143 Comments
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Sam Penrose's avatar

You do not address the deflationary impact of technology adoption, which I suspect is a significant driver of current economic trends. I've been a programmer for 20 years at multiple stops, and my employers have generally hired me to increase efficiency by substituting software for labor. For example, in my current job we replace expensive kerosene with cheap solar lanterns in off-grid sub-Saharan Africa by providing software to financialize the capital tied up in the lantern. The result is that lighting services get cheaper. Before that, it was using batteries to displace fossil fuels. Before that, it was reducing the cost of making special effects in movies. The general theme is: tech companies pay me a high salary, consumers get similar goods and services at lower prices, and various forms of labor and fossil fuels (themselves extracted from the earth with great amounts of labor, durable goods, etc) are displaced.

Then there's the famous image of all the machines an iPhone replaces.

Daisy B Foote's avatar

When you talk about populists and how they would like to starve the labor market of immigrant labor — such a good point. I

am reading JOE BIDEN’S PROMISE ME DAD. The brain surgeon who operated on his son was originally from Syria and the oncologist was from Hong Kong.

Nico Brancolini's avatar

The successes around the vaccine really confirmed for me a lot of what Mariana Mazzucato has written about the systems of innovation approach to research and development and the role of governments in actively balancing the risk-reward nexus. Specifically it strikes me that the approach here -- investment in a "portfolio" of researchers allows for broader and riskier research; specific institutions to build opportunity space; clear guidance for commercialization markets and process-- were all effectively employed and seem adaptable to green energy space.

Caleb's avatar

It's hard for me to shake the feeling that the "innovative immigrant" narrative is rife with class prejudice at least, racism if one is feeling uncharitable. How can we say smart immigrants are needed for innovation without denying the presence of untapped domestic talent in ghettos and inner-city slums?

Matthew Yglesias's avatar

I mean if one person in one thousand is an innovator, then letting in 100,000 immigrants will lead to 100 more significant innovations. It’s nothing against native born people.

But also I think you can tell a story where the people inclined to move to a foreign country are more innovative than the average human being.

Caleb's avatar

Shouldn't such calculations consider unemployment rates? Also, can't we just as readily say that significant innovation (and mental fortitude) are required to survive environmental and economic hardship?

It's worth noting that my views on this issue have been colored by being homeless as a child, now working at a large tech company alongside many H-1B holders. In my observation, H-1B workers are hired because management thinks they'll work harder. I think management is correct, because the H-1B holders I know tend to be stressed out and exhausted. If losing my job meant I had to leave the country, I'd be stressed too; I think I'd also be very biddable during salary negotiations.

Daniel's avatar

It isn't an either or argument. Or put another way it isn't a zero-sum game where any gain from immigration means a loss by domestic workers. Quite the contrary. Immigration benefits everyone and is key to economic growth. And that's true even if less-educated or working-class immigrants (usually referred to, somewhat inaccurately, as "low-skilled" immigrants).

One common argument made against immigrants is that they “take” jobs that could be filled with non-immigrant workers who could command higher wages if they didn’t have to compete with immigrant labor. This seems logical and is consistent with a very basic, rudimentary understanding of supply and demand—whenever something is available in large amounts its cost goes down. So if there are lots of workers looking for jobs, that must drive wages down. But the real-world is often more complicated than a simple understanding of supply and demand would suggest.

Simplifying, wages are a reflection of labor productivity, measured both in terms of output per worker and in terms of the value of the work produced. That is, people who perform jobs making high-value items are paid more than people making low-value items. For example, the reason why, on average, wages are higher in California than in, say, South Dakota is because California workers have higher productivity. California workers can make more and better quality goods and services per hour than their Dakotan counterparts. This isn’t the sole explanation of wages, but it is key to understanding why the absence of immigrant labor would not magically drive up wages.

For example, let’s say you could somehow remove every single undocumented immigrant currently residing in the United States. Would all the jobs those people currently do now be filled by American citizens or legal residents at higher wages? Not really.

The jobs typically performed by immigrant workers would not be automatically filled at a higher wage level by non-immigrant workers because those jobs are not productive enough to command higher wages. What would happen instead is that many of the jobs currently done by immigrant labor would simply disappear. So, for example, many fewer Americans would employ housekeepers or nannies or gardeners. Immigrants don’t “take” jobs – they create jobs that very often would not exist otherwise.

Nor do immigrants depress economic growth. If you could remove all undocumented immigrants or if you were to radically restrict legal immigration we would actually harm the economy greatly. We would produce far less goods and services, thus reducing our Gross Domestic Product. Moreover, the fact that people would have to spend far more time on duties they currently outsource, like childcare or home cleaning, would have an overall negative impact on everyone’s productivity. Put another way, immigrants come to the US to work. In working they produce goods and services at prices that people can afford thus allowing for greater specialization of labor and thus improving overall labor productivity.

Eliminating immigration would also most likely raise the unemployment rate. We’d all have fewer jobs if it were not for immigration. Immigrants are not just workers—they are also consumers. By removing millions of workers from the economy you would also be removing millions of consumers—thus overall demand for goods and services would decline. That is, you’d have many fewer workers earning wages and you would have many fewer consumers demanding goods and services. Less demand for goods and services would lead to less production of goods and services and thus less jobs to make those goods and services. The overall effect, then, of removing such a large number of individuals from the labor force would be a higher level of unemployment and slower economic growth for everyone.

Now, I think the point you were making was more to Matt's argument in favor of highly educated immigrants and I think what you are asking is why not invest in educating and improving the quality of life of low-income Americans instead of encouraging highly educated immigrants. But again, it's not an either or.

Consider that immigrants pay taxes. Less immigrants would lead to less tax receipts, either leading to higher taxes or less government services or more government debt. That is, by helping to grow the economy and the tax base immigration creates the material prosperity that allows for further investments in education and healthcare.

By the way, I find the use of the word "ghetto" and "inner-city slums" a bit off-putting and an inaccurate way to describe low-income urban areas in the United States. Skid Row in downtown LA could certainly qualify as a slum. But that isn't true of the majority of other low-income areas of the US. Mostly when you hear these words used -- and I'm not saying this was your intent -- they are code words for places with high percentages of black Americans or other people of color. Calling something a "ghetto" or a "slum" is often used not as a description but as an derogation. I've seen slums and I've lived in high-crime, low-income areas. They are not the same.

Troy a Garrett's avatar

So anti immigration is about more than tricking central banks/ corporations into having full employment. It is also about forcing society including big companies to care more about all people in society. If you can’t import all the stem PHD’s you want you have to invest in education at all levels. If you can’t import more general labor you have to care about families and find a way to help people who want kids to have them family leave etc. The problem is these anti immigration hawks are wrong big companies can’t care about families and education look at Japan. Corporations and governments have made no big moves to make work more family friendly. And they have had bad demographics and low immigration for like 50 years.

Vadim's avatar

"These kind of gains are badly overlooked by “populists” who think you can promote economic equality by starving the labor market of immigrant workers in some kind of desperate plot to trick central banks into sustaining full employment."

I get what you are saying here - the real cause of getting closer to full employment in the Trump era was lax monetary policy, not his immigration restrictions - but attempting to trick central banks is not where populist support for immigration restrictions comes from, obviously.

They oppose immigration because they don't like immigrants and think they're stealing their jobs. My mom (a Trump supporter who is an immigrant herself) reports that many times massive amounts of H1b immigrants would be hired at the company she worked for and then she'd get laid off. Others just don't like immigrants because they are different.

I don't think we can fix people who hate immigrants, and they're a minority in America anyway. But anytime layoffs happen directly as a result of immigrants coming in, that's a policy failure, not "innovative companies realizing efficiencies by shifting their human capital to lower-cost resources" or however corporatists like to justify policies which lead to layoffs of American workers. Do that enough times, and you get someone like Trump elected who shuts it all down.

Michael E's avatar

My brother works alongside many H1-Bs supporting a major telco's operations for years (by way of a contracting firm, naturally). He gets paid more than the H1-Bs do, and they regularly get squeezed into working far longer hours because the contracting firm threatens to end the contract early.

People like my brother who see this going on and share their honest assessment of the situation with anybody who will listen - they aren't reactionaries. They're people with functioning brains and hearts.

RS's avatar

The last section sounds like a ringing endorsement of Biden's climate plan and the broad strokes of the Green New Deal.

Nicholas's avatar

Democrats need to find a way to synthesize the point that immigration is a net benefit to the country into a more "populist" message. I am convinced by David Shor's analysis of the 2016 election that Obama -> Trump voters were mostly motivated by the campaigns' emphasis on immigration. Trump's populism here will persist within the views of the electorate and I suspect be codified as a pillar of Republican policy. Any attempt at a technocratic point here, like an X% increase of immigrants correspond to a Y% increase of productivity/innovation/etc. is not going to cut it I'm afraid.

Projecting out elections for the foreseeable future (a fraught task admittedly), this is a existential question to ponder: Democrats will need to court rural white voters! Hope to see this tackled in the blog.

BronxZooCobra's avatar

I don't think there is any opposition to bringing in the best and brightest. The Trump admin recently announced that the H1-B lottery would concert to essentially a sealed bid auction. The highest paid would get their visas first. The wailing and gnashing of teeth from usual suspects trying to keep from saying they reason they use it is to drive down wages.

In all cases the objection is to, as Bernie would say, using immigration as a Koch funded plot to drive down wages.

Nicholas's avatar

Right, however this is precisely the question I posed. While consensus (mostly) exists that immigration of the tail of high achievers is a net benefit, the second order benefits of less targeted immigration discussed in the article is strongly polarized.

I think your statement serves as a nice example of the problem - the putative downsides of immigration are acute, it's easy to point to shuttered factories and low wages as results of immigration. The upsides of immigration are diffuse and thus lend themselves to more longform arguments which make it hard to campaign on.

RS's avatar

Every time I see a hot take about the NYC subway system - I have to question whether there are not real structural impediments that make NY different than other cities.

New York's subway signals are extremely old. The vast majority of the system runs on Great Depression era signaling systems. [1] The plans for modernizing have been made, but it requires significant capital and labor costs. [1][2] At a time when the state government is seeing declining revenue, many of the proposed plans for signals upgrades are being put on hold. [3] This is especially unfortunate, since the decreased ridership during the COVID-19 pandemic actually provides an opportunity to do more infrastructure work without dispruptions to commuters. If the funding was secure, we could've had a shorter timeline for signal upgrades.

I'm pretty sure that it's not even possible to have one-person train operation (OPTO) on subway lines that haven't been upgraded to communications-based train control (CBTC) signaling, given that the article you cited only states that the L and 7 trains are capable of OPTO. Assuming the CBTC signaling upgrades are required before you can even have OPTO, then the argument about current labor costs is moot until there is a plan with secured funding for system-wide CBTC signaling upgrades. Which all leads back to the argument that a massive federal infrastructure spending would be required to speed this along, and it should been done ASAP to take advantage of the lower ridership during the COVID-19 pandemic. Absent a commitment of federal funding I see worsening delays in signal upgrades that will continue to hurt the NYC region for the forseeable future.

[1] https://www.nytimes.com/2017/05/01/nyregion/new-york-subway-signals.html

[2] https://www.nytimes.com/2019/09/16/nyregion/mta-budget-subway.htm

[3] https://www.nytimes.com/2020/06/05/nyregion/coronavirus-ny-transportation-work.html

TS's avatar

I don't believe the conductors have a role in actual operation of the train beyond signaling that it's safe for the train to move off the platform.

The principle impediments to improvement are labor featherbedding and a management culture that just doesn't think it's their job to provide an efficient, reliable service: https://www.villagevoice.com/2018/03/13/the-trains-are-slower-because-they-slowed-the-trains-down/

RS's avatar

The article you share points to an implementation of a policy that failed to account for how train operator behavior might adapt to the new system. They highlight the "one shot timers" where operators choose to go slower because they are avoiding the severe penalty that is incurred for violating the speed limit. Certainly the management culture of the MTA was poor in handling this - and I commend Andy Byford for being more transparent about the failures of the subway system. Sadly, Byford was pushed out by Gov. Cuomo despite leading a massive turnaround in on-time performance during his short tenure. [1]

[1] https://www.nytimes.com/2020/01/24/nyregion/andy-byford-mta.html

RS's avatar

I found an article [1] that claims that one-person train operation (OPTO) is possible even on lines without the upgraded signaling, so my argument about labor costs may not hold up. Still, there are many other reasons that we should prioritize funding signal upgrades and other capital investments in the NYC subways, and fiscal stimulus from the federal government would be a smart path.

[1] https://ny.curbed.com/2017/10/13/16455880/new-york-city-subway-mta-operating-cost-analysis

Jonnymac's avatar

Interesting... btw, I deleted my comment below bc it showed up twice for some reason, but I was apparently wrong, so I won't repost it!

Gimmick's avatar

Agreeing to purchase vaccines seems great for the simple reason that people need vaccines. But what's the math on the promise moving the needle for Pfizer? If I'm selling safety and a return to normal to billions of people I don't think I'm that worried about not making money.

Peter G's avatar

Interesting comments on this thread regarding the pros and cons of public service unions. I would say that if the progressive view prevailed (if they ask it must be given) it would be daylight madness to elect Democratic Party politicians of the progressive variety to run cities. It is not enough for them to be able to say no. If you watched what happened after the teacher's strikes in Chicago and Philadelphia you get assaulted even when you say yes.

Tom Hitchner's avatar

I’m surprised to see you mention DoorDash as a company that’s making our lives better, given the evidence that companies like it are killing the restaurant industry: https://themargins.substack.com/p/doordash-and-pizza-arbitrage

Peter G's avatar

Now about warp speed and future technologies. Yes there are fields of technology where investments might yield new technologies that will help address climate change. No they are not the ones people hope for. Catalyst technologies are a yes. So are biotechnologies. Big yes. But the idea that if you burn a big enough pile of money then magic happens just does not work. Electro-chemistry and surface science, for example, are well advanced as is organic chemistry. If you are expecting some gigantic leap in battery technology that will somehow double energy density and reduce charging cycles by half while not sacrificing battery life lose that expectation now. Improving battery life still has prospects. But you would have to do much much better than that for pure EVs to begin to match the performance envelopes of conventional or hybrid vehicles. When it comes to birthing new technologies you actually have to have something to work with.

Bill's avatar

That's a chunk Matthew. I won't post much, but I will say this. I was born on the analog side of the digital divide, but am firmly on the tech side now. I am a technology teacher and take care of IT at a small rural school. While the tech advances make distance learning possible, it will never replace in person teaching as an effective teaching tool for 99% of students. We have had to make the difficult decision to go to distance learning for a time, and it is anguishing to all of our staff.

There is another issue that I think is being over looked: it is assumed by most of the people that I talk to and listen to that this disease has little to no effect on children, that only older people that are at risk. There is just too much that we don't know about this virus and it's long term effects. What if we find out in 20, 30, or 40 years from now that the kids that contract the virus are 10, 20, or 30 times more likely to develop a catastrophic illness? We have had a mask mandate the entire school year for both staff and students, and I see the students becoming more and more lax when they should be more vigilant. I fear that Dr. Fauci is right, and we are headed for some dark months. The bottom line for me is that we have politicians that are playing games with this virus, and our kids may be the ones to pay the piper when time proves that some, if not most, of them are idiots.

JJ's avatar

“One difference, of course, is that we don’t have a pro-virus lobby.”

Sure we do, it’s called the Trump Administration.

Good post though. I thought it was pretty shocking that the House decided to hold antitrust hearings on Big Tech (and release a complete and total mess of an antitrust report) during a pandemic which saw public trust in and appreciation for tech skyrocket. There are plenty of strong arguments that we should better regulate tech (though antitrust isn’t one of them), but the politics of taking a bold public stance against the companies that are keeping us relatively sane throughout this nightmare we’re living in seemed really bad and probably set back the cause of better tech regulation for a while to come.

Michael Whelan's avatar

One quick point - innovation isn't really needed to electrify buses. True, battery buses are unreliable and need work. But trolleybuses already run reliably all over the world and could easily be implemented in America with a big federal program to sting up wires and connect them to the grid. Even once battery buses become more reliable, the wires would be useful for in-motion charging.