Tuesday, October 18, 2005

I am not a Macro-Economist, but I play one in the Blogesphere.

On the ride home today I listened to the fallout over Homeland Security Secretary Michael Chertoff's statement. If you want to talk about stealth, how about this as a stealth policy.

"Our goal at DHS (Homeland Security) is to completely eliminate the 'catch and release' enforcement problem, and return every single illegal entrant, no exceptions. "It should be possible to achieve significant and measurable progress to this end in less than a year," Chertoff told a Senate hearing.
The Bush administration has been in office for a while, and they have been very busy trying to keep suicide bombers out of our shopping malls, and for that I am very grateful, but this seems like a 180 degree shift in policy. One I am pleased to hear.

One of the hot topics on talk radio were the callers who employ illegal aliens in their businesses reacting to the reality of keeping the doors open without this cheap source of labor. That started my thinking, and as you know, that can be a dangerous thing.

My question, is the inflation rate being drastically influenced by our trade imbalance with China, and illegal aliens in our work force?

It seems to me that while gasoline and housing, especially here in California keeps soaring out of site, most day to day products have remained in check. We are buying more products from China than ever before. Why? Because they are cheap, and the quality is fast becoming acceptable to US markets.

It is hard to find US made products in most stores. I would like to see a study done where a family of four goes back to school shopping as they regularly do. I would then send them back to the stores and tell them that they have to re-purchase the same items, only this time they all must be made in the USA. I wonder what the difference in price would be? 10%, 20%, 50% ? I am not sure, but the difference would be eye opening.

I would also like to see how much a concrete patio or re-tiling your kitchen would cost in California if you sent all the illegal workers back south of the border? Not to mention your landscaping bill. Again, 20%, 30%, 50% or more?

My point is not to bash China or Illegal aliens, I am asking are these two dynamic forces keeping our inflation rate unnaturally low? If so, here is another question, if your are in favor of buying American, or sending the illegals back home, are you willing to pay more for just about everything?

It is a question that I wrestle with.

We live in a global economy, we cannot go back to the days when garment workers were paid like auto workers. China and the Asian rim countries can make products to our quality specifications for a fraction of the price. I just don't see some industries, like textiles, coming back to this country. That is reality. It may not be the reality that a union garment worker would like, but it is what it is. That leads me to the second shoe dropping. As we have transitioned to a service industry society, we are being priced out of those jobs by foreign competition. The blue collar jobs are facing increasing competition by Mexican and Latin American workers, while the white collar jobs are being syphoned off by India and the Asian rim.

Gone are the days when a young man out of high school can get a job at a construction company for twice the minimum wage and learn a trade. This employer can now hire an experienced man, with a family to feed, who is going to show up on time every day and work hard. Being an illegal alien, he can also pay him just above minimum wage and without workers comp, SSI, and FICA to match, he is money ahead. He is also committing a crime.

Another question that you do not have to have an Economics degree to answer. Would you be willing to have the core rate of inflation go back to 4-7% a year to have more American products on the shelves made by American workers?