Bare Knuckled Economics
by tdaxp ~ September 16th, 2007
Hard not be be impressed with Alan Greenspan’s thinking:
Education reform will take years, and we need to address increasing income inequality now. Increasing taxes on the rich, a seemingly simple remedy, is likely to prove counterproductive to economic growth. But by opening our borders to large numbers of highly skilled immigrant workers, we would both enhance the skill level of the overall workforce and provide a new source of competition for higher-earning employees, thus driving down their wages. The popular acceptance of capitalist practice in the United States will likely rest on these seemingly quite doable reforms.
Of course, brain draining other countries by importing the best workers probably will increase income inequality in the long term, all other things being equal, because a country with a higher average general intelligence grows faster and, thus, creates inequality faster. Still, when a country is rich it can afford luxuries such as public goods, universal health care, etc.
I think this is your...
September 16th, 2007 at 12:00 am
That income inequality across national borders already exists — one of the main reasons so many people want to come to America.
And I completely agree with the former Fed Chairman's logic — it's embarrassing how few H-1B visas our government authorizes each year.
September 16th, 2007 at 12:00 am
What defines a “highly skilled worker?”
I'm certainly not a proponent of penalizing people for success (or wealth redistribution) but from what I've read (and I'm no economist) nominal wage growth has been restricted in all but the highest educated (masters and beyond.) Is this the economic echelon Greenspan refers to?
September 17th, 2007 at 12:00 am
Shane,
I've gone back and forth over H1-B visas. Without a path to citizenship they amount to a labor subsidy to large firms. My impression is that the program doesn't have such a path as such, but many (most?) H1-B holders either choose to go home on their own or else do gain permanent residency.
Jay,
That's my impression, too.