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Wednesday, November 14, 2012

Human Trafficking: The Other Good Reason to Reform Immigration

Restrictive immigration policies have long been associated with a variety of economic problems including the diminished availability of foreign business and scientific talent, the inability to fill low-skilled agricultural and service jobs typically scorned by legal residents, and reduced access to the kind of entrepreneurial enthusiasm characteristic of those willing to risk their futures in another country.

Only recently has it become clear how restrictive immigration laws also produce harmful social consequences, particularly when it comes to the age-old scourge of human trafficking—the use of force and fraud to supply cheap labor and sexual services.

To understand these consequences, it is important to appreciate just how lucrative a branch of organized crime the modern slave trade has become.  Efficient transportation, technological advances in both farming and factory work, and advances in communication have all combined to make the use of forced labor very cheap by historical measures.

Free the Slaves, a Washington, D.C.-based nonprofit, has calculated the return on the cost of an enslaved field worker in 1850s Alabama at just 5 percent, whereas today a trafficked farmhand can yield the owner anywhere from double digits to 800 percent.  Similarly, an imprisoned prostitute shuttled around the boroughs of New York City in a van by a driver scheduling appointments on his cell phone can service as many as 40 customers in a single shift.  As one researcher coldly but accurately put it, “People are a good commodity as they do not easily perish, but they can be transported over long distances and can be re-used and re-sold.”

The result, according to the United Nations Office on Drugs and Crime, is that 2.5 million victims, approximately 80 percent female and 50 percent under the age of 18, are being trafficked around the world at any given time.  In 2005 the International Labor Organization in Geneva, Switzerland, estimated the annual revenues from this “industry” at $32 billion, or $13,000 per victim.

It would undoubtedly surprise many Americans to learn the extent to which this modern slave trade operates within their own country.  A 2004 study, Hidden Slaves: Forced Labor in the United States, by Free the Slaves and the Human Rights Center at the University of California, Berkeley, estimates that “tens of thousands” of women and children are trafficked nationwide with the largest numbers coming from China, Mexico, and Vietnam.

According to the study 46 percent are prostitutes, 27 percent are imprisoned household servants, 10 percent work in agriculture, 5 percent are held in sweatshops, and 4 percent serve against their will in restaurants and hotels.  A May 2012 televised report by the BBC identified a single town in Mexico, Tenancingo, where 10 percent of the 10,000 residents are engaged full-time in trafficking teenage girls to work the streets of New York, Chicago, and other major U.S. cities.

The unexpectedly large size and scope of America’s slave economy is hidden from policymakers and the public in part by its criminal nature, but also by a longstanding federal metric that substantially undercounts victims.  The government has traditionally not tallied imprisoned workers identified in crackdowns of border-smuggling operations or in raids of sweatshops and brothels, only the relatively small number who somehow escape their captors and formally apply for assistance.

Debt Bondage  

It is also important to understand the basic mechanism of human enslavement, which is typically referred to as “debt bondage.”  The victim, almost always from a poor, developing, or economically unstable country, agrees to repay the trafficker from future earnings the cost of transport, border-control evasion, and accrued interest in order to land what is believed to be a legitimate job in a more prosperous part of the globe.

By the time a trafficked laborer discovers the real work he or she has been imported to perform, it is too late.  Amid threats of violence, uncertainty as to the help local authorities are willing to provide, possible retribution against loved ones back home, inability to speak the local language well, and a lack of financial resources, the victim has no choice but to accept the captor’s unilateral modification of the contract.

Even when brothels, sex tourism operations, exploitative factories, and farm labor camps are subjected to local law enforcement crackdowns, the trafficker himself is typically insulated from prosecution by having set up some of his victims as onsite managers.  According to the Danish Centre against Human Trafficking (DCAHT), most pimps and forced labor guards rounded up in police raids around the world usually turn out to have been trafficked themselves.

The Business Model

For all the human misery inflicted by the slave trade, there was little hard data on the problem beyond the statistics already cited—until recently, when social scientists in the United States and Germany began to think that a dispassionate economic perspective might be helpful.  Reasoning that an objective analysis of the market could conceivably reveal unexpected vulnerabilities in the typical trafficker’s business plan, they set out to create an unemotional commercial understanding of slavery, framing what most consider an abhorrent activity in terms of standard business concepts such as product demand, asset life, aftermarket, and ordinary expenses.

In 2010, for example, Elizabeth Wheaton, Edward Schauer, and Thomas Galli created a detailed report for the journal International Migration, showing how traffickers calculate the marginal cost of each new person sold into slavery and therefore the optimal size of a given network.  They also described how successful traffickers in mature markets survive competition by cultivating resale customers.

The first thing such research began to make clear is the surprisingly large number of subcontractors a trafficker needs to employ: recruiters on the ground, corrupt officials, smugglers, forgers, pimps and labor camp enforcers at the back end, and even people to compose advertisements to lure naive victims with the false hope of legitimate jobs in distant lands.

What economists then began to see is that a trafficker’s ability to control operating expenses is dependent almost exclusively on migration patterns.  Poor and underdeveloped regions where large numbers of people are anxiously seeking employment in more prosperous countries with closed borders give rise to large, efficient smuggling operations that reduce the trafficker’s transportation expenses.  (A smuggler is not necessarily a trafficker until he is employed by one or branches out into that business himself.)  Economies of scale similarly lower the costs of recruitment and documentation.

The most recent example of how migration alters trafficking patterns involves the dissolution of the Soviet Union.  This may have been a welcome political development, but the resulting chaos in the satellite counties led to waves of migration, which in turn made trafficking from Eastern Europe exceptionally profitable.  Combined with the formation of the European Union, which eliminated border checkpoints across much of the continent, the fall of the Russian empire made it possible to cheaply transport coerced workers from countries like Bulgaria, Moldova, Romania, and the Ukraine to almost anywhere in the West.

One result is that sex tourism in Spanish border towns like La Jonquera is currently booming.  According to local authorities interviewed for a story by New York Times reporter Suzanne Daley, a disproportionately large percentage of female slaves are lured from Eastern Europe under the control of a network.

Between Poverty and Closed Borders

Weak legislation in the receiving counties, the poor quality of law enforcement, and official corruption—all may exacerbate trafficking, say the Kiel Institute’s Toman Omar Mahmoud and the Free University of Berlin’s Christoph Trebesch in their study The Economics of Human Trafficking and Labour Migration, but “it is first and foremost the wish for a better life abroad that puts millions of people at risk of ending up in exploitative working conditions.”

“In a nutshell,” they write, “trafficking and exploitation are the sad but obvious consequences of migration pressure in a world of closed borders.”

What this conclusion clearly suggests is that that the most effective way to reduce trafficking would be to undercut the barriers to employment migration in more affluent nations.  Noting that the vast majority of victims are trapped between a desperate desire to improve their lives and restrictive immigration policies, Kevin Bales, professor emeritus at Roehampton University in London and the author of Ending Slavery, argues that stemming the illegal flow of slaves means “facing up to the economic demand for people to fill jobs in richer countries.”

Interestingly, this argument dovetails with the commonsense observations of those fighting slavery on the ground in countries like Thailand, which is notorious for child prostitution, labor exploitation, and sexual tourism.  The Development and Education Programme for Daughters and Communities (DEPDC) notes that the Thai government recognizes only nine of the tribes in the remote highlands.  As a result, the other tribes are disproportionately vulnerable to traffickers because they are treated as if they were foreigners and officially they have no rights.  DEPDC has long argued that the most effective antidote for human slavery in Southeast Asia would involve conferring some kind of legal status on would-be workers who are effectively stateless.

Halfway across the world in the United Kingdom, the Adam Smith Society, a market-oriented think tank, has similarly argued that government efforts to stop the trafficking of bonded labor to meet seasonal demands in the European supermarket business are a largely a waste of time and taxpayer money.  Instead of passing tougher regulations or hiring more police to crack down on illegal migrant workers, the society recommends making employment visas more flexible and easier for foreigners to obtain.

The case for a more lenient immigration policy has long been based on the sound economic argument that an open employment market increases productivity, which in turn raises a country’s overall standard of living.   To that we can now append the opportunity to undermine sex and labor trafficking and thereby begin to end an age-old source of human misery.


  • Lewis Andrews is the senior policy analyst at Connecticut’s Yankee Institute for Public Policy.