regulation and you -- LI only slightly bores its readers

LI has been reading about the immigration issue, and looking at the pics of the amazing demonstrations. And it occurred to us that, as a public service, we should pull out the patented LI-THEORY-OF-REGULATION to make sense of it all. (thank you, thank you, people in the back row, but that last tomato you hurled up here is not appreciated!)

If you will remember, regulation is bounded by two ideal poles. One is an ideal of absolute unregulation (an impossibility, by the way, but conceptually necessary) and the other is banning. As the equilibrium of the regulation of a product or a service shifts towards the banning pole, certain questions must be asked – the most important of which is the ‘cost of banning.” A cost is an indicator of possibility – if a product or service costs so much to ban that it successfully would destroy or seriously damage the political system doing the regulating, this should make us re-consider banning. It is for this reason that LI has previously advocated lifting the bans on illegal drugs like marijuana and heroine, and is disapproving of moving from gun licensing to gun bans. I should note, in passing, that regulation is ALWAYS going to impinge on any good or service – the question is going to be, who regulates it. A gang eliminating another gang in order to sell heroin in a certain area is simply regulating action-movie style. That gang will control purity, cost, availability, etc. The public/private divide is secondary, or derivative, to regulation, libertarians to the contrary.

How to analyze those costs? Well, there are a number of factors, here, but major ones have to do with: the capability of producing the product or service (is it an extensive resource or a strictly limited one?); its place in the economy (is it a direct consumer good or service, or is it an industrial good or service?); and, finally, the cost and nature of the regulating of the good or service (is the regulation going to fall on the police, or on a special bureaucracy? is it going to involve extensive searching? are there perverse incentives that encourage police intervention beyond a certain norm?).

Well, putting our little machine to work about immigrant labor is an interesting task. Surveying the fascist suggestions by the Colorado Nazi – uh, oops, that sounds soooo unneutral. Let me start over. Surveying the interestingly authoritarian law advocated by this Tancredo character, one wonders, beyond the moral sickness of outlawing a sterling moral impulse, about its effect. Let’s say we succeed in throwing eleven million Mexican workers back into Mexico, shutting off one of the major, if not the major, cash flows into that country. How long before Mexico explodes? One month? Two? Anyone who thinks that explosion will be seamlessly closed in by a bogus wall along the border, manned by crazy eyed, potbellied white guys with duck hunting gear should… well, should get a job in the Iraq planning room at the Pentagon. One of the numerous idiocies of the NAFTA setup is that, for a short term gain, Mexico essentially allowed itself to be caught at a permanent subaltern level of production on the world market -- instead of leveraging its labor union structure to extract much more from the macquilladora and use it to finance a true social welfare structure. Hence, you get low cost labor reproducing even lower cost labor, instead of low cost labor accumulating the resources to be used by higher quality labor. But I'm this is an aside.

Of course, this assumes that Tancredo's law would really use the police to satisfactorily purge the country of illegal labor. I would put the chances of that happening at around, what, 1 percent? An eleven million person roundup, undertaken by a disparate, less than million member police department, could only succeed if every other policing task is dropped. In fact, the whole point of the legislation is not to succeed – but to make a vicious, pointyheaded moral point. This is the mark of vicious legislation, as any conservative from the era when there were really such things – the 19th century – could tell you. American conservatives are, of course, no such things – they love nothing better than passing symbolic laws, with all the cave man’s belief that the drawing of the bison with the spear in its side means that the next bison will be magically killed at just that spot.

Unfortunately, George Bush is, uh, right about this. Unfortunately, since Bush’s support for a position is usually a sign that something is fucked. But alas, life is full of chances, and one of those chances is that, out of every million neural firings in the Bush brain, one or two of them will be correct. The guest worker idea is probably not going to work – but Bush’s attitude, which is that the free market in labor has helped the U.S., is essentially correct. To descend to the impressionistic, for a second – since the eighties, the roofing trade in Atlanta has been almost exclusively Mexican/Salvadoran. This is something I knew a bit about, having often worked around apartment complexes and condominiums in the Atlanta area for my brothers. The savings from using a vast, cheaper labor force did not accrue exclusively, or even mostly, to the Mexicans/Salavadorans – it went, instead, to the builders and the homeowners. This is no little thing – one of the mysteries of the U.S. economy for the past thirty years is how a middle strata that is essentially dependent, now, on two earner households, remains prosperous. A large part of that is due to efficiencies in the system that the middle capitalizes on – homebuilding being a perfect example.


Brian Miller said…
One must admit that it is not only Conservatives (whatever that means) that love such laws. :)

On a peripheral note, you don't buy the libertarian argument that private contracts and agreements-and the courts-are not more "efficient" at regulation? I like your image of the gunned down competitor as the apogee of pure capitalist regulation :)
roger said…
Brian, to reply to your question -- no, I think libertarianism, as a theory, is entirely vulnerable to objections having to do with scale and social cost. On a deeper level, I just don't think the theory applies to humans. It applies to robots -- robots programmed to make contracts, who actually believe economics encode the final and complete values. This is the converse of communism, which applies to robots programmed to produce. In order to make these ideologies work, you simply have to train humans to be robots. But I'm anti-robotic.