According to Its Text, It Benefits the Poor

by Don Boudreaux on July 30, 2014

in Immigration, Reality Is Not Optional, Seen and Unseen, Work

Congratulations are due to Zac Gochenour, who successfully defended his excellent dissertation on Monday afternoon in Carow Hall on George Mason University’s Fairfax campus.  Dr. Gochenour (who will soon start his career as an assistant professor at Western Carolina University) began his academic study of economics as an undergraduate at George Mason.  Bryan Caplan served as chairman of Zac’s dissertation committee; Pete Leeson and I had the honor of serving as the other two members of Zac’s committee.

Zac’s dissertation is on the economics and political economy of immigration.  Here’s a brief passage from page 14 of chapter 2 – a chapter that details the history of efforts in the United States to restrict immigration:

The 47th Congress saw the most action on immigration of any to that point; ultimately, three major acts concerning immigration were enacted. The first concerned regulations for vessels carrying immigrants: the new bill added minimums for carrying capacity and deck area per passenger.

(Fortunately, President Arthur vetoed this 1882 act.)

Note that these Congressional acts were the handiwork of people hostile to immigrants.  Yet lookie here!  We find among the legislative tactics used by these anti-immigrant types a legislative mandate that, on its surface, makes life better for immigrants: larger ships and more space for immigrants traveling to America.

The lesson here is not only that legislators’ unsavory intentions are easily hidden behind fine-sounding statutory language, but also that one tried and true way for government to inflict harm on disfavored groups is to mandate benefits for those groups.  By mandating more ship space for immigrants en route to America, many members of Congress in the early 1880s understood that the actual result of the mandate would be fewer ships willing to carry immigrants to America or higher fees charged to people wishing to gain passage on ships bound for the United States.  Either way, the mandated minimum-space requirement (had Pres. Arthur not vetoed it) would have raised the cost to shipowners of carrying immigrants and, thus, would have restricted the options of those non-Americans who wished to immigrate to America.  Immigrants would have suffered from this statute that, on its surface, made them better off.

Pretty statutory words are crafted to achieve ugly actual outcomes – outcomes that are, at any rate, decidedly different from any results that credulous people infer from the literal texts of statutes.

A similar effect is in play (to mention only one of many real-world examples) with minimum-wage legislation: the words of the legislation proclaim a desire to improve the lot of low-skilled workers.  But the actual effects of the legislation – effects that are the direct result of government mandating that private businesses supply a minimum amount of benefits to poor workers – harm those workers.  The results of such legislation are fewer employment options for the very workers that the words of the legislation lead credulous people to believe government seeks to help.

….

As much as I would love to have more office space at GMU than I now have – and as much as I’d love (even more!) to have a higher (oh, say, a 40 percent higher) salary than I now have – I would vigorously oppose any efforts to mandate such improved benefits for middle-aged academic economists in America.  For purely selfish reasons I know that I am too likely to suffer if such ‘benefits’ are mandated for me.

To mandate that Smith offer more benefits to Jones whenever he deals with Jones is to mandate that Smith incur higher costs whenever he deals with Jones.  To avoid such higher costs, Smith typically reacts by reducing, or even completely eliminating, his dealings with Jones.  Jones’s lot is not improved as a result; it’s worsened.

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