U.S.

Immigration Policies: Uncomfortable Facts by Paul

Krugman
the net benefits to the U.S. economy from immigration, aside from the large gains to the
immigrants themselves, are small. Realistic estimates suggest that immigration since
1980 has raised the total income of native-born Americans by no more than a fraction of
1%.
immigration may have raised overall income slightly, many of the worst-off native-born
Americans are hurt by immigration—especially immigration from Mexico. Because
Mexican immigrants have much less education than the average U.S. worker, they
increase the supply of less-skilled labor, driving down the wages of the worst-paid
Americans. Estimates that U.S. high school dropouts would earn as much as 8% more if it
weren’t for Mexican immigration.
The willingness of Americans to do a job depends on how much that job pays and the
reason some jobs pay too little to attract native-born Americans is competition from poorly
paid immigrants.
modern America is a welfare state, even if our social safety net has more holes in it than it
should—and low-skill immigrants threaten to unravel that safety net.
Basic decency requires that we provide immigrants, once they’re here, with essential health
care, education for their children, and more. Unfortunately, low-skill immigrants don’t pay
enough taxes to cover the cost of the benefits they receive.
Mexican immigration, says the Borjas-Katz study, has played only a “modest role” in
growing U.S. inequality. And the political threat that low-skill immigration poses to the
welfare state is more serious than the fiscal threat.
Realistically, we’ll need to reduce the inflow of low-skill immigrants. Mainly that means
better controls on illegal immigration. But the harsh anti-immigration legislation passed by
the House, which has led to huge protests—legislation that would, among other things, make
it a criminal act to provide an illegal immigrant with medical care—is simply immoral.
Meanwhile, Mr. Bush’s plan for a ”guest worker” program is clearly designed by and for
corporate interests. And because guest workers would face the prospect of deportation after a
few years, they would have no incentive to become integrated into our society.
Guest Worker: A guest worker program allows foreign workers to temporarily reside
and work in a host country until a next round of workers is readily available to switch.
Not coming to America
A shortfall in immigration has become an economic problem

ALMOST EVERY day for four months buses carrying asylum-seeking migrants have
disembarked near the heart of American power more than 6,000 people have arrived on these
buses

The resulting shortfall in the population of immigrants is already making it harder for
companies to find workers and threatens to do more damage to the economy. But whereas
unauthorised border crossings are a perennial controversy, the drop in overall immigration
has barely registered in Congress.

Net international migration-that is, accounting for both arrivals, whether authorised or not,
and departures-added 247,000 to America's population between July 2020 and July 2021.
That was the smallest increase in the past three decades, and less than a third of the annual
average during that time. The covid pandemic explained much of the drop, as America
barred international visitors from dozens of countries, closed consulates around the
world and froze many applications.

Net immigration has trended down since 2017, Donald Trump's High-profile restrictions
on travel from several predominately Muslim countries set the tone for his
administration. Most important, it put sand in the gears of the immigration process by,
for instance, adding interviews and raising fees Emigration has been another factor.

The shortfall is visible in the labour market. Giovanni Peri and Reem Zaiour of the University
of California, Davis, estimate that by February America was missing roughly 1.8m
working-age foreign migrants relative to its post-2010 trend. Industries with higher shares
of migrant workers tend to have higher vacancy rates now.

Employers in the restaurant and accommodation sector, which draws a quarter of its
employees from the foreign-born population, could not fill about 15% of job openings
last year. In professional and business services, where the foreign-born make up a fifth
of workers, doing everything from architectural sketches to tax preparation, roughly
10% of jobs went unfilled last year. That, in turn, may be contributing to higher wages,
with pay rising especially quickly for low-income earners.

New immigrants accounted for nearly 70% of the growth in the American labour force
in the 2010s. Over the next two decades, immigrants are likely to be the only source of
growth. The Pew Research Centre calculates that without new arrivals America's
labour force would decline to 163m in 2040 from 166m in 2020. If net immigration were
to return to pre-pandemic levels, the labour force would instead grow to 178m by 2040.

Businesses are noticing the gaps. the us Chamber of Commerce outlined how widespread the
problems are. Just one out of every three individuals seeking standard employment visas
or seasonal work visas was successful last year, while one in four applicants for highly
skilled work visas will make the cut this year.

Some delays are absurd. estimates that Indians with degrees face a notional 90-year wait for
green cards. From farm groups to theme-park associations, lobbyists have been asking the
government to make it easier for American firms to hire from abroad.
Silicon Valley's tech giants have long clamoured for the same, arguing that they need
foreign tech talent to stay at the global leading edge.

There is no shortage of sensible ideas. Connecting migrants with employers before they
reach America's southern border would reduce pressure on crossings and help
businesses. The conclusion is a dismal one: the headaches of the past year from worker
shortages, far from being temporary, will be a recurrent problem in an ageing America
that has forgotten how immigrants made the country what it is.
Honey who Shrunk the World?
Tariff: A tariff is a tax imposed by the government of a country or by a supranational union
on imports or exports of goods

In the mid-1980s, world trade had recovered from the disruptions and protectionism of the
interwar period, but exports as a share of world G.D.P. were still back only to around their
level in 1913. Starting around 1988, however, there was a huge surge in trade —
sometimes referred to as hyperglobalization — that leveled off around 2008 but left the
world’s economies much more integrated than ever before:

This tight integration has played an important background role in pandemic economics.
Vaccine production is very much an international enterprise, with production of each major
vaccine relying on inputs from multiple nations. On the downside, our reliance on global
supply chains has introduced forms of economic risk: One factor in recent inflation has
been a worldwide shortage of shipping containers.

But how did we get so globalized?

One narrative stresses the role of technology, especially the rise of containerized shipping.
David Hummels, points out, there has also been a large decline in the cost of air transport,
which is a surprisingly big factor: Only a tiny fraction of the tonnage that crosses borders
goes by air, but air-shipped goods are, of course, much higher value per pound than those
sent by water, so airplanes carry around 30 percent of the value of world trade.

An alternative narrative, however, places less weight on technology than on policy. That’s the
narrative one often sees associated with Trumpists : Globalists pushed to open our borders to
imports, and that’s why foreign goods have flooded into our economy.

there was a trade policy revolution in emerging markets, which had high rates of protection in
the early 1980s, then drastically liberalized. Here’s the World Bank estimate of average
tariffs in low and middle-income countries:

You might ask why a reduction in emerging-market tariffs — taxes on imports — should lead
to a surge in emerging-market exports.. Basically, nations can choose to be inward-
looking, trying to develop by producing for the domestic market, or outward-looking,
trying to develop by selling to the rest of the world.

What happened in much of the developing world during the era of hyperglobalization
was a drastic turn toward outward-looking policies. What caused that trade policy
revolution and hence helped cause hyperglobalization itself? ideas.

For more than a generation after World War II, it was widely accepted, even among
mainstream economists and at organizations like the World Bank, that nations in the early
stages of development should pursue import-substituting industrialization: building up
manufacturing behind tariff barriers until it was mature enough to compete on world markets.

Disappointing results of I.S.I. and as people began to notice export-oriented success

stories like South Korea and Taiwan.
So orthodoxy shifted to a much more free-trade set of ideas. the change in economic
ideology led to a radical change in policy, which played an important role in surging world
trade: We wouldn’t be importing all those goods from low-wage countries if those countries
were still, like India and Mexico in the 1970s, inward-looking economies living behind high
tariff walls.

There are, I think, two morals from this story.

First, ideas matter.

Second, it’s a corrective against American hubris. We still tend, far too often, to imagine
that we can shape the world as we like. But those days are long gone, if they ever existed.
Hyperglobalization was made in Beijing, New Delhi and Mexico City, not in D.C.
In Praise of Cheap Labor
Such moral outrage is common among the opponents of globalization–of the transfer of
technology and capital from high-wage to low-wage countries and the resulting growth of
labor-intensive Third World exports.

While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are,
yes, Third World workers.

although the rapid economic growth of a handful of small Asian nations had started to
attract attention, developing countries like Indonesia or Bangladesh were still mainly what
they had always been: exporters of raw materials, importers of manufactures. Inefficient
manufacturing sectors served their domestic markets, sheltered behind import quotas, but
generated few jobs. Meanwhile, population pressure pushed desperate peasants into
cultivating ever more marginal land or seeking a livelihood in any way possible–such as
homesteading on a mountain of garbage.

But in the mid-’70s, cheap labor was not enough to allow a developing country to
compete in world markets for manufactured goods. The entrenched advantages of
advanced nations–their infrastructure and technical know-how, the vastly larger size of their
markets and their proximity to suppliers of key components, their political stability and the
subtle-but-crucial social adaptations that are necessary to operate an efficient economy–
seemed to outweigh even a tenfold or twentyfold disparity in wage rates.

lower tariff barriers, improved telecommunications, cheaper air transport–reduced the

disadvantages of producing in developing countries. In a substantial number of industries,
low wages allowed developing countries to break into world markets. And so countries that
had previously made a living selling jute or coffee started producing shirts and sneakers
instead.

Workers in those shirt and sneaker factories are, inevitably, paid very little and
expected to endure terrible working conditions. I say “inevitably” because their employers
are not in business for their health; they pay as little as possible, and that minimum is
determined by the other opportunities available to workers. And these are still extremely poor
countries, where living on a garbage heap is attractive compared with the alternatives.

And yet, wherever the new export industries have grown, there has been measurable
improvement in the lives of ordinary people. Partly this is because a growing industry must
offer a somewhat higher wage than workers could get elsewhere in order to get them to
move. More importantly, however, the growth of manufacturing–and of the penumbra of
other jobs that the new export sector creates–has a ripple effect throughout the economy. The
pressure on the land becomes less intense, so rural wages rise; the pool of unemployed urban
dwellers always anxious for work shrinks, so factories start to compete with each other for
workers, and urban wages also begin to rise. Where the process has gone on long enough–
say, in South Korea or Taiwan–average wages start to approach what an American teen-ager
can earn at McDonald’s. And eventually people are no longer eager to live on garbage
dumps.

The benefits of export-led economic growth to the mass of people in the newly industrializing
economies are not a matter of conjecture.. These improvements have not taken place because
well-meaning people in the West have done anything to help–foreign aid, never large, has
lately shrunk to virtually nothing. Nor is it the result of the benign policies of national
governments, which are as callous and corrupt as ever. It is the indirect and unintended
result of the actions of soulless multinationals and rapacious local entrepreneurs, whose
only concern was to take advantage of the profit opportunities offered by cheap labor. It
is not an edifying spectacle; but no matter how base the motives of those involved, the result
has been to move hundreds of millions of people from abject poverty to something still awful
but nonetheless significantly better.

Why, then, the outrage of my correspondents? Why does the image of an Indonesian
sewing sneakers for 60 cents an hour evoke so much more feeling than the image of
another Indonesian earning the equivalent of 30 cents an hour trying to feed his family
on a tiny plot of land

The main answer, I think, is a sort of fastidiousness. Unlike the starving subsistence
farmer, the women and children in the sneaker factory are working at slave wages for
our benefit–and this makes us feel unclean. And so there are self-righteous demands for
international labor standards: We should not, the opponents of globalization insist, be willing
to buy those sneakers and shirts unless the people who make them receive decent wages and
work under decent conditions.

This sounds only fair–but is it? Let’s think through the consequences.

First of all, even if we could assure the workers in Third World export industries of higher
wages and better working conditions, this would do nothing for the peasants, day laborers,
scavengers, and so on who make up the bulk of these countries’ populations. At best, forcing
developing countries to adhere to our labor standards would create a privileged labor
aristocracy, leaving the poor majority no better off.

The only reason developing countries have been able to compete with those industries is
their ability to offer employers cheap labor. Deny them that ability, and you might well
deny them the prospect of continuing industrial growth, even reverse the growth that has been
achieved. And since export-oriented growth, for all its injustice, has been a huge boon for the
workers in those nations, anything that curtails that growth is very much against their
interests.

You may say that the wretched of the earth should not be forced to serve as hewers of wood,
drawers of water, and sewers of sneakers for the affluent. But what is the alternative? Should
they be helped with foreign aid? Anyway, there isn’t the slightest prospect of significant aid
materializing. Should their own governments provide more social justice? Of course–but
they won’t, or at least not because we tell them to. And as long as you have no realistic
alternative to industrialization based on low wages, to oppose it means that you are willing to
deny desperately poor people the best chance they have of progress for the sake of what
amounts to an aesthetic standard.
ONE HOUR LONG VIDEO KRUGMAN
He says that globalization is not a new thing and that in the past the key factors where the
railroads, steamship, and the telegraph.
He talks about how trading changed in cost is because of technology and the main reason
back then that it was costly and took a longer time because it took a longer time to take the
containers out of the ship, now taking the containers out are much easier because of the
technology we have.
The next reason is the policy changing, many developing countries looked inwards of
encouraging production for the domestic market ended up discouraging exports. Policies
shifted to outward looking policies which is world trade and trading with others and being
open.
Right now, we have many stages of production, and this creates a lot of shipping back and
forth because of producing different parts of the product in different places.
advanced countries have a great advantage in producing the goods and developing countries
have cheap labor which causes this back-and-forth trade.
Globalization is a good thing because the world of economy is now richer because now rich
countries are now doing the things that they do well and making other countries do what they
can do well. the entire world gets richer, and We can now make more efficient product.
Disadvantages id that lowers education workers in advanced countries are hurt by import and
the inequality
Many people think that it is bad because that these people working in developing countries
are being hurt even more however it is these developing countries become richer and poor
people can create some sort of money for themselves
Runaway cost: rising quickly in a way that is not under control
Globalization is driven by people looking for profit, and it also produces an integration of
thought.
The normal escape from a crisis is by exporting as much as you can to gain money which is
an export surplus.
Clustering: Clustering is the phenomenon whereby firms from the same industry gather in
close proximity
Keeping it Green The Economist
The conflict comes because the pipeline is at capacity, forcing Alberta's producers to ship oil
by rail to the United States. So the province wants to treble capacity by adding another pipe
alongside the existing one. But the project has provoked opposition from British Columbia,
environmentalists and some of the indigenous groups along the pipeline's

Balancing act

Canada's oil reserves are the world's third-largest. Oil and gas extraction, and industries
related to it, he also wants, by 2030, to meet Canada's commitment, made by Stephen Harper
and reaffirmed under the Paris climate agreement, to cut emissions of greenhouse gases by
30% from the levels of 2005. Canadians are currently among the world's biggest emitters per
person, each of them belching out nearly three times more greenhouse gases than the average
person in G20 countries. To square green goals with economic ones, Mr Trudeau has set
a national standard for pricing carbon emissions, which seeks to cut pollution by raising
its price.

Despite its wealth, it is not feeling rich. The plunge in global oil prices that began in
2014 turned boom to bust. By 2016 Alberta's oil industry had shed 100,000 jobs. The
province is still hurting even though prices have risen. Unemployment has dropped
from a peak of 9.1% in 2016 to 6.6% in June this year, but it is still a percentage point
above the national rate. International oil companies such as Exxon, Total and Royal Dutch
Shell have either delayed projects or are pulling out.

Just as irksome are two environmental bills backed by the federal government-one
overhauling the process for approving big infrastructure projects, the other a ban on coastal
tanker traffic-which look to many Albertans like part of the broader conspiracy to keep the
province's oil sands poorly connected.

Locals insist that the stigma borne by their oil is unwarranted. The view that it is more
damaging to the atmosphere to extract is becoming outdated,. The price slump, transport
bottlenecks and pressure from activists have forced oil firms to cut costs and emissions.
"When you have the lowest commodity prices in the world you get clever very fast," he says.

Where you been so long?

Cenovus, a Calgary-based oil producer, has reduced the greenhouse-gas intensity of its
production by a third, says its chief executive, Alex Pourbaix. It now matches the American
refined average, and at some sites it is lower. Besides, extraction accounts for only a small
fraction of emissions associated with each barrel of oil; 70-80% occur when the customer
burns it.

By scrapping the carbon tax brought in by his predecessor, Mr Kenney has made it harder to
claim that Albertans are environmental boy scouts. He has hitched Alberta to a national
campaign against Mr Trudeau's climate policy, waged in the name of "affordability".
Ontario's government has told petrol stations to put stickers on their pumps reading, "The
federal carbon tax will cost you."

The government's scheme was designed to resist such attacks. Provinces with their own
carbon-pricing schemes can keep them. British Columbia, which began taxing emissions in
2008, and Quebec, which has a cap-and-trade system, have done so. The national scheme is
only imposed on provinces that reject carbon pricing or whose schemes fall short of federal
standards. It sets a price floor of C$20 a tonne this year, rising to C$50 by 2022. All the
money goes back to the province where it is raised; 90% of that goes to taxpayers. In Ontario,
a family of four will get back C$307 this year. "It's a small-c conservative approach," says
Catherine McKenna, the environment minister.

The carbon-pricing scheme plus other measures, such as "the toughest methane regulations
for oil and gas in the world", will ensure that Canada meets its emission-reduction targets, Ms
McKenna insists. Others say that will require more action. "When people say, 'We can't have
a carbon price that high,' I say, 'Why can't we have income taxes that low?' "

The decision to expand Trans Mountain could provoke more protests at Burnaby. Alone it
will not solve Alberta's problem. Another pipeline is needed to free producers from factoring
the cost of rail transport into prices, says Trevor Tombe of the University of Calgary. The
likeliest option is one called Line 3 to Minnesota, which exists but needs replacement.
Opposition to that comes mainly from America. Alberta will seethe, but it is unlikely to
secede. "Canada exists to try to address some of these challenges," says Mr Tombe.

Although Mr Trudeau has lost recent battles, he could yet win the war. Canada is warming
twice as fast as the rest of the world. Voters are starting to notice. The country is already
getting rainier, and thus more vulnerable to flooding. Mr Kenney cancelled an event at a
petrol station on May 30th to tout the repeal of the carbon tax because wildfires were raging
near Edmonton, Alberta's capital.

Nearly 80% of Canadians think pollution pricing should be among the tools their government
employs to fight climate change, according to a recent poll by Abacus Data. In the election, it
may be that climate alarm will count for more than affordability anxiety.
Good food? Ethical food-The Economist
if you think you can make the planet better by clever shopping, think again. You might make
it worse

a nutritionist at New York University, argues that "when you choose organics, you are voting
for a planet with fewer pesticides, richer soil and cleaner water supplies."

The idea that shopping is the new politics is certainly seductive. you probably go shopping
several times a month, providing yourself with lots of opportunities to express your
opinions. If you are worried about the environment, you might buy organic food; if you
want to help poor farmers, you can do your bit by buying Fairtrade products; or you
can express a dislike of evil multinational companies and rampant globalisation by
buying only local produce.

Sadly, it's not that easy. There are good reasons to doubt the claims made about three of
the most popular varieties of "ethical" food: organic food, Fairtrade food and local food
People who want to make the world a better place cannot do so by shifting their shopping
habits: transforming the planet requires duller disciplines, like politics.

Buy organic, destroy the rainforest

Organic food, which is grown without man-made pesticides and fertilisers, is generally
assumed to be more environmentally friendly than conventional intensive farming, which is
heavily reliant on chemical inputs. But it all depends what you mean by "environmentally
friendly". Farming is inherently bad for the environment: since humans took it up
around 11,000 years ago, the result has been deforestation on a massive scale. Organic
methods, which rely on crop rotation, manure and compost in place of fertiliser, are far less
intensive. So producing the world's current agricultural output organically would
require several times as much land as is currently cultivated. There wouldn't be much
room left for the rainforest.

Fairtrade food is designed to raise poor farmers' incomes. It is sold at a higher price
than ordinary food, with a subsidy passed back to the farmer. But prices of agricultural
commodities are low because of overproduction. By propping up the price, the Fairtrade
system encourages farmers to produce more of these commodities rather than diversifying
into other crops and so depresses prices--thus achieving, for most farmers, exactly the
opposite of what the initiative is intended to do.

Surely the case for local food, produced as close as possible to the consumer in order to
minimise "food miles" and, by extension, carbon emissions, is clear? Surprisingly, it is not. A
study of Britain's food system found that nearly half of food-vehicle miles were driven by
cars going to and from the shops. Most people live closer to a supermarket than a farmer's
market, so more local food could mean more food-vehicle miles. Moving food around in big,
carefully packed lorries, as supermarkets do, may in fact be the most efficient way to
transport the stuff.

local food may turn out to be even less green. Producing lamb in New Zealand and
shipping it to Britain uses less energy than producing British lamb, because farming in
New Zealand is less energy-intensive. And the local-food movement's aims, of course,
contradict those of the Fairtrade movement, by discouraging rich-country consumers from
buying poor-country produce. But since the local-food movement looks suspiciously like old-
fashioned protectionism masquerading as concern for the environment, helping poor
countries is presumably not the point.

Appetite for change

The aims of much of the ethical-food movement--to protect the environment, to encourage
development and to redress the distortions in global trade--are admirable. The problems lie in
the means, not the ends. No amount of Fairtrade coffee will eliminate poverty, and all the
organic asparagus in the world will not save the planet. Some of the stuff sold under an
ethical label may even leave the world in a worse state and its poor farmers poorer than
they otherwise would be.

Real change will require action by governments, in the form of a global carbon tax;
reform of the world trade system; and the abolition of agricultural tariffs and subsidies,
notably Europe's monstrous common agricultural policy, which coddles rich farmers
and prices those in the poor world out of the European market. Proper free trade would
be by far the best way to help poor farmers. Taxing carbon would price the cost of
emissions into the price of goods, and retailers would then have an incentive to source
locally if it saved energy. But these changes will come about only through difficult,
international, political deals that the world's governments have so far failed to do.
A Grim Calculus-The Economist
Covid-19 presents stark choices between life, death and the economy. They will probably get
harder

Imagine having two critically ill patients but just one ventilator. Medics have to say who will
be treated and who must go without: who might live and who will probably die.

The pandemic that is raging across the world heaps one such miserable choice upon another.
Should medical resources go to covid-19 patients or those suffering from other diseases?
Some unemployment and bankruptcy is a price worth paying, but how much? If extreme
social distancing fails to stop the disease, how long should it persist?

The governor of New York, Andrew Cuomo, has declared that "We're not going to put a
dollar figure on human life." It was meant as a rallying-cry from a courageous man whose
state is overwhelmed. Yet by brushing trade-offs aside, Mr Cuomo was in fact advocating a
choice-one that does not begin to reckon with the litany of consequences among his wider
community. It sounds hard-hearted but a dollar figure on life, or at least some way of thinking
systematically, is precisely what leaders will need if they are to see their way through the
harrowing months to come. As in that hospital ward, trade-offs are unavoidable.

Their complexity is growing as more countries are stricken by covid-19. In the week to April
the tally of reported cases doubled. The presidential task-force has predicted that the
pandemic will cost at least 100,000-240,000 American lives.

Just now the effort to fight the virus seems all-consuming. India declared a 21-day lockdown
starting on March 24th. Having insisted that it was all but immune to a covid-19 outbreak,
Russia has ordered a severe lockdown, with the threat of seven years' prison for gross
violations of the quarantine. Some 250m Americans have been told to stay at home. Each
country is striking a different trade-off-and not all of them make sense.

In India the Modi government decided that its priority was speed. Perhaps as a result it has
fatally bungled the shutdown. It did not think about migrant workers who have streamed out
of the cities, spreading the disease among themselves and carrying it back to their villages. in
addition, the lockdown will be harder to pull off than in rich countries, because the
state's capacity is more limited. India is aiming to slow its epidemic, delaying cases to
when new treatments are available and its health-care system is better prepared. But
hundreds of millions of Indians have few or no savings to fall back on and the state
cannot afford to support them month after month.

Russia's trade-off is different. Clear, trusted communications have helped ensure that
people comply with health measures in countries like Singapore and Taiwan. But
Vladimir Putin has been preoccupied with extending his rule and using covid-19 in his
propaganda campaign against the West. Now that the virus has struck, he is more
concerned with minimising political damage and suppressing information than leading
his country out of a crisis. That trade-off suits Mr Putin, but not his people.

America is different, too. Like India, it has shut down its economy, but it is spending
heavily to help save businesses from bankruptcy and to support the income of workers
who are being laid off in devastating numbers
For two weeks Mr Trump speculated that the cure might be worse than the "problem itself".
Putting a dollar figure on life shows he was wrong. Shutting the economy will cause huge
economic damage. Models suggest that letting covid-19 burn through the population would
do less, but lead to perhaps 1m extra deaths. You can make a full accounting, using the age-
adjusted official value of each life saved. This suggests that attempting to mitigate the disease
is worth $60,000 to each American household. Some see Mr Trump's formulation itself as
mistaken. But that is a comforting delusion. There really is a trade-off, and for America
today the cost of a shutdown is far outweighed by the lives saved.

Wherever you look, covid-19 throws up a miasma of such trade-offs. When China shuts its
borders to foreigners almost completely, it stops imported infections but it also hobbles
foreign businesses. A huge effort to make and distribute covid-19 vaccines will save lives,
but it may affect programmes that protect children against measles and polio.

How should you think about these trade-offs? The first principle is to be systematic. The
$60,000 benefit to American households, as in all cost-of-life calculations, is not real cash but
an accounting measure that helps compare very different things such as lives, jobs and
contending moral and social values in a complex society. The bigger the crisis, the more
important such measurements are.

A second principle is to help those on the losing side of sensible trade-offs. Workers
sacked in forced shutdowns deserve extra help; children who no longer get meals at
schools need to be given food.

A third principle is that countries must adapt. The balance of costs and benefits will
change as the pandemic unfolds. Lockdowns buy time, an invaluable commodity. When they
are lifted, covid-19 will spread again among people who are still susceptible. But societies
can prepare in a way that they never did for the first wave, by equipping health systems with
more beds, ventilators and staff. They can study new ways to treat the disease and recruit an
army of testing and tracing teams to snuff out new clusters.

People will have endured months indoors, hurting both social cohesion and their mental
health. Year-long lockdowns would cost America and the euro zone a third or so of gdp.
Markets would tumble and investments be delayed. The capacity of the economy would
wither as innovation stalled and skills decayed. Eventually, even if many people are dying,
the cost of distancing could outweigh the benefits. That is a side to the trade-offs that nobody
is yet ready to admit.
The Pinto Memo: ‘It’s Cheaper to let them
Burn!’
Nowadays, most people are aware that the late great Ford Pinto was widely considered to be a rolling
death trap during its reign of terror from 1970 through 1980. This is mainly due to allegations that
if it were rear-ended, the doors would jam shut and the bomb-like rear gas tank would explode
upon impact.

Critics argue that before the Pinto was released to the public in 1970, Ford knew it was a
potentially murderous and tacky–looking compact. Only, instead of recalling the cars for safety
retrofits, Ford ran a cost-benefit analysis on the matter and found it would be cheaper to pay off
the possible lawsuits of crash victims in out–of–court settlements.

“The Pinto Memo,” which contains these dirty numbers, was allegedly circulated among Ford’s senior
management in 1968, two years before the Pinto hit the streets and caused a number of injuries and
deaths.
The Infamous "Pinto Memo"

Fatalities Associated with Crash-Induced Fuel Leakage and Fires

Expected Costs of producing the Pinto with fuel tank modifications:

Expected unit sales: 11 million vehicles (includes utility vehicles built on same chassis)
Modification costs per unit: $11.00

Total Cost: $121 million (11,000,000 vehicles x $11.00 per unit)

Expected Costs of producing the Pinto without fuel tank modifications:

Expected accident results (assuming 2100 accidents)
180 burn deaths
180 serious burn injuries
2100 burned out vehicles

Unit costs of accident results (assuming out of court settlements)

$200,000 per burn death
$67,000 per serious injury
$700 per burned out vehicle

Total Costs: $49.53 million (180 deaths x $200k) + (180 injuries x $67k) + (2100 vehicles x $700
per vehicle)

In sum, the cost of recalling the Pinto would have been $121 million, whereas paying off the
victims would only have cost Ford $50 million. The Pinto went into production in 1970 without
the safety modifications.

“during that time, nearly 9,000 people burned to death in flaming wrecks. Tens of thousands more
were badly burned and scarred for life. And the four-year delay meant that over 10 million new unsafe
vehicles went on the road, vehicles that will be crashing, leaking fuel and incinerating people well
into the 1980s.”
Public outcry and various legal battles forced Ford to institute a recall for dealer–installed “safety
kits.” The kits consisted of plastic safety wrappings intended to dull the pointy objects that might
otherwise tear through the Pinto’s gas tank in the event of an accident.

the Pinto did not have a true rear bumper or adequate reinforcement between the rear panel
and the fuel tank, it was an exploding accordion waiting to compress. When the rear of the car
collapsed, the tank would be rocketed into the differential, which came equipped with various
extended bolts perfect for puncturing the gassy bladder.

Adding to the fun, the Pinto’s doors also lacked stable reinforcement, meaning that they could
crumple and jam shut, drawing the fiery coffin routine to a close.

These are just the arguments of the critics, mind you. The general public came up with the
unofficial Pinto slogan, “the barbecue that seats four.”
Labor, Earnings and Discrimination