Sunday, June 18, 2006

Immigration and Pigou

The NYTimes might not recognize it themselves, but they occasionally focus on one issue every Sunday; today being Immigration. Mexico seems to be enduring the same problems on their southern border, as the United States suffers along the Rio Grande. Another article in the Paper suggests 2nd Generation Immigrants do better than native Contemporaries of equal Age--higher Educational levels, etc. It may be time to apply Pigou positive and negative externalities to the issue of Immigration.

Watch as I blend this argument into a review of Pigouian analysis.

Arnold Kling has an excellent comment on The Pigou Club proposed by Greg Mankiw. I have only one reservation: I have heard the argument of positive and negative externalities numerous times, and have always come away unsatisfied with the conclusions. The negative externalities always seemed quite correct, but the argument for positive externalities has always failed in my judgement. The Former does not automatically imply the Later. It might only be an error in my own analysis, but I think the economic model needs to be reworked on a theoritical level. A detraction of worth does not produce a addition to worth when removed. lgl

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