Tuesday, March 6, 2007

Would you like to have a choice on immigration?

Europe made a deal with the devil, and the U.S. refuses to learn from it. Much of what I’m about to write applies equally to our much loved neighbors to the north, but not all.

I continue to be amazed that folks talk about immigration and additions to socialized programs (such as the renewed charge for 'universal' health care) without discussing the fact that these policy issues are joined at the hip.

Socialized programs depend upon a growing worker base for financial solvency. Since we westerners have a choice, and choose not to breed all that much (the US is barely sustaining replacement rate, thanks to minority populations which exceed the anglo rate of 1.67 by enough to bring our rate to 2.1 or so), our social programs are as unsustainable as Europe's have proven to be, and we will be forced to do what Europe does – throw in the towel on defense spending, and open the borders for anyone.

I am not anti-immigration and would in fact prefer a “controlled” open border policy, with incentives for legal immigration and an appearance of deterrence for immigration of criminals (appearance, regrettably, is all that can be reliably done). I would remove any restrictions on educated, English speaking immigrants immediately to brain drain the rest of the world to here, but not being master of time and space as yet, I will have to wait on that one. The fact that politicians and others continue to discuss the two issues - govt programs and immigration policy - as if they were separate issues makes me wonder if they think we are stupid or they are disingenuous (of course, both may be true). Also true, we are not as informed as we should be or we would demand better leadership.

If sustainability is an issue – for example, water availability in the west – one has to be concerned about population growth. Also, if you are one who believes the four assertions about global warming (it is happening, caused by humans, will cause injury to humans, and is reversible by human behavior without causing greater harm than good), you should be concerned about population growth. If the US would like to have the choice not to have a growing population, we cannot continue to have socialized programs which function by taking a little of the life energy from a lot of workers to pay for the ‘benefits’ of all (while I admire the originally stated intent of social programs, I think there’s ample evidence that outputs of socialized programs are a thing done TO people not FOR people, but that’s another discussion). “Socialized math” only works with a growing population base, because government transfers are zero sum transactions. Health care and social security in particular are largely consumed by the elderly – 25% or so of all health care costs are consumed in the last year of life, “end of life care.” ‘Wealth transfer programs’ (‘life energy’ transfer programs) only work when the young outnumber the old by a wide margin, otherwise, there’s no hiding the fact that these programs are in fact politicians bribing the public by taking money from those who are productive, and passing that money/wealth/life energy to the unproductive, so the unproductive can sustain life without being productive (in some cases, maybe most cases, despite not having taken the effort to store up wealth for later years, and/or without having to depend upon the productive members of their own families, which was the only similar option in pre-industrial days).

Socialized programs amount to a politician saying you can have something for nothing, and we had no reason not to believe them in 40s, but we would know better now - if we were paying attention. Since we have not been paying attention, we're at the point that by 2040, we will be able to pay for our promised social benefits and payments on our national debt; and nothing else.

Three considerations, totally apart from the immigration/socialization discussion – if you pay more to people to be unproductive, you get more unproductive people. Two, the implication of a smaller and smaller population of the productive, most of whom are young, being forced by the government to pay more and more of their life energy for the unproductive, most of whom are old (as is seen now in Europe), is that the whole process will begin to appear to be a fight between the young and the old for resources (it will seem that way because it is that way). One might think that would cause more than a little generational friction. If you look, you can see the impact of that struggle in European (particularly continental) culture today, and it is starting to get ugly. Third, I don’t assert, nor could I prove, that proposals for sustaining or increasing socialistic programs are a means by which some would like to wreck the US’s incontestable military dominance, but socialization programs are a proven strategy to economically handcuff a nation such that it cannot afford to defend itself. Examples abound.

Please note that I do not intentionally disparage all of the unproductive as blameful for their condition, or lesser humans for their lack of productivity – clearly, the world is not fair and produces many humans who can not be productive due to accidents of birth or life. The term unproductive is intended as descriptive and factual but not pejorative term.

It appears there is a fundamental gap of understanding which drives the willingness of some to put their trust in a government solutions to economic problems. The best I can tell, that gap is the mis-understanding of where wealth comes from. Governments do not create wealth, but at their best, they are essential for creation/defense of conditions under which men/woman may create wealth through busy-ness (business?). Men/women create wealth by investment in capital goods, which may be combined with innovation (or result from innovation) to produce an output of greater value than the sum of the inputs to the process. Value creation can be as simple as making/selling pencils from graphite, wood, pot metal and rubber, or as complex as the post 9/11 US economy growing by an amount larger than the entire value of the (2006) economy of China.

One example – social security is supposed to take money from many, hold the money in a trust, and then redistribute the money to the original “contributor” (slave?). In the time that the money is not available for use by the one who produced it, the money does not ‘work,’ it is not invested. By contrast, the same person who might invest only half of what social security requires (15%, ask a small business owner), would have the option of using the money to invest in the purchase of capital, such that the money is utilized to create wealth/value where none exists. 7% of the free man’s income would nearly always produce more wealth for him as a retiree than the government's 15%, and in the mean time would contribute to overall economic growth. The investor keeps his/her own money, plus a ‘return on investment,’ AND whomever utilized the money in the investment process also created a product of greater value to a customer than the sum of the inputs to create the product, not to mention jobs.

Even when the ‘insurance’ idea is referenced (“social security is just an insurance policy”), the government approach is demonstrably poor. The insurance premium you pay for real insurance coverage is immediately ‘invested’ by the insurance company – providing a means to increase wealth for the insurance company owners/investors – and thus when the premium is paid back out as a claim, it has in the mean time created wealth, contributing to the growth of the overall economy. In other words, the insurance company makes its money off of the 'float' - the use of premiums in between collection and payout. If the government were to provide the amount of coverage, they would have to charge much higher premiums because government cannot invest, cannot put capital to work to create value/wealth. Government ‘insurance’ programs are zero sum, at best. Real insurance programs are an incredible economic boon.

Failing to understand what creates wealth, many won’t understand why government wealth transfer programs do not contribute to wealth and in many ways stifle additional wealth creation.

Failing to understand the source of our wealth, like the fabled farmer, we will kill the golden goose thinking to get what is inside.

I fear it is not an accident that public schools and universities don’t require fundamental economic literacy.

How does this tie into today’s title? By the fact that Europe has no choice but to continue to import labor, much of which must come from Muslim nations such as Somalia, because these are the nations which produce unskilled labor (for example, Somali birthrate exceeds 6/female). Even if they decided they’d like to reduce immigration to a rate such that immigrants would be more likely to assimilate into European culture, these nations don’t have that choice. Mark Steyn’s articles and books are pointing this out, and what the implications are, but I can’t tell that anyone’s listening. No one on the main political stage is.

Should the US continue to ride economic illiteracy, the fallacy of which has been demonstrated for our edification by observable experiments in socialism, we will follow Europe into financial helplessness. The helplessly fertile will inherit the earth.