Progress Daily

YouNotSneaky! points out (”How much of a jerk do you have to be to oppose immigration?“) that a low-skilled worker can make $9.34 an hour in America, compared with just $2.56 in Mexico. He assumes that migrants depress the wages of low-skilled Americans by 5% — a widely cited estimate. To justify opposing immigration, the blog concludes, you must attach at least 20 times more weight to the well being of a native-born American than to a Mexican.

Gordon Hanson points out (”The Economic Logic of Illegal Immigration” — .pdf file here) that since 1960 the share of native-born workers with less than a high-school diploma has fallen from 50% to 12%. Some 24% of farm workers, 17% of cleaners and 14% of construction workers are illegal aliens.

A study in the 1990s showed that a 10% drop in Mexican pay relative to US wages prompted a 6% increase in attempts to cross the border. Recently, a slowdown in remittances to Mexico and other Central American countries suggests the housing bust, and home-building slump, may have reduced the pace of illegal immigration.

“Guests v gatecrashers,” The Economist

Until 1997, on average, 5-8% of Kerala’s total fish catch was wasted, says Robert Jensen [”The Digital Provide”; .pdf file here], who has surveyed the price of sardines at 15 beach markets. On January 14th 1997, for example, 11 fishermen at Badagara beach ended up throwing away their catches, yet on that day there were 27 buyers at markets within about nine miles who would have bought their fish. There were also wide variations in the price of sardines along the coast.

But starting in 1997 mobile phones were introduced. Coverage spread gradually, providing an ideal way to gauge the effect.

As phone coverage spread between 1997 and 2000, instead of selling their fish at beach auctions, the fishermen would call around to find the best price, while still at sea. Dividing the coast into three regions, Mr Jensen found that the proportion of fishermen who ventured beyond their home markets to sell their catches jumped from zero to around 35% as soon as coverage became available in each region. At that point, no fish were wasted and the variation in prices fell dramatically. By the end of the study coverage was available in all three regions. Waste had been eliminated and the “law of one price” had come into effect, in the form of a single rate for sardines along the coast.

Fishermen’s profits rose by 8% on average and consumer prices fell by 4% on average. Higher profits meant the phones typically paid for themselves within two months.

Leonard Waverman [”The Impact of Telecoms on Economic Growth in Developing Countries”; .pdf file here] found that an extra 10 mobile phones per 100 people in a typical developing country leads to an additional 0.44 percentage points of growth in GDP per person.

“To do with the price of fish,” The Economist

Farm subsidies are bad for both taxpayers and unsubsidized farmers, but in 2002 the American farm lobby got a 70% increase in government support.

Since 1976, the Worldviews survey has always found that Americans who “sympathize more with those who want to eliminate tariffs” are seriously outnumbered by “those who think such tariffs are necessary.” A 2004 PIPA-Knowledge Networks Poll found that 58% agree that “government needs to subsidize farming to make sure there will always be a good supply of food.” In 2006, the Pew Research Center found that over 80% of Americans want to raise the minimum wage.

Yet economists have spent centuries explaining how markets channel greedy intentions into socially desirable results; how trade is mutually beneficial both within and between countries; how using price controls to redistribute income inflicts a lot of collateral damage. These are the lessons of every economics textbook. Economists across the political spectrum see eye to eye on these basic lessons.

As every introductory teacher of economics knows, students are not blank slates. On the first day of class, they arrive with strong — and usually misguided — beliefs.

The mystery of politics is why policies aren’t a lot worse.

“Special-Interest Secret,” by Bryan Caplan

Man’s habitat at the outset was dominated by the need to find food, and hunting and foraging were rural pursuits. Not until the end of the last ice age, around 11,000 years ago, did he start building anything that might be called a village, and by that time man had been around for about 120,000 years. It took another six millennia for cities of more than 100,000 people to develop. Even in 1800 only 3% of the world’s population lived in cities. Sometime in the next few months, though, that proportion will pass the 50% mark, if it has not done so already.

The first villages came with the emergence of agriculture and the domestication of animals: people no longer had to wander as they hunted and gathered but could instead draw together in settlements, allowing some to develop particular skills and all to live in greater safety from predators. After a while the farmers could produce surpluses, at least in good times, and the various products of the villagers—grain, meat, cloth, pots—could be exchanged. Around 2000BC metal tokens, the forerunners of coins, were produced as receipts for quantities of grain placed in granaries. Cities began to take shape at about the same time.

They did so, first, in the Fertile Crescent, the sweep of productive land that ran through Iraq, Syria, Jordan and Palestine, from which Jericho, Ur, Nineveh and Babylon would emerge. Rome was the first great metropolis, which boasted, at its zenith in the third century AD, a population of more than 1m people.

The city became a centre of exchange, both of goods and of ideas, and so it also became a centre of learning, innovation and sophistication.

Technological changes made it possible to survive in a city. The Romans, for instance, constructed aqueducts to bring fresh water to their towns and sewers to provide sanitation.

With the new factories of the industrial age that began in the late 18th century was born an entirely new urban era. Peasants left the land in their multitudes to live in new cities, first in the north of England, then all over Europe and North America. By 1900, 13% of the world’s population had become urban.

The latest leap, from 13% to 50% took just 107 years. Improvements in medicine, coupled with new knowledge about ways to avoid disease, have enabled more and more people to live together without succumbing as once they did to diarrhoea, tuberculosis, cholera and other pestilences. The same developments have lengthened lives in the countryside, leading to a huge increase in rural population, but without commensurate growth in rural prosperity. As a result, ever more villagers have seeked a better life in the city.

“The world goes to town,” by John Grimond

The Survey of Americans and Economists on the Economy finds that, compared to the experts, laymen are much more skeptical of markets, especially international and labor markets, and much more pessimistic about the past, present, and future of the economy. When laymen see business conspiracies, economists see supply-and-demand. When laymen see ruinous competition from foreigners, economists see the wonder of comparative advantage. When laymen see dangerous downsizing, economists see wealth-enhancing reallocation of labor. When laymen see decline, economists see progress.

Controlling for income, income growth, job security, gender, and race only mildly reduces the size of the lay-expert belief gap. And, since the typical economist is actually a moderate Democrat, controlling for party identification and ideology makes the lay-expert belief gap get a little bigger.

The data show that no matter how much you know about a voter’s material interests, it is hard to predict how he is going to vote. In contrast, if you know what a voter thinks is best for society, you can count on him to support it.

The Survey asks respondents to say whether “too many immigrants” is a major, minor, or non-reason why the economy is not doing better than it is. 47% of non-economists think it is a major reason; 80% of economists think it is not a reason at all. Since immigrants are largely young males, and most government programs support the old, women, and children, immigrants wind up paying more in taxes than they take in benefits. (See Ronald Lee and Timothy Miller “Immigration, Social Security, and Broader Fiscal Impacts” and Julian Simon The Economic Consequences of Immigration.)

Virtually every survey finds that a solid majority of Americans wants to reduce immigration, and almost no one wants to increase immigration.

The data show that well-educated voters hold more sensible policy views. (In “What Makes People Think Like Economists?,” Caplan estimates that each step of education on a 1-7 scale has 9.3% as much effect on economic beliefs as a Ph.D. in economics.)

“The Myth of the Rational Voter,” by Bryan Caplan

US pop culture tends to be popular in regions like Scandinavia that are lightly populated, not very hierarchical and looking for new global cultural symbols. But most of the world’s population is in countries — China and India, Brazil, Mexico, Egypt, Indonesia, etc. — that do not fit that description.

Hollywood movies often capture 70% or more of a typical EU cinematic market.

The Indian music market is 96% domestic in origin. It is common in Central America for domestically produced music to command up to 70% of market share. In Ghana, domestic music has captured 71% of the market. Data supplied by Omar Lizardo (see “Globalization and Culture“) show that the poorer a country, the more likely it will buy and listen to its own domestic music.

“Some Countries Remain Resistant to American Cultural Exports,” by Tyler Cowen

In America around 20m jobs, or about one in seven, are lost involuntarily every year. Only a small fraction of those, some 2m-3m a year or 2% of all jobs, are permanent “displacements,” where workers have little or no prospect of returning to their old industry. The displacement rates for Europe are broadly similar. Only a small share of these permanent job losses can be directly attributed to globalization, rather than, say, to technological change.

A study by Lori Kletzer found that only 14% of displaced manufacturing workers are in industries facing intense international competition. To judge by the number of people receiving Trade Adjustment Assistance, the figure is even lower: fewer than 120,000 workers were deemed eligible for it in 2005.

“Trade’s Victims,” The Economist

Rich countries are mostly trading with each other. China, with about 1/4 of the world’s population, produces less than 4% of the world’s exports. Mexico exported less than Belgium in 2000. India, with a billion people, produced less than 1% of world exports. And these figures are for physical merchandise: developing countries contribute even less to the trade in commerical services.

North American imports from the least developed countries were only 0.6% of total imports in 2000, down from 0.8% in 1980. And 0.5% of Western Europe’s imports in 2000 were from these countries, down from 1%. For Japan, the figure is 0.3%, down from 1%. For all the major world traders put together, the percentage of their imports from the least developed countries is 0.6%, down from 0.9% 20 years before.

The Undercover Economist, Tim Harford

Between 1990 and 2000, the Gross Domestic Product of the United States grew from $5.8 to $9.8 trillion – an increase of nearly 70%. At the same time, exports grew from $393 billion to $780 billion. This period also saw an increase in employment in the U.S. from 109 million to 132 million non-farm jobs. In the high-tech sector alone, exports reached $180 billion in 2003, supporting an estimated 1.4 million jobs in the United States. 95% of the world’s customers and 70% of the world’s economic product lie outside the US.

Export-related jobs pay, on the average, 18% more than jobs unrelated to exports or trade. Between 1983 and 2002, higher-paying managerial and professional jobs in the US expanded from 23% to 31% of total employment.

Between 1993 and 2002, total private sector employment increased by almost 18 million jobs. Yet during this time, almost 310 million jobs were destroyed – while 328 million new jobs were created.

Over the last decade, according to the World Bank, per capita incomes grew 5.1% in developing countries with high trade and investment flows, while more isolated countries experienced income declines of 1.1%.

“International Trade,” Electronic Industry Alliance

Norman Borlaug: Thanks to synthetic fertilisers global cereal production tripled between 1950 and 2000, but the amount of land used increased by only 10%. The more intensively you farm the more room you have left for rainforest.

Anthony Trewavas: organic farming requires more energy per ton of food produced because yields are lower and weeds are kept at bay by ploughing.

Michael Pollan: only 1/5 of the energy associated with food production across the whole food chain is consumed on the farm: the rest goes on transport and processing.

“Fairtrade” means paying producers an above-market price for produce, provided farmers meet particular labor and production standards. This premium is passed back to the producers to spend on development programs.

Tim Harford: the low price of commodities such as coffee is due to overproduction, and ought to be a signal to producers to switch to growing other crops. Paying a guaranteed premium both prevents this signal from getting through and, by raising the average price paid for coffee, encourages more producers to enter the market. This then drives down the price of non-Fairtrade coffee even further, making non-Fairtrade farmers poorer.

“Voting with your trolley” The Economist