Tahmooressi and the Border Issue

The latest battle between political parties and their followers and pundits is the issue of Borders, Securing those borders, Immigration and Amnesty. It has in the past few months become the most visible topic by candidates, commentators and political junkies alike. The story of ex-US Marine Sgt. Andrew Tahmooressi has reignited this issue and has left myself with more than enough questions to the idea of borders and the sincerity of either political party and their adherents to the motives of their stances. The idea of borders, definable lines arbitrarily drawn on maps and fought over, has consumed the airwaves.

As always, the issue is made to be seen as only two options. Pro Immigration and Anti Immigration or Pro-Amnesty and Anti-Amnesty. The first option is to allow amnesty to persons already in the country "illegally" and the second is to continue deportation and criminal charges against those living in the United States borders without having gone through the immigration process, the "legal" way as they call it. The line these two beliefs draws is apparent and approachable by yet other paths. The history of immigration into the United States is riddled with laws, regulation, restrictions, hate, fear, death and hypocrisy. Beginning the Idea of America on the act of Immigration, Genocide and Conquest doesn't lend well to the history of immigration into this country and the resulting years and decades since the first Illegal Alien stepped foot on American soil. If we were to respect borders of any countries our military armaments would rust and its soldiers be taken back to private employment. If one reduces this issue down to its base it is a belief that one person may have say over the movement of another, this is to say that one person holds rule over another, or that any government have the right to restrict travel in any way.

We have seen wars fought over land, deaths in foreign countries in the name of this land and a new breed of bigots and hypocrites arise from the simple act of movement and travel around the globe. The mainstream accepted idea on immigration is to subject other human beings to tests and health restrictions, to perform up to certain levels, to curtail freedom and to allow themselves to be robbed of wealth in the process. Every year hundreds of people die in an effort to reach "The Most Free and Most Prosperous Country in the World". They die in their attempt to reach a land that promises freedom and prosperity, they die for a lack of freedom to enjoy a better life, they die for a lack of freedom to move about the earth unhindered and uninhibited. The act of Legalized Immigration is an act of barbarity and exclusivity.


To say you believe in the closing of borders, demarcations of land used in exclusion by one government entity, You have not only barred any entering of outside persons but have also confined oneself to the same rule. You have created your own prison.

The economic theory behind the want of closed borders is this. As more and more immigrants come into this country they will, without fail, turn and send these American dollars outside of our borders. In a proper understanding of Economics this isn't seen as a negative as any country that bars it's currency from foreign circulation fails to have that currency to buy products from the foreign markets. If this theory were to hold water, countries would have difficulty acquiring goods from foreign markets for lack of foreign funds. Now one might say to convert these currencies would be the answer and to reduce trade to currency exchanges and money manipulation. There is also the prohibition of allowing workers into trades within a country. Lower skilled workers who enter into a foreign marker make much lower wages, while this is seen on its surface as a negative, is actually a positive. Lower wages equal out to lower costs and in effect lead to lower prices. "Let's look at the problem of immigration from another angle. There exists a market demand for low-skilled cheap labor. Part of this demand is being met by outsourcing of jobs overseas. The rest is met by vast numbers of immigrants coming to this country. Illegal immigration is the market supplying a demand. A demand is being met and satisfied. When viewed this way, how is this a problem? This triumph of the market is not in itself a problem." says Wade A. Mitchell

Now to the Hypocrisy Part.

Ex-US Marine Sgt. Andrew Tahmooressi sits in a jail cell in Mexico for this very act, and the hypocrites on every side of the political aisle are in fervor for his release and an escape from the very laws they seek to impose on their own borders. The Marine, who had been visiting friends had supposedly come upon a border crossing station and checkpoint run by the Mexican Federal Government. Tahmooressi alledges to have informed the guards that he had registered weapons in the vehicle and had just made a wrong turn. Enforcing their own laws the border agents arrested Tahmooressi and the ensuing battle over his release has brought a new wave of nationalistic border builders and wall wishers. Whether Tahmooressi had or had not meant to cross into Mexico and whether or not he informed them of his weaponry, the Mexican Border Agents did the job of upholding their national law. This law may not be agreeable to me but it is to those that wish to "secure" the US's borders in the same fashion. It is hypocritical to say that a man from America should be released from custody yet scream and push for the same actions from your own border agents and administration.  This is the real gap in reasoning I see in the issue.

The gap in this is the face of the issue, subjective value and nationalism. Nationalism, to believe that the nation of your residence is befitting a higher status and therefore more rule over any other. The Subjective Value to reduce a mans worth and the worth of all others to the geographical location of their birth. The happenstance of birth in any place of the world  does not predispose one to a higher place in the world or a higher rule over others. It should not be seen as a benefit or hindrance where one is placed on the earth and it should not be restricted or inhibited in any way to any place he wishes to travel.

The issue of borders can best be seen from afar. Space. In the pictures of earth from above there are no borders, there is only earth, all of us together, all of us combined in this experience.

The War Boom Fallacy

There is a persistent fallacy that is used by people in terms of economic thought and practice. The War Boom Fallacy is The Broken Window Fallacy used to try and explain War Time economics. Under the theory war brings jobs, production and wealth to workers and producers. At its base is the assumption that ALL things produced in War or for War are needed. War being described as the engine for new prosperity and returned wealth gains not only for the individual workers but also for the State through higher tax rates. Economists have long warned that war is not a driving force behind the building of capital but the greatest destroyers of capital. This fallacy has been used for decades following the great depression and the ending of World War 2 and again when used to explain lower unemployment numbers during the Bush years in office. 

This piece by Jeffrey Tucker in 2004 puts into detail the War Boom Fallacy.

"FEE.org caught this revealing piece from the Washington Post: “Across America, War means Jobs”

 In this corner of a critical presidential-election battleground state, the economy is surging with the urgency of a boom. But it wasn’t President Bush’s tax cuts, Federal Reserve interest rate policies or even a general economic turnaround that did the trick. It was war.
In the first three months of this year, defense work accounted for nearly 16 percent of the nation’s economic growth, according to the Commerce Department. Military spending leaped 15.1 percent to an annualized rate of $537.4 billion, up from $463.3 billion in the comparable period of 2003, when Bush declared major combat operations in Iraq over. …
It is impossible to know how many of the 708,000 jobs created in the past three months are defense-related, since the Labor Department does not track defense contractor employment. But anecdotal evidence suggests the contribution is significant….
In inflation-adjusted terms, the war’s cost will surpass the United States’ $199 billion share of World War I sometime next year. Coming on top of three major tax cuts, that spending will drive the federal budget deficit to more than $400 billion this year. That borrowing will eventually have to be repaid in higher taxes or reduced government services and benefits.
Economists have long argued that war is an inefficient use of government revenue. A dollar spent on a highway not only employs workers but also creates a lasting, broadly shared benefit for the economy. A dollar spent on military equipment is soon lost to enemy attack or the rapid wear of war. If it bought a bomb or bullet, it simply explodes.The families of thousands of National Guard members and reservists have been dealt severe financial blows by the extended deployments of breadwinners…."

The frenetic activity is repeated all over the country. New kilns in California bake ceramic body-armor plates. Apparel plants in Arkansas, Alabama, Florida and Puerto Rico struggle to keep up with uniform orders. Once-idle textile mills in South Carolina spin rugged camouflage fabric. Army depots operate 24/7 to repair and rebuild the wreckage of war in time to ship it back with the next troop deployment.

Many of the younger adults and children are being feed this fallacy and are accepting it without question, aided by Public and Private school curriculum and professed by Economists of the Keynesian School like Paul Krugman. Krugman uses this fallacy without delay in defense of war time spending and stimulus spending by government. He goes even so far as to joke (at least that is what I hope he was doing) that to aid in a recovery from the slump driven by the ever long Iraq and Afghanistan Wars, a housing market collapse and a tanking Wall Street,an Alien Invasion, even if false, would jump start the machines of war and the country and it's economy would be saved.

In Mid 2011 Krugman was a guest on CNN's  "Fareed Zakaria GPS"

"If we discovered that, you know, space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months," he said. "And then if we discovered, oops, we made a mistake, there aren't any aliens, we'd be better--"
"We need Orson Welles, is what you're saying," Rogoff cut in.
"There was a 'Twilight Zone' episode like this in which scientists fake an alien threat in order to achieve world peace," Krugman said. "Well, this time, we don't need it, we need it in order to get some fiscal stimulus."

 Krugman and the Keynesian School Economists who favor this fallacy fail to recognize the fact that as War Produced goods are built and destroyed products built outside of this false demand are what are wanted by consumers rather than required for war time measures. The theory is as if to say that to stimulate an economy citizens should burn their clothes once a year and replace them, this of course would lead to a rise in demand for clothes but at the expense of savings for other wants and needs, this false demand being used as an example would be fit if not for the thousands of other markets that would be wanting this policy in place to support a false demand for their products, we would see the annihilation of virtually every good in the name of economic steadiness and security. Carpenters not doing well, burn the houses and stores. Auto Industry sluggish, force people to crush their cars once every few years.So on and so on until every good becomes disposable by mandate and is done so to fabricate and support an economic lie.

The War Boom Fallacy or known better as the Broken Window Fallacy brought to us by Frederic Bastiat (The Law) and reaffirmed by Henry Hazlitt (Economics In One Lesson) is a leading factor in the US economy due to it's military budgets and affairs around the world. This act of destruction of goods to strengthen an economy is ridiculous in theory and practice yet is still the most taught fallacy to students through public education. I say to these students and teachers alike, burn your books, your clothes, your beds and backpacks, smash your computers, TVs, your cell phones, in the name of a fallacy you hold to be true, destroy your goods and wait for the stimulus and economic boom to kick you in the rear.

A great paper on the numbers and stats of the "General Discussion of Pre and Post WW2 economics" can be found here. Authored by David R. Henderson this working paper lays out the numbers of the myth and dispels false impulses with clear understanding.

Also look into the Great Myths of the Great Depression by Lawrence Reed, found here, these two essays can be the starting point to your own understanding of the Broken Window fallacy redressed as a War Boom Fallacy.

What You Weren't Told About The Minimum Wage by Skyler Lehto.

I came across this Video by Skyler Lehto on his YouTube channel. It raises what I believe to be the greatest argument against any artificial raise in minimum wages in the United States. Transcribed under this video is the complete text. 

Last year, President Obama proposed a hike in the federal minimum wage from $7.25 to $9.00 an hour. After the predictable failure of his proposal, Obama and his party have returned with the Harkin/Miller proposal to raise the minimum wage to $10.10 an hour. What I’m going to do in this video is make several points to confront the myths and address the reality behind the minimum wage. 

Point #1 

Elizabeth Warren’s assertion about a $22-an-hour productivity-adjusted minimum wage is highly misleading. 
First of all, the fact that the minimum wage has fallen behind in value does not mean that the jobs themselves have been held back just as much. In fact, over the past 34 years for which the BLS has maintained this data, the percentage of jobs paying at or below minimum wage has fallen precipitously. So the fact that the minimum wage is lower does not necessarily mean that most low-end workers are worse off for it. What’s more, the federal minimum wage law in 1960 did not apply to as many sectors of the economy as it does today, so Warren’s comparison is not entirely commensurable. Second, her suggestion overlooks a very crucial distinction between average productivity and marginal productivity. Not only did she cherry pick one of the highest estimates of productivity growth, but the statistic that Warren uses is based on an aggregate measure of productivity growth for the whole economy. However, we have to recognize that different jobs have changed in marginal productivity by vastly different amounts. Given the changes in technology and composition of the economy since 1960, some types of jobs have grown tremendously in productivity, whereas others have not grown nearly as much. Economists refer to this phenomenon as skill-biased technological change. As Christopher Wheeler notes in his 2005 St. Louis Fed study, increased wage dispersion since 1983 is significantly correlated with the increased relevance of college education and occupational computer use. Long story short, if we want more workers to earn $22 an hour, it requires getting more people the skills to actually take on these higher productivity jobs. 

Point #2 

The minimum wage is not a big stimulus to the economy. Many proponents of a higher minimum wage argue that giving workers more money to spend will set off a virtuous cycle leading to more jobs and more economic growth. Putting the transient nature of Keynesianism aside, the quantitative effect of a minimum wage increase on spending is actually quite trivial, because only a small portion of workers earn at or near the minimum wage, and much of their increased spending would come at the expense of others. As Obama's former chief economist Christina Romer writes, “the income increase from the higher minimum wage would be about $50 billion. Even assuming all of that higher income was redistributed from the wealthiest families, the difference in spending behavior is likely to translate into only an additional $10-20 billion in consumer purchases. That’s not much in a $15 trillion economy.” Now granted, that was in consideration of the $9.00 minimum wage proposal. But even if the minimum wage hike boosted total spending by as much as $40 billion, that would still amount to less than one quarter of one percent of GDP, which isn't much to get excited about.

Point #3

Australia’s minimum wage is not $16 an hour in US terms. People who make this claim are not doing the currency conversion properly. The exchange rate between two currencies in the foreign exchange market does not necessarily reflect what the currencies are valued at domestically. The nominal exchange rate is often skewed from the real exchange rate due to various factors, such as taxes on imports and exports, or international financial flows that favor one currency over another. Making an accurate price comparison between two countries requires taking account for something called purchasing power parity. Doing this, we discover that Australia’s minimum wage is actually $10.51 in US terms. While that is measurably higher than the US, it’s a far cry from the $16 an hour that many have suggested, and it doesn't come without its share of unintended consequences. Along these lines, people will also occasionally cite higher minimum wages in Canada. But applying the same process to Canada using Ontario’s minimum wage results in a figure of only $8.03 in US terms. 

Point #4

The minimum wage does little to reduce poverty. Supporters of a minimum wage hike usually take it as an article to faith that it will effectuate a reduction in poverty by raising incomes for the working poor. Yet the vast majority of empirical evidence suggests otherwise. Most studies, such as Neumark and Wascher in 1997, Vedder and Gallaway in 2001, Sabia and Burkhauser in 2010, and Sabia and Nielsen 2012 find that minimum wage hikes have no significant effect towards reducing poverty. This is because there are several factors either trivialize or negate the positive effects of a higher minimum wage. First of all, 80 percent of minimum wage earners are not in poverty. The mean household income for a minimum wage worker is around fifty-one thousand dollars a year, because most minimum wage workers are actually second and third earners in their household. Three out of five minimum wage workers end up getting a pay raise anyway within their first year. As it currently stands, the median age of a minimum wage worker is 24, and single parents working full time only constitute four percent of minimum wage workers. Ironically enough, raising the minimum wage is least likely to benefit the workers who actually are in poverty, because as their income rises, many see their government benefits sharply reduced. And of course, the minimum wage is going to have a hard time reaching the 65 percent of impoverished adults who are not employed. To make matters worse, raising the minimum wage comes with adverse side effects. Among these include higher food prices, and a decrease in employment opportunities, which brings me to my next point. 

Point #5 

The minimum wage worsens unemployment for the low-skilled. Now this point has been heavily researched and discussed amongst economists, especially with the new minimum wage research that has proliferated since the 1990s. Nearly two-thirds of new minimum wage research studies indicate a negative employment effect associated with the minimum wage. But a few studies have purported to find a zero or positive effect of the minimum wage on employment. One such study was done by David Card and Alan Krueger in 1994. More recently, another was done by Dube, Lester and Reich in 2010, and another by Allegretto, Dube, and Reich in 2011. These studies have numerous flaws, as David Neumark and William Wascher have pointed out. Most of the details are too extensive for this video, but I would like to indulge in the following. Suppose it were true that the minimum wage has zero effect on the quantity of labor employed by low-wage employers. In that case, it would still be likely to have deleterious effects on the employment prospects of the low-skilled because of something called “labor-labor substitution.” Hypothetically speaking, even if employers paid for the higher minimum wage entirely through prices, productivity, and reduced turnover, the positive supply effects of a higher wage would give the employer a larger labor pool to draw from. Consequently, they would be able to select more-skilled applicants at the expense of those who are less-skilled. And to add insult to injury, lower turnover means fewer job openings for those looking to get a foothold in the job market. Thus, a higher minimum wage would still make it more difficult for the low-skilled to find employment, even if the employer’s elasticity of labor demand were zero. So it should come as no surprise that when we segment the labor force by skill level, as economist Antony Davies and many others have done, we find that a higher minimum wage is correlated with higher unemployment for the lowest-skilled members of the work force. This is also why in their meta-study of new minimum wage research, Neumark and Wascher concluded that, “the studies that focused on the least-skilled groups provide relatively overwhelming evidence of stronger dis-employment effects for these groups.” All in all, three-quarters of economists recognize that   the minimum wage has negative effects on the employment of low-skilled workers. 

Point #6 

The minimum wage hurts the disadvantaged. Most advocates for a higher minimum wage are undoubtedly motivated to improve the well-being of the worst-off members of society. But good intentions are no excuse for bad results, and the minimum wage is just that for the lowest-skilled members of the workforce. Not only does the minimum wage make it more difficult for less-skilled prospective workers to find jobs, but evidence suggests that it also has a long-term negative effect. A 2004 study from Neumark and Nizalova found that exposure to a higher minimum wage during young adulthood is associated with lower earning several years later, and that the main reason for this is a deprivation of work experience during younger years. They also found that this effect was more pronounced for blacks than any other racial group. This is unsurprising, given how black teenage unemployment is exceedingly high, in great part due to the minimum wage. 

So there you have it. Average productivity is not the same as marginal productivity. $16 in Australia is not the same as $16 in the US. Being on the minimum wage is not the same as being in poverty. Raising the minimum wage is not the same as helping the disadvantaged. Good intentions are not the same as good results. And for those reasons, raising the minimum wage is not the same as a good idea.

Special Thanks to Skyler Lehto for permission to transcribe as well as my wife for transcribing this.