think it does! Think about it this way - say I make a dollar, and then send it to India. Either that dollar makes its way back to the US, or it doesn't. If it does make its way back to the US, then that's as good as the guy who earned it spending it. And if the dollar doesn't come back to the US, from the perspective of the 'real economy' I created value for others and asked for nothing in return, which is even better! (This is the reduction in the price level)
More like burning it.
No? With respect to the health of the economy, it's consumption whether the guy buys a $100 thingy and enjoys it himself, or pays $100 to have some thingy shipped to India. There might be other concerns not directly about the economy but OP was talking specifically about economy
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What, exactly, is the harm? The benefit is, as I said, a reduction in the price level.
Note that remittances are 0.7% of GDP and so any effect (good or bad) is probably indistinguishable from zero.
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