you might see substantial economic losses as migrants send income back home to support family.
Is that a real problem? Assume they get paid in local currency (e.g. US dollars).
Option one; they buy a foreign currency with those US dollars, and send that foreign currency overseas. The dollars stay in the US and get spent.
Option two, they send those US dollars overseas; those US dollars ultimately either come back to the US to be spent (in which case the fact that they circled around the world matters as much as if they sat in a wallet in Utah for a year), or they never come back and the US is ahead on the deal, given that the worker did some work but US society will never need to hand over goods/services in exchange.
I guess my hypothesis is that either those US dollars get spent in the US, or they don't. If they do, it's just like a non-migrant worker. If they don't, US society got work done and didn't have to give back goods/services - bargain for US society.
A currency exchange is a zero sum transaction. Whether it is US dollars or Philippine pesos makes no difference, the value stayed in-country.
When it gets sent overseas, it leaves the country and is spent elsewhere, so that is a loss in value for the originating country. The only value remaining would be whatever fee was charged on its way out.
If the US prints a million dollars, and some does a million dollars' worth of work in the US (or someone outside the US sends over a shipload of electronics in exchange for that big back of dollars) and moves that million dollars overseas, and those dollars never come back to be spent in the US, the US has gained. The US got a whole lot of work done, and did not have to give anyone goods or services in exchange.
The US has been doing this with a trade deficit for decades; giving people paper (or just numbers), which the US can make almost for free, in exchange for actual goods and services which people overseas happily send to the US. A trade deficit is free stuff. It's only a problem if the holder of all that paper comes back some day to spend it.
"When it gets sent overseas, it leaves the country and is spent elsewhere, so that is a loss in value for the originating country."
What value? The US did not give anyone goods or services, no goods from the US were transported to another country. What value was lost to the US? In the future, someone might come back with those dollars and exchange them for goods and services which they move outside the US. That would be a loss of value for the US, watching real goods and services go overseas.
I disagree. A lot of the US dollars that are held outside the US seem to be held not with an intention of spending them in the US, but out of trust that everyone will always agree they're valuable.
USD has inherent value* because it can be exchanged for goods, property, and services in the US. Or to pay US taxes. The US has a lot of goods, property, and services that people want. US taxes are not a consideration for most people outside the US.
*Since most global trade is denominated in USD, and many countries use USD as their official currency, it can also be used to pay for goods, property, and services outside the US. But arguably it wouldn't have this global status if the US itself didn't have valuable goods, property, and services.
> If they do, it's just like a non-migrant worker.
It isn't quite. Imagine dollars leave the US, get sent to Nigeria, and eventually return to the US to buy some music.
Compare that to the case where the dollars do not get sent to Nigeria, but remain in the US.
In the latter case, the Nigerian person wanting their music needs to find another source for the dollars to buy their music. That in turn makes the dollar more valuable, and reduces Nigerias buying power for US products and services.
Imagine dollars leave the US, get sent to Nigeria, and eventually return to the US to buy some music.
I'm definitely on board with the idea that if those dollars never return to the US, then the US effectively got free labour (which is why a trade deficit, I often suggest, isn't automatically a bad thing - it's free stuff, at least until the dollars all come back!), which is quite a win for the US, and given that of all dollars sent overseas, some will never come back, the US has a steady supply of free labour purely because migrant workers are sending dollars overseas (which sure feels like a win for the US).
So the only "downside" for the US is if those dollars sent overseas do eventually make their way back and buy something; at that point the US is handing over goods and services in exchange for that original work done by the migrant worker. Not so much a downside as a delayed fair exchange.
Let me just think out loud for a moment; sending the US dollars to our Nigerian chum, and him returning them to the US in exchange for something, is the same (barring people skiming off the top and postage etc.) as our migrant worker just buying something and posting that to the Nigerian chum. So I think I agree with what you say, but I hypothesise it's not making the US any worse off than the money not making that round trip and just being spent on goods/services in the US by the migrant worker (barring postage etc).
NOT sending the US dollars to our Nigerian chum, and him needing to source US dollars from somewhere else, does make the US dollar a tiny bit more valuable as there is a tiny increased demand for it. Whether that's a good or bad thing for the US, I couldn't say, but if the US dollar becomes too expensive, US exports go down. At this point I guess we're heading into second-order effects of what happens when US exports become too expensive, and I wouldn't like to run into that right now.
Is that a real problem? Assume they get paid in local currency (e.g. US dollars).
Option one; they buy a foreign currency with those US dollars, and send that foreign currency overseas. The dollars stay in the US and get spent.
Option two, they send those US dollars overseas; those US dollars ultimately either come back to the US to be spent (in which case the fact that they circled around the world matters as much as if they sat in a wallet in Utah for a year), or they never come back and the US is ahead on the deal, given that the worker did some work but US society will never need to hand over goods/services in exchange.
I guess my hypothesis is that either those US dollars get spent in the US, or they don't. If they do, it's just like a non-migrant worker. If they don't, US society got work done and didn't have to give back goods/services - bargain for US society.