Former Federal Reserve Chairman Alan Greenspan testifies before a United States Senate Subcommittee that illegal immigration aids our economy by providing for a “safety valve” as demand for workers rises or falls. Contrary to his rosy assertion, in fact illegal immigration imports poverty for the purpose of decreasing wages and then passes on the costs to the American taxpayer – much like the Federal Reserve has been doing to the same taxpayers for years, on behalf of the banking cartel it serves.

Indeed, there is a parallel between the two perversions of our national economy: the sad blight of illegal immigration and the banking cartel protected by the Federal Reserve. In both instances, we see oligarchic, self-interested, politically powerful corporate interests essentially allowed to engage in business practices that would be too risky or costly in a free market system; and we see the costs of their behaviors passed onto the taxpayers.

In the case of illegal immigration, certain industries are able to get away with wages and working conditions that would not prevail among American workers. It is clear how this hurts the workers; what is less clear, but equally true, is how this provides a disincentive for the same industries to become more efficient in how they conduct their own business practices. For example, if an agribusiness firm can get away with submarket wages, and commensurate working conditions, in order to have its produce picked profitably, then it will withhold the type of capital investment in new technologies that would allow for it to do the same without recourse to “slave labor.” Why invest in next generation technology, when the persistence of what is tantamount to “slave labor” keeps the business humming?

Besides the cost to workers, and the inefficiency in business practices, there is the greater cost borne by the taxpayers, in the form of welfare, health care, and crime. Even when we pay less for a piece of produce in the supermarket, we pay much more in the costs of such services. It is a hidden cost, in comparison to the “savings” encountered at the supermarket; and it is justified all too often with a politically correct play on a need to protect “children” or to give back to those which have been “dispossessed” purportedly by past, racially motivated policies.

In the case of the Federal Reserve, banks are able to get away with lending practices that a free market would never condone, because they know that the Federal Reserve (or, even more recently, the United States Treasury) will bail them out as “too big to fail,” when in fact their risky endeavors come home to roost. Indeed, this has been the recurring practice of the Federal Reserve since its inception. It is ironic, since the Federal Reserve has been sold as providing a “stability,” not only in terms of monetary policy, but also in terms of the industry norms prevailing among banks; we have been supposedly “saved” from the age of politicized monetary policies, where the standard might change from gold to silver based on whether “strict money” Republicans or “loose money” Democrats happened to be in power, and also from the irregular lending and reserve practices of what came to be known as “wildcat banks.” Nevertheless, in fact, the Federal Reserve merely has allowed for unsavory banking practices to prevail among the elite banks in its protection. Instead of many small “wildcat banks,” there are now fewer large “wildcat banks,” which in fact may reap much more damage, as we have seen recently, than their smaller counterparts.

When Federal Reserve protected banks teeter on the edge, due to their own risky actions, once again taxpayers foot the bill, in the form of an increased inflation over time from the bank bailouts provided by the Federal Reserve. We have been paying a lot of attention in recent months to the bailouts provided directly by the federal government; what we often fail to notice are the bailouts provided routinely by the Federal Reserve, not only to banks domestically, but to banks and other financial institutions across the globe. Literally, with the Federal Reserve in its present form, we taxpayers have been footing the bill for a very oligarchic, unrepresentative, global system of lending and commerce – one commonly at odds with our national interest. In comparison, financial aid is a pittance in terms of how we have been blindly transferring our national wealth to foreign interests; and, because it is done primarily through the Federal Reserve, it has been largely unheralded and outside of the review or control of the American people.

Indeed, it is fitting that the former Federal Reserve Chairman should support our present day system of open borders. Both illegal immigration and the Federal Reserve benefit the elites at the expense of the taxpayers; both use subterfuge to hide their real financial and social costs; and both aim to sell out our national sovereignty.

Greenspan Says Illegal Immigration Aids U.S. Economy, by Nicholas Johnston (Bloomberg)

Former Federal Reserve Chairman Alan Greenspan said that illegal immigration makes a “significant” contribution to U.S. economic growth by providing a flexible workforce.

Greenspan, appearing before a Senate subcommittee today, said illegal immigrants provide a “safety valve” as demand for workers rises and falls.

“There is little doubt that unauthorized, that is, illegal, immigration has made a significant contribution to the growth of our economy,” Greenspan said. An overhaul of U.S. immigration laws is “badly needed” to create legal avenues for skilled and unskilled workers to enter the country legally, he said.

“Our immigration laws must be reformed and brought up to date,” Greenspan told the Senate Judiciary Subcommittee on Immigration, Refugees and Border Security.

Congress is beginning hearings on an overhaul of U.S. immigration policies, a legislative priority of President Barack Obama. The Senate blocked legislation in 2007 that would have given an estimated 12 million illegal immigrants a way to earn legal status and would have created a new guest-worker program, a measure supported by then-President George W. Bush.

Working Groups

Obama again endorsed an overhaul of U.S. immigration laws during a prime-time news conference last night and said he will soon convene working groups with lawmakers “to start looking at a framework of how this legislation might be shaped.”

“No one is happy with our current system,” New York Democrat Chuck Schumer, the subcommittee’s chairman, said as the hearing began. “There is a recognition in America that the status quo is not working.”

A key sticking point during the last immigration debate was how to treat the millions of immigrants who are in the country illegally.

Opponents said giving them a path to legal status rewards people who broke the law. They also argued that low-skilled immigrant workers suppress wages for U.S. workers and burden local governments with demands for services. Greenspan dismissed those concerns.

“Economists generally view the overall economic benefits of this workforce as significantly outweighing the costs,” he said.

Skilled Workers

Greenspan also endorsed an expansion of the H-1B visa program for skilled workers that is backed by technology companies such as Microsoft Corp. and Intel Corp.

The 2007 legislation would have increased the size of the program to 115,000 annual visas, up from 65,000.

Greenspan said U.S. schools don’t produce enough skilled workers and the gap must be filled with immigrants who have advanced degrees.

“If we are to continue to engage the world and enhance our standards of living, we will have to either markedly improve our elementary and secondary education or lower our barriers to skilled immigrants,” Greenspan said.

Schumer and Senator Jon Kyl, an Arizona Republican, cautioned that it will remain difficult to reach agreement on the immigration issue. Texas Republican John Cornyn said the Senate devoted 36 days of floor consideration during the last debate to no avail.

“This will be very, very hard to do,” Schumer said. “Make no mistake, this will not be an easy task.”