http://today.reuters.com/business/ne...yID=nN05259136
ANALYSIS-Immigration debate reveals limits of market "freedom"
Friday 5 May 2006, 1:31pm EST
Printer Friendly | Email Article | Reprints | RSS

By Pedro Nicolaci da Costa

NEW YORK, May 5 (Reuters) - The recent furor over U.S. immigration reform has highlighted globalization's dark side: businesses can scour the earth for the cheapest labor, but borders still prevent workers from seeking better pay.

When it comes to commercial agreements, there is no shortage of rhetoric about freedom: free markets, free trade, and the free movement of goods and capital are held up as basic prerequisites for a healthy economy.

Yet when the subject turns to freedom of movement for human beings, emotions get roused, fingers are pointed, anger simmers, legislators make speeches.

"The world is moving ahead in more integrated product markets of goods and services, in capital markets and cross-border investments, and yet we seem to want to hold up a stop-sign to labor mobility," said Daniel Griswold, director of the Cato Institute's Center for Trade Policy Studies.

"There is a disconnect there," he said.

Many experts agree that the country would not only be able to absorb the more than 11 million illegal immigrants currently thought to be living in the United States, but it might actually stand to benefit economically from such a move.

In fact, analysts point out that cross-border movement of workers is a quite natural extension of the Western world's predominant free market economic model, where resources are naturally distributed to where they are most needed.

They note that many jobs in the United States are also lost not to immigrants coming in, but to companies taking work abroad. Either way, conventional economic wisdom says the pros of globalization outweigh its cons.

"On a net benefit basis, trade with other countries helps us -- we are losing some jobs to foreigners overseas, but consumers here are enjoying the benefits of lower goods prices," said Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi.

"But anything that smacks of taking away jobs from American citizens is a hot-button issue," he added.

Proponents of more stringent laws argue that illegal immigrants create an excessive drag on social services, at the expense of taxpayers.

Furthermore, immigrants tend to have more children than average, critics say, many of whom do not speak English -- which burdens the school system with extra costs.


PANDORA'S BOX

It is these sorts of concerns that kick-started the latest spat over immigration in the first place.

The brouhaha first started when the Repulican-led House of Representatives passed a bill aimed not only at tightening the border with Mexico but also at turning illegal immigration -- and any attempt to help immigrants -- into a felony.

The move opened a Pandora's box of outrage that led to large-scale demonstrations among foreign residents of all stripes, but Latinos in particular. In the latest round of protests, hundreds of thousands of mostly Hispanic immigrants walked off the job earlier this week and rallied in major cities across the United States.

Immigration has always been a thorny issue, but increased xenophobia following the Sept. 11 attacks appears to have heightened tensions, say analysts.

As the dust settles, the outcome of this hotly debated issue remains unclear. Some political experts argue that Republicans, who had slowly been making inroads with traditionally Democrat Hispanics, squandered some good will with what many see as an antagonistic immigration stance.

Others note that while the number of Latinos in the United States is high and rising, less than half are eligible to vote

-- and fewer still have historically turned out at the polls.

Whether the immigration debacle will galvanize this constituency could influence the outcome of congressional elections later this year. Regardless, one thing is certain: the issue is, quite literally, here to stay.

Recent polls show around 30 percent of Americans advocate tougher laws for illegal immigrants. But a majority, including President George W. Bush, would like to see the creation of a guest worker program, accompanied by better enforcement.

Whatever the political ramifications surrounding the issue, analysts say that in purely economic terms immigration is a boon to both domestic and global growth.

"What's most efficient for the global economy is for labor and capital to flow to the places where they can best be used," said Nigel Gault, director of U.S. economic research at Global Insight.

"From an economic standpoint, immigrants clearly bring a lot to the table and have always been a primary reason why the U.S. has been so successful over such a long period."