Commentary: Globalization vs. Immigration Reform

Can we have free flow of goods and capital without free flow of labor?

The draft immigration reform bill being considered by the Senate reads like something out of a bureaucratic nightmare. In addition to inventing "Z" visas for unlawful immigrants and "Y" visas for guest workers, the 300-plus-page version I examined includes specifications for border cameras, penalties for a person who "knowingly enters into two or more marriages for the purpose of evading any immigration law," and special mention of the undesirability of "polygamists, child abductors, and unlawful voters."

More important, the draft legislation ties itself in knots attempting to balance the pro- and anti-immigration forces. On one side are the labor needs of business and America's historic openness to newcomers. On the other side are concerns about national security, the very real worries of American workers, and strong public support for gaining control of the country's borders. That's why, for example, the bill lets U.S. employers potentially hire up to 600,000 temporary Y guest workers, but all employers must attest that their hires "will not adversely affect the wages and working conditions of workers in the U.S. similarly employed." Good luck on that, especially since economists have been arguing about the impact of immigration for the past decade.

But really, the bill's sponsors can't be faulted for its convoluted logic or what looks like its probable failure in the face of multiple amendments and intense opposition. Immigration reform, in any flavor, has to contend with today's central reality: In a world where goods, capital, ideas, and services are becoming more and more mobile and able to cross national borders, tighter restrictions on the movement of people are increasingly anachronistic.

Just look at IBM (IBM ), which has for decades been one of the leading lights of the U.S. economy. The company, which earned more than $9 billion in 2006, now has two-thirds of its workers abroad, both foreign nationals and American citizens. It's becoming a "globally integrated enterprise," as CEO Samuel J. Palmisano noted in IBM's latest annual report, "which locates its operations and functions anywhere in the world based on the right cost, the right skills, and the right business environment."

How can this borderless view of the global economy be reconciled with a bill that actually requires the construction or acquisition of at least 20 new detention facilities capable of holding 20,000 "aliens," as they are called in the bill? The answer is it can't, at least for now. One view of the world tears down the walls that separate countries; the other view builds them up.

Europe is wrestling with the same conflicts as the U.S. The European Commission is considering proposals for a crackdown on the large number of illegal immigrants, even as it looks for new ways to admit legally the temporary workers needed for construction, tourism, and agriculture. Meanwhile, Britain has gotten a substantial boost to growth from the migrants from those Eastern European countries that joined the European Union in May, 2004, while France and Germany still have tougher rules for these workers.

Lant Pritchett, an economist at the World Bank and Harvard University's John F. Kennedy School of Government and the author of the 2006 book Let Their People Come, argues that the global pressure for labor movement across national borders is rising. He cites, in particular, the combination of big gaps in wages between rich and poor countries and the slow population growth of many developed countries, which will soon lead to a shrinking workforce unless more immigration is allowed. Cheap communications make a difference as well, says Pritchett, since "it is less psychically costly to move when one can stay in touch."

If Pritchett is right, immigration seems likely to increase rather than decrease in the future, just as trade and communications between countries have grown by leaps and bounds. And no piece of legislation, no matter how finely balanced, is likely to change that.

By Michael Mandel

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