Why we need more people and competition
Nobel Prize laureate Gary Becker died on Saturday at the age of 87. He first published The Economics of Discrimination, the monograph developed from his doctoral thesis, in 1957. The book did not attract much attention until the civil rights movements in the 1960s.
Half a century away, almost everyone from left, right and center agrees with Becker that discrimination is costly for victims as well as those who hold irrational prejudice against others.
Becker was also the first to popularize the catchphrase "human capital," which was once considered dehumanizing and debasing. In 1964 he published Human Capital, suggesting that as a means of production human capital is substitutable yet it can also be augmented by education, training and healthier lifestyles.
Marxists abhor the idea. Individualists and libertarians are uneasy. Policymakers, however, find it a good reason to expand public programs in education, vocational training and medicine.
True to his belief that the market mechanism is the most efficient way to allocate rights and resources, Becker argued that the right to citizenship should be sold. Opponents from the libertarian side say people should be free to move. On the other side, protectionists warn that criminals, terrorists, the sick and welfare rent-seekers will take advantage of the loophole.
It is interesting to note that the staunchest opponents of open immigration are not the vested interests and existing welfare rent-seekers. They believe that the welfare establishment can grow forever. Taxpayers and the middle-income working class are the ones who are both afraid of a bigger tax bill and more competition.
In reality, countries are already offering rights of residency to those with much-needed skills or talents. Auctioning the immigration rights to individuals, nevertheless, implies the elimination of middlemen such as immigration lawyers and investment consultants.
Isn't it always better to be more transparent? It is a no- brainer that countries which attract more capital and human capital perform better.
Discrimination against capital and human capital of foreign origin is irrational and it hurts the nation and the people. As Keynes noted, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. I hope Keynes is right about Becker.
Hong Kong needs more people, money and competition. Demand should be filled, the sooner the better.
Wednesday, May 07, 2014
