I realize that this is not your point, but capital per worker in a modern economy does not increase in the short run when population decreases unexpectedly. That’s because the unexpected decrease in population renders some capital uneconomic, and this worthless. It takes a long time to readjust ratios of capital to labor. It was less of a problem in pre-industrial systems, but even there it happened — it’s just that the effect was muted because of the interchangeability of capital equipment. When the plague killed one in three people, there were uneconomic plows that went unused. But there was an increase in capital per worker because people retired the most broken down plows. (And, of course, they retired the least productive land, so living standards went way up for the survivors.)
Nicholas, this is correct. If the immigration of people into a nation suppressed wages (a zero-sum approach view of growth) and was otherwise harmful, then we could not explain the United States, a nation that rose from nothing to become a world superpower in less than 200 centuries.
I often hear this argument that “this time is different.” I don’t buy this. “This time is different” was said in 1900 of Italians and Greeks, in 1880 of the Chinese, and in 1840 of the Irish. All of these groups assimilated and contributed to the rise of the United States.
Immigrants are largely a self-selecting group. It takes adaptivity, money, persistence, drive, planning, and a certain rejection of the status quo to uproot one’s lives and move to the US.
It just so happens that these are good qualities to have as a person and the more of these brains that moved to the US, the greater the total “compute” it had to solve problems, from inventing the automobile to, reusable rockets, to the atom bomb.
"in the long term" is doing a bunch of heavy lifting here though. Let's say there are 1 million SWEs in the US who make $250k, and 10 million SWEs in India who make $25k. If you suddenly join these two into the same labor market, the average wage might go up, but it's unlikely that the Americans retain their extra zero, and they also won't be getting it back for a long time. Eventually, they might overtake the previous trajectory, but eventually can be longer than a career in this case.
This is a fruitless hypothetical. Immigrants likely have lower reservation wages than current US citizens, but they don’t just flood US labor markets making the same income as they do in their home country (why the hell would they migrate for the same wage?).
In this new labor market you propose, with 10 million foreign SWEs, the best SWEs will likely make ≈250k. I do not care if such SWEs are foreign born or not. American consumers would be better off with a more productive tech sector.
Also, are there even 10 million hire-able SWEs in India? Regardless, we’d never see a sudden immigration of this level in one field.
I realize that this is not your point, but capital per worker in a modern economy does not increase in the short run when population decreases unexpectedly. That’s because the unexpected decrease in population renders some capital uneconomic, and this worthless. It takes a long time to readjust ratios of capital to labor. It was less of a problem in pre-industrial systems, but even there it happened — it’s just that the effect was muted because of the interchangeability of capital equipment. When the plague killed one in three people, there were uneconomic plows that went unused. But there was an increase in capital per worker because people retired the most broken down plows. (And, of course, they retired the least productive land, so living standards went way up for the survivors.)
Nicholas, this is correct. If the immigration of people into a nation suppressed wages (a zero-sum approach view of growth) and was otherwise harmful, then we could not explain the United States, a nation that rose from nothing to become a world superpower in less than 200 centuries.
I often hear this argument that “this time is different.” I don’t buy this. “This time is different” was said in 1900 of Italians and Greeks, in 1880 of the Chinese, and in 1840 of the Irish. All of these groups assimilated and contributed to the rise of the United States.
Immigrants are largely a self-selecting group. It takes adaptivity, money, persistence, drive, planning, and a certain rejection of the status quo to uproot one’s lives and move to the US.
It just so happens that these are good qualities to have as a person and the more of these brains that moved to the US, the greater the total “compute” it had to solve problems, from inventing the automobile to, reusable rockets, to the atom bomb.
"in the long term" is doing a bunch of heavy lifting here though. Let's say there are 1 million SWEs in the US who make $250k, and 10 million SWEs in India who make $25k. If you suddenly join these two into the same labor market, the average wage might go up, but it's unlikely that the Americans retain their extra zero, and they also won't be getting it back for a long time. Eventually, they might overtake the previous trajectory, but eventually can be longer than a career in this case.
This is a fruitless hypothetical. Immigrants likely have lower reservation wages than current US citizens, but they don’t just flood US labor markets making the same income as they do in their home country (why the hell would they migrate for the same wage?).
In this new labor market you propose, with 10 million foreign SWEs, the best SWEs will likely make ≈250k. I do not care if such SWEs are foreign born or not. American consumers would be better off with a more productive tech sector.
Also, are there even 10 million hire-able SWEs in India? Regardless, we’d never see a sudden immigration of this level in one field.