Despite today’s polarized political atmosphere, it is possible to construct an ambitious and highly promising agenda of pro-growth policy reform that can command support across the ideological spectrum. Such an agenda would focus on policies whose primary effect is to inflate the incomes and wealth of the rich, the powerful, and the well-established by shielding them from market competition. A convenient label for these policies is “regressive regulation”—regulatory barriers to entry and competition that work to redistribute income and wealth up the socioeconomic scale. This paper identifies four major examples of regressive regulation: excessive monopoly privileges granted under copyright and patent law; restrictions on high-skilled immigration; protection of incumbent service providers under occupational licensing; and artificial scarcity created by land-use regulation.
The subtitle is “Low-hanging fruit guarded by dragons,” by which he means that “the interest groups that benefit from the status quo are politically powerful, well organized, and highly motivated.” For me, it is clear that concentrated political power can explain why three of the four regressive regulations persist. The book publishers and incumbents in the entertainment industry want infinite copyright protection, and patent lawyers want powerful patent laws. Hair braiders and interior decorators want occupational licensing. Owners of developed property want land-use regulation.
The one I don’t quite get is high-skill immigration. Employers want it, and the high-skilled workers who might be threatened by it do not have a formidable lobbying organization.
I do not follow the issue closely, and I could be wrong about this, but I believe that Democrats do not want any legislation passed on immigration that is not comprehensive, and the Republican base does not want comprehensive immigration legislation that includes a path to citizenship for illegal immigrants. The high-skilled immigration question is caught in the middle.
That’s a really good point that I hadn’t thought of before.
Do you think that increasing high-skilled immigration levels is an issue that would plausibly gain the support of both parties?
My initial reaction is that Republicans would object on a general anti-immigration basis.
Why would two parties in a two party system want anything that benefits them equally?
Perhaps the H1B system isnt as restrictive as it appears. Loop holes always exist, and as you say, employers are more well connected. After all, there are only so many skilled workers in the world at any point in time, and the visa program could have the effect of a defacto indentured servitude system. Just speculating.
What are the numbers? Number of developers (for instance) in the US, in India, in the world? I dont know, but the data matters in order to form a meaningful belief.
Is the first order effect of the marginal H1B is to replace a worker at a lower wage, or to boost GDP? I dont know but it seems to matter if one wants to tell a rent seeking story where workers arent the rent seekers. My thinking could be wrong, but as of now that makes sense to me.
What is your reaction, if any, to stories of employers (i.e. Disney) replacing domestic tech workers with H1Bs, and sometimes requiring them to train their replacements? Admittedly they are anecdotes, and will always be biased in one direction, but does that in any way affect your priors about high skilled immigration and growth?
I am a computer programmer and in the majority of cases the on-site teams that I have worked on are majority foreign. It’s common for at least seventy percent of the team to be foreign born, especially if management and non-technical roles are excluded.
I see this like math in academia. The two blades to the scissors are that foreigners can do it while domestics can do other things. Add to that the relative costs of paying the two.
The H1B system is certainly at least somewhat restrictive, in that the number of applications received exceeds the cap, at least in some years (such as the early 2000s or 2015; there were some years after the financial crisis when the quota was not reached). If there is something businesspeople hate more than restrictive policy, it’s unpredictable restrictive policy, and H1B is just that. A number of companies I am familiar with now have new hires stranded overseas.
Here’s a thought, though: H1B caps benefit larger employers at the expense of smaller ones. When a small company fails to get an employee into the country because of visa issues, they don’t get that employee. When a large company finds itself in the same position, they station the employee in an overseas office for a few months or a year, then try their hand at the H1B lottery again. This situation plays to a range of strengths of the larger companies: their deeper pockets, international reach, even relative organizational inertia.
“The one I don’t quite get is high-skill immigration. Employers want it, and the high-skilled workers who might be threatened by it do not have a formidable lobbying organization.”
Per-capita immigration was at its lowest in the 1960s and 1970s, people whose formative years are in that period are the voters of today and find it weird to think of America as an immigrant nation. Unlike sugar tariffs, the gains aren’t concentrated enough to overpower the small desires of millions.
This doesn’t seem particularly likely as an explanation. Stocks of immigrants and immediate offspring would still be very high for most of the 60s and 70s.
Highest skilled immigration also falls under licensing and our most powerful unions, the ABA and AMA, are both highly organized and in distributed control of employment.
Let us now praise:
Mancur Olson
As to “comprehensive” legislation re: Immigration
Lamar Alexander put it succinctly: “We don’t do comprehensive very well.”
Equally seriously: Why do we not hear and read of “what” **specifically** is wrong, or has “gone” wrong with our present statutes on immigration?
Take apart our existing codes, analytically, and identify what “needs” they do not serve, what protections they do not provide, what remedies are not available.
Let us look more closely at what we have before we add more layers in an attempt to achieve what existing words now in force MAY have failed to achieve.
Is it the “Law;” or is it what, in fact, we do with and under it?
The problem is they aren’t enforced because they are unrealistic.
The,establishment is holding commom,sense hostage in exchange for their desire for more unrealistic and selectively enforced laws.
Watch for more,of the,same from bipartisan groups nicknamed the gang of X.
Look for a more rational plan to come from someone like Paul or Ryan,who have some incentive to appear realistic and pragmatic.
“Such an agenda would focus on policies whose primary effect is to inflate the incomes and wealth of the rich, the powerful, and the well-established by shielding them from market competition.”
But for progressives and I imagine many Americans, the hope is to extend such regulations to EVERYONE so that all Americans can enjoy being wealthy. You’d have to already be convinced by right-leaning economics to think de-regulation would raise living standards for the poor instead of just taking the rich down a notch.
You’d think a great example of low-hanging fruit libertarians and progressives can agree on is IP reform. But even here, the left is revolting against the IP revolters, because they sense not incorrectly that Silicon Valley is in love with “disruption” and hostile to copyright. And for the sophisticated left, nothing embodies capitalism worse than SV. More on this: https://nplusonemag.com/issue-20/the-intellectual-situation/the-free-and-the-antifree/
Yeah, progressives see most of these as protections, not burdens. They are just like the prohibitionists who turned a blind eye to its problems because it so obviously was good for their inferiors.
Look at the Left turning on Uber for their knee jerk pro regulation stance.
You want a certain amount of regulation to force people to internalize dangerous externalities. Consider, for example, the Triangle Shirtwaist Fire problem. Regulations like “businesses must not nail shut the fire-escape doors even though that saves the expense of guarding them to prevent pilferage” are desirable because there is no post-disaster remedy which can deter the pre-disaster short-term-profitable behavior that creates the dangerous externality (it’s no good saying the heirs of dead seamstresses can sue– after the factory goes up in smoke there is no money to pay out in compensation. Besides, that won’t bring fire victims back to life. (“Requiring factory-owners to buy insurance” is a regulation in itself, not a magic formula which averts the need for regulation.)
However, as soon as you allow any regulation, however wise, rent-seekers pile on with much more regulation that benefits only themselves (though their propaganda will claim otherwise).
The question then becomes distinguishing good from bad and limiting the proliferation of bad regulations.
Excessive copyright and patent rules, land-use restrictions, and occupational licensing are clear examples of bad regulation driven by rent-seeking.
But immigration restrictions are good regulation because immigrants impose stiff externalities on citizens which their would-be employers have no intention of mitigating.
So-called “high skilled” immigration really is hung up on politics. The American Establishment wants low-skilled immigration with prompt citizenship to provide an insurmountable electoral base for its program of perpetual oligarchy and cronyism. The Beltway crowd observe politics in countries like Mexico and see exactly what they want in the USA: a mass of impoverished peasants supporting a small plutocratic elite, voting ritualistically (since all the candidates are tools of the elite) every few years for redistribution which never comes because the very notion is a carrot on a stick, forever out of reach. The goal of the elite is to have so many peasant clients in the country that middle-class citizens can neither win elections nor recover control by revolution (the 20th Century experience in LDC’s having shown that an IQ of 75 is sufficient to pull the trigger on an AK-47 and plenty of intelligence to absorb cultural-Marxist propaganda).
Ordinary Americans wisely oppose the plan to destroy their country by mass immigration. They recognize that schemes touted as “high skilled” immigration is just the camel’s nose under the tent. Existing “high skilled” visas like H1-B are nearly all given to not-very-highly-skilled immigrants (in violation of the authorizing law). It is clear that the Establishment uses the expansion of any immigration category to bring in more peasants. Since the Democrat party is dedicated to mass immigration, ordinary Americans are driven to act via the Republican party even though it is their enemy on many other fronts. So long as ordinary citizens cannot restrain the perfidy of politicians like Obama (who has been importing peasants as fast as he can and feeding them at the expense of middle-class taxpayers) they rationally oppose all immigration expansion schemes, however labeled.
Progressives treat deregulation as one of two things: obviously evil, or a trap whose evil just hasn’t been uncovered yet.
It is in the interest of a few employers, but most would just as well offshore for even greater profits.
So basically he’s saying “Let’s focus on trying to change the policies which public choice tells us are least likely to be changeable”? Brilliant. It’s not like we have half a century of Nobel Prize winning economics which describes why policies that benefit concentrated interests at the expense of diverse ones tend to be selected for by the democratic process.
If the book specifically addresses the reasons why these policies exist, from a public choice literate perspective, and describes what new special interest, macro political trend, or technology has eroded their base of power, then awesome. Otherwise, it sounds like Brink has dreamily drifted into the faerie world where inefficient redistribution from the many to the few can be overcome by forming a hearty coalition. With pamphlets and buttons and sound economic arguments, if we just try hard enough and speak clearly then good will triumph!
Folk economics are very intuitive and compelling; and the air at a think tank in DC is surely not conducive to kicking that particular habit, so I can understand why people pen these dream-world missives. But I don’t see much reason to waste our time analyzing them for real-world content.