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A Good Problem ?

08/27/2017

There is a nation that is considered wealthy, where workers earn good wages.  There is another nation that is not wealthy, where workers earn lower wages.  For some reason, workers earning low wages migrate to the wealthy nation, where they can earn a better living for their families.  The leader of the wealthy nation becomes indignant, insisting these immigrants are taking jobs away from his higher-paid workers and accuses the non-wealthy nation of “social dumping.”  The leader of the less-wealthy nation is offended and insults the intelligence of the other leader. calling him “arrogant.”

You are forgiven, if you assume that we’re talking about the United States and Mexico.  Instead, we’re talking about France and Poland.  The latter has exported about 450 thousand of its Polish citizens to other EU nations, while France has imported about 175 thousand of the cheaper workers.  Germany has imported about 400 thousand cheaper workers from other EU nations.

We like to say that “capital flows to where it is most appreciated,” meaning that capital leaves nations with low interest rates and goes to nations with higher interest rates.  So does labor – it flows to where it is more appreciated.  Poland has more workers than jobs.  Those workers then go where the jobs are.  This importing and exporting of workers is not new.  Slavery is but one example.  (Remember:  it is better to be a net importer of labor than an exporter.)

There are two differences.  First, since France and Poland are not contiguous, no “Great Wall” would help stem the flow.  Secondly, within the European Union, workers are allowed to migrate and are not “illegal” immigrants.  They are called “posted workers.”  The economic demand for workers doesn’t care if those workers are documented or undocumented.  There is an economic need to be met.

Laws usually prevail in the short run, but economics will prevail in the long run.

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