Immigration and Inequality

Last week, Matt explained why liberals who worry about inequality don't worry about reducing illegal immigration:

What most liberals think is that we should resist efforts to frame the economic problems of working class Americans as solely a matter of zero-sum competition with Mexican peasants, as opposed to something that could be more productively dealt with through measures that might compromise the interests of the global elite.

Of course, one might argue that reducing illegal immigration is something that would “compromise the interests of the global elite” – which is one reason (among many others, some of them quite high-minded) why so many members of that elite are on the “left” on immigration. A slightly better way of putting what Matt is driving at, I think, is this: Large-scale immigration from Mexico to the United States is a form of de facto humanitarianism, and since Americans are generally leery of humanitarian spending (primarily because we overestimate the size of our existing foreign aid budget), liberal humanitarians have a vested interest in preserving the existing immigration system. It’s a rare issue where business interests line up on the side of raising the living standards of Third World peasants, and why mess with a good thing? Better, as Matt suggests, to go after the global elite in other arenas – like tax policy, say – where the business class’s preferred policies don’t have humanitarian externalities.

To which one might respond that there’s something slightly perverse about pursuing humanitarian ends through policies that lower the incomes of your poorest citizens and raise the incomes of your richest citizens. If I proposed a new AIDS-in-Africa initiative and advocated funding it through a regressive tax that included a tax credit for families making over $75,000, I doubt that many liberals would line up behind the proposal.

I would add that I’m by no means opposed to other measures that “compromise the interests of the global elite” to help out the American poor and working class. But the measures I would support – which range from wage subsidies to scrapping the payroll tax and replacing it with a VAT that hits the rich hardest – tend to involve using the government as a middleman, raising wages by redistributing income. I’m increasingly persuaded that this may be a necessary evil, but it’s far from ideal, and where when there’s an opportunity to raise wages without bringing the tax code into it, I think we should take it - particularly when it involves what's supposed to be a pretty basic function of government.