The Invisible Hand

The Invisible Hand

1776 was a momentous year. Thirteen British colonies in North America banded together and determined to break away from King George III, joining in a Declaration of Independence.  As Franklin supposedly said at the time, “…we must all hang together or most assuredly we will all hang separately.”  

But Jefferson’s Declaration wasn’t the only foundational document of that year.  In Scotland, Adam Smith authored The Wealth of Nation, the basis of modern economic thought.  In his treatise, Smith describes “the invisible hand,” the equilibrium between supply and demand that establishes costs in a market.

Supply and demand concepts didn’t begin with Smith, but his description of those forces clarified it. And while there have been many other theories and philosophies of economics since Smith, his fundamental description of market forces remains true.

In the United States today, we look at the nations to our South as “a danger.”  Some want to militarize our borders, others want to “Wall” ourselves off from the world.  Many Americans feel threatened by all manners of evil from the border: drugs, criminals, sex slaves, terrorists; all have been described as crossing into the United States unfettered by the border guards.

It makes some simple sense: put up a wall, and keep what we don’t want on the outside of it.  Many make the analogy of locking your house at night, preventing break-ins.  And yet that doesn’t seem to work, there are break-ins all the time.  The next step, get a security system, alarms that will call police.  But, while that has some deterrent effect, in the end houses with alarms get broken into as well.  

So some Americans then arm themselves with weapons, threatening to shoot any intruder.  The problem:  they spend the nights on guard, in fear of attack.  And sometimes they do shoot the intruders, only to find their child was sneaking back into the house.  So while weapons might stop intrusion, it raises the risk of accident, and makes a questionable moral statement:  I can take your life for trying to take my property.

Before we spend billions of dollars to build a wall, we should ask ourselves two questions:  why are people coming across our border, and are they of value to us?  

Honest migrants want to come to America for safety and protection.  They are the reason for the UN Treaty on Migration:  folks in fear of their lives, asking for asylum and protection in a larger, safer nation.  We should all agree that this is clearly the moral thing to do, to offer that protection and safety to those who cannot protect themselves.

Honest migrants come to America for jobs and a better way of life.  And America needs those migrants to work; they do jobs that most American citizens don’t want.  Whether it’s chicken factories in Arkansas, or truck farming in California, or housekeeping at the Trump National Golf Course in New Jersey; Americans need migrant workers.  We, the United States, have created a demand for their supply.  The “invisible hand” of economics is filling that demand, regardless of border guards or concertina wire.

If we want fewer migrants, legal or illegal, then we need to change THEIR supply.  We could do that be altering their lives at home, by changing the socio-economic forces in their own countries.  We are already seeing in Mexico, as conditions improve and fewer Mexicans leave for the US.  Spending money to make Central America a better place to live, rather than on a wall, would be a better long term investment.

Sadly, the United States has an almost insatiable demand for drugs.  In 2010, the Rand Corporation estimated that Americans spent $100 billion on four drugs:  heroin, meth-amphetamine, marijuana and cocaine.   With the increased use of heroin and the advent of Fentanyl we can only assume that that cost has gone up, probably by several orders of magnitude.

With that kind of demand, and the subsequent profit available, it’s hard to imagine a simple wall would stop anything.  Drugs come through customs, they come by air, they come through tunnels, they come by boat, the come in the digestive tracts of human drug-mules.  Since Richard Nixon declared “a war on drugs” in 1971, the United States has done everything it can to interdict drugs, and punish drug sellers and users.  We have locked the doors, put an alarm system in, and guarded the border.  The problem has continued to grow.

We have even tried to destroy the supply, using chemical agents on South American coca crops.  We have had little impact on drug supplies, but what we have done is encouraged a wide range of “creative” ways to get drugs in. And when we do manage stop some, we find “home brew” drugs being manufactured: go almost anywhere in rural Ohio and ask about crystal-meth.  The bottom line:  a wall won’t stop drugs.

So how can we use “the invisible hand” to change our border?  First, we can recognize that the United States NEEDS a significant amount of the labor provided by migrants.  We can alter our policies to allow for legal immigration for them, and then we can assure that employers both pay a living wage, and are punished for using illegal immigrants.  We can then try to change the environment in those countries in Central America where people live in poverty and fear.  By improving their lives there, we keep them from coming here.

And while we can’t stop policing drugs at the border, we should start looking at the reasons for drug use. Drug-use prevention, rehabilitation and de-criminalization may (there are no guarantees) impact on reducing demand, thus reducing the pressure to supply.  This is not a panacea;  but our current strategy hasn’t worked for almost fifty years, and “doubling down” with walls, concertina barbed wire and guns at the border is expensive, and will have  little impact.

To solve our problems at the border, we need to look at ourselves, not those outside.  The “invisible hand” tells the tale:  it is our demand, not their supply, that creates the problem.