Lant Pritchett's Big Idea

Did you not have enough time to read the Jason DeParle article on Lant Pritchett in the New York Times on Sunday? I have to admit that I skipped it: because DeParle managed to persuade his editors to send him to Nepal, he spends most of the first 1,600 words of his article there, and the main idea doesn't come until about 2,800 words in. Once you get there, however, it makes a lot of sense.

The rich world has lots of well-paying jobs and an aging population that cannot fill them. The poor world has desperate workers. But while goods and capital can easily cross borders, modern labor cannot. This strikes Pritchett as bad economics and worse social justice. He likens the limits on labor mobility to “apartheid on a global scale.”...
Part of Pritchett’s argument is mathematical. Drawing on World Bank models, he estimates his plan would produce annual gains of about $300 billion — three times the benefit of removing the remaining barriers to trade. But the philosophical packaging gives his plan its edge. Pritchett assails a basic premise — that development means developing places. He is more concerned about helping Nepalis than he is about helping Nepal.

DeParle is clearly impresed, but not sold, on this idea, and he quotes no one who's fully on board with Pritchett's philosophy. So Michael Clemens at the Center for Global Development has now stepped in to respond to some of DeParle's criticisms. It's worth reading the whole thing, but here's a taster:

Lant's proposal involves creating three million jobs in the U.S. for guest workers who would not have full citizenship rights. The Times article derides this as "a Saudi Arabian plan in which an affluent society creates a labor subcaste that is permanently excluded from its ranks." Unfortunately this is not the Saudi plan, it's the American plan, today, now. In the 1990s, about 350,000 unauthorized workers entered the country every year (pdf). In other words, over that decade, America took in three million low-skill workers with no citizen rights and, thanks to the recent failure of the immigration reform bill, little prospect of such rights. They were made much better off, the countries they came from were made much better off, and the U.S. remains the richest and most powerful country on earth.

This is a powerful rejoinder. What countries do is what countries do, no matter what they say they do. Americans don't like Saudi Arabia's labor policy because it's a policy. But in fact they do like Saudi Arabia's labor policy in terms of the way that it effectively imports needed cheap labor into a rich country where there are many jobs that citizens have no desire to do. Or at least it looks very much as though Americans like that policy, because America in general runs on illegal labor – and places like California and New York City would grind to a halt without it.

The problem is that Americans don't feel nearly as bad being harsh to laborers who are here illegally as they do about being harsh to temporary workers who would be here legally: they're much happier to deport the former than the latter, for instance, after three or five years. And in any case, the world's system of democratic nation-states simply isn't designed for a quantum leap in free labor mobility. But it would probably be a very good thing if it were.