[Foss-cafe] Open Borders (was: job sites don't work anymore ?)

[Daniel Cassidy]

Firstly, apologies for the misconfigured mailer used in my last mail. I'm
temporarily using webmail until I've finished faffing about getting Evolution
set up :).

Quoting Tink <tink at svn.net>:
> At 14:14 +0100 4/6/04, dan at dmdstudios.co.uk wrote about Re: 
> [Foss-cafe] job sites don't work anymore ?:
> 
> |Nonsense. Closed borders is exactly what causes life to be comparitively
> |expensive in the US and comparitively cheap in India.
> 
> Don't agree with you. As we have open borders in the EU now, life has 
> not exactly been getting cheaper but either more expensive.
> 
> I think the coming months will proof that in the once so called 'low 
> cost of living' countries like the new EU countries, who are now 
> joining the EU, life will be getting more expensive.

Uhh, I suspect you are confusing increases in real terms and inflationary
increases (at the very least you are not being clear which you meant). If wages
stay the same and costs go up, then costs have increased in real terms, but if
wages go up by more as a percentage, costs have clearly decreased in real
terms.

If you are saying 'the new EU countries will experience inflation', I think
that
is highly likely, yes. But, if you say 'the new EU countries will be more
expensive to live in in real terms', I really don't agree. I think the *old* EU
countries will be getting more expensive in real terms.

With open borders, rich countries such as the UK and France will get less rich.
This means that in real terms, prices there will go up. The poor countries,
however, will get less poor, and in real terms prices will go down.

> So I'm not quiet sure why you think that opening up your borders will 
> lower the cost of living.

Uhh, I don't think I said anything about the cost of living getting cheaper.
Indeed, with open borders I am absolutely certain that in most Western
countries it would increase, which is of course why we have closed borders.

It should be pretty obvious why. In poor countries, the cost of living is very
high relative to earnings in those countries, while in rich countries the cost
of living is generally very low relative to earnings.

I'm going to discuss the effects of opening up the border between the UK and an
imaginary poor country, X. I do this because I am not absolutely familiar with
the economic situation in any country other than the UK and so will make some
generalisations about poor countries and leave it to the reader to fill in the
gaps.

Now, we can assume that X has a plentiful supply of unskilled workers and a
fair
supply of skilled workers (such as the Indians employed in California). Upon
opening up the border between the UK and X, the immediate effects would be that
both skilled and unskilled workers from X would flock to the UK in search of a
better life. UK wages would drop to the point where they are just above those
in X, so as to still provide an incentive for Xian workers to migrate.

In the short term, this is of course an utter disaster for me and anyone else
living in the UK, because wages have dropped, the cost of living in the UK is
just as high, and the Xians who have just arrived are suddenly getting rich by
earning in the UK and sending the money back to X where it's worth ten times as
much.

And that's all there is to it. Open borders are bad, right? Uhh, no. By
stopping
here you totally miss the highly important point that earnings and cost of
living are not independent but thoroughly intertwined. As soon as wages go down
in the UK, so will cost of living. Why? Two reasons: Now that wages are lower,
it's cheaper to employ people and so prices go down, and now that wages are
lower people can no longer afford to pay so much so supply and demand causes
price to go down. For exactly the same reasons, but in reverse, the cost of
living in X will go up; since the average Xian earning in the UK now has more
to spend. With more money floating around in X, the average wage will go up.
After a while, the two economies will balance out and it will no longer be
worth the bother for an Xian to travel all the way to the UK to earn the same
wage.

There are two negative things that will come out of this:

1) Inflation will go crazy for the first few years while the above is working
itself out. I think the temporary suffering is worth it for a better future.

2) People in the UK won't benefit from this at all, in fact, they'll suffer,
because the cost of living in real terms will go up. This is of course
precisely
why we've kept borders closed all these years.

To explain why I don't think this is a bad thing, I'm going to have to dispense
with the two country simplification. In the world today, we in the rich
countries of the world live beyond our means by exploiting the poor and keeping
them poor. I can, for example, go out and buy clothing that has been produced
in a sweatshop in some utter shit hole, probably by a child who could otherwise
have had a promising future. Did I work as hard to pay for those clothes as the
person who produced them? Hell no. Yet, not even a fraction of what I pay goes
to the person who produced them.

If borders were open, people working in that sweatshop could travel to achieve
a
better future. Sure, they'd take 'our' jobs in the short term, but at the same
time it would cease to be economical to rely practically upon slave labour to
produce goods for rich idiots. Closed borders are a system designed to say that
I, as a citizen of a rich nation, am entitled to goods produced worth
significantly more in terms of human labour than I put into purchasing them,
and that citizens of poor countries are entitled to significantly less.

Thankyou for reading.