Labor for Convergence, Big Time.

Just came back from Lant Pritchett's lecture, which was fabulous! The title of this blog post is how he signed my copy of "Divergence, Big Time." [That's right kids. I have a signed copy of his paper!]

Pritchett's lecture sparked a lot of controversy here at Wellesley, which goes to show the degree of sensitivity with which such issues as migration and nationalism must be addressed. Good thing Lant is so engaging and likable.

Quote that I liked: "You find power in silence, not in controversy."
Lant explained it this way: we no longer believe in racism, sexism, sexualism, etc. However, we still believe in nationalism. While people think it is absurd to treat others differently based on race, sex, or sexuality, nobody thinks it is absurd to treat people differently based on nationality. There is silence when it comes to nationalism. Nobody questions the validity of such "imagined communities."

Nayan Chanda makes a similar point in Bound Together. He argues that people have gone from believing in separate towns, to separate states, to separate countries. So why stop there? Isn't it time we made the transition from separate entities to one global community?

Economists always talk about free trade and free movement of goods. However, the gains from free movement of goods are dwarfed by those that are potentially made from free movement of labor. According to Lant's calculations, a lifetime of micro-credit made available to a person in Bangladesh results in gains that are equivalent [in NPV] to those made by a person being allowed to work in the U.S. for 2.4 weeks. 2.4 weeks!
If we allowed 3,000 Bangladeshi workers into the U.S. [the labor force is ~153.1 million in the U.S. including those unemployed], we could help Bangladeshis by as much as Grameen Bank does each year.

Usually people argue that such immigrants would push down wages for U.S. workers. However, a study by Peri found that low-skilled immigrant workers from Mexico actually created more job opportunities for Californians, and added scarcity value to skilled American workers in CA. Why? Because more often than not, low-skilled immigrant workers are imperfect substitutes for high-skilled American workers.

If free migration leads to such pareto improvements, why are people so hung up on the importance of nationalism/borders?

Several friends of mine argued that Lant's idea of a world without borders is a pipe dream. They also argued that culture comes from people being tied to specific places that are not open to everyone. However, the more I talked about this issue with my friends, the more I found myself defending Lant's point of view. I agree that Lant's proposal is somewhat of a pipe dream. However, the more I argue about it with people, the more upset I am that it IS a pipe dream.

One argument that someone made against Lant's idea was that culture is created and preserved because people are tied to a specific place. An example that was presented to me was India. If everyone in India were allowed to move to the U.S., what would happen to the Indian culture? Wouldn't it fade away?

My response to that is as follows. I believe that cultures are preserved not within places, but within people.
This is my over-simplification of the issue: I'm from NYC, and I am very much a New Yorker. I jaywalk all the time, I don't know how to drive, and I am weirded out by strangers who smile or wave to me unnecessarily. However, I attend school in Wellesley, MA. Not because I was tired of NY, or because I wanted to give up being a New Yorker, but because the college that I wanted to attend happened to be in Wellesley, MA. Obviously, I had to make adjustments. However, I still jaywalk [not that it's hard to do in wellesley, ma], I still don't drive, and I am still weirded out by strangers who smile or wave to me unnecessarily. My "New Yorker-ness" has been diluted in the sense that I no longer make a weird face when strangers wave to me. However, I don't think that the people of Wellesley, MA have the right to refuse my entry on the grounds that it is my responsibility to maintain the "New York" culture by staying in NY. Likewise, I don't think one can make the argument that other people should not be allowed to migrate freely b/c their country of origin's culture might fade away. People will preserve their culture no matter where they are if they are so compelled. My parents would rather live in NY than in South Korea any day, but they're certainly not going to tell other South Koreans to stay in S. Korea b/c well, somebody has to preserve the culture. No. Also, if people need to choose between preserving culture, and finding a way to provide food for their families, they are going to choose the latter. It's kind of like the environment. Countries don't give a shit about the environment until after they've developed and have reached a certain level of income.

I feel like one can even argue that victims of various diasporas have been even better about preserving culture than those who have always had a country called home. Maybe people who don't have a country to go back to feel a greater sense of responsibility about preserving culture within themselves. [Just a theory based on comments from Jewish and Armenian friends]

Also, Lant argued that "brain drain" is a concept that has only stuck around for so long b/c it rhymes. He suggested an alternative phrase: "cortex vortex!"

Someone argued that borders should not be open b/c "brain drain" "steals" skilled labor away from developing countries that need it most. Lant argued that the alternative then, is to keep these skilled people out of countries where they will be paid their marginal product and force them to stay in countries where they will be more likely to pursue rent-seeking activities in order to compensate for the fact that they are not paid their marginal product.

Overall, I thought Lant made some very interesting points about migration and development. Another quote that I liked from his lecture was: "We have to think about development in terms of people, not places." When we talk about developing countries, we are really thinking about the people in those countries. So why are we so opposed to labor migration? Why is it such a pipe dream?

Lant talked about so much more, but I'm going to go rest my wrists now. This is one of the longest blog posts I've ever written...and it probably did not do Lant Pritchett's lecture justice. You'll just have to see him for yourself when you get a chance.