In the current American debate over immigration, you frequently hear the argument that illegal immigrants come here to do the back-breaking work that no American cares to do anymore; therefore, they are indispensable to our economy. After all, no economy cannot survive unless there is a plentiful supply of people willing to lift heavy things and exercise their muscle power doing productive labor. Thus, if we Americans are no longer willing to use our bodies to get things done, then we must permit impoverished immigrants to come here who are willing to rely on their brawn to make a living, while we Americans educate ourselves more and more, so that we can earn our daily bread using our brains more.
On the other side of this question, there are those who dispute the claim that there is any job that an American won't do, provided that he is paid enough to do it. Their solution to the immigration problem is to get employers to pay more money to Americans to do the work that only illegal immigrants are willing to do at present.
Yet getting employers to pay more for any resource than he absolutely has to pay is not the easiest task in the world. If company A insists on paying more for labor than his competitor company B, then, all things being equal, company A will either become less profitable or less competitive -- and what business owner in his right mind wants either of these alternatives? If the market price for Hispanic brawn is lower than the market price for American brawn, then any business that requires brawn will seek out the cheapest form of it available.
Now there are two ways to deal with this problem. First, you simply ship back all the illegal immigrants who are willing to work cheaper than Americans, thereby eliminating them altogether from the labor market, in which case the cost of brawn will rise to the point where Americans will again be willing to do the work previous done by illegal immigrants. Second, you can try to penalize those companies that rely on illegal immigrants, until the point is reached where, due to active and vigilant government interference in the day-to-day operation of thousands upon thousands of small businesses, each and every labor-intensive business will be so harassed by legal sanctions that they will be forced to adopt a policy of hiring only Americans, at which time the illegal immigrants will simply pack up their bags and go back home.
The first method, the deportation of over eleven million men, women, and children, strikes most people -- even those who are most opposed to a permissive policy on immigration -- as simply too drastic (a fact that President Bush acknowledged when he said that such a solution to the problem of immigration was "unrealistic"). The US has not used mass deportation as an instrument of policy since the infamous forced removal of the Cherokees in the 1830's, and it is not likely to revive it now.
It is little wonder then that so many people think the solution to the problem of immigration lies in the second method -- enforcing the current laws and thereby increasing the real cost to businesses of hiring illegal immigrants through fines and the threat of costly legal action. But what those who take this approach fail to understand is that, in order to make the second method work, it is not enough to make examples of certain businesses who hire illegal immigrants -- the government would have to make it clear to each and every business that it cannot risk hiring illegal immigrants because of the certainty of the fact that they would get caught. But how can the government make thousands and thousands of small businesses feel certain that they would get caught except by actually monitoring, on a virtually day by day basis, their hiring practices? And how much bigger would our already big government have to get in order to achieve that ability to micro-manage all the independent businesses that use illegal immigrants as laborers? And who would pay for this new army of bureaucrats, but the American people themselves?
It is difficult to enforce a law on small businessmen that runs counter to their own economic self-interest -- a fact that I learned first-hand running a small window tinting business in Norcross, Georgia many years ago.
Around 1991, the State of Georgia passed a law that made it illegal to have window tint on your vehicle if the tint was too dark -- light tint was fine and legal, but the black tint was illegal. Unfortunately, many of the people who wish to have their cars tinted preferred to have the dark tint on them. Thus, window tinting companies were placed in a bind: They could either obey the new Georgia law and lose customers, or disobey the law and keep the customers who wanted the illegal tint.
Now had a state inspector been stationed at every one of the many window tinting shops in the state of Georgia, and if he personally examined every piece of tint put on every window, there is no question that the Georgia window-tinting law would have been a smashing success. But because the enforcement of the law was on a fairly hit-or-miss basis, and since it was aimed primarily at the drivers of the illegally tinted vehicles, the economic effect of the law on the window-tinting businesses themselves was utterly perverse. Those companies that obeyed the law to the letter were economically penalized by their very respect for the law, while those companies that flouted the law were economically rewarded by their lack of respect for the law. Furthermore, since it was larger and more established businesses that were most likely to be targeted by law enforcement agencies, it was the smaller and more fly-by-night operations that were least at risk, and which also had the least to lose -- and hence they were the ones that continued to apply the illegal tint.
The same logic applies to the idea of targeting the big companies that hire illegal immigrants. Yes, you might be able to get them to obey the law, but the smaller companies, who are not by definition exposed to the same degree of risk, will simply take over those customers who would rather have cheaper service provided to them by the labor of illegal immigrants than more expensive services provided by the higher priced American labor. Here, as in the window tinting example, it is, after all, the customer who is ultimately in control. If the customers had all wanted legal window tint on their windows, there would have been no difficulty in enforcing the Georgia window tinting law. By the same logic, if all the customers of the hundreds of businesses who currently employed illegal immigrants were prepared to spend more money for the same service provided by American labor, then, once again, the current laws could be enforced -- or, more precisely, they would not need to be enforced, because the people themselves would be spontaneously obeying them.
Recently, Georgia has passed what has been called the nation's toughest laws against the hiring of illegal immigrants. But if Georgia was unwilling or unable to enforce a law that applied to the relatively few window tinting shops in its state, what prospect is there that it will be willing or able to enforce a law that applies to the vast multitude of small businesses that hire illegals: restaurants, construction firms, landscaping companies, just to name a few? Yes, examples can be made of a few big companies, but it defies credibility to suppose that the law will be rigorously applied to the thousand smaller businesses that hire illegal aliens -- and these businesses are perfectly aware of this fact. Their very smallness protects them.
Herein lies the drawback to laws that are passed by legislative bodies solely to prove to their constituents that they, the legislators, are really doing something. "See," the legislators can tell the voters back home, "we are really cracking down on illegal immigrants by making tougher laws." But what is the point of tougher laws if these laws only penalize, economically, the few who obey them, while rewarding the many who do not? For small businesses, running risks is an everyday occurrence, and where the risk is judged to be minimal, and the rewards of taking the risk are great, the risk will be run. Thus, while large companies may comply with the new Georgia law, the tiny ones won't.
At least in the law against illegal tint, it was the final customer who was penalized by fines; but in the law against hiring illegal immigrants, the final customer is in no way punished if he decides to go with a landscape firm that uses illegal aliens, or decides to have his roof replaced by a company that employs them. In most cases, all the final customer will care about is the cost of the service, and if it is cheaper to go with a company that hired illegals, that is what he will do. And how do you solve this problem? By fining customers who eat at restaurants that employ illegal immigrants, or who have their bushes pruned by them?
As long as the final customers behave as economic actors, preferring to pay less than more for the same quality of service or product, there will be a market for those laborers who are willing to work for less, provided that they work as hard and as well as those who demand a higher wage. Pass all the laws you want; make as many examples as you please -- neither of these policies can hope to do more than to drive up the cost of those businesses that obey the law, while rewarding those that are willing to take the risk of disobeying it. In short, the end result will not be more Americans working at higher wages, but a flight of illegal immigrants from larger and more stable companies to smaller and less stable ones -- or, to put this another way, a flight from higher to lower wages.
Should this surprise us? Considering the history of legislative attempts to regulate trade and commerce, no it should not. There are some things that law can do; but it can never be able to make people act against their economic self-interest. And every time that the law has been used for this purpose, not only does it fail -- it does much worse, it backfires. The French National Assembly during the French Revolution tried to control the price of bread; but the result was less bread available at an even higher price. Similarly, the attempt to raise the wages for American labor by passing laws criminalizing the hiring of illegal laborers will end not in higher wages for Americans, but in lower wages for illegals, thereby creating a bigger gap between what the wages at which illegals are willing to work and the wages at which Americans are willing to work. This was not the intent of the Georgia legislature; but then the French National Assembly didn't mean to raise the price of bread, either.