A few years ago, I was invited to attend a dinner party in Washington, D.C. Present at the dinner were several prominent journalists, think-tank heads, and politicians, including one who is likely to run for President of the United States in 2008. Not surprisingly, given the policy orientation of the dinner guests, the conversation quickly turned to the pressing matters of the day, specifically globalization's contribution to rising economic inequality. Largely liberal, the dinner guests all expressed grave concern over the growing gap between rich and poor in the nation. But few offered any real solutions.
Rather than debate possible reforms, everyone at the dinner party uttered the familiar globalization litany. The integration of markets is irresistible, all averred. Nothing can be done to shape, much less forestall, globalization; the only debate is about what palliative policies should be enacted. For the Democrats present that night, education was the critical policy response to globalization. With better education and opportunities for retraining, young people can avoid the nitty-gritty of the tradable sector and make their careers in high value-added, nontradable services. Older workers displaced by globalization can find entirely new careers. Or so it was argued. Over the last fifteen years, this argument has been made repeatedly, and education-as-panacea has become axiomatic for Democrats.
Reflecting on that evening, I was struck by the fact that no one at the party brought up illegal immigration, which is of course one form of globalization, and its lamentable effect on income distribution. After all, most economists — even redoubtable liberals like Paul Krugman — have concluded that the vast increase in low-skilled immigration over the last forty years has depressed the wages of low-skilled citizens. There is some debate about the magnitude of immigration's effects on the labor market, but not much about the direction of that effect.
But then again, I really shouldn't have been so surprised, as nearly everyone at the party was part of what the writer Michael Lind calls the overclass, educated at the best universities and earning hundreds of thousands of dollars each year. Their children attended private schools. Everyone had a fine retirement package and subsidized health care, and each was immune to the vicissitudes of middle-class economic life. From their cloistered positions, the solution to nearly all perceived problems — from globalization to crime — is education, which was their own personal visa into the merit-obsessed overclass. For this group of people, immigration is not about inequality in America, but instead all about a cheap nanny, inexpensive lawn care, or proof of multicultural bona fides. Even to bring up the subject of immigration is to seem impolite, if not crass.
This is a shame, for the most important domestic policy challenge in the 21st century is found in the labor market. Alone among industrialized nations, the United States has a massive class of unskilled workers. This unskilled workforce is being buffeted by globalization-enabled labor arbitrage, the automation of blue-collar jobs, and, yes, the arrival of millions of low-skilled laborers through illegal immigration. Tragically, this class of workers is only going to grow in the future, just as the returns to schooling will become higher than ever. Let me offer an underreported but rather shocking fact: the number of young people who graduate from high school, as opposed to receiving a GED, is declining. And, as James Heckman of the University of Chicago has shown, workers with a GED have the same economic prospects as workers who drop out of high school and never get an equivalency degree. In sum, a greater proportion of American young people are low-skilled dropouts than thirty years ago. Close to 50 percent of these dropouts are immigrants. Now there's a problem for the overclass to consider.
America tolerates an immigration policy that adds millions of very low-skilled workers every decade, who come to this country at the expense of low-skilled native workers. Why? There is no good explanation, especially for Democrats, who like to believe that their core constituencies are the middle and lower classes of America.
To be fair, there are some Democrats who acknowledge the harmful effects of illegal immigration on the incomes of native workers — workers who are already stressed by structural changes in the economy. But few Democrats clamor to limit the supply of low-skilled foreign workers. Instead, many Democrats are pushing an increased minimum wage or card-check unionization or — again — more funding for education. They argue that these policies would have a more direct effect on the incomes of lower-skilled workers. And these policies might, in fact, be sufficient to resist the effect of illegal immigration, and, in any event, all are desirable policy and should be enacted at once. But there is no political consensus for such policies, and it is difficult to imagine that the Republican-dominated Congress would even consider them. It is irresponsible to hold on to the illusion of their possibility. Immigration reform may be a second-best solution, but the first-best is out of reach, and worse outcomes are likely if we hold on to misplaced fantasies of egalitarian social policies. Besides, the growing number of low-skilled workers, swelled by illegal immigration, makes these progressive interventions that much more expensive and, hence, unlikely.
For Democrats, fighting illegal immigration would not only be good policy, but would have the welcome effect of being good politics, too. Democrats' major political obstacle is the increasingly intractable opposition of the non-union working and middle class, exactly the groups who most fervently oppose illegal immigration. While the opponents of immigration no doubt include nativists and xenophobes, the vast majority of those who oppose illegal immigration do so on sound public policy grounds. Illegal immigration is seen rightly as a threat to their economic livelihood. So when the Republican Party offers a platform that not only comports with their social and religious beliefs, but also addresses the one economic threat that is open to government solution, is there any wonder that the working and middle classes find solace in the GOP? Democrats should find a way to bust up this alliance between economic populists and social conservatives, and make many current Republican voters choose which of these movements matters most.
By recognizing the harmful effects of illegal immigration on low-skilled citizens and by supporting legislation to prohibit untrammeled immigration, Democrats would boost the economic prospects of their core constituencies while driving a wedge into the Republican base. Democrats could even oppose illegal immigration while welcoming legal immigration, especially of the high-skilled variety. Immigration presents Democrats with an unusual opportunity to shake up the coalitions that have guided the political parties for a generation, while proving to the struggling middle and working classes that the Democratic Party is serious about reclaiming its historic role as their champion. The overclass might frown, but I would bet that millions and millions of American workers would reward the Democratic Party with their electoral gratitude.
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