In yesterday’s blog post, I described the self-regulating nature of the price system in the context of the issue of immigration. I pointed out that when employers raise their wages in a big way, they are sending a message — an invitation — to workers that says: “I need you to come and work for me right now.”
By the same token, retail storeowners and homeowners use the price system to attract consumers and people who are looking for a place to live. I used Austin, Texas, as an example to demonstrate my points about the price system, the fundamental right of freedom of travel, and free-market principles.
Two days ago, the Wall Street Journal published a story about Westlake, Texas, which is located about 10-15 minutes from downtown Austin. The article stated that the median price of a home in that area is $2.65 million. It is virtually impossible to find a home cheaper than $1 million.
My hunch is that most people, especially illegal immigrants, are not going to be moving to Westlake anytime soon. That’s because they simply cannot afford to pay those prices for housing.
The situation in Westlake is a good example of how the price system works. The area is obviously extremely attractive and, thus, very popular. The Journal’s article states: “Known for its natural beauty — rolling hills, trees, lakes and trails — Westlake encompasses the city of West Lake Hills and a handful of other neighborhoods that feed into the coveted Eanes Independent School District…. Local restaurants and shops are clustered along main thoroughfares that offer convenient Austin city access.”
As more people have moved into the area, prices of homes have increased significantly. It’s just a simple application of the law of supply and demand. The tremendous increase in prices is a signal to people: You need to go elsewhere to find a place to live.
In fact, for the past several years, the cost of living, especially for housing, in the entire Austin area has soared, owing to the large number of people who have moved into the area. That increase in prices sends a message to other people, including foreigners, that states: If you’re thinking about moving, you might want to go somewhere other than Austin to live.
These same free-market principles apply to foreigners in general. The reason so many foreigners wish to come to the United States is that it is an attractive economic country, at least compared to the countries they are fleeing. Again, it’s just a simple law of supply and demand.
For example, consider Venezuela. For years, it has been besieged by a combination of two things that have devastated economic conditions: the Venezuelan government’s socialist economic system and the U.S. government’s brutal system of economic sanctions. The consequence of these two factors have put the Venezuelan people on the verge of starvation.
Thus, the United States provides a relatively attractive place to go. If the Venezuelan government were to suddenly abandon socialism or if the U.S. government were to suddenly lift its brutal system of sanctions, then economic conditions in Venezuela would immediately improve. Such being the case, for some Venezuelans it would no longer be worth it to leave their country to move to the United States. In other words, the marginal benefit of moving, compared to staying, would no longer be worth it to them.
There is also another factor to consider in the immigration area — the U.S. government’s war on drugs, which U.S. officials have pressured Latin American officials to wage. The drug war has brought into existence Latin American drug cartels and massive violence. Thus, many Latin Americans naturally try to save their lives and the lives of their families by fleeing to the United States, where life is relatively more secure.
If the United States were to legalize drugs, Latin American countries would almost certainly do the same. The drug cartels and the drug-war violence would immediately evaporate, which would make life in Latin American countries much more attractive than it is now. Once again, under the law of supply and demand, the marginal value of moving to another country would diminish, which would bring a more natural flow of immigrants to the United States.
If only Americans were to rediscover the virtues of a genuine free-market system and commit themselves to restoring it, we would be well on the road toward restoring a harmonious society based on economic liberty, free enterprise, morality, religious principles, and a limited-government republic.