Purpose and Introduction

The understanding of basic economic principles is critical to any decision involving the regulation of free trade and immigration. This author is not attempting to set these levels or influence them in any way; however, the author does attempt to justify the fact that free trade and well regulated immigration is an essential part of any continued growth and prosperity in the new global economy for the United States and Mexico. It is up to the reader to make a decision based on their own personal knowledge, pertinent facts, and life experiences. One additional goal of this project is to distance free trade and immigration policies from predjudice and protectionistic policies.

Economic Theory

Few ideas have been as widely accepted by economists and as roundly rejected by many other people as the doctrine of free international trade. Economists base their acceptance of the mutual benefits from such trade on a concept called comparative advantage. The theory is most closely associated with the writings of the great English classical school economist David Ricardo. Although his career in the field of political economy was brief, Ricardo became one of the most influential and financially successful practitioners the discipline has ever known.

Today, world trade agreements are under increasing attack. Many people are deeply concerned about such issues as outsourcing and the physical location and relocation of firms doing business across national borders. In light of these developments, I offer this latest Economic Insights on the life and ideas of one of free trade's most ardent theoretical defenders. Anyone interested in this issue should become familiar with Ricadro's work. I hope this short piece provides a useful starting point.

Opportunity Cost and Comparitive Advantage

The key issue of any economic decision is: What is the opportunity cost? Opportunity cost is simply the value of what is given up by making a decision or pursuing a course of action. When this theory is applied to comparitive advantage and free trade, it becomes obvious that any restiriction in trade will lower the available goods for both countries.

A Thought on Immigration

While the nineteenth century was a period of rugged individualism, almost every other feature of the myth [of the robber barons] is false. Far from being a period in which the poor were being ground under the heels of the rich and exploited unmercifully, there is probably no other period in history, in this or any other country, in which the ordinary man had as large an increase in his standard of living as in the period between the Civil War and the First World War, when unrestrained individualism was most rugged. The evidence of this is to be found in the statistics that economists have constructed of what was happening to national income, but it is documented in a much more dramatic way by the numbers of people who came to the United States during that period. That was a time when we had completely unrestricted immigration, when anybody could come to these shores and the motto on the Statue of Liberty had some real meaning. This was a country of hope and of promise for immigrants and their children. Did people come to this country to be ground under the heels of merciless capitalists? Did they come to make their own conditions worse?

There is no more dramatic way in which people can vote than with their feet. The fact that East Germany had to build a wall to keep people from going to West Germany is striking evidence of which country had the better conditions of life. In the same way, the fact that year after year hundreds of thousands of people left the countries of Europe to come to this country was persuasive evidence that they were coming to improve their lot, not to worsen it. Far more effective evidence, I believe, than any statistics on per capita real income, which show that real income went up decade after decade at a rate of 2, 2.5, 3 percent per year. They came with empty hands....It was the poor and the miserable who flocked here, and they found a home and the opportunity to improve their lot. And they found it, not despite rugged individualism but because of rugged individualism. It was rugged individualism that induced the developments in industry, in trade, that offered opportunities to people.