Rudimentary Economics Versus Rudimentary Politics

Sarah Palin made a good point in a speech this week about the immigration "reform" bill that has just passed the Senate.   Palin called the bill " a "sad betrayal of working class Americans of every ethnicity who will see their wages lowered."

She's right.   This is rudimentary economics -- the law of supply and demand.  Labor is what economists call an "input"; it must be purchased in the marketplace just like a carmaker would purchase steel for car chassis, and energy to run its factory.   If there is more steel on the world market, the price the carmaker has to pay goes down; if less, it goes up.   If there is more abundant energy, the cost for that "input" goes down; if less, it goes up, with a concomitant loss of profit.

We do not have a labor shortage in America, we have surplus labor.  We have millions of long-term unemployed, millions of young people struggling to find jobs (often unable to pay off student loans).   Not surprisingly, then, given the law of supply and demand, we have seen flat wages and slimmed-down benefit packages.   And, remember, benefits (health insurance, pensions, etc.) are just different forms of compensation -- the more competition in the job market, the lower the total compensation (wages and benefits) companies have to pay.   That is good for labor costs from the companies' perspective, but it's bad for workers. 

But, while the economics is rudimentary, there is also the sad fact of rudimentary politics.   Politicians (and this goes for left and right, liberal and conservative, Democrat and Republican) don't care about the lives of real working people.   They may care about an abstraction called "the People," but that is lip service.   Politicians care about getting elected and re-elected, gaining power and keeping power and dispensing power to their friends in the elites.   This certainly applies to the Chuck Schumers and Harry Reids in the Democratic Senate leadership, who want immigration reform and amnesty because they want tens of millions of new Democratic voters; but it also applies to Marco Rubio of Florida, who apparently wants more than anything to be President, and apparently thinks the way to do so is to become a heroic "centrist."  

He's wrong.   Democrats like centrist Republicans like McCain and Graham and Rubio because they can roll them on issues like immigration where the elite opinion in Washington is operating in a realm of fantasy.   But they won't vote for them in the end.   Shumer and Reid's political calculations in my view are more accurate -- amnesty will mean a permanent Democratic majority, because Mexican Hispanics moving into a state like California will be more likely to gravitate toward big government and dependency on government services and, hence, the party of Big Government, the Dems.  

Either way, the point is... rudimentary politics is trumping rudimentary economics.