Cafe Hayek

Unintendend Consequences

Division of Labour's Art Carden hits a home-run with this letter in today's Wall Street Journal:

The problems identified in the article about organized gangs smuggling undocumented immigrants across the U.S. border and then holding them for ransom ("Immigrants Become Hostages as Gangs Prey on Mexicans," page one, June 10) were created by a perfect storm of government intervention. The drug war has encouraged the development of international criminal syndicates and turned parts of the U.S.-Mexico border into actual war zones.

The war on undocumented immigrants has created opportunities for those syndicates to enter into the human-trafficking business. Cheap money and government policies aimed at increasing access to "affordable housing" created the housing bubble, and further intervention in the last year prevented housing prices from falling far enough to clear the market. This effectively created the "drop houses" in which criminal gangs abuse immigrants who have no legal recourse against them.

I expect that politicians will demand ramped-up enforcement, but this will be a mistake. The best way to proceed would be to end the war on drugs, end the war on immigrants, and scale back intervention in the housing market.

Art Carden
Memphis, Tenn.

Focus on the Essence

Here's a letter that I sent yesterday to the Wall Street Journal:

C. T. Sciance doesn't like immigrants competing for jobs in America (Letters, May 1).  He tells of his brother "whose job driving trucks in California used to pay $40 per hour and is now done by $15-per-hour illegal immigrants with fake papers and stolen identities."  I've some questions.

What's the relevance to Mr. Sciance's economic argument of the immigrants' legal status?  Would he not complain if these immigrants were legal?

Second, does Mr. Sciance oppose the development of engines with more horsepower, rigs with improved braking and suspension systems, better highways that permit safer travel at higher speeds, or other technological advances that enable trucking companies today to ship any given amount of freight using fewer and fewer drivers?  If not, why not?  Why might he oppose one method of reducing shipping costs - a method that reduces the demand for high-wage drivers - but not other methods that do exactly the same thing?
 
Sincerely,
Donald J. Boudreaux

The Nation Is Not a House

I argue here that those who analogize a nation to a house thereby suffer distorted reasoning about immigration.

Smith, Hayek, and Will on Society's Complexity

George Will's column in today's Washington Post is especially good (save for his slipping into the mistake of apparently assuming that America competes economically with other nations).

Especially noteworthy is this wonderful -- and wonderfully Smithian and Hayekian -- line:

Modernity means the multiplication of dependencies on things utterly mysterious to those who are dependent -- things such as semiconductors, which control the functioning of almost everything from cellphones to computers to cars.

I would add only that our dependence is not only on things utterly mysterious to each of us, but also on millions of strangers -- as Adam Smith noted in Book I, Chapter 2 of The Wealth of Nations:

But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chuses to depend chiefly upon the benevolence of his fellow-citizens. Even a beggar does not depend upon it entirely.

Also relevant here is the final paragraph of Hayeks' 1945 essay "Individualism: True and False":

What [true] individualism teaches us is that society is greater than the individual only in so far as it is free. In so far as it is controlled or directed, it is limited to the powers of the individual minds which control or direct it. If the presumption of the modern mind, which will not respect anything that is not consciously controlled by individual reason, does not learn in time where to stop, we may, as Edmund Burke warned us, "be well assured that everything about us will dwindle by degrees, until at length our concerns are shrunk to the dimensions of our minds."

Benedict and Lou

Today's Wall Street Journal reports that CNN's Lou Dobbs is angry at the Pope for speaking out in favor of immigration during the recent Papal visit to America.  According to the WSJ, Mr. Dobbs fulminated that "I really don't appreciate the bad manners of a guest telling me in this country and my fellow citizens what to do."

Memo to Mr. Dobbs: I really don't appreciate your bad-mannered habit of incessantly telling me, my family, and my friends what to do.  If we want to hire - or to befriend, or to live with, or simply to enjoy as neighbors - non-Americans in our own hometowns, you rudely tell us that we should not be allowed to do so. You insult us with myth-laden bombast and uninformed accusations.  The Pope, in this case, spoke out for greater freedom of association; you continue to champion obnoxious restrictions on this important freedom.

Higgs of Louisiana (via Washington State via PA via Maryland via ....) on Immigration

Patrons of the Cafe know of my great admiration for Robert Higgs, as both a scholar and a person.  Bob edits -- with much creativity, energy, and scholarly wisdom -- the Independent Institute's splendid quarterly journal The Independent Review, and has a long corpus of work, chiefly in economic history.  Here's Bob's most recent essay.  In it, he eloquently defends immigration -- and, in the process, challenges many of the most fundamental myths of modern politics.  Here's a paragraph to whet your appetite:

Lest you wonder about the point of this mundane little narrative, I hasten to emphasize that my father had done something quite remarkable: he had left the sovereign state of Oklahoma, crossed the sovereign states of Texas, New Mexico, and Arizona, and entered into and established permanent residence in the sovereign state of California, all without the permission of any of the rulers of these states. Imagine that!

The Benefits of Immigration

I'm pleased to find that this ten-year-old short article that I'd written on immigration (for the Foundation for Economic Education) is today posted at a website for immigration lawyers.  It's here.

Here's an early paragraph:

Each immigrant comes to America to make himself better off. Suppose government no longer redistributes income to immigrants. Would immigrants still relocate here? You bet! A handful will come because some Americans are willing to use their own resources to care for them. Most immigrants will come because each has sufficient skill and ambition to profit in the market.

Illicit Use of "Illegal"?

Law -- what it is, where it comes from, how it changes -- is not as simple a concept as many believe it to be.  The modern popular myth is that law is created by government, so that in democratic countries, law is created by The People exclusively through their representatives.  Statutes and regulations duly enacted by the state are, under this view, "the law."

This account of the law is grossly incomplete.  Much law (I would argue most law) emerges spontaneously in the course of multitudes of human interactions and is never -- or only after the fact -- written down in a statute book.  In addition, much "law" that is written in statute books truly isn't law in any operational sense.  (Is it really unlawful to jaywalk?  Or to drive at 60 mph on a highway whose posted speed limit is 55 mph?)

Greater recognition that promulgation by the state is neither a necessary nor a sufficient condition for a rule to become law would make the current debate over immigration much more fruitful and much less shrill.  (So, too, would the recognition that violation of some laws are more serious than are violation of other laws.)

This essay by Lawrence Downes appearing in Sunday's New York Times makes an important point.  Here are the opening paragraphs:

I am a human pileup of illegality. I am an illegal driver and an illegal parker and even an illegal walker, having at various times stretched or broken various laws and regulations that govern those parts of life. The offenses were trivial, and I feel sure I could endure the punishments — penalties and fines — and get on with my life. Nobody would deny me the chance to rehabilitate myself. Look at Martha Stewart, illegal stock trader, and George Steinbrenner, illegal campaign donor, to name two illegals whose crimes exceeded mine.      

Good thing I am not an illegal immigrant. There is no way out of that trap. It’s the crime you can’t make amends for. Nothing short of deportation will free you from it, such is the mood of the country today. And that is a problem.

America has a big problem with illegal immigration, but a big part of it stems from the word “illegal.” It pollutes the debate. It blocks solutions. Used dispassionately and technically, there is nothing wrong with it. Used as an irreducible modifier for a large and largely decent group of people, it is badly damaging. And as a code word for racial and ethnic hatred, it is detestable.

A Note On My Anti-Anti-Immigration Argument

Since the appearance of this column of mine, on immigration, several friends (as well as non-friends) have accused me of ignoring the fact that Milton Friedman, Thomas Sowell, and some other free-market advocates oppose more-open immigration.

Fact is, I mentioned no names in my column.

I have long been aware that that Friedman, Sowell, and others whose positions I generally respect have spoken out against immigration.

But let's be clear.  In the case of Milton Friedman, his only reason for opposing more-open borders was the existence in the U.S. of a welfare state.  Friedman emphatically did not make the anti-immigration argument that I criticize in my column.  (And he would not have made that argument.   Just before he died, I asked him by e-mail if he'd favor a return to  the pre-1920s immigration regime if the U.S. abolished its welfare state.  He wrote back saying yes.)

Nor is Thomas Sowell's opposition to more-open immigration based upon the argument that I take issue with in my column.

There are, of course, many different possible reasons for opposing immigration, some more plausible than others.  The alleged reason that I challenged in my column is just one such reason -- a reason that I continue to find illogical and downright bizarre.

A Libertarian Case for Restricting Immigration?

My latest column in the Pittsburgh Tribune-Review will bring me plenty of hate mail; one cannot endorse more open immigration today without causing unjustified fury.

Tom Palmer's related post from several years ago is especially worth reading.

Grateful for Immigrants

Do you think that immigrants working today on the countless efforts to rebuild my hometown of New Orleans are "stealing" jobs from Americans?  Are a scourge?  Are welfare bums?  Think again -- as this op-ed in today's Wall Street Journal will cause you to do.

It is by Mario Villarreal and Dan Rothschild.  (Dan is a friend of mine who works with my wife at the Mercatus Center at George Mason University.)  Here are some key passages:

Shortly after Katrina hit, while the majority of the city's residents were still in exile and despite inhospitable conditions, a stream of Latino workers and entrepreneurs poured into New Orleans. They were followed by friends and family. There are now perhaps 100,000 Latinos in the New Orleans area, although nobody knows for sure.

Pundits began to speculate on what the influx would mean. Just weeks after Katrina, New Orleans Mayor Ray Nagin asked, "How do I ensure that New Orleans is not overrun by Mexican workers?"

Critics generally fall into two camps. The first believes that the immigrant Latinos in New Orleans are ignorant, helpless and in need of protection. The second maintains that they are stealing jobs, sponging off of welfare and crippling the city's fragile infrastructure. Neither claim is true. Out of our surveys and interviews with Latino workers in the post-Katrina New Orleans area, we see a microcosm of immigration and immigrants generally: self-sufficient, hard-working, entrepreneurial, law-abiding people simply trying to make a better life for themselves and their families.

.....

There is little evidence that these immigrants are the scroungers or welfare cheats their detractors claim. They came here for one reason: jobs. As one said to us, "I do not need help. I need a job, that's all I need." And they plan to stay, as many people told us, "as long as there is work to do."

Nor is there evidence that they are taking jobs from native New Orleanians. As of April, the last month for which data are available, unemployment in Orleans Parish was 4.0%, compared with 4.5% nationwide. By comparison, in July 2005, the Orleans Parish unemployment rate was 7%, two percentage points above the national figure.

Moreover, the Latino immigrants in New Orleans are not merely doing construction. They're also opening stores and restaurants, breathing economic vitality into a city still badly in need of a boost.

St. Claude Avenue, one of the two main drags through the Lower Ninth Ward, remains close to deserted, with only perhaps a half-dozen businesses open. But with its spray-painted sign and impressive selection of Latino groceries, soft drinks, phone cards and compact discs, Tienda Latina (essentially, "Latin Store") is bringing commerce back into the most devastated neighborhood in New Orleans. Its customers, as might be expected, are mostly Latino, although a handful of Anglos come through as well. It was the first store between the Industrial Canal and St. Bernard Parish to reopen.

.....

Whether doing temporary construction work or settling into the community and opening businesses, Latinos are playing a critical role in rebuilding New Orleans. The days are long, the work is hard, and the living conditions are frequently trying. But the work is getting done. People are moving back. Businesses are reopening.

The most striking thing is that in New Orleans, the opportunities for immigrants to add to the local economy are obvious: There are roofs to repair, drywall to be hung, trees to be planted. But less apparent opportunities exist in every city, from opening new stores and restaurants to building new homes and offices.

Immigrants, a versatile and entrepreneurial group, remain an integral part of the American enterprise. It's unfortunate that it takes a disaster to remind us of that.

King George "Lou Dobbs" III

Today, the Washington Times appropriately reprints the Declaration of Independence.  It is truly a beautiful document.

I sent the following letter in response:

Thank you for reprinting the Declaration of Independence (July 4).  I encourage especially you, with your hostility to immigration, to read it carefully, noting that Jefferson explicitly condemned King George III's restrictive immigration policy: "He has endeavoured to prevent the population of these states; for that purpose obstructing the laws for naturalization of foreigners; refusing to pass others to encourage their migrations hither."

Back then when America covered vastly fewer square miles than it covers today, when each parcel of land fed many fewer mouths than land feeds today, when the amount of capital per worker was a tiny fraction of what it is now, and when Americans' standard of living was far lower than today's standard, America's wise founders nevertheless wanted more open immigration.

Why is it that today, the wealthiest time in our history, so many Americans fear immigration?  Why do so few Americans today share Jefferson's understanding that more free people in America mean an even more prosperous America?

Sincerely,
Donald J. Boudreaux

It is worth pointing out, again and again, that America has never been better able than it is today to absorb immigrants.

They're So Lazy We Must Use Force to Stop Them from Working

James D. Miller is not alone in arguing that the existence of the U.S. welfare state means that more open immigration -- particularly of unskilled foreign workers -- is unwise policy.  My reasons for rejecting this argument are several, but at the top of the list is this reason: If immigrants come to America to suckle on the tits of American taxpayers, why does Uncle Sam spend so much effort trying to prevent these immigrants from working?

As long as the U.S. government persists in making the employment of immigrants artificially difficult, I can have little sympathy for the argument that "we" must reject immigrants because they will become unproductive drains on our economy.

Illegal Immigrants

Opponents of immigration keep mentioning the illegality of some immigrants as if that issue were decisive. They cheated, goes the argument—they jumped the line and we can't reward cheaters. Jeff Jacoby explains why the line-jumping argument is irrelevant:

Illegal immigrants don't steal across the Mexican border because they lack the patience to wait their turn in line. They do it because there is no line for them to wait in. The great majority of immigrants who enter the United States lawfully qualify for visas because of family ties: They are lucky enough to be related to a US citizen.

For them, there is indeed a line -- the waiting time for a family-based visa can take upward of 10 years. A smaller number of legal immigrants are granted visas because they have advanced degrees or specialized skills and a job is waiting for them.

For most illegal immigrants, a legal option simply doesn't exist. Under current law, a young Mexican or Salvadoran who wants to improve his life by moving to America and working hard at a useful job generally has just two options: (a) Enter illegally, or (b) stay out forever. Several hundred thousand a year choose option (a).

Read the rest of it. It's superb.

For me, an illegal immigrant who comes here to work is like a father speeding to the hospital to get his son medical care. When he arrives, the hospital could say:

I'm sorry, I wish we could take care of your kid, but you broke the law on the way over here. You were speeding. So we can't give you medical care. That would reward criminals--people who break the law by speeding.

But what hospital would say that? Everyone speeds on the way to the hospital. Everyone understands that speeding, while always illegal, is only immoral when it endangers. And we pardon speeding under circumstances such as a sick child on the way to the hospital. Why do people want to keep out those who come here to work, legally or illegally? What does the legality have to do with it?

One listener to my commentary on immigration asked me if I locked my house. A prudent person, he argued, keeps out some types of people (criminals) while welcoming others (friends and painters, say). My co-blogger Don pointed out that the real analogy is that the anti-immigrant people want to put a lock on my house letting OTHERS control who comes in and out. I want to let in the house painter from Guatemala but the anti-immigrant people don't want me to hire him.

Merit-based immigration

Here is my commentary on immigration that was on NPR's All Things Considered, yesterday. Listen to it here. Here's the opening:

According to the White House, the new immigration bill will "Help Keep The U.S. Competitive In The Global Economy By Establishing A New Merit-Based System For Immigration That Is Similar To Those Used By Other Countries."

And how is it going to do that?

There's going to be a point system to determine who gets one of the precious 380,000 visas that are up for grabs. Highly educated people get points. People with skills that are in high demand, whatever that means, get points. Young but not too young? Points. Speak English well? More points for you. Speak it badly, fewer points. Don't speak it at all? No points.

People with the highest point totals get the visas.

Some people complain that the Bush Administration is too free market. But the idea that Washington bureaucrats can figure out which skills are in high demand is an idea straight out of the old Soviet Union. It would be great if we could get some old communists from the politburo to administer it, but we won't be able to. They won't score high enough on the point system to get a visa.

                                                                                                   

The idea that we should base our immigration policy on "keeping the U.S. competitive" is bizarre to me. First, it implies that there are right and wrong kinds of immigrants, bureaucrats can figure out which kind is which and that the goal of immigration is to help maximize GDP. I don' t think any of those things are true.

Take Note: Irish Immigrants Never Led a Papal Invasion of these United States

Linda Chavez, writing in today's Wall Street Journal, explains that Hispanics assimilate quite thoroughly into American society and the American economy.  Here's her concluding paragraph, which makes an especially interesting point:

Finally, consider that ultimate indicator of assimilation, intermarriage. One in four Hispanics marries a non-Hispanic white spouse, but nearly one-third of all U.S.-born Hispanics who are married have non-Hispanic spouses; and the percentage is slightly higher among college-educated Hispanic women (35%). There is a curious, and provocative fact buried in all this. The Population Reference Bureau notes in its 2005 study of intermarriage that, because most children of intermarriages are reported as Hispanic on Census data, "Hispanic intermarriage may have been a factor in the phenomenal growth of the U.S. Hispanic population in recent years, and it has important implications for future growth and characteristics of the Hispanic population." In other words, the widely cited prediction that by mid-century Hispanics will represent fully one third of the U.S. population fails to take into account that increasing numbers of these so-called Hispanics will have only one grandparent or great-grandparent of Hispanic heritage. At which point Hispanic ethnicity will mean little more than German, Italian or Irish ethnicity does today.

Her entire article is worth reading (but, unfortunately, a paid subscription to the WSJ is required to do so).  This article inspired me to send the following letter to the editors of that newspaper:

It's inspiring to read Linda Chavez's report on how well Hispanics assimilate into America's society and economy ("The Great Assimilation Machine," June 5).  This achievement is especially remarkable given that the employment in America of several million Hispanics - the "illegals" - is formally prohibited.  Imagine how much higher still their earnings and their rates of employment, homeownership, and education would be if no employer had to fear prosecution for the "crime" of hiring any willing worker.

Sincerely,
Donald J. Boudreaux

Jobs in a Market Economy

Here's a letter that I sent today to USA Today:

To the Editor:

Dale Powers argues that the hiring of foreign skilled workers "wastes" the brainpower of Americans ("Don't waste U.S. brainpower by hiring foreign workers for coveted jobs," June 4).  Mr. Powers' brainpower as an aerospace engineer might be awesome, but it's weak in economics.

The number and kinds of jobs in a market economy aren't fixed.  They expand and change as entrepreneurs seek to use all available talent as productively as possible.  Consider the microchip - which, after all, is a substitute for lots of human brainpower.  If Mr. Powers' argument were correct, the advent of this device would have cast millions of smart, educated Americans into low-skilled jobs.  Instead, of course, the microchip has created for talented Americans countless high-wage jobs whose existence was inconceivable thirty years ago.

Sincerely,
Donald J. Boudreaux

Actions Speak Louder than Boos

Here's a letter that I sent today to the Washington Times:

Michelle Malkin is hot'n'bothered by the booing of Miss USA at the Miss Universe pageant in Mexico City ("Hostility...and hypocrisy," June 1).  She even wants President Bush to "speak out against" this dissing of America.

But actions speak louder than boos.  The actions of millions of Mexicans who come to America seeking opportunity demonstrate a profound affection for American civilization - a civilization rooted in an openness and optimism that Ms. Malkin and her xenophobic comrades want to replace with a nativist nationalism rooted in ignorance and fear.

Sincerely,
Donald J. Boudreaux

Some Economics of Homeland Security

In refreshing contrast to the jingoistic and anecdotes-masquerading-as-analyses offerings of Lou Dobbs, Michelle Malkin, and other xenophobes, the Washington Post's Sebastian Mallaby today talks much good sense:

Of the many infuriating assertions in the immigration debate, perhaps this one takes top prize: that we have to keep illegal immigrants out for the sake of our security. This notion is wrong, not just because undocumented workers are statistically less likely than native-born Americans to commit crimes or because they are serenely indifferent to al-Qaeda's teachings. It is wrong because it misses the most basic rule of smart homeland security.

Smart homeland security starts with the reality that you can't protect everything. The federal government alone spends more than $58 billion on homeland security per year -- a sum greater than the entire defense budget of Britain and about three times the estimated level of the pre-2001 homeland security budget. This spending has bought important gains: There are air marshals on planes, cockpits have been reinforced and so on. But the United States contains half a million bridges, 500 skyscrapers and 2,800 power plants, not to mention thousands of schools, shopping malls and subway stations. Even if you doubled spending and then doubled it again, there would be too many targets to protect. Total security is unattainable.

....

Which raises a few questions about the immigration bill in Congress. If Clinton and Obama are upset with the misallocation of homeland security funds, why aren't they yelling about the proposed crackdown on immigrants? As a Post editorial recently pointed out, the immigration bill would require that the Department of Homeland Security hire, train and deploy 5,000 to 6,000 new border agents; recruit and support several thousand civilian employees required to fingerprint and register immigrants; build 370 miles of border fence; and create a whiz-bang database that would allow businesses to check whether a prospective employee has entered the country illegally. In a world of limited homeland security dollars, how is any of this a priority?

Malum in se; malum prohibitum

Bruce Charlton sensibly asks (in a comment to this post):

Isn't  illegal immigration more equivalent to smuggling than to free trade?

I would favour easier, cheaper and quicker regulation of immigration, which would need to be coupled with general reforms to cut back on welfare and making it easy to work legally, repealing the minimum wage etc.

But I find it hard to see how mass scale law-breaking can be ignored without serious knock-on problems.

I respectfully disagree with Mr. Charlton -- or, rather, I submit that he (like so many other persons) is inappropriately distracted by immigrants' "legal" status.

A critical distinction in Anglo-American law is that between actions that are malum in se and actions that are malum prohibitum.  Some actions are malum in se -- wrong in themselves.  Examples are murder, rape, theft, and fraud.  These actions are now formally prohibited by legislation, but their wrongness -- indeed, their very illegality -- exists independently of legislative prohibition.  If, say, the Virginia legislature were to repeal its statutory prohibition on murder, murder would still be wrong and criminal in Virginia.  Murderers would still be wrongdoers and criminals.  If the State government refused to punish such criminals, people would do so privately.

Other actions are malum prohibitum -- "wrong" merely because the government proclaims these actions to be wrong.  One example is avoiding taxes.  If Uncle Sam tomorrow abolishes the federal income tax, failure of Americans to send money to Washington would be neither wrong nor criminal, and persons who send no money to Washington would not be regarded by their neighbors and co-workers as despicable louts whose company should be avoided.

To attach the label "criminal" both to persons who commit actions that are malum in se and to persons whose only wrongdoing is the commission of actions that are merely malum prohibitum is to use language confusingly.  It is to dilute the scorn and loathing that true criminals deserve.  After all, if someone whose only offense is to cross the U.S.-Mexico border in search of a job is a criminal, what is a shoplifter or a child-beater or a murderer?

Looked at differently, to call "criminal" those persons whose only offenses are merely malum prohibitum is unfairly and inappropriately to tar them with the scorn and wariness that is deserved only by persons who commit genuine offenses against others.

And such language clouds and confuses the political debate.  Because most persons understand the word "criminal" to indicate an individual who, to one degree or another, is harmfully anti-social, calling immigrants who are in the U.S. without official government permission "criminal" gives the impression that these people are all harmfully anti-social.  But that impression is emphatically false (unless you include in your definition of "anti-social" the desire for a better life and willingness to compete for jobs).

There is a legitimate debate over how open America's borders should be.  But that debate today is far too soiled by those persons who think that merely calling "illegal" immigrants "criminals" settles the matter.  It does not.  "Illegal" immigrants are "criminals" only because government policy declares them to be -- in the same way that persons openly practicing Christianity or Judaism in Soviet Russia were "criminals" only because government policy declared them to be.  The contours and specifics of this policy are precisely what is at issue in the debate over how widely open U.S. borders ought to be.  This debate should be on the economics and the national-security issues raised by immigration; it should not be confused by the confusing (and often self-serving) application of the term "criminal" to persons who come to America without Uncle Sam's permission -- permission that is very difficult to get.

On Immigration

His eyes and mind ever-sharp, here's my co-blogger at Market Correction Andy Morriss on immigration; this is a letter that he sent recently to the Wall Street Journal:

Sirs,

Your editorial on the proposed immigration bill does an excellent job of summarizing the policy issues at stake (“Immigration Opening,” May 19) but leaves out a crucial important dimension to the debate. The proper way to think about all immigration restrictions is as barriers to trade in what economists term “human capital,” the skills and education each brings to his new country. The proposed bill makes this explicit with its $5,000 “fine” for illegal immigrants wishing to regularize their status, which is more properly thought of as a tariff.

Tariffs on goods are bad because they reduce trade. Restrictions on importing capital are foolish because they reduce investment. So too are tariffs on human capital, for even unskilled immigrants bring an important human capital contribution to the United States: Immigrants are risk takers by definition. They leave homes and families and for a new land, where they are unfamiliar with the culture and often cannot speak the language. These are precisely the people who create economic growth because they are willing to take such a risk to gain a better life for themselves and their children. In short, every immigrant is a potential entrepreneur and every entrepreneur is a benefit for the rest of us.

Of course, just as every country has the right to inspect goods coming into its territory, every country has the right to regulate immigration to a limited extent. For example, nations are entitled to ensure that criminals do not immigrate just as they are entitled to inspect agricultural goods for hidden pests. But the fundamental principle underlying immigration should be the same as it is in all areas of trade: the presumption is free trade and the burden is on those proposing restrictions to show both that their restrictions are justified and that they are the minimum needed to accomplish their purpose. The proposed immigration bill flunks both these tests.

Andrew P. Morris
H. Ross and Helen Workman Professor of Law
University of Illinois, College of Law

 

Immigrants, Work, & Welfare

Here's a letter that I sent earlier this week to the Washington Post.  It's in response to this column by the generally very thoughtful and sound Robert Samuelson.

Robert Samuelson misses an important point when he discusses immigration ("Seeking Sense on Immigration," May 2).

Anti-immigrationists who worry so raucously about immigrants using taxpayer-funded welfare should lead the charge to eliminate the countless restrictions aimed at preventing immigrants from working legally.  It's phony to insist that immigrants' employment options be severely restricted and then, in the next breath, to pontificate about the need to keep immigrants from using welfare.

Sincerely,
Donald J. Boudreaux

On Attitudes Toward Immigrants

From a review, by Jonathan Yardley, in today's Washington Post Book World of Peter Quinn's new book Looking for Jimmy:

Today the Irish are so thoroughly assimilated into the larger American society that it is difficult for anyone to remember how harshly and unforgivingly they were greeted as they arrived in the great wave that began in the mid-1840s and lasted for a decade, but white America equated them with blacks and stereotyped them accordingly as "childlike buffoons, lazy, superstitious, given to doubletalk, inflated rhetoric, and comic misuse of proper English.
....
White Anglo-Saxons who regarded themselves as "native Americans" gave the newcomers a frosty welcome. In Boston, employers famously posted signs that read: "No Irish Need Apply." Irish women, who outnumbered men, "worked in factories and mills. Irish maids became a fixture of bourgeois American life. Domestic service became so associated with the Irish that maids often were referred to generically as 'Kathleens' or 'Bridgets,' " just as black railroad porters were universally, and equally patronizingly, called "George."

Thus, often, are attitudes toward poor immigrants from poor countries.

In that age (mid-19th century) before the welfare state, how did these poor, poorly educated, and hated Irish immigrants survive and prosper in America?  Involvement in politics was certainly one way.  But hardly the only way.  According to Yardley, Quinn relates how this "immigrant group" "built its own far-flung network of charitable and educational institutions," and how the Catholic Church also played a major, positive role.

See this earlier post for references to some important scholarly research on the history of private means of providing charity and mutual aid.

Xenophobia is Poor Public Policy

My friend Ryan Young has this very nice letter published in today's edition of the Washington Post:

The Jan. 31 front-page article "Va. House Approves Bill on Illegal Immigration; Aim Is to Block Access to State, Local Funds" provided a real-world example of why government should not be in the business of funding charities: The money comes with strings attached.

In this case, charities that accept funds from the state would no longer be allowed to give aid to illegal immigrants.

Put another way, these charities would essentially be required by law to be xenophobic. They would also lose their right to decide for themselves whom they help. Certain state legislators would rather make that decision for them.

The only way for charities to avoid being bullied like this is to refuse state aid.

If this legislation makes it to the desk of Gov. Timothy M. Kaine (D), I hope he has the good sense to veto it.

RYAN YOUNG
Arlington

Friedman On Growth Measurements and Immigration

I thank Bob Higgs for drawing my attention to a short but insightful 1974 article, in the March/April 1974 issue of the Journal of Political Economy, by Milton Friedman.  (For those of you with access to JSTOR, here's the link.)  I'm giddy with pride that my most-recent column in the Pittsburgh Tribune-Review reminded Bob of this article, by Friedman, entitled "A Bias In Current Measures of Economic Growth."

Here's an excerpt:

It is common practice to measure the growth in economic welfare in a country over any considerable period by the rate of growth in real per capita income.  However, this measure can be seriously biased for a period during which the country experienced substantial immigration or emigration.

Consider the United States from, say, 1870 to 1914.  During that period, real per capita income as measured by Simon Kuznets grew at the annual rate of about 2 percent.  However, there was heavy immigration, reaching a peak rate of over 1 1/4 million persons a year in 1907.  By 1914, roughly one-third of the total population of the United States was foreign born or of foreign or mixed parentage, and one-fifth of the population over 14 years old was foreign born.  Their counterparts in 1870 -- for, of course, we want to measure the growth in economic welfare for a "representative" population, not for a collection of identical and aging individuals -- lived and worked in other countries, not in the United States.  We have every reason to believe that their 1870 counterparts had lower incomes than the then population of the United States -- presumably that is why the United States experienced heavy immigration, not emigration.

The foreign-born in 1914 probably also had lower incomes than the rest of the U.S. population, but again the fact of continued large-scale immigration, let alone a wide variety of historical evidence, suggests that their incomes in the United States were substantially above the incomes that they could have received in the countries from which they came.  In any event, the incomes of the 1914 foreign-born are included in the aggregate income underlying the 1914 per-capita income estimate, while the incomes of their counterparts in 1870 are completely excluded.  The result is to bias the estimated rate of growth downward.
......

One of the great economic achievements of the United States in the period from 1870 to 1914 was the absorption of millions of residents who came to the United States with little but their bare hands, were able to make a better life for themselves than in their countries of origin, and to lay the foundations for a still better life for their children.  Yet not only is this achievement not recorded positively in the common measure of economic growth, it actually enters as a negative factor, reducing the measured rate of growth.

Just so.

In Markets, People are the Ultimate Resource

This from an editorial in today's Wall Street Journal:

Everyone knows that Intel, Yahoo, Google, eBay and Sun Microsystems are wildly successful U.S. technology companies. Less well known is that immigrant entrepreneurs played a role in founding each one -- and a whole lot of others.

After an election season that featured an unfortunate amount of anti-immigration posturing, a new study from the National Venture Capital Association is a welcome reminder that foreign workers make their fair share of important contributions to our economy.

Titled "American Made: The Impact of Immigrant Entrepreneurs and Professionals on U.S. Competitiveness," the report found that "Over the past 15 years, immigrants have started 25 percent of U.S. public companies that were venture-backed." These businesses employ some 220,000 people in the U.S. and have a current market capitalization that "exceeds $500 billion, adding significant value to the American economy."

Here's a link to the study.

Comical Immigration

Don't miss this clear and insightful comic strip on immigration from Reason.com.

(HT: BoingBoing)

Illegal Immigrants and Emigrants

Marshall Fritz is the moving force behind the noble effort to separate school and state.  He recently sent me an e-mail, chiming in on the debate over whether or not immigrants who don't possess official government permission to be in the United States truly are wrong-doers worthy of our scorn and deserving punishment.

What percentage of the American public are opposed to illegal emigration?  You know, people who disregard the law and hop the Berlin wall or who disobey Castro and leave Cuba?

If an immigrant's failure to get government permission to come into America is sufficient to render him or her a criminal worthy of scorn and punishment, then the same arguably is true of emigrants who fail to get government permission to escape from a particular country.  Telling a Cuban, for example, to wait his "turn" -- telling him that law and order and decency and fairness require that he first get permission to leave from Castro's government -- would be a most absurd exercise of the myth that the state defines all that is right and wrong.

It's true that some governments are less evil than others (with Cuba's among the most heinous), but no government creates rights.  If no government -- not even Uncle Sam -- creates rights, then people have rights (as the American founders understood) independent of government.  And if people have rights independent of government, then the popular anti-immigrant tactic of pointing at "illegal" aliens in America and accusing them of wrong-doing simply because they are here without Uncle Sam's official blessing is illegitimate.

Too many magazine writers?

In this post, I asked Cafe Hayek readers to discuss this concern about the effects of competition from immigrants:

Individual native workers are less likely to be affected if the immigrants resemble the society they are joining — not physically but in the same mix of skills and educational backgrounds. For instance, if every immigrant were a doctor, the theory is, it would be bad for doctors already here. Or as Borjas asked pointedly of me, what if the U.S. created a special visa just for magazine writers? All those foreign-born writers would eat more meals, sure, but (once they mastered English, anyway), they would be supplying only one type of service — my type. Bye-bye fancy assignments.

There were a lot of interesting comments but no one mentioned what I thought was the most important missing point—if there were an influx of foreign magazine writers, it would encourage entrepreneurs not just to open restaurants for them to eat in but also magazines for them to work at. Why would you assume that the number of jobs writing interesting magazine stories is fixed? So it wouldn't be bye-bye fancy assignments; there probably would be more assignments to choose from.

But the wages would probably be lower. I say "probably" because the quoted paragraph implicitly makes the absurd assumption that foreign magazine writers are perfect substitutes for native-born writers. Ignoring the language problems, it's imaginable that foreign magazine writers would bring a fresh perspective to the magazines that employ them. So the number of magazine readers might expand as well without a decrease in the price of magazines.

The analysis is more likely to hold for people who work for a lawn service or who put up dry wall. An increase in close substitutes will lower your wages, though there's no reason to think it will make you unemployed. And how much wages will fall depends on the elasticity of demand--how many new lawn service or home improvement companies get started in response to the increase in supply of workers. That in turn depends on how the demand for those underlying services and how responsive they are to price.

The quoted paragraph assumes that all demand curves are vertical.

But as one commenter (Maxim) pointed out, immigration is much like trade in goods and services. Allowing steel to come to America is good for most Americans but makes life more challenging for steel companies and their workers. Do we want to make America poorer to insure that particular groups have a protected standard of living? Much better to improve education if we think immigrants make the lives of a particular group of Americans more challenging.

Supply and demand and immigration

Do immigrants lower wages of native born Americans? Those who say yes, such as George Borjas in this New York Times Sunday Magazine piece by Roger Lowenstein, say it's just a matter of supply and demand—the supply shifts out and wages have to fall. But of course, that only holds if demand is constant as well as David Card points out:

As Card likes to say, "The demand curve also shifts out." It's jargon, but it's profound. New workers add to the supply of labor, but since they consume products and services, they add to the demand for it as well. "Just because Los Angeles is bigger than Bakersfield doesn't mean L.A. has more unemployed than Bakersfield," Card observes.

In theory, if you added 10 percent to the population — or even doubled it — nothing about the labor market would change. Of course, it would take a little while for the economy to adjust. People would have to invest money and start some new businesses to hire all those newcomers. The point is, they would do it. Somebody would realize that the immigrants needed to eat and would open a restaurant; someone else would think to build them housing. Pretty soon there would be new jobs available in kitchens and on construction sites. And that has been going on since the first boat docked at Ellis Island.

Seems pretty reasonable. But then Lowenstein gives the reader Borjas's retort:

But there's a catch. Individual native workers are less likely to be affected if the immigrants resemble the society they are joining — not physically but in the same mix of skills and educational backgrounds. For instance, if every immigrant were a doctor, the theory is, it would be bad for doctors already here. Or as Borjas asked pointedly of me, what if the U.S. created a special visa just for magazine writers? All those foreign-born writers would eat more meals, sure, but (once they mastered English, anyway), they would be supplying only one type of service — my type. Bye-bye fancy assignments.

Is Borjas right? Should Lowenstein be worried?  Give it a shot in the comments section and I'll weigh in later today or tomorrow.

Tabarrok on Chiswick

My colleague Alex Tabarrok, over at Marginal Revolution, neatly and importanly exposes many of the flaws in a surprisingly flaw-filled op-ed by Barry Chiswick that appeared in Sunday's New York Times.  In this op-ed, Chiswick seems to want to argue that restricting immigration will have no effect on the output of the American economy -- but he fails rather spectacularly.

Immigration and Assimilation

Jeff Jacoby at the Boston Globe has a lot of interesting things to say about immigration. And as always, he says them very well. The most interesting point and unfortunately he doesn't have room to explore it fully, is that assimilation and the melting pot aren't what they used to be. He's right. Legislation of various kinds has made it easier to stay unassimilated and encourages people to identify either culturally or politically with their own ethnic groups.

I think there's another point to be made as well about assimilation. Some argue that we need public schools so that all of us can have a common vision for America and to aid the process of assimilation. But the public schools common vision for America is that there is no common vision. Everything is sacrificed to the god of tolerance. The common education children receive in public schools is that there should be no common vision of America. Everyone is entitled to a unique vision and no one's vision is better or worse than anyone else's.

The other problem, and this is much more serious, is political. When government's power is limited and when there is respect for the Constitution, the political impact of the growth of this ethnic group or that one, or this religious group or that one, is unimportant. But when government is powerful and the Constitution is just a piece of paper, the growth of groups that are hostile to freedom and liberty is no longer unimportant. That is one reason why Europe is threatened by religious fundamentalism in a way that America is not. As of now, the ability of religious fundamentalists of any stripe to impose their views on others is highly limited in America. But that is only true because we remain something of a republic. As the Constitution becomes weaker, the threat of ethnic or religious political power is serious.

Some of the scaremongers on the immigration debate talk about the percentage of America that will be Hispanic by 2050 if we don't "do something." But why should I care if America is more Hispanic in the coming years? Or more Christian? Or more Islamic? The answer, tragically, is that I should care if our political system allows a group to channel money or power to its own group at the expense of others.

The answer to this challenge is not to close our borders. The answer is to strengthen the Constitution and reduce the power of government.

Legal Immigrants: Waiting Forever

Stuart Anderson of the National Foundation for American Policy just published this important study co-authored with David Miller.  Its title speaks volumes: "Legal Immigrants: Waiting Forever."  Here's the introduction to the Executive Summary:

Why don't people wait to immigrate legally to the United States?  The answer is that many people do come here legally but processing delays and the family and employment-based immigration quotas legislated by Congress result in significant wait times -- and much frustration -- for potential immigrants and U.S. employers.

This detailed review of immigration statistics from the U.S. Department of State, Department of Homeland Security, and U.S. Citizenship and Immigration Services reveals that those who "play by the rules" are likely to wait many years to become a lawful permanent resident, whether they are sponsored by an employer or a family member.  Moreover, those seeking to become citizens must also endure long processing delays in the quest for naturalization.

What kind of rules result in U.S. citizens having to wait, on average, between 11 and 12 years before their siblings can immigrate to America?  (This wait time is 22 years for citizens with siblings seeking to immigrate from the Philippines.)  What kind of rules result in U.S. citizens having to suffer a wait time of, on average, six years before their unmarried adult children can immigrate to America?  (For U.S. citizens with such children in Mexico the wait time is 13 years!)

Talking about "illegal" immigrants "cutting in line" and "not waiting their turn" and "not playing by the rules" makes it seem as if those who come to America without Uncle Sam's formal stamp of approval are selfish, irresponsible, anti-social, impatient, unfair cheats.  But rule-breakers hurt society only when the rules they break are ones that help society when these rules are followed.  It's not at all clear to me that the existing rules that limit immigration are helpful; they are, indeed, much more likely to be simply a species of economic protectionism, buoyed by ugly nativism -- rules that create and protect rents -- rules that are anti-social in the deepest sense. 

Are Immigrants to Blame for Inappropriate Government Activities?

The strongest economic argument against immigration is the claim that immigrants free-ride on government-provided goods.  There's a lot to say about this claim; here I limit myself to one point.

The goods and services that people complain immigrants cause to be overused are either government-supplied goods and services (for example, government schools) or goods and services that are heavily subsidized by government (for example, medical care).  No one complains that immigrants are over-using supermarkets, movie theaters, auto dealerships, or clothing stores.  That is, private enterprise seems quite able to 'absorb' immigrants and prevent overcrowding and free-riding.  Problems arise almost exclusively with goods and services supplied or subsidized by government.

I understand that on pure utilitarian grounds it's too simplistic to say "Oh, the solution is for government to stop supplying these things."  Given that government is supplying or heavily subsidizing X, Y, and Z, and given that immigrants can use X, Y, and Z, problems are indeed created.

The narrow cost-benefit solution might well be further restrictions on immigration -- I say "might," not "is" -- even if, in my opinion, such restrictions are unethical because they violate the basic human rights of Americans and foreigners alike.

But even if we conclude that, on pure cost-benefit grounds, the best course of action is to restrict immigration further because immigrants overuse public-supplied and subsidized goods and services, why blame immigrants?  Why point accusing fingers at immigrants?  Why not blame government for supplying and subsidizing things that it ought not supply and subsidize?

The root problem is not immigration; it is government provision and subsidization of goods and services that should be supplied by the market.

Queuing Up for a Bad Analogy II

Robert Cote, commenting on the first installment in this series of blog-posts, says:

I suggest you test your theory at Disneyland.  Ignore the parking regs, jump the lines, sneak past the security checks, don't pay at the gate and when you get inside avail yourself of the attractions and services. If as you predict the theme park becomes a better place for your actions and indeed those waiting in line applaud your actions and eventually approve of your brave actions as being in their best interests I shall withdraw my clam.

This response is appropriate and sensible; it gets us to the heart of the matter.  The heart of the matter is not queue-jumping; it is, rather, the belief that the object sought by those waiting in the queue – and by those jumping the queue – is scarce.

The Disneyland analogy works better the more the following is true:

- the U.S. is crowded

-- the number of jobs and amount of capital per worker are more or less fixed in quantity

- people, once here, frequently free-ride on goods and services provided by government

Disneyland, after all, is a small space, and privately created, maintained, and owned. Frequently it is on the verge of being over-crowded, so that each new entrant into that amusement park reduces other people’s ability to enjoy the park.  Disney has a strong incentive to keep the park from becoming too crowded; it achieves this goal largely by charging high prices.  (I’ll note that Disney doesn’t deny large swaths of people any real chance of entering its park. An aspiring customer doesn’t have to be related to an existing customer, for example.)

Also, Disney has an incentive to keep the length of its queues as short as possible.  I’ve been to DisneyWorld three times, most recently in April 2005; never have I had a significant wait to enter the park.  (I did wait in several queues for a variety of rides and attractions within the park.  But for these queues, the standard queue-jumping analysis that I explained in my previous post fits perfectly.)

Moreover, Disney’s customers are not producers.  Disneyland is a consumption experience. People pay to get in to consume scarce experiences and things. The rides are there for customers to consume; likewise for the food, drinks, and mouse ears and other trinkets.

But immigrants who come to the United States are not just consumers; most are also producers. (Incidentally, even if they were exclusively consumers, if they – like Disney’s customers – paid for all that they consume, there would be no problem.  Problems arise when immigrants – and citizens – free-ride on goods and services supplied by others.)

It’s here that I believe the analogy with Disneyland breaks down irreparably.  Not only are immigrants not coming to America to crowd us Americans out of ‘our’ spaces and jobs, most come to produce.  I support more open immigration because I am quite confident that

     - the U.S. is not crowded

- the number of jobs and amount of capital per worker are emphatically not fixed in quantity

- while people, once here, free-ride on goods and services provided by government, the first step in solving this problem is to enable more foreigners to work in America legally; that way, immigrants’ contributions to the economy in general, and to the provision of public goods, will be even greater than it already is;

AND

- people, being the ultimate resource, help deepen and widen the division of labor -- which is the chief source of human prosperity.

Queuing Up for a Bad Analogy

People who jump the queue – who “cut in line” – are annoying because they directly harm others. Their selfishness reduces other peoples’ range of opportunities. At best, they play zero-sum games: what queue-jumpers gain in reduced waiting time and increased chances of securing the scarce object is lost by those who patiently wait their turn. Clearly, queue-jumping is undesirable. 

This waiting-in-line, and queue-jumping, analogy is used in the current immigration debate to condemn 'illegal' immigration.  Immigrants here without Uncle Sam's permission are said to have jumped the queue, not waited their turn for opportunities to enter legally.  But I believe that this analogy is misplaced and, hence, misleading.

Many of the Latin American immigrants who are in the United States without Uncle Sam’s stamp of approval likely have little or no chance of getting in legally. Therefore, for these people – for those whose chances of entering the U.S. legally are practically zero – there is no line for them to wait in.  To tell them to wait their turn implies that they, in fact, will have a turn.  But no chance at any real turn to enter the USA exists for many foreigners.  So it’s incorrect to portray such foreigners who then enter 'illegally' as selfish scoundrels who jump the queue merely to speed up their arrival in the U.S. 

Now ask: does coming to the United States without Uncle Sam’s stamp of approval hurt those who are waiting in line to get this approval as a condition of entering the land of the free and the home of the brave? I don’t see how. The number of legal immigration slots isn’t reduced by the number of ‘illegal’ immigrants entering the USA. 

Indeed, to the extent that those who enter the USA 'illegally’ would be eligible for legal-immigration status, their entering ‘illegally’ actually helps aspiring immigrants who are waiting in the queue. Those who enter the USA 'illegally' obviously aren’t waiting in the queue to get here 'legally'; therefore, immigrants who enter 'illegally,' rather than join the queue, shorten the queue.  Those waiting in the queue are made better off.

So the ‘jumping-the-queue’ analogy misleads because our disgust at queue jumpers springs from our correct sense that queue jumpers hurt those who wait their turns in the queue. But ‘illegal’ immigrants don’t hurt those waiting in the queue for Uncle Sam’s approval to enter.

There are other problems with the queue-jumping analogy that, perhaps, I’ll discuss in later posts.

Oh Che Can You See?

On the Fence Films, the group that brought us "Dead Meat," has a four minute film on the role of Marxists on the recent immigration protests earlier this week.

You can find the video here.

Lots of Che t-shirts.

I did see a very tepid and tiny protest on Monday when I was out in California. Did anyone else go to one in a major city? Was there the kind of influence that On the Fence portrays?

The Reddest of Red Herrings

Suppose that several proponents of lower taxes argued that one important reason -- maybe the important reason -- for cutting taxes is that lower taxes save paper.  "If we cut taxes, we'll use up less paper in record keeping and tax filing.  What a boon such a saving would be to our economy!"

Persons opposed to cutting taxes would surely respond that this effect is so small as to be irrelevant.  Indeed, this effect might not even be real.  But the tax-cut advocates don't give up: they keep focusing on the paper-saving that they argue will result from tax cuts.

Surely, if this paper-saving argument is the best one for cutting taxes, the case for cutting taxes would be very weak indeed.

.....

The above ridiculous scenario isn't very far from the scenario playing out now in the immigration debate.  Many people on the pro-immigration side say that immigrants do jobs that Americans won't do.  Those opposed to freer immigration then correctly respond that if the supply of workers to do these jobs falls (say, because immigration is restricted further), the wages paid to perform these jobs will rise and, thus, attract Americans into these jobs.  In fact, even if we totally prohibit any further immigration into America, Americans' lawns will still be mowed, our garbage will still be collected, our homes will still be cleaned, and produce grown on American farms will still be harvested.

This claim that "immigrants do jobs that Americans won't do" permits opponents of immigration to win easy battles by exposing the foolishness of such arguments.  And because so many people today seem to think that the main economic advantage of immigration is that it supplies people willing to do jobs that Americans won't do, immigration opponents gain much more credibility than they deserve.

The "jobs Americans won't do" issue is a neon-brilliant-scarlet red herring.

Kinder, Gentler America

Since moving to The Atlantic, Clive Crook has written some outstanding articles.  One is this wonderful essay (summarized by Alex at Marginal Revolution) on why something as lovable as capitalism is largely unloved.

Another of Crook's outstanding essays appears in the current -- the May 2006 -- Atlantic.  It's on immigration.  It's theme is that the allegedly humane European system of "social democracy" creates cruelty and callousness toward immigrants -- much more cruelty and callousness than exists here in America.  Here's Crook:

On the face of it, America's welfare system is harsher and less hospitable than Europe's, something that many liberals lament.  But in this respect, at least, that appearance is misleading.  The unintended consequences of Europe's milder regime are not just a looming fiscal collapse but also, in the meantime, intensifying and plainly self-destructive anti-immigration sentiment.  America's harsher insistence on work is not just economically advantageous (which is self-evident) but socially beneficial as well (which some may find surprising).  Jobs alone are not enough to ensure successful assimilation of immigrants, but jobs are a necessary condition.  By insisting that immigrants work, the host country attacks the incumbents' intellectual and emotional resistance to immigration.  The work requirement increases the dispersed economic benefits; it reduces or eliminates the net fiscal burdens; and it lowers cultural barriers.  As a result, tempers cool.  In these key respects, America's more brutal model is kinder -- in addition to bring more sustainable.

Everything is relative, of course.  Uncle Sam is not as ready as Crook suggests to let foreigners work in America.  But Uncle Sam is much more tolerant -- and, hence, less brutal -- on this front than are European welfare-state governments.

Some Latino Facts

Novelist and ex-journalist Alisa Valdes-Rodriguez in Sunday's Washington Post provides some basic facts about Latinos that may surprise you. My favorites:

5 Language is not genetic. The Pew Hispanic Center shows that by the third generation, 100 percent of Latinos speak English as their first and often only language. This is the precise assimilation pattern for every other foreign-language immigrant group in this country. P.S. If you're so opposed to non-English words, you may speak the names of only 13 American states and almost no cities in the Southwest.

6 Hispanics like to remind you about America's Hispanic past not because we want to go back to it, but because we are sick of you assuming that all Latinos are immigrants. My family has been in New Mexico for seven generations. Bet I beat Lou Dobbs on that one.

7   Please stop sending e-mails saying things such as, "All you Hispanics should go home." I, like most Hispanics you see every day, am already home.

The Entrepreneurial Side of Immigration

Immigrants are not a random selection of the world's population. John Gartner explains in today's Washington Post:

If you've been following the big immigration debate, you might get the impression that the primary economic advantage of liberal economic immigration policies is that they supply America with low-wage workers willing to do grueling, unskilled jobs that native-born Americans won't touch. Not true: They are the source of America's success.

The secret to America's wealth is that we were settled by restless, driven, overconfident, risk-taking dreamers.

Gartner continues:

America is an amazing natural experiment -- a continent populated largely by self-selected immigrants. All these people had the get-up-and-go to pull up stakes and come here, a temperament that made them different from their friends and relatives who stayed home. Immigrants are the original venture capitalists, risking their human capital -- their lives -- on a dangerous and arduous voyage into the unknown.

Not surprisingly, given this entrepreneurial spirit, immigrants are self-employed at much higher rates than native-born people, regardless of what nation they emigrate to or from. And the rate of entrepreneurial activity in a nation is correlated with the number of immigrants it absorbs. According to a cross-national study, "The Global Entrepreneurship Monitor," conducted jointly by Babson College and the London School of Economics, the four nations with the highest per capita creation of new companies are the United States, Canada, Israel and Australia -- all nations of immigrants. New company creation per capita is a strong predictor of gross domestic product, and so the conclusion is simple: Immigrants equal national wealth.

Andrew Carnegie, a 19th century Scottish immigrant and, quite a manic personality, who started working in a factory for pennies a day and became the richest man in the world by mass-producing steel, made the same argument. Immigrants, he wrote, were unusually "capable, energetic and ambitious" people. They had to be. "The old and the destitute, the idle and the contented do not brave the waves of the stormy Atlantic, but sit helplessly at home." He called the flow of people into America the "golden stream" that contributed more to America's wealth than "all the gold mines in the world." It's as true today as it was then. The Scottish, Irish, Italians, Japanese and Eastern Europeans were last century's Mexicans -- unwashed hordes, thought to be good only for cheap labor.

More on immigration and wages

Here's a nice overview from the Economist of the empirical evidence on immigration and the underlying economics (Ht: Joshua Hill):

Mr Borjas divides people into categories, according to their education and work experience. He assumes that workers of different types are not easily substitutable for each other, but that immigrants and natives within each category are. By comparing wage trends in categories with lots of immigrants against those in groups with only a few, he derives an estimate of immigration's effect. His headline conclusion is that, between 1980 and 2000, immigration caused average wages to be some 3% lower than they would otherwise have been. Wages for high-school drop-outs were dragged down by around 8%.

Immigration's critics therefore count Mr Borjas as an ally. But hold on. These figures take no account of the offsetting impact of extra investment. If the capital stock is assumed to adjust, Mr Borjas reports, overall wages are unaffected and the loss of wages for high-school drop-outs is cut to below 5%.

Gianmarco Ottaviano, of the University of Bologna, and Giovanni Peri, of the University of California, Davis, argue that Mr Borjas's findings should be adjusted further. They think that, even within the same skill category, immigrants and natives need not be perfect substitutes, pointing out that the two groups tend to end up in different jobs. Mexicans are found in gardening, housework and construction, while low-skilled natives dominate other occupations, such as logging. Taking this into account, the authors claim that between 1980 and 2000 immigration pushed down the wages of American high-school drop-outs by at most 0.4%.

This should give Nicholas Kristof pause. He argues it's compassionate to keep out pitifully poor immigrants to keep the wages of American high school dropout high. So the total impact on the poorest Americans is either a decrease of a little more than 8%, less than 5% or less than 1%. For that, Kristof is willing to condemn Mexicans to the Mexican economy. Where's the compassion?

Immigration Economics

What is the effect of immigration on wages and the standard of living of American who are already here? One commenter on a recent post here at Cafe Hayek wrote it's simple supply and demand—let in more people and wages have to fall. George Borjas makes the same argument—more immigrants means lower wages. But that can't be the whole story. It certainly isn't the whole story for Americans overall, inclusive of the full economic effects of immigration.

Imagine the same arguments made about imports of foreign products. It's a mistake to let in foreign products. Imports lower prices which means Americans selling goods will make less money and be worse off. So imports make America poorer. Imports mean fewer jobs in America, this argument would go, because obviously, there are going to be jobs lost to imports.

There are people who believe these arguments. But it's hard for these arguments to stand up to logic or the facts. The logical problem with the argument is that it only looks at part of the story. It only looks at what is seen. It misses what is unseen. The unseen effect of trade is that it spurs innovation because domestic firms have to compete with foreign firms. It creates wealth because America can now produce some products the roundabout way—rather than producing our own clothes, for example, we make something else and swap it for clothes—the power of comparative advantage and specialization. And trade doesn't reduce the number of jobs in the United States. It reduces certain types of jobs but others increase as capital and resources are now available to create new products now that we don't have to make everything ourselves.

On the facts side, the number of jobs in the United States has risen steadily for 50 years as our population has grown absorbing immigrants, and a tripling of women in the workplace.

The same logic and facts apply to immigration.

Lower wages and fewer jobs can't be the whole effect. That misses the unseen benefits of new people and new ideas coming into our economy from beyond our borders. Some wages may fall as native-born Americans compete with new arrivals. (And of course, virtually all of these native-borns are descendants of immigrants). But that can't be the whole impact. That can't be the end of the story. If America can produce some products more cheaply because of immigrants, that frees up resources to produce more of something else. Those benefits are unseen. But the net impact on America has to be positive. We have more resources. (I am ignoring the problem of immigrants who come here to enjoy the welfare state. I am focusing on the narrower question of whether foreing workers coming here is good or bad for those of us who are already here. The critics of immigration think even foreign workers are bad for America.)

You can't use supply and demand (or at least the simplistic version of shifting supply and holding demand constant) because everything is endogenous.

That's the logic. Now what about the facts? Borjas estimates that American wages are depressed 4% by immigration. He estimates that the impact on high school dropouts is a reduction in wages of 8%. He argues that immigration is a redistribution from workers to employers, implying no net effect. Are these numbers right? Maybe. A lot of assumptions have to be made to tease out the effects. But my intuition based on the above logic is that he's missing something—the hidden connections are too difficult to tease out.

That's an easy criticism to make of course, so here are some questions to think about if you worry that immigration drives down wages and standard of living of the people already here.

If immigration lowers the wages and standard of living of people already here, do increases in labor force participation and population lower them, too? Yet labor's share in national income is rock-steady at 70% for the last 50 years. Our standard of living is many times higher.

Would Native Americans (not native-born Americans, but American Indians) be wealthier if they had the American continent to themselves?

Would New York City (or any other city) be richer today if it had held its population to what it was in 1850? 1900? 1950? 1980? Does the inflow of people into New York lower the wages of the people already there? Does it make them poorer? Does it matter whether rich or poor people, high-skilled or low-skilled people are the ones moving into New York?

Has rural America gotten richer as fewer people have chosen to live there? Does the smaller supply of workers increase the wages and standard of living of those people still living there?

Do population increases lower America's standard of living? Would our wages be higher if we had had zero population growth over the last century? Has the population growth of the last century reduced wages or the standard of living in America? Does population growth lower our standard of living if poor people have a disproportionate share of the new births?

Has the tripling of women in the workforce over the last 50 years reduced wages or the standard of living in the United States? Would our wages or standard of living be even higher if women weren't crowding into the work force and allegedly lowering wages?

If there were a plague that killed half of the American people, would those who were left find their standard of living rise or fall? Would it depend on whether the people who lived or died were rich or poor or high-skilled or low-skilled?

My answer to all of these questions is "no." More people means more resources for the people already here. It means more trade. More specialization. More economies of scale. It doesn't matter whether they are native born or imported. (I also recognize it means potentially more congestion and more pollution depending on our public policy choices. But those aren't necessary consequences of the increase in population. The direct impact on our wages and productivity and standard of living is positive.)

Immigration makes most Americans better off. Are some Americans made worse off because their skills are closest to new immigrants? Here, at least in the short run, one's usual intuition about supply and demand might hold, though my questions above make me wonder if it's even right in this case. But let's help poor Americans by giving them better schools instead of keeping out immigrants. And immigration is really good for immigrants. I care about them, too. If they want to work, let them come.

The impact of immigration

The New York Times had a full-page story on immigration in the Week in Review section yesterday. It was a negative piece. A lot of data were presented (see the "Multimedia" link in the Times article) were presented, all negative. A caption under the photograph read:

JOBS LOST AND FOUND At California construction sites like this one, well-paid work that used to go to native-born Americans is going to lower-paid immigrants.

That description implies that immigrants take jobs away from native-born Americans. I don't know of any serious study that shows that. The usual claim is that competition from immigrants lowers the wages of Americans. And sure enough, the Times article has a chart that shows that. Here it is:

There's nothing in the graphic that questions whether these numbers are accurate. They're presented as facts ("Reduced Wages") with no disclaimers about the statistical techniques or assumptions that went into them. Borjas is quoted in the article but no skeptic is quoted about whether these estimates are reliable.  The numbers are about the impact of legal and illegal immigrants even though the article is about illegals, a smaller group. And there's nothing about the impact on the immigrants themselves from coming to America relative to the country they've left behind.

But what's really misleading and bizarre about the chart is that there's no visual benchmark for these decreases. Your eye can see that 5.0 is almost twice 3.1. But is 5% a big decrease or a small one?  The way you'd show the size would be to have a bar chart of what average wages are for Asians, Whites, Blacks and Hispanics and then show the average wages that would allegedly exist if there were no immigration. If the data were presented in this way, you'd see how small or large the impact is.

Ironically, just below this chart in the Times article is another chart that does exactly what could have been done with the wages chart. This second chart shows how little the impact on food prices would be if didn't allow immigration and we had to pick farm products with native-born labor. Farm wages would go up and so would prices. But the impact on food prices would be small, the Times graphic points out, only about two or three cents on the dollar:

So the impact on wages of all immigration, legal and illegal, is about four cents on the dollar. The overall impact on food prices is about two to three cents on the dollar. There's no differential impact illustrated for blacks or hispanics who are relatively poor. Just a summary "two or three cents" with a nice picture to let your eye see how little two or three percent is. But no corresponding measure for wages.

What a dishonest article. The Times should be ashamed.

Are 'Illegal' Immigrants Illegal?

One of the chief complaints that persons opposed to immigration today level against those immigrants now in the United States without permission of the United States government is that these immigrants are here illegally. “They broke the law; they’re criminals” – so the story goes. "Send them home and let them apply to come here legally."

The phrase “illegal immigrant” is a boon to xenophobes. It permits them to mask their hostility to freedom of movement, to freedom of association, and to foreigners, behind high-sounding rhetoric about the rule of law.

I concede that many people today are in the United States without Uncle Sam’s formal permission. I disagree, however, that these people are ‘illegal’ or ‘criminal’ in any but the most formal and empty sense of the terms.

Law is not so much what legislatures declare it to be; law, instead, is the complex of norms and expectations that motivate most people in a community. In some states – including, I believe, Georgia, Massachusetts, and Mississippi – the legislative codes still prohibit sexual intercourse between unmarried persons. Suppose you’re a resident of one of these states and you’re called to jury duty. The case is State v. Jones, where the state government is prosecuting Ms. Jones (an adult) for having voluntary sex with her boyfriend (also an adult) in the privacy of their own home. Would you vote to convict Ms. Jones even if both Jones and her boyfriend admit that they are not married to one another but that they routinely have sex with each other in private?

Would you find it compelling if someone argued “Look, I personally have no problem with unmarried adults voluntarily having sex with each other.  But the law’s the law! If unmarried adults want to have sex, let them do it legally; let them first get married or move to a state that doesn’t criminalize fornication. Then they can screw each other all they want. But if the law says that sex between unmarried people is illegal, then if we let people get away with breaking this law openly, arrogantly, we risk undermining the rule of law in the United States." 

As I’ve argued elsewhere (and here), it’s a mistake to confuse legislative declarations with the law. In fact, despite what's written in the statute books in some American states, it is legal everywhere in the U.S. for unmarried adults to have sex voluntarily with each other. The actual law is revealed by the practice.  Statutory language, in this case, obscures the law.

And so it is with so-called “illegal immigration.” Although not as universally accepted today throughout America as is consensual sex among unmarried adults, immigration without permission of government is widely enough accepted that we can conclude that it is lawful, despite what is written in the statute books.

Employers hire foreign workers without caring much whether these workers can document that they are in the U.S. with Uncle Sam’s permission. Consumers patronize commercial establishments without caring enough about the official status of these establishments’ workers to cause these consumers to seek out establishments that clearly document that they hire only ‘legal’ workers. And save for a relatively small handful of busybodies – such as the so-called “Minutemen” – we Americans in our private choices and actions do virtually nothing to hinder ‘illegal’ foreigners from living and working and playing in our midst.

A ‘law’ that is overwhelmingly ignored – a ‘law’ aimed not at protecting innocent people from the initiation of force or fraud by others but, rather, at protecting one group of people from the economic competition of another group of people – a ‘law’ that depends for its creation and enforcement upon both ideological and economic interest groups whipping up political passions – any ‘law’ with one or more of these characteristics is not really a law. At best such a ‘law’ is a government command that must be enforced without the active cooperation of the populace and, in many cases, against the revealed wishes of this populace.

Anyone in America peacefully going about his or her business is not illegal, regardless of whether or not this person has Uncle Sam's permission to be here.

SATURDAY-MORNING UPDATE: New York Times columnist John Tierney quite eloquently makes much the same point in his column that appears in today's edition.  Here's his concluding paragraph:

Railing at them ['illegal' immigrants] for breaking the law is not going to make them go home or stop others from following them here. Immigrants will cross the border one way or another. The more of them we let in legally, the better off everyone will be. Whether you welcome more immigrants, as I do, or whether you'd rather see fewer, there's no point in commanding the tide to ebb.

So true.

Does America Need Immigrants?

Does America need immigrants? Need? Of course America doesn't need immigrants. Some pro-immigration people like to point out all the jobs and tasks done by immigrants and argue that if it weren't for immigrants we'd have to do without all those things. This is mostly not true. If we closed our borders, all the things that immigrants do now would either be done by 'native' Americans (presumably at higher wages with resulting higher prices) or be done by machines or would not get done at all. The country would not collapse. We'd just be poorer.

Robert Samuelson, in a depressingly bad piece in today's Washington Post, gets part of the story right when he writes:

Economist Philip Martin of the University of California likes to tell a story about the state's tomato industry. In the early 1960s, growers relied on seasonal Mexican laborers, brought in under the government's "bracero" program. The Mexicans picked the tomatoes that were then processed into ketchup and other products. In 1964 Congress killed the program despite growers' warnings that its abolition would doom their industry. What happened? Well, plant scientists developed oblong tomatoes that could be harvested by machine. Since then, California's tomato output has risen fivefold.

For Samuelson (who usually gets it right), this story proves we don't need immigrants. And he's right. We don't need them. They just make life better for those of us already here. True, keeping out Mexicans doesn't mean that the tomatoes die on the vine, never to be eaten.  But losing the opportunity to have Mexicans come and pick them means that for some period of time, tomatoes were more expensive than they needed to be.

Arguing about whether we 'need' immigrants is a red herring.

But that's not the truly depressing part of the Samuelson piece.  It's this part where he argues against a 'guest worker' program and immigration in general:

What we have now -- and would with guest workers -- is a conscious policy of creating poverty in the United States while relieving it in Mexico. By and large, this is a bad bargain for the United States. It stresses local schools, hospitals and housing; it feeds social tensions (witness the Minutemen). To be sure, some Americans get cheap housecleaning or landscaping services. But if more mowed their own lawns or did their own laundry, it wouldn't be a tragedy.

Bob, what were you thinking when you wrote that paragraph? I don't agree that more immigrants stress our local schools and hospitals and housings. If immigrants come here and pick those tomatoes and put up that dry wall and mow our lawns, they add to the economic pie, they don't take from it. As for social tension, I'd argue that immigrants add much more through enriching American culture than they detract from our lives in the form of 'social tension.' Social tension is just another name for racism—why should we pander to that?

But the real problem with the paragraph is the last two lines:

To be sure, some Americans get cheap housecleaning or landscaping services. But if more mowed their own lawns or did their own laundry, it wouldn't be a tragedy.

It wouldn't be a tragedy? No, it wouldn't be a tragedy for the Americans. A little more lawn mowing and laundry isn't a tragedy. But what about the Mexicans? I care about them, too.

Samuelson hints at it himself without noticing when he writes that current policy creates poverty in the United States and relieves it in Mexico. But that's misleading. The poverty 'created' in the United States isn't an increase in suffering. It's a shift in where the suffering occurs—it moves across the border. Total human well-being hasn't really gotten worse. But the American economy gives those Mexicans a chance to get out of poverty, a much better chance than they have if they stay. That's why they risk so much to come here. Stopping them from coming means they're more likely to be stuck in poverty. That's the real tragedy.

Immigrants and Wages

This new CNN/Gallup/USA Today poll finds that a majority of Americans believe both illegal and legal immigration to "hurt the economy by driving wages down for many Americans." (Hat tip to Jeff Noble of the Mercatus Center.)

Many economic truths are difficult to convey, but perhaps none more so than the idea that people who work in markets that are at least reasonably free are net producers – that a larger number of people in the market’s workforce means a deeper, more fine-grained division of labor – that more people mean more creativity, more problem-solving capacity, more knowledge, all of which increases and widens prosperity.

People are, as Julian Simon emphasized, the ultimate resource – the one resource without which nothing else becomes a resource – the foundational resource -- the only truly indispensable resource.

From one angle, it’s easy to see why the man-in-the-street so readily accepts the notion that greater numbers of workers mean lower wages. But from another angle, it’s not so easy. After all, even the man-in-the-street knows that America’s population today is far larger than it was at America’s founding, or during the mid-19th century, or during the Great Depression, or during JFK’s presidency. The man-in-the-street should wonder how it is that we’re so much wealthier now than then – why real wages are so very much higher.

Perhaps the man-in-the-street would reply to the above point by saying "Technology!" Well, yes. But technological advance doesn’t just happen; it’s not a force that descends from on high or that emerges, cicada-like, from the soil. People – and people only – create technological advance, as well as the businesses, products, and services that embody these advances in ways that are useful to the masses.

Alas, it’s not fair to blame the man-in-the-street for his failure to understand this point. We economists have done far too little to explore it and to explain it. That’s a shame.

What Is it About Immigration???

In a comment on this blog-post, Ivan Kirigin repeats a claim asserted frequently by people who are suspicious of open immigration: "illegal immigrants are more likely to be a burden on society through higher taxes."

I doubt that this assertion is true, but I confess that I don't have any numbers to present at the moment to support my position.  But I do have handy a widely known fact whose persistence is evidence against Mr. Kirigin's claim.

This fact is the government's many restrictions on the ability of foreigners to work lawfully in the United States.  If immigrants come to these shores largely to free-ride on taxpayers, Uncle Sam wouldn't have to spill so much ink and spend so much effort trying to prevent them from working.

But I confess that it's possible that the numbers might show that the typical illegal immigrant (or even typical immigrant) drains more from taxpayers than does the typical native-born American.  If so, this fact does not mean that the net contribution of these immigrants is negative.  Against the amount they consume in taxes must be weighed not just the amount they pay in taxes but also the amount of value they add to the economy.

But let's assume for the moment that the net contribution of immigrants, even properly measured, is negative.  Rather than restrict them from coming to America, the first and best step surely is to remove all restrictions aimed at preventing them from working.  Removal of such restrictions would surely increase immigrants' contribution to the economy and reduce their reliance upon government.