Re: John Hood’s “industrial policy” comments. No, I don’t think that “government policymakers know better than entrepreneurs and managers how to operate businesses” — heck, they’re hard-pressed to operate the government properly. The problem is that access to cheap foreign labor through the federal immigration program (or through federal refusal to enforce immigration controls) short-circuits the natural tendency of a modern economy to upskill its workforce and have relatively fewer low-skilled workers. In effect, through immigration policy Washington serves as an enabler of certain industries’ addiction to cheap labor, to the industries’ long-term detriment.
Southern California Edison, for example, did a report a few years ago on the local garment industry, noting that “overreliance on relatively low-cost sources of labor may now cost the industry dearly. The fact is, southern California has fallen behind both domestic and international competitors, even some of its lowest-labor-cost competitors, in applying the array of production and communications technologies available to the industry.”
The federal government shouldn’t allow the importation of any low-skilled labor for its own sake (as opposed to, say, refugees or an American marrying a foreigner, where skills are not the issue), and then simply allow market forces to work. This might mean some production is offshored — maybe strawberries can’t be grown in First-World conditions, in which case we should be happy to import them — while other functions will be mechanized. I’m happy to let the market work that out organically — within the context of limited access to the American labor market. And experience has shown that such limited access ends up being good even for the industries themselves.