Thursday, September 18, 2014

The case for open borders

Alex Tabarrok has a splendid post "the case for open borders" on Marginal Revolution.

Along the way he points to "Economics and Immigration: Trillion Dollar Bills on the Sidewalk?" by Michael Clemens and forthcoming Journal of Economic Perspectives, "The Domestic Economic Impacts of Immigration" by David Roodman and "The case for Open Borders" by Dylan Matthews, a Bryan Caplan interview and story on vox. All are worth reading.

1) Women

Anecdotes and analogies are important for how we understand events, beyond equations and tables. Bryan makes this point, with a lovely "elevator pitch" metaphor. Bryan comes up with a good story as well, that I hadn't thought of:

How much has the entry of women to the labor force lowered men's jobs and wages? (I was tempted to write "access to jobs," but someone might take it seriously!)  Should the US government have prohibited women from entering the labor force, in order to shore up the wages of men?

The increase in women's labor force participation was huge -- from 32% to 60%, resulting in an increase in overall labor force participation from 59% to 67% of the population from 1960 to 2000. 8% of 320 million is 26 million, so we're talking about a lot of extra people working.

The answer to the first question is surely yes, but not a lot. 26 million men did not lose their jobs so women could work.  And the answer to the second question is surely no.

Put similarly, should we be glad of falling birthrates because that means far fewer young people coming to compete for the jobs of older people?  Are countries like Japan and Europe breathing a sigh of relief that there are not a lot of youngsters pushing down wages?

David Roodman's excellent quantiative review makes the point well
The debate over the economic impacts of immigration can be seen as a battle between metaphors. Is an economy like a pie, with a set number of jobs, so that one person’s employment gain is another’s loss? Or is it like a church congregation, which one person can join to experience communion and fellowship without costing anyone else the same?
To a first approximation the answer is clear: the latter.
2) Charity

Roodman starts with
My client GiveWell, working closely with the foundation Good Ventures through the Open Philanthropy Project, is seriously considering labor mobility as a cause to which Good Ventures should commit resources:
It appears to us that moving from a lower-income country to a higher-income country can bring about enormous increases in a person’s income (e.g., multiplying it several-fold), dwarfing the effect of any direct-aid intervention we’re aware of.
I found it interesting that GiveWell commissioned the study. Many of our charities send cows, goats, adventuresome undergraduates and high school students anxious to improve their college admissions chances to Do Good in foreign villages. If you really want to improve their standard of living, letting them work in the US is far more effective. MR says "plaudits are due Give Well," and I agree.

3) The wedge

How much is the world losing overall by keeping people from moving? Clemens review the literature
For the elimination of trade policy barriers and capital flow barriers, the estimated gains amount to less than a few percent of world  GDP.  For labor mobility barriers, the estimated gains are often in the range of 50–150 percent of world GDP.
That's a lot.

4) Inequality

Bryan and Alex have been adding another point. Letting people work in the US lowers, and has lowered global inequality. Letting foreigners sell things in the US has done the same.


  1. To a first approximation

    In a non-linear world the devil is always in the second order effects.

  2. All valid arguments, but don't forget that when poor foreigners come here, they will start voting for the same kind of people that they vote for back home (Chavez, Moreno, etc).

  3. Cui Bono?

    In order to make your case you have to prove that the rising tide will lift the boats so far that the vast majority of Americans will be better off, and the rest will not be worse off. With our soggy labor markets of the last few years, I don't think you can do that.

    My other objection is the continued existence of the welfare state. There is a much better case for unlimited immigration when there is no cushy taxpayer financed feather-bed for the inevitable losers to fall back on. An unlimited immigration scheme should at least require the immigrant to post a bond against becoming a public charge.

  4. I would just like to sincerely point out that Europe is not a single country. At least not today in 2014.

  5. In the end I tend to agree with John's posts. But this one is not one of them (at least today)...

    The flaw is related to the Chavez/Moreno criticism really:

    You are assuming the *same* country before and after immigration. This is clearly not the case. See the Obama care and etc. With more poor immigrantes you will soon start a rent seeking state in the US. And ruin everyone's lives.

    PS: I dont even live in the US! But this is clearly a bad policy.

  6. I see people are already making the (valid) criticism that immigrants could vote in more restrictive policies. True. But as Bryan Caplan would point out, they keyhole solution is to admit immigrants and make them ineligible to vote - them and their descendants, for that matter. Most of them would take the deal.

    Same goes for welfare eligibility.

    1. I am afraid there is this little thing that makes that idea infeasible. It is called the 14th Amendment. Of course that may be aa bug that kills the immigration plan, which is a good thing.

    2. But that is unrealistic, it would never happen and its unconstitutional. Proposing that is the same as being against free immigration but with another name, because of discomfort with the anti free immigration label.

  7. I agree with the above comments. Nobody wants to talk about values/culture/language. This reminds me that Kevin Williamson recently brought up Pat Buchana's quip from 1992:

    "If we had to take a million immigrants in, say Zulus, next year, or Englishmen, and put them in Virginia, what group would be easier to assimilate and would cause less problems for the people of Virginia?"

  8. In some ways the US has done this experiment with many far larger impulse functions than current immigration in New York City at various times over a few centuries. In response to some of the greatest slums in history NYC used more government intervention, and used government investment to build minor things like the Erie Canal, the Brooklyn Bridge, Central Park. Undoubtably along they way there were huge numbers of semi-recent immigrants who opposed the new immigrants, just as we see happening today.

    How did that turn out? Is NYC a testimony to the damaging ravages of immigration and a more involved government? Is Hong Kong, Mumbai, Sydney, London, Paris, San Francisco, Los Angeles, Chicago, ...

    For cities at least, the data seem to almost perfectly correlate with more immigration being a positive effect, even when coupled with what the right dismisses as "welfare" support.

    There is certainly an impact on lower end labor. By almost any measure, at the median, immigrants work far harder for lower wages at menial jobs than native born people. Is this a bad thing? We tell ourselves that we teach our children to work hard. But if you want to see hard work, look at immigrants.

    There are so many anecdotal stories to the positive, coupled with overwhelming macro economic data, that immigration is a positive thing it's hard to understand the origin of the hostility.

  9. Professor, your post ignores the most important problem with total free immigration at will. The people who immigrate in these circumstances tend to be very poor and support statist redistributionist policies. They don't speak the language, they are very poor, they can't use a computer, why wouldn't they? Also they tend to have lots of children, who in turn support this statist policies. This is an uncomfortable fact that you can easily recognize. There are many countries that are politically free yet the people overwhelmingly support statism. (I grew up in one of them). Free immigration may benefit these immigrants, but how would it benefit the people already in the US?
    Its vey noble to go to poor countries to help the people there, but its very different from giving that very same people the right to vote for who will govern you in your own country!

  10. There is a case for open borders as a long-term goal, but Caplan has ceased to be a good advocate for it.

    Note his statement that US executive amnesty of >10 million people is the right course of action--there's no precedent for a US executive order with supermajority opposition and such far-reaching effects, and similar actions in other countries have frequently resulted in political chaos and massive wealth destruction. Furthermore, we already know from other countries which have tried something close to open borders (e.g. Argentina, Sweden, Singapore) that there won't be any "explosion of wealth" which would cause currently-opposed citizens to change their minds after the fact; to the contrary, both "rich countries" among the three have had skyrocketing opposition to foreigners (from a very, very low base in Sweden's case), and Singapore recently ended their border liberalization experiment. (Note that Singapore still engages in congestion pricing; these guys are hardcore and don't even blink at doing the unpopular but right thing. They clearly now believe that social and other costs of mass immigration exceed the benefits suggested by simple economic models.)

    Caplan calls for picking up currency in front of a steamroller. I'm pretty sure you should refocus on the sidewalks *without* the steamroller of supermajority dissent, and do your best to improve immigration and related policies in a country like Argentina or Sweden.

  11. I find it very ironic that so many immigration restrictionists cite immigrants' alleged support of statism. There is no more statist policy than for the government to determine where people live and work for such a large number of people. The non-interventionist policy is to let the markets determine that. The reason that there are such large potential GDP gains from open borders is precisely because it undoes the damage caused by statist immigration restrictions. If we had restrictions on movement across neighborhood, city, and state borders, our national GDP would plummet too.

    Besides, Caplan addresses the immigration-leads-to-statism fallacy in the Vox interview. Immigration has very little impact on the size of the welfare state. Texas vs. California is a good example. The two states have similarly large foreign-born percentage. Yet, Texas has one of the smallest welfare states in the country, and California has a large welfare state. Other forces are much more important in determining welfare state size.

    1. I'm not anti immigrant. How could I be? Im an immigrant myself!. The problem is not poor people who are just escaping poverty, the problem is irresponsible demagogues to whom they are an easy prey.

      Why not focus in ending the war on drugs that creates so many problems both in the US and Central America? I think illegal immigration has a lot to do with it. Drug wars lead to political chaos, political chaos leads to poverty, poverty leads to illegal immigration.

    2. California has nearly twice the percentage of foreign born population as Texas. That's 27% vs 15%.
      You should always think in percentages and never in "one of the biggest" and "one of the smallest". So, how many times bigger is the welfare state in California compared to Texas?

  12. The 50-150% GDP gain is very interesting. If true, then this issue is really really worthy of more attention.

    To me, opposition to increased immigration comes from 2 places; the "fear of loss of control" place, and the "already economically insecure" place. Both are reasonable enough. Place 1 we can't do much about. Place 2 we can and should.


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