[lit-ideas] Re: [lit-id] The Poverty of Heritage
- From: "John McCreery" <john.mccreery@xxxxxxxxx>
- To: lit-ideas@xxxxxxxxxxxxx
- Date: Thu, 25 May 2006 10:47:38 +0900
FYI
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Rising Wages for Nurses? Nanny State to the Rescue
By Dean Baker
t r u t h o u t | Perspective
Wednesday 24 May 2006
The New York Times had an article today that inadvertently
revealed a huge amount about how wages are set in the US economy ("US
Plan to Lure Nurses May Hurt Poor Nations," 5-24-06; A1). We all know
the official story - wages are supposed to be set by the market, our
old friends supply and demand. When certain skills are in short
supply, the wages for workers with these skills are bid up. This leads
more people to acquire the skills and may also reduce the demand.
Eventually, supply increases and demand falls by enough to establish a
balance in the market.
In this wonderful market world, the people who end up with high
wages (e.g. doctors, lawyers, accountants, economists) have skills
that are in high demand and difficult to master. The people with low
pay (e.g. custodians, retail clerks, child care workers, dishwashers,
etc.) are ones who have skills that are relatively plentiful.
That is a nice fairy tale. It has about as much relationship to
the real world as the tooth fairy, as the Times article showed.
The article reports on a provision in the Senate immigration bill
that removes the cap on the number of nurses who can enter the country
each year. The problem, as described in the article, is that the
country faces a large and growing shortage of nurses. In a market
economy, a shortage means that wages should rise. This will cause more
students to enter nursing schools (presumably creating more incentive
to establish nursing schools), and will induce many part-time or
retired nurses to work more hours as nurses. It may also curtail the
demand somewhat, as some tasks that are performed by nurses can
presumably be performed by less-skilled workers.
But, that is not the way things work in the world of the
conservative nanny state. The people who set economic policy in this
country donít want to pay nurses higher wages. They have a different
solution - bring more nurses from developing countries into the United
States. These nurses will be very happy to work for the current wages
received by nurses in the United States, which are far higher than
what nurses in places like the Philippines or India earn. (Never mind
the impact that this drain of nurses has on developing countries.)
Before anyone claims that free immigration is part of a free
market, it is important to remember that the United States does not
have free immigration in general, it only allows free immigration in
occupations where it is trying to depress wages. While it is far
cheaper to educate nurses in developing countries than in the United
States, it is also far cheaper to educate doctors, lawyers,
accountants and economists. The gains from having free immigration for
people working in these professions would be enormous. We could even
share these gains by reimbursing the countries of origin.
This would be an enormous win-win scenario. By making our
education and licensing requirements fully transparent and opening the
door to foreigners in the most highly paid professions, we would be
able to drastically reduce the cost of health care, college education
and many other goods and services. This would mean higher living
standards and more jobs for people in the United States. This is the
gains-from-trade story that economists like to tell in other contexts.
We could share these gains with developing countries, paying them 3 or
4 times the costs of educating these professionals, so that they can
educate more professionals for their own countries, and also
redistribute some of this income.
Incidentally, this form of free trade would also lead to a more
equal distribution of income, improving the situation of those at the
middle and the bottom and the expense of those at the top. Of course
this is the reason why Congress is not about to remove the barriers
that protect our highly paid professionals from foreign competition.
The key to the story is that our political leaders think that free
trade and competition are good only for manufacturing workers, nurses,
and other workers lower down the social ladder. They want the nanny
state to protect the highest-paid workers from international
competition. The huge gap in wages between those at the top and those
at the bottom is not because of the market, itís because those at the
top got Congress to rig the game.
Dean Baker is the co-director of the Center for Economic and Policy
Research (CEPR). He is the author The Conservative Nanny State: How
the Wealthy Use the Government to Stay Rich and Get Richer
(www.conservativenannystate.org). He also has a blog, "Beat the
Press," where he discusses the media's coverage of economic issues. It
can be found at the CEPR website, www.cepr.net.
--
John McCreery
The Word Works, Ltd., Yokohama, JAPAN
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THROW THE RASCALS OUT!
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