Yesterday I wrote about how exponential economic growth has a much larger impact on employee welfare than unions can hope to. Well low wages isn’t the only problem economic growth can solve!
Economist and Judge Richard Posner, influential member of the law and economics movement, thinks that with the debt and obligations the US has piled up, their only real option is to focus on maximising exponential economic growth (HT Robin Hanson):
I conclude that there probably is only one way out of our fiscal dilemma, apart from default, devaluation, or runaway inflation, and that is to increase the rate of economic growth to the point at which a growing public debt falls, or at least does not increase further, in percentage of GDP. But measures to increase economic growth must satisfy four criteria: that they not interfere with the economic recovery; that they not put the government in the futile position of trying to pick tomorrow’s industry winners and investing in them (“industrial policy”); that they not cost too much, as that will contribute to the deficit, because the costs are likely to be incurred before the benefits are obtained; that they be politically feasible.
What is the easiest way to get economic growth? Immigration, says Bill Easterly!
In 2001, I published an obscure paper that concluded “Econometric tests and fiscal solvency accounting confirm the important role of growth in debt crises.” Based on this, I can now say that Haitians can rescue the US from an impending budget crisis. The crisis is already severe, with previously unthinkable warnings that US government bonds might lose their AAA rating.
Here’s the short version. If you are worried about having enough tax revenue to pay interest on the government debt, find more taxpayers! And look, here are some people volunteering to become new taxpayers: Haitian immigrants fleeing quakes and poverty! So let’s open the door to our Haitian fiscal rescuers, who will also lift themselves out of poverty as dramatized by a previous post. It’s a TWOFER!
End poverty and get your bill paid on time! Immigration – is there anything it can’t do?
Added: Posner also mentioned immigration, though only of skilled migrants, in his list: “1. Remove all limits on the immigration of highly skilled workers, or persons of wealth. (This should be done gradually, so as not to increase unemployment while the unemployment rate remains very high.)”
Added: A video about the huge contribution migration has made to ending poverty in the past and how it could do so again today if we let it.