Sowell Applied Economics Thinking Beyond Stage One (revised and enlarged ed)

Street Journal in an article titled “Big Bank Targets Immigrant Group, Many Illegal.” The problems encountered by banks lending in “subprime” markets were reported in the Wall Street Journal of August 16, 2001 in a front-page story titled “As Economy Slows, ‘Subprime’ Lending Looks Even Riskier,” which continued on page A2. The Federal Housing Authority’s higher delinquency rates on loans to lower income buyers can be found on page E2 of the November 9, 2002 issue of The Washington Post under the title “Stuck under a Load of Debt,” which began on page E1. The statements about government licensing of motorists and the insurance industry’s lack of incentive to guarantee that drivers purchase adequate levels of insurance are quoted from page A6 of the September 1–2, 2007 issue of the Wall Street Journal in an article titled “On the Road.” The damage amounts covered by auto insurers in Arizona are from the same article. Automobile fatality rates by drivers of different ages are shown in Figure 3–19, “Fatality Rate per 100 Million VMT by Age: 1996,” from page 3–22 of the publication The Changing Face of Transportation, published in 2000 by the U.S. Department of Transportation. The quote about families riding on scooters in India is from page C4 of the October 12, 2007 New York Times, in a story beginning on page C1 under the title “In India, a $2,500 Pace Car.” Ralph Nader’s comments about automobile safety are from his book Unsafe at Any Speed, pages vii, viii, ix, x, 14, 18, 26, 42. Automobile fatality rates are from pages 719 and 720 of the U. S. Bureau of the Census’ 1975 publication Historical Statistics of the United States: Colonial Times to 1970, Part 2. The results of the government study of the safety of the Corvair were reported in the Congressional Record–Senate, March 27, 1973, pages 9748 to 9774. Its conclusion about the Corvair’s performance is quoted from page 9749. The new precautions required of homeowners by insurance companies were discussed on page D1 of the June 7, 2007 issue of the Wall Street Journal in an article titled “Bracing for Disaster.” The growing reliance on insurers of last resort in coastal areas prone to hurricanes and storms was reported on pages A1 and A18 of the June 7, 2007 issue of the Wall Street Journal in an article titled “As Insurers Flee Coast, States Face New Threat.” The quote about re-insurance from the London magazine, The Economist is from its June 30, 2001 issue, page 66, in an article titled “Filling a Gap.” The fact

that American life insurance companies transfer risk through reinsurance is discussed on page 55 of Life Insurers Fact Book 2007, published by the American Council of Life Insurers. The charge that the government of India was reluctant to accept international help in response to the cyclone which struck the country in 1999, for political reasons, was made in India’s own media and was reported on page 46 of Liberty and Hard Cases edited by Tibor R. Machan. The Russian government’s similar reluctance, for political reasons, to accept international help in rescuing men trapped in one of its submarines— and its later acceptance of such aid with a second submarine in the wake of outcries from the Russian public over the deaths of the men in the first submarine— was reported in a story beginning on the front page of the New York Times of August 7, 2005 under the headline: “All 7 Men Alive as Russian Submarine Is Raised.” Information on the Swiss Reinsurance Company is from An Introduction to Reinsurance, a brochure published by Swiss Re. The insurance industry practice of denying coverage to homeowners who own certain breeds of dogs, and the efforts by homeowners and lawmakers to prevent this practice, are described in the article “Canine Mutiny: Dog Owners Fight Insurers,” from the Wall Street Journal dated June 1, 2006, pages D1 and D2. Information on New Jersey’s experience under state regulation of automobile insurance is from page 24 of The Economics of Life by Gary Becker and Guity Nashat Becker. The increase in the amount of money paid out by Britain’s Motor Insurers Bureau from 1988–2000 due to accidents caused by uninsured motorists was noted on page 76 of the December 21, 2002 issue of The Economist, under the title “Blame Culture.” The debate over whether or not insurance companies should have access to patient genetic data was reported on page 70 of the August 25, 2007 issue of The Economist, in an article titled “Do Not Ask or Do Not Answer?” which began on page 69. The issue of “genetic discrimination” in the United States was discussed on page A1 of the May 2, 2008 issue of the New York Times in an article titled “Congress Clears Bill to Bar Bias Based on Genes.” The quotes from the Japanese pilot about the risks of wearing parachutes in aerial combat are from page 176 of Samurai! by Saburo Sakai, 1957 edition published by E.P. Dutton and Company, Inc. The comment on higher death rates from natural disasters

in poorer countries was made on page 39 of an essay by Indian economist Barun S. Mitra titled “Dealing with Natural Disaster: Role of the Market” from the book Liberty and Hard Cases, edited by Tibor R. Machan. Information on the deaths caused by the hurricane that struck Galveston, Texas, in 1900 is from page 38 of the same book, while information on the number of deaths caused when Hurricane Andrew devastated southern Florida in 1992 is from pages 38–39. Barun Mitra’s quote about the drought that struck India in 2000 is from page 41 of the same book. Data on deaths from Hurricane Katrina in the United States and earthquakes in India and Pakistan are from page 98 of the March 4, 2006 issue of The Economist, in an article titled “Emerging-Market Indicators,” under the heading “Catastrophes.” The fact that bank failures in the 1930s were concentrated in unit banks is from page 55 of FDR’s Folly by Jim Powell. The bailout of savings and loan associations in the 1980s at a cost of more than half a trillion dollars is noted on page 57 of the same book. The quotation from Paul Samuelson in defense of social insurance schemes and the economic and demographic data on their problems are from an article titled “Snares and Delusions” on pages 5 and 6 of a special section within the February 16, 2002 issue of The Economist. The special section is titled “Time to Grow Up.”

CHAPTER 6: THE ECONOMICS OF IMMIGRATION

The epigraph is from page ix of Sustainable Immigration and Cultural

Integration by Wolfgang Kasper, published by the Centre for Independent Studies in Australia. The estimate of 200 million immigrants worldwide is from page 4 of a special report on migration, titled “Open Up,” in the January 5, 2008 issue of The Economist. The migration of highly skilled people from poorer countries to more prosperous nations is discussed on pages 4 and 5 of the same article. The number of international migrants living in the United States was reported on page 21 of Pocket World in Figures, 2007 Edition, published by The Economist. The changes in the country origins of European immigrants in various decades of the 19th

century are from page 13 of the US Census Bureau’s Current Population Reports, P23–206 published in 2001. The prominence of Italians originating from the cities of Messina and Molfetta among fishermen in the Australian port of Freemantle was noted on page 30 of Southern Europeans in Australia by Charles A. Price. That Lebanese immigrants from particular towns often settled together in particular towns in Colombia was mentioned on page 368 of The Lebanese in the World, edited by Albert Hourani and Nadim Shehadi. Differences in geographic origin and culture among those who settled in New England and in the colonies of the South are discussed on pages 298–299, 626, 628–629, 634–635, 721–726 of Albion’s Seed by David Hackett Fischer, and on pages 16 to 18, and in Chapters VI and VIII of Cracker Culture by Grady McWhiney. The use of prepaid tickets by emigrants from Scandinavia during the late nineteenth and early twentieth centuries was noted on page 14 of The Age of Mass Migration: Causes and Economic Impact by Timothy Hatton and Jeffrey G. Williamson. Information on the prepaid passage of Irish immigrants is from pages 394–395 of Perspectives in American History, Vol. X (1976), in an article titled “The Irish Famine Emigration to the United States.” The statement that most Jewish immigrants to America in the early twentieth century had their passage to America paid for by family members already living in the U.S. is from page 113 of the same publication, Vol. IX (1975), in an article titled “Immigration of Russian Jews to the United States: Background and Structure.” The chain migration patterns of the Lebanese in West Africa, Indians in East Africa, and Chinese in Southeast Asia were noted, respectively, on pages 242 to 243 of The Lebanese Traders in Sierra Leone by H. L. van der Laan; pages 73–75 of The Indian Minority of Zambia, Rhodesia, and Malawi by Floyd Dotson and Lillian O. Dotson; page 300 of South Asians in East Africa: An Economic and Social History, 1890–1980 by Robert G. Gregory; page 172 of The Chinese in Philippine Life: 1850–1898 by Edgar Wickberg; and page 15 of The Chinese in New Zealand: A Study in Assimilation by Ng Bickleen Fong. The high percentage of immigrants that settled in Australia via the chain migration process is from page 109 of Southern Europeans in Australia by Charles A. Price. The quote about how the affordability of modern communications and travel facilitates family ties

across international borders is from pages 3–4 of a special supplement titled “The Longest Journey,” in the November 2, 2002 issue of The Economist. The estimated $318 billion in immigrant remittances worldwide in 2007 was reported on page 106 of the December 15, 2007 issue of The Economist under the heading “Remittances.” The value of worldwide immigrant remittances as a proportion of the GDP of poorer countries was noted on page 116 of the November 26, 2005 issue of The Economist under the heading “Remittances.” The African doctors sending a substantial proportion of their income home even after 20 years abroad were mentioned on page 11 of a special supplement to the January 5, 2008 issue of The Economist, this supplement being titled, “Open Up.” The extent of Japanese ownership of land in Brazil was mentioned on page 91 of The Japanese Immigrant in Brazil by Teiiti Suzuki. The growing ratio of immigrants to the United States from Asia in the years between 1965–1998 is shown on page 15 of The First Measured Century: An Illustrated Guide to Trends in America, 1900–2000, by Theodore Caplow, et al. The estimated 55 million Europeans who migrated to the Western Hemisphere and Australia between the years 1850–1914 are noted on page 3 of The Age of Mass Migration by Timothy Hatton and Jeffrey G. Williamson. The differing assimilation patterns of Lebanese immigrants in various countries where they settled is discussed on page 9 of The Lebanese in the World, edited by Albert Hourani and Nadim Shehadi. The high rate of savings among Italians living in Argentina was noted on page 50 of Immigration and Nationalism: Argentina and Chile, 1890–1914, by Carl Solberg. The cultural differences between Japanese immigrants in Brazil and Japanese immigrants in the United States are mentioned on page 465 of Perspectives in American History, Vol. XII (1979), in an article titled, “Japanese Emigration to the United States, 1866–1924.” The booing of the Marseillaise by the descendants of North African immigrants to France was quoted from page 307 of Our Culture, What’s Left of It: The Mandarins and the Masses by Theodore Dalrymple. The rioting in France that left more than one hundred police officers wounded in 2007 was discussed on page A1 of the November 28, 2007 issue of the New York Times, under the title “In French Suburbs, Same Rage, but New Tactics.” The increased levels of crime

among the children of Mexican immigrants to the United States was reported on page 68 of The Immigration Solution by Heather Mac Donald, Victor Davis Hanson, and Steven Malanga. The booing of the American national anthem before a soccer match against Mexico was noted on page A20 of the April 6, 2002 issue of the Washington Post under the title “Immigrant Invasions.” The fact that a 2007 poll in the United States showed that suicide bombing was accepted by one in four Muslim respondents under the age of thirty was reported on page A16 of the Wall Street Journal dated June 4, 2007 in an article titled “Muslim Melting Pot.” The thousands of people of Indian and Chinese descent who returned to their native countries between 2005 and 2006 were noted on page 88 of the July 23, 2007 issue of Forbes magazine, in an article titled “Back to India.” The return of 8.5 million emigrants to Italy between the years 1905–1976 was noted on page 399 of Perspectives in American History, New Series, Volume I (1984), in an article titled “Italian Mass Emigration to the United States, 1876–1930: A Historical Survey.” The estimates for Indian migration during the century between the mid 1830s and the late 1930s are from page 99 of The Population of India and Pakistan by Kingsley Davis. Variations in the rate of return migration among various immigrant groups are from page 9 of The Age of Mass Migration by Timothy Hatton and Jeffrey G. Williamson. The large financial costs of treating immigrants in Britain’s National Health Service were reported on page 20 of the May 23, 2003 issue of the Daily Telegraph, in an article titled “The World’s Sick Are Flocking to the NHS— and We’re Paying.” The high percentage of tuberculosis cases attributed to immigrants in Loudoun and Fairfax Counties in Virginia was reported on page B1 of the August 26, 2005 issue of the Washington Times under the title “TB Cases Rooted in Foreign Countries; Immigrants, Visitors Carry Disease to Area.” The higher rate of Hepatitis A in the Hispanic population of Texas compared to the black and white populations of the state was shown on page 53S of the October 2005 issue of the American Journal of Medicine, in an article titled “United States Epidemiology of Hepatitis A: Influenced by Immigrants Visiting Friends and Relatives in Mexico?” The prevalence of hepatitis A, B and C among African immigrants in Minneapolis was reported on page 84 of the January

11, 1999 issue of Archives of Internal Medicine, in an article titled “Communicable Disease in African Immigrants in Minneapolis.” The statement that both the increase in tropical diseases and resurgence of tuberculosis and viral hepatitis in Western countries are the results of the growing migration from less developed nations is from page 115 of the July 2003 issue of American Journal of Tropical Medicine and Hygiene, in an article titled “Infectious Diseases in Immigrants from the Perspective of a Tropical Medicine Referral Unit.” The respective educational attainments of immigrants from Asia and Mexico are shown on page 37 of the Census Bureau’s Current Population Reports, P23–206. The fact that many Scottish highlanders of the nineteenth century did not speak English and were illiterate and unskilled is noted on page 768 of The Australian People: An Encyclopedia of the Nation, Its People and Their Origins, edited by James Jupp, 1988 edition. The fact that Scottish highlanders settled in separate communities from lowlanders in America is noted on page 118 of The Highland Scots of North Carolina, 1732–1776 by Duane Meyer, and page 621 of Albion’s Seed by David Hackett Fischer. The settlement patterns of urban Scottish lowlanders in Australia were mentioned on page 764 of The Australian People, edited by James Jupp, 1988 edition. The advanced nature of Scottish agricultural methods was noted on page 762 of the same publication and the decline in the proportion of Scottish highlanders immigrating to Australia after the 1850s was noted on page 764. That immigrants in Britain take jobs that unemployed Britons will not take was mentioned on page 14 of a special supplement section of the November 2, 2002 issue of The Economist, this supplement being titled “The Longest Journey.” The role of real wages in influencing emigration from the United Kingdom is discussed on page 66 of The Age of Mass Migration by Timothy Hatton and Jeffrey G. Williamson, where the role of mass migration in bringing about wage convergence is discussed on page 29 and where the rise in wages in Ireland and the decline in both rents and the return on capital during the age of mass migration are noted on page 188, while the decline in Irish emigration is noted on pages 78–80 and 184 of the same book. The surge in emigration among poor southern Italians in the wake of higher wage levels brought on by earlier migrations is discussed on pages 98–100

and the rising wage levels in Sweden during the decades from 1870–1910 are noted on page 198, while the decline in the real wage gap between the Old World and the New World during the late nineteenth and early twentieth centuries is discussed on page 211 of the same book. Estimates for the number of immigrants arriving in the United States from various parts of Europe during different eras are from pages 7 and 40 of Heaven’s Door by George J. Borjas. Changes in the geographic origins of immigrants to the United States after 1965 are reported on pages 11 and 12 of the US Census Bureau’s Current Population Reports, P23–206. The fact that the average immigrant earned more than the average native-born American in 1960 is reported on pages 21–22 of Heaven’s Door: Immigration Policy and the American Economy by George J. Borjas. The widening gap in educational attainment between native-born Americans and immigrants after the 1960s is described on the same pages. The fact that the average pay of immigrants from Mexico was 40 percent less than that of the average American is noted on page 44 of the same book. Canada’s immigration policy is discussed on pages 58–59 of the same book. The differing views of elite opinion leaders and the general public on the issue of immigration are shown on page 3 of the December 2002 issue of Backgrounder, published by the Center for Immigration Studies, in an article titled “Elite vs. Public Opinion.” The quote about “the white Western majority” having to do some assimilating to the immigrants is from pages 31–32 of Heaven’s Door by George J. Borjas. Dismissive reports of growing concerns among European voters about immigrants appeared on page 56 of the November 24, 2007 issue of The Economist, in an article titled “The Trouble with Migrants.” Changing public opinion on the issue of immigration in Australia over the last decades of the 20th century was reported on page xi of Sustainable Immigration and Cultural Integration, by Wolfgang Kasper. The fact that one-fourth of the Australian population was foreign-born in 1998 is mentioned on page 6 of the same publication and the reluctance of immigrants to assimilate into the Western culture is mentioned on page viii, while the discussion of the debates on immigration policy in Australia are mentioned on page xvi. Immigration’s impact on the economy of Britain was discussed on pages 53–54 of the June 29, 2002 issue of The Economist

under the title “Who Gains from Immigration?” According to the Government Accountability Office, 27 percent of all federal prisoners are criminal aliens. See pages 2, 7, 9, and 19 of the Government Accountability Office’s publication Information on Criminal Aliens Incarcerated in Federal and State Prisons and Local Jails, GAO–05–337R. That Mexico is the country of origin of most of these criminal aliens is shown on pages 10, 20, and 25 of the same publication. The varying conclusions reached by different studies of the net costs and benefits of immigration in the United States are mentioned on page 121 of Heaven’s Door by George J. Borjas, and the impact of immigration on the American labor market is the focus of Chapter 4 of that book, while the widening wage gap between native-born American men and immigrant men since the 1960s is discussed on pages 21–22. The 40 percent unemployment rate among young Muslim men in France was reported on page B13 of the April 11, 2006 issue of the Los Angeles Times in an op-ed column titled “... It’s a Major Mistake.” Increased crime among the Muslim population in France and a growing hostility toward French society among them is discussed on pages 299–301, 303–304, and 305 of Our Culture, What’s Left of It by Theodore Dalrymple. Damages caused during the three weeks of rioting in France in 2005 were reported on pages 47–48 of the December 17, 2005 issue of The Economist under the title “After the Riots.” Additional information on the riots is from page A18 of the November 13, 2005 issue of the Washington Post in an article titled “Police, Rioting Youths Clash in Central Lyon.” The failure of the British security establishment to respond to threats by Muslim extremists in Britain is the subject of Chapter 3 of Londonistan by Melanie Phillips. The Turkish prime minister’s urging of Turks in Germany to resist assimilation, and the poor performance of Turkish students in German schools were reported on pages 31 and 32 of the April 5, 2008 issue of The Economist under the title “Two Unamalgamated Worlds.” The social fragmentation of the various ethnic cultures in Britain was reported on pages 74 and 76 of the February 23, 2008 issue of The Economist under the title “The Search for Social Glue.” The assimilation of the Irish, the Jewish, and the Lebanese immigrants into American culture during their periods of immigration have been discussed, respectively, in pages 101–102 of The Irish

in America by Carl Wittke; pages 229–235 of World of Our Fathers by Irving Howe; and pages 154–155 of The Lebanese in the World, edited by Albert Hourani and Nadim Shehadi. Similar efforts toward assimilation among blacks are discussed on pages 36–37 of my Black Rednecks and White Liberals. Support among Hispanic voters for the proposition ending bilingual education in California was reported on pages 57–58 of Heaven’s Door by George J. Borjas. The distributions of immigrants and native-born Americans in various job classifications were reported on page 3, section 4, of the April 2, 2006 issue of the New York Times in an article titled “Immigrants and the Economics of Hard Work.” The small share of agricultural labor in the price of fruits and vegetables was shown on page 3, section 4, of the April 2, 2006 issue of the New York Times, in an article titled “Plentiful, Productive— and Illegal.”

CHAPTER 7: THE ECONOMICS OF DISCRIMINATION

The admission of Jewish merchants into Russia during the reign of Catherine the Great was from pages 86–87 of Human Capital: The Settlement of Foreigners in Russia, 1762–1804 by Roger P. Bartlett. W. E. B. DuBois’ comments on the hiring of black workers in the nineteenth century were from pages 323 and 395 of The Philadelphia Negro. The fact that never-married, college-educated women who have never had children and who were working full-time between the ages of 40 and 64 earn higher average salaries than men of the same description is from page xxiii of Why Men Earn More by Warren Farrell. The greater likelihood of hiring young black males by those employers who check criminal backgrounds was reported on pages 452 and 473 of the October 2006 issue of Journal of Law & Economics in an article titled “Perceived Criminality, Criminal Background Checks, and the Racial Hiring Practices of Employers.” Bias against lower-caste people in India was discussed on page 553 of Competing Equalities by Marc Galanter. The comment that the Chinese could do everything better and more cheaply than Malays was from page 25 of The Malay Dilemma by Mahathir bin Mohamad, published in Kuala Lumpur by