The final goal of any hypothetical liberalization of the movement of labor would be that eventually an economic equilibrium between any two given countries could be expected in the context of the labor market. This is to say that the pay that is received for one type of work would be at the same level in both nations. This important result would facilitate the establishment of fluid trade between the firms of one nation and the consumers of the other, or vice versa. With an opening to free labor movement concordantly with the North American Free Trade Agreement, the transnational market should be able to utilize gradually all the resources of the continent to provide products in the most economically efficient way. These consequences do not come without much complexity, and one must be cognizant of the instabilities that such a large change as this could create in all of the region.
Yet without a doubt a concerned American commentator could highlight the possibility that such changes would result in an immediate reduction of the pay of low-skill workers in traditionally more wealthy areas, in this context, the United States. The competition of more economical labor from Mexico nearly certainly would reduce the effective pay of many Americans without an absolute lack of formal education. But even having admitted this, it's necessary to note the hidden effects which lie unseen at first glace, however inevitable they may be at truth. In the words of Bastiat, we must keep in mind "what is seen and what is unseen" that is to say that all policies have repercussions that are either subtle or obvious, and the former are typically of greater importance. In the United States, the arrival of cheaper labor shall compete with the native population for low-skill positions and the pay of the equilibrium with all probability shall be lower nominally than the current dollar-amount. What is important is that the production costs for precisely the same reason shall fall by the exact same quantity, and concordantly all products produced by this labor can be produced and distributed with higher efficiency and with greater cheapness.
The policy of limiting immigration only serves to create scarcity in the market for productive labor. This scarcity does indeed maintain pay for native workers, but at the expense of all consumers in society; it is a point of dead-weight loss. Now although these American workers might lose a portion of their pay or even a job, even they will gain the permanent ability to buy all of their necessities and services for less money, and more importantly, this is something that the entire U.S. population can enjoy. This money which no longer would be used to support the jobs of more expensive workers can be freed to provide capital to new entrepreneurs and thus new jobs for those having lost their own to cheaper labor.
Of course the consequences for such a policy cannot be ignored as they come to bear in Mexico as well, and in some sense, these results realized in developing countries are theoretically more important. At first glace, this large movement of young people from rural employment can appear quite worrisome. Still this tendency only functions in the context of the market; the exodus certainly will not be total. While some capable workers leave for higher wages in the United States, the competition in the local labor market lessens and the pay of those who remain rises. With the passing of time, the incentives to move to the United States shall be reduced by increasing salaries in their location of birth and by an equal amount of competition across the border. This is the point at which we will have reached an equilibrium between the two markets which become one. And during all of this, Mexico shall continue to maintain population growth that should provide the place with labor able to compensate for any deficiency realized in the supply of physical persons.
In another sense, the aid of remittances will function as effective investments that can supply more disposable income to family members and thus economic stimulus to developing communities in Mexico. Entrepreneurs of Mexico can take advantage of the new effective demand in the zone and thus begin more risky commercial ventures. The migrant workers continue begin a fundamental part of their native economies because of the integration of trade that such liberalization of movement would afford.
The brief image of the future that we have over-viewed appears to be somewhat optimistic. The reason for its presentation thus is that we are already aware of the stress that migratory changes produce. Separated Mexican families and jobless Americans have already dominated the popular discussion, but the vision that they allow is too exclusively myopic. These birthpains are simply a realization of Creative Destruction, a force that at the end of the day forms perhaps the most important component in structural economic development. The results of total freedom of movement essentially would be little different from any liberalization of international markets; and although the temporary effects often appear as a cause of much discontent and social tension, in the long term, they create a mutualistic society with more abundance for all.
This essay is a translation from a Spanish original.