May 22, 2013
By David Bier
First, if each new immigrant lowers living standards, new people also lower living standards. But without new people, America’s economy would lack the workers it needs to operate. This highlights an economic principle that economist Deidre McCloskey calls “human resourcefulness.” It is the idea popularized by the late Julian Simon that people are the “ultimate resource,” that new people should be welcomed because all production, even production of environmental goods, ultimately relies on people. As the philosopher John Locke once said, “People are the strength of any country… the more we have the better is it for us.”
Second, wealth comes primarily from specialization and trade, as Adam Smith explained in The Wealth of Nations. Smith and his contemporaries saw dividing labor among more people allows each to specialize in one area and rely on others for other needs. Thus, wealth increases and countries in turn permit more voluntary trade to occur—the opposite, producing everything that one consumes, is poverty. Therefore, prosperity was directly related to the quantity of traders permitted access to an economy, whether through international trade or immigration. As much research has found, free trade and immigration create wealth for Americans.
Third, perhaps the most significant reason that trade and immigration create wealth for Americans is because some individuals have a comparative advantage in production of certain goods. The 19th century economist David Ricardo first explained how this worked in terms of trade between countries, but it works the same between any two people or groups of people. Imagine that Americans can produce a gallon of wine and beer at the relative costs of $10 and $20 respectively, and foreigners can produce them at $40 and $30. In absolute terms, Americans can produce both more efficiently, but if they chose only to make wine and trade wine for beer produced by immigrants, they still save $10...
Read the full article at the Competitive Enterprise Institute: Five Reasons Immigration Creates Economic Benefits