In the immigration debate, the conventional wisdom is that the solution to millions of “undocumented workers” is for the government to print up documents for them.
That always reminds me of a pivotal scene in Evelyn Waugh’s prophetic 1932 novel Black Mischief. After observing Haile Selassie as crowning emperor of Abyssinia, Waugh wrote a tale of an African monarch attempting to renovate his realm through an ambitious One Year Plan that was the most accurate fictional portrait of 1970s Africa until John Updike’s 1978 novel The Coup.
The Emperor Seth’s downfall begins when he learns that for a modest fee he can have printed in Europe millions of pounds of paper money with his picture on them. The monarch explains to his aghast Minister of Modernization, Basil Seal:
You see there were a great many things which needed doing and I had not a great many rupees.…Pretty fine picture of me, eh? I wondered about the hat. You will see that in the fifty pound notes I wear a crown.
Seal attempts to outline to Seth the principles of monetarist economics (such as that, all else being equal, increasing the supply of money decreases its value), only to give it up as hopeless. “I knew you would understand,” says the Emperor. “It is so simple. As soon as these are used up we will send for some more.”
This ignorance of the law of supply and demand may seem derisible today, but the topic is esoteric enough that we should have some sympathy for the many politicians in the decades after World War II who cranked out too much fiat money.
While governments had long understood that counterfeiting currency in your basement robs the public, the temptation to bloat the money supply legally was hard for governments to resist in the post-gold-standard era.
Thus, the 1970s were a decade of stagflation in America and worse in Britain. (The foremost exception to this inflationary decade was Germany, which had learned its lesson from the Weimar Republic’s hyperinflation of 1923 that wiped out savers, with unfortunate political consequences).
Ethnically Catholic countries such as Italy and Argentina were particularly prone to inflation due to trying to please everybody. When the workers demanded higher wages, the government would order the employers to pay up. When the firms then complained that they were going broke, the government would order the banks to lend them more money. When the banks predictably faced ruin, the government would lend them newly concocted money. After a few years, it would have to issue renamed banknotes with three digits lopped off.
For example, the Mexican inflation rate would spike to over 50 or even 100 percent per year whenever presidents’ six-year terms were up in 1976, 1982, 1988, and 1994.
And yet the human race sometimes learns from its mistakes. Retail price inflation, which was a major economic curse of my young manhood, has been reasonably under control in much of the world in recent years. (Asset price inflation, however, is a different story, as the late housing bubble indicates.)
While Zimbabwe (whose 89-year-old ruler, Robert Mugabe, was reelected last week) experienced hyperinflation so ludicrous (an estimated 6.5 sextillion percent at its peak) that it has not had a national currency since 2009, it’s now the exception rather than the rule. Zimbabwe’s neighbor South Africa, for example, currently has an inflation rate of 5.5 percent. And Mexico’s is only 4.1 percent.
Unfortunately, while people can learn from painful experiences, we’re not very good at drawing analogies. It ought to be readily apparent that Marco Rubio’s push to print up documents for millions of undocumented illegal aliens and tens of millions of new immigrants is similar to the discredited Juan Peron/Salvador Allende school of economic management.
Evidently, though, it’s not.
Today, we comprehend that if, like the Weimar Republic in 1923, the government undermines the scarcity value of money, people could end up having to take a wheelbarrow full of cash to buy groceries. But the majority of the Senate that voted for the Schumer-Rubio bill to put tens of millions of foreigners on “a pathway to citizenship” by converting their counterfeit documents into new official papers showed little understanding of the scarcity value of citizenship and right of residence.
This willful ignorance isn’t surprising because politicians love giving big handouts to small numbers of people by nicking a small amount from big numbers of people. For instance, farm subsidies take billions from random taxpayers like you and me and give it to a small but well-funded lobby that has been enjoying record profits. Sure, it’s inane and corrupt, but is it worth your while to lobby Congress just to save a small amount in taxes?
Even more than they love taxing and spending, politicians adore a giveaway that doesn’t show up in the budget. Stumped by how to get minorities to earn more money, for instance, George W. Bush announced at his 2002 White House Conference on Increasing Minority Homeownership his plan for letting minorities borrow more money: Reduce requirements for down payments and documentation on mortgages. What could go wrong?
Even better from the modern Senator’s standpoint is frittering away the scarcity value of your citizenship on various ethnic and business lobbies. In part, that’s easy to do because the notion that American citizenship has a cash value is not a concept that comes readily to the minds of idealistic Americans.
It sure does to foreigners, however. Randall Burns calculated in 2005 from Indian-arranged marriage ads that an H-1B visa adds $50,000-$70,000 to dowries. The gold standard of citizenship is worth even more. Similarly, Chinese birth tourism websites are extremely informative about all the advantages that accrue from glomming onto birthright citizenship.
Moreover, Americans don’t like to admit that the chief advantage of being an American is that our forefathers carved out for us a big, empty country where the short supply of labor and the ample supply of land would make a middle-class existence broadly affordable. Benjamin Franklin explained in the 1750s that in the Old World, in contrast to high-wage, low-cost America:
In countries fully settled…those who cannot get land must labor for others that have it; when laborers are plenty, their wages will be low; by low wages a family is supported with difficulty; this difficulty deters many from marriage, who therefore long continue servants and single.
Thus, Franklin proposed restricting immigration to preserve Americans’ patrimony of economic independence.
That’s what the Senate is trying to give away with the Schumer-Rubio immigration bill. To them, Franklin’s vision of self-ruling Americans is annoying. In contrast, a nation of Latin American-style debt peonage, keeping citizens single and servile, is the Promised Land.
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