One thought on “Sandpit

  1. “Open borders” is another one of those mythic constructs like “free markets”. Neither phrase makes any sense when you analyze it. They are political catchcries, not firm or technical definitions which would allow one to examine matters logically. No market is perfectly free and no border is perfectly open. Indeed, the term “open border” is an oxymoron. If a border or boundary is perfectly open in every sense then it is not a border or boundary in any sense.

    No market is perfectly free. We can easily see this. Every market exists in an institutional setting of society, culture, government, law, common law and custom. Every market is also regulated to a greater or less degree. For example, there are restrictions and even bans on trading many dangerous and illegal goods.

    With borders, the correct way to look at such matters is to view them through the lens of complex system thinking. A nation is a system. A border is a boundary and a boundary is one of the defining characteristics of a system.

    “A system is a set of interacting or interdependent component parts forming a complex or intricate whole. Every system is delineated by its spatial and temporal boundaries, surrounded and influenced by its environment, described by its structure and purpose and expressed in its functioning.” – Wikipedia.

    To highlight the boundary issue. Systems are a complex of interacting parts and processes which are interrelated in such a way that interactions between them sustain a boundary-maintaining entity. (Adapted from Laszlo.)

    If you fully abolished a nation’s boundaries, if that were possible, then that nation would cease to be a nation. A formal national border is not the only boundary a nation has. Boundaries will be found to be implicit in the system,as a system, in many other ways. Immigration border control could be abolished while maintaining the “border of law”. You would be free to come into Australia but once you passed the border, Australian law would apply to you and indeed would apply to certain crimes committed abroad (and recognised by Australian and international law). One of the results might be a delayed deportation. The “open border” is thus not truly open.

    While capitalism exists, less controlled borders will favor capitalists over all other people on average and by a considerable margin. Free movement of capital clearly favors owners of capital the most. A free system, an unregulated system, always favors those with the most capacity. Just as an open buffet favours large-stomached gluttons, an unregulated capital system favors those with the most capital.

    Some poor workers can get a benefit from less controlled borders for humans, but most workers globally will be forced into a further race to the bottom under a de-regulated capitalist system. Where capital holds the whip-hand (almost everywhere now under neoliberalism), poor people moving to well-developed areas will force wages down and lift unemployment there (unless there is an absolute labor shortage there, a situation which pertains almost nowhere in the world now). There will be no concomitant increase in wages in the areas they left. The labor glut is global under conditions of advanced industrialization. Global labor arbitrage will ensure industry and jobs still move to the places with the poorest wages, the weakest regulations and the weakest environmental protections. The global average labor share of income will fall. This is the real world experience under neoliberalism or late stage capitalisism; call it what you will.

    See “The Global Decline of the Labor Share” –
    Loukas Karabarbounis
    University of Chicago and NBER
    Brent Neiman
    University of Chicago and NBER
    June 2013


    The stability of the labor share of income is a key foundation in macroeconomic models. We document, however, that the global labor share has significantly declined since the early 1980s, with the decline occurring within the large majority of countries and industries. We show that the decrease in the relative price of investment goods, often attributed to advances in information technology and the computer age, induced firms to shift away from labor and toward capital. The lower price of investment goods explains roughly half of the observed decline in the labor share, even when we allow for other mechanisms influencing factor shares such as increasing profits, capital-augmenting technology growth, and the changing skill composition of the labor force. We highlight the implications of this explanation for welfare and macroeconomic dynamics.”

    Click to access KarabarbounisNeiman13.pdf

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