A Question for Paul Krugman


Source: Wikipedia

Paul Krugman has a dash of cold waterfor those who think that trade liberalization is a path out of our current growth slump:

First, there’s an especially strong tendency to mythologize the power of free trade. Not that open world markets are a bad thing; they’re definitely a force for good, especially for small, poor countries. But my experience is that the less somebody knows about international trade, the more likely he or she is to imagine that modest moves toward or away from protectionism will have huge effects. Trade economists, who have actually worked with the models, have a much less grandiose view.

Second, even to the extent that trade liberalization would raise the efficiency of the world economy, it is not, repeat not, a route to overall job creation. Yes, everyone would export more; they would also import more. There is no reason at all to assume that the jobs gained from export creation would exceed the jobs lost to import competition.

Globalization is not the answer to the Lesser Depression.

I don’t disagree with this, and I think it’s important for people to understand. I am a strong advocate of free trade, but trade is already very free, and while freer trade would be a good thing there just isn’t that much left to gain. And like Paul says, while trade liberalization would increase global efficiency and would be good for poorer countries it wouldn’t create many jobs. My question for Paul is this: does he think this is also true of migration liberalization?

I know that Krugman has written slightly pessimistically about immigration in the past, but all of his caveats appear to apply to low-skilled immigration. In this 2006 post, for instance, he lists a bunch of reasons he worries about immigration, including the impact on low-skilled natives and the fiscal burden. But then he acknowledges that his complaints don’t apply to high-skilled immigrants:

There is, by the way, a possible out from this argument in the case of high-skill immigrants. You could argue that, say, South Asian engineers who move to Silicon Valley add to the dynamism of the region, generating benefits much larger than their wages. (Economists know that I’m talking about “positive externalities.”) But that’s not an argument you can easily make about Mexican migrants who haven’t completed high school.

In a 2010 post he writes about the tension between immigration and the social safety net, but again this does not apply to high skilled immigrants who make a stronger social safety net more affordable. Krugman agrees with this elsewhere when he tells a reader:

I’ll post some material soon on the long-term fiscal consequences of immigration. The best work seems to show that high-skill immigrants help the long run problem, but low-skill immigrants make the situation worse.

And here in another reader question response:

The picture is much different for high-skill immigrants. By any criterion I can think of, the large numbers of South Asians — mostly engineers and other high-skill professions — buying houses in West Windsor, N.J., just down the road from me, are a net plus for America.

Not only do high-skilled immigrants provide a net fiscal plus, but as Krugman says they buy houses, and the economic benefits of this for natives are higher when we are in a recession. Globalization of capital may not be the solution to the Lesser Depression, but what about globalization of skilled labor? Has he elaborated more on the case for high-skilled immigration recently and I have simply missed it?

I and many others have argued throughout this economic slump that high-skilled immigration represents an important opportunity that help us achieve a variety of goals, from fighting the housing slump to decreasing inequality. Krugman is one of the most influential economists of our time, but it looks to me like he has been largely quiet on this issue. Does he disagree about the potential benefits? If not then why isn’t he writing about this all of the time?

A Question for Paul Krugman
Adam Ozimek
Mon, 10 Dec 2012 01:43:49 GMT


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