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At Newsweek, Mickey Kaus suggests that if President Obama and liberal Democrats really want to address the problem of increasing income inequality, they should crack down on illegal immigration. Kaus points out that the worst feature of inequality is the concentration of poverty at the bottom, not runaway earnings at the top, and argues that accordingly stricter immigration laws are necessary to prevent Brazil-style social stratification in the U.S.:
If you’re worried about incomes at the bottom, though, one solution leaps out at you. It’s a solution that worked, at least in the late 1990s under Bill Clinton, when wages at the low end of the income ladder rose fairly dramatically. The solution is tight labor markets. Get employers bidding for scarce workers and you’ll see incomes rise across the board without the need for government aid programs or tax redistribution. A major enemy of tight labor markets at the bottom is also fairly clear: unchecked immigration by undocumented low-skilled workers. It’s hard for a day laborer to command $18 an hour in the market if there are illegals hanging out on the corner willing to work for $7. Even experts who claim illlegal immigration is good for Americans overall admit that it’s not good for Americans at the bottom. In other words, it’s not good for income equality.
I’d argue Obama’s main effort on immigration would, in fact, have made the inequality problem at the bottom worse. A “comprehensive” bill would almost certainly have attracted new illegals, but the efforts to stop them at the border might well have failed, as they failed after a similar 1986 bill. The result of that failure has been a looser labor market at the bottom. Lower unskilled wages. Even the emergence of favela-like shantytowns in California. You want Brazil? Obama’s 2009-2010 immigration plan would bring us Brazil. Obama was putting coalition politics—pleasing Latino voters, and especially Latino politicians—over economics, at least egalitarian economics.
I think that Kaus is absolutely right that less illegal immigration would entail less measured inequality. But that’s not the same as saying that it would solve the underlying problems with growing measured inequality in the U.S. There’s a big difference, as I argued in my magazine piece on inequality in the latest issue of the Spectator.