I’m not positive, but I’m reasonably certain the guy with the bedroll in this picture is performing arbitrage. He was sleeping out the midday sun under the San Luis Bridge on the Sonora-Baja-Arizona border before I saw him pick up and head toward those bushes on the Colorado River’s east bank. Just beyond that array of fences is an Arizona farm, where workers are paid substantially more than they are paid on this, the Mexican side of the border.

Here’s how Irving Fisher explained this in his “Elementary Principles of Economics“:

Competition, in the case of our friend with the bedroll facing the border, is not “perfect”, to borrow Fisher’s word. The fence, and the Border Patrol patrolling the no-man’s land between the fence and the Colorado River, have the effect of preventing the easy transaction of Bedroll Guy’s business. But if he can slip past the border fence defenses, he can sell his labor for a substantially higher price.

This very practical exercise in arbitrage, carried out many times over along the U.S.-Mexico border, has enormous implications.