Clinton guest worker scheme to cheapen services (70% of all jobs) will globally redistribute wealth

[Baobab]

Its not widely known in the US, but internationally, its clear that the changes promised in Hillary Clinton's platform will shift the United States away from protectionism and globalize services, 70% of all jobs, starting with the higer paid skilled professions and moving downward. These changes - which began in 1995, are still in negotiations, and have barely begun, by all accounts they will shift wealth outward and upward.

Descriptions of them can be found in economics textbooks that focus on globalization under the broad category of labour mobility, or services liberalisation.

Here is an example of how its described:

Note that only corporations can move their already hired workers, unless a worker is themselves a corporation. (not that unusual)

Potential Economic Gains from Greater Labor Mobility
The fact that we cannot accurately know the real statistical importance of temporary workers in the world economy is secondary to the fact that impediments to labor

mobility suppress trade to the disadvantage of everyone,
but particularly developing countries. Goods move freely
in response to price differentials, and capital flows effort-
lessly around the globe in response to profit and interest
rate differentials, but workers are not allowed to move
readily in response to wage differentials. Consequently,
very large wage differentials exist in the world today, as
shown in figure 13.1. The benefit to be derived from the
exploitation of comparative advantage is directly propor-
tional to the size of wage, price, or profit differences prior
to trade or investment liberalization; thus, considerable
gains could be realized if workers were permitted to
exploit wage differentials among countries. (See box 13.2
for estimates of these gains.)


-----------------------------------------------

Box 13.2. Quantitative Estimates of Overall Gains from Greater Labor Mobility

Complete liberalization of mode 4 would result in very large gains.

Hamilton and Whalley (1984) use a partial equilibrium (PE) model and 1977 data to estimate the benefits from the complete
elimination of all immigration restrictions, for skilled and unskilled labor alike. The potential gains are enormous, ranging from 60
to almost 205 percent of world gross domestic product (GDP). Millions of workers would move from low-productivity to high-
productivity jobs in countries with high salaries, until wages in labor-sending and labor-receiving countries equalized. Iregui (1999)
revisits the question using a computable general equilibrium (CGE) model and more precise measures of elasticities and population
characteristics. Here again, the gains are large, ranging from 15 to 67 percent of world GDP. Moses and Letnes (2004), using more
precise values for productivities, confirm large gains, ranging from 4.3 to about 112 percent of world GDP in 1977. According to
these authors, the ‘’most reasonable’’ gain would be 7.5 percent of world GDP.

The large differences between these estimates, both within and between studies, can be explained by the differences in
modeling frameworks (partial versus general equilibrium) and assumed parameters. Some estimates assume that migrants can
achieve the average productivity of workers in the destination country; others assume that additional education and training will be
needed.

Gains from less than complete liberalization of mode 4 are still large.
Because full liberalization is politically unacceptable, some economists have estimated the potential outcome of more modest
liberalization of mode 4. Moses and Letnes (2004) estimate the gains from eliminating 10 percent of the wage inequality between
countries and find that potential gains would still be large, corresponding to around 2.2 percent of world GDP. Walmsley and
Winters (2002) estimate the potential gain from a 3 percent increase in the workforce in developed countries, a movement of 14.2
million workers, and a 50 percent increase in the current number of immigrants in developed countries at US$156 billion in 2002,
representing 0.6 percent of world GDP. World Bank (2006) reaches a very similar result.
Most of the gains come from the movement of unskilled labor.

According to Iregui (1999), the potential gains from the migration of skilled labor only are much smaller: 3 to 11 percent of world
GDP, in comparison with 13 to 59 percent for all skills. Walmsley and Winters (2002) show that the potential gain from the
movement of unskilled workers would account for US$110 billion, or 70 percent of the total. This reflects the fact that inequality in
wages worldwide is larger for unskilled than for skilled workers.
Source: Annex table 13A.1.

-----------------------------------------------
Theoretical Model of the Distributional Effects of
Mode 4 Liberalization

Like trade in goods, labor mobility can create losers as
well as winners. In the overall balance, gains usually
exceed losses by a wide margin, but political sensitivities
focus on those who lose. In simple theoretical terms,
migration can be modeled as an increase of supply in the
labor markets of developed countries and a decrease of
supply in developing countries. Here, we use that frame-
work to examine the effects of those supply changes on
the incomes of capitalists and workers, in both the send-
ing and the host countries, and on the incomes of the
migrants themselves.

Effect in developed countries. Given the restrictions on
labor mobility, the equilibrium in the labor market is at
point A in figure 13.2. After liberalization, the equilibrium
moves to point B, reflecting an increase in the number of
hours worked and a decrease in the wage per hour. The loss

for native workers is shown by area ACDE. The gain for
capitalists is shown by area EABD, with most of this gain
coming from the loss for native workers. Since the gain for
capitalists is larger than the loss for native workers, the lib-
eralization of mode 4 leads to an overall gain, shown by
area ABC.

Effect on developing countries. The effect of the liberal-
ization of mode 4 on developing countries is the exact
opposite to that for developed countries. With restrictions
on mode 4, the equilibrium in the labor market is at point
B in figure 13.3. After liberalization, the equilibrium point
moves to point A, reflecting an increase in the wage per
hour and a decrease in the number of hours worked.
As will be apparent later, the gains for migrants in
developed countries are much larger than the loss that
their departure inflicts on developing countries. Nonmi-
grant workers also experience gains, shown by area ACDE
in figure 13.3, since the wage rate has increased in devel-
oping countries. But nonmigrant capitalists experience a
very large loss, shown by area ABDE (most of the loss cor-
responds to the wage gain for nonmigrant workers).
Because the loss for nonmigrant capitalists is larger than
the gain for nonmigrant workers, the group of nonmi-
grants as a whole experiences an overall loss of income,
shown by area ABC. In other words, the effect on total
welfare of liberalizing mode 4 is negative for nonmigrants
in developing countries. Income per capita, however, is
likely (although not guaranteed) to rise as marginal pro-
ductivity increases.

Overall outcome. Migrants lose their erstwhile wages in
developing countries but enjoy larger wages in developed
countries. They therefore experience a gain, measured by
the wage difference between the destination and source
countries.

According to the theoretical model, the liberalization of
mode 4 has the following distributional consequences:

• In developed countries, most of the gains for capitalists
are balanced by losses to native workers.

• In developing countries, most of the losses to capitalists
are mirrored by gains to nonmigrant workers.

• In developed countries, the gains for capitalists are
larger than the losses for native workers. Therefore, total
income in developed countries rises.

• In developing countries, the losses for capitalists are
larger than the gains for nonmigrant workers. There-
fore, total income in developing countries falls.

-----------

Distributional Effects of Mode 4 Liberalization

The theoretical and empirical prediction of large gains
from full or partial liberalization of mode 4 outlined in
box 13.2 do not hide the fact that labor mobility will have
distributional consequences. Migrants are the main win-
ners; the results for natives in both the sending and the host
countries are mixed.

Gains for migrants. Walmsley and Winters (2002) calcu-
late that benefits to migrants (US$171 billion) actually
account for more than the total gain from increased labor
mobility (US$156 billion). Total gains are smaller than the
gains to migrants because of the losses to the sending
countries, discussed below.

Losses for developing countries, before remittances. The
departure of migrants reduces the number of workers in
the sending countries, which increases hourly wages of
nonmigrant workers but diminishes total output. Walms-
ley and Winters (2002) calculate that Brazil would see its
welfare reduced by US$7 billion if the workforce going to
developed countries increased by 3 percent, and China
would experience a decline of US$2 billion, notwith-
standing the compensation received from remittances.
The authors’ calculations suggest that unskilled workers
in India would see a wage increase of 0.7 percent and that
skilled workers in Mexico would enjoy an increase of
4.5 percent. Returns to capital would, however, decrease
by, for example, 0.4 percent in Mexico. Exploring a more
extreme scenario, Moses and Letnes (2004) arrive at simi-
lar results. In their calculations, a 10 percent elimination
of wage inequality leads to an 11.4 percent increase in the
wages of nonmigrant workers in the poorest countries in
1998, while the return to capital in those countries falls
like a stone, by 21 percent.

The importance of remittances for developing countries.
If the gains to migrants themselves are included in the
overall balance sheet for developing countries, the pic-
ture changes completely. (Pritchett 2006 makes this
point.) When the gains to migrants are combined with
the national income losses to the sending countries, the
developing countries experience a significant gain in
plausible scenarios—the equivalent of 1.8 percent of their
gross domestic product (GDP), according to the World
Bank’s Global Economic Prospects 2006, which explores
the “3 percent scenario.”

World Bank estimates of global remittances show that
globally, compensation and remittances increased sixfold

between 1990 and 2008, rising from US$69 billion to
US$397 billion (adjusted for inflation). In 2007, migrant
compensation and remittances accounted for around
0.7 percent of world GDP, but for developing countries,
the relative importance of remittances in GDP in 2007 was
much higher. Remittances were 2.1 percent of the GDP of
developing countries as a whole, but 1.9 percent of the
GDP of middle-income countries and 5.8 percent of the
GDP of the least-developed countries (a UN category).
An increasing share of remittances goes to developing
countries, which accounted for 46 percent of this flow in
1990 but for 76 percent by 2007. It is estimated that remit-
tances touch 1 in 10 people worldwide. Dependence on
remittances is especially high in certain countries. The
main receiving countries in absolute terms are India
(US$27 billion), China (US$26 billion), Mexico (US$25
billion), and the Philippines (US$17 billion). For many
smaller countries, remittances represent a very large frac-
tion of GDP, accounting for more than 36 percent of the
GDPs of Moldova and Tajikistan and about 25 percent of
the GDPs of Guyana, Honduras, and Lesotho.
Mixed picture in developed countries. Outcomes of
migration for the developed countries are mixed, although
slightly positive. Workers, especially unskilled ones, face
increased competition from migrants and see their wages
decline. For example, Hatton and Williamson (1998) esti-
mate that in 1910, American wages would have been 11 to
14 percent higher in the absence of the immigration wave
that set in after 1870. Borjas (1999) calculates that immi-
gration to the United States between 1980 and 1998
resulted in a decrease in native wages amounting to
1.9 percent of GDP and that the losses were concentrated
among low-skilled U.S. workers, whereas skilled workers
actually benefited from immigration. Immigration
reduced the wages of native high-school dropouts in the
United States by 8.9 percent between 1980 and 2000 but
increased the return to capital by 2 percent of GDP. The
net gain from the 1980–98 migration wave for all U.S.
natives is the difference between the decrease in wages
and the increase in returns to capital, or 0.1 percent of
U.S. GDP per year over the period. This net gain repre-
sents about US$10 billion a year, accounting for about
5 percent of U.S. economic growth over a 20-year period.
Moses and Letnes (2004) find the same pattern in the
case of a 10 percent elimination of wage inequality. They
calculate that liberalization of this magnitude would
reduce wages in developed countries by 3.1 percent,
while increasing the return to capital by 7.2 percent.
Walmsley and Winters (2002) reach similar results in the
case of a 3 percent increase in the workforce of devel-
oped countries: that scenario leads to a 0.8 percent
decrease in U.S. and European wages and a 0.8 percent
increase in return to capital in the United States. The World
Bank’s Global Economic Prospects 2006 study shows that in
the 3 percent scenario, the incomes of all natives combined
in developed countries would rise by 0.4 percent (World
Bank 2006).

(From Sherry Stephenson and Gary Hufbauer "Labour Mobility" Chapter 13)

Hillary Clinton's platform makes promises with the vague implication that generically, as those kinds of things did in the past, they would generate jobs.

That much is true, however, because of changes in how services are procured, those jobs will be steered to the lowest qualified bidders in an international bidding process that US firms cannot win, unless they subcontract the actual labor to foreign providers of it who will be enabled to come here for periods up to several years in length by means of special protocols we must comply with or risk potentially huge sanctions from organizations like the WTO, which could also compel us to change our national laws if they can be framed as disguised barriers to trade or market entry.




For example, the issue of wage parity is contentious. If we were seen as having increased wages in anticipation of the almost completed negotiations, as a trade barrier, we might be subjected to sanctions such as a ruling compelling us to change any regulation seem as impeding free trade.

[Faux pas]

1. Kickin' with gusto!

[tonyt53]

2. "Hillary Clinton's platform"?????

The Democratic Party will present a platform, not the candidate.

[Baobab]

4. People should know that throwing a great many Americans under the bus

is her plan, and she justfies it by claiming that it will help the developing world.

It will, but mostly help them to preserve corrupt regimes even worse than her own. Because shipping your skilled workers overseas silences them. While here they will be on a very short leash. And the Americans who lose their jobs may lose them for good because the lure of very low wages is high enough to drive a lot of rationalization. For example, what happens when you deprive education of money for 20 years, you get a crisis on some levels, this particular crisis is fake and was created by a greedy bunch of people who intentionally created a dysfunctional situation agreeing to pretend to argue.

While they pretended to argue a huge number of people died by having modern medical care denied them.

[mooseprime]

3. well, the facts do have a known

anti-clinton bias.

what i can't get is why there seem to be millions of people who think they're in the 1%, and that this is going to work out well for them.

we have millions of american families with children living in CARS thanks to the last rounds of this vile selfishness.