JDN 2456977 PST 12:31.
The big topic in policy news today is immigration. After years of getting nothing done on the issue, Obama has finally decided to bypass Congress and reform our immigration system by executive order. Republicans are threatening to impeach him if he does. His decision to go forward without Congressional approval may have something to do with the fact that Republicans just took control of both houses of Congress. Naturally, Fox News is predicting economic disaster due to the expansion of the welfare state. (When is that not true?) A more legitimate critique comes from the New York Times, who point out how this sudden shift demonstrates a number of serious problems in our political system and how it is financed.
So let’s talk about immigration, and why it is almost always a good thing for a society and its economy. There are a couple of downsides, but they are far outweighed by the upsides.
I’ll start with the obvious: Immigration is good for the immigrants. That’s why they’re doing it. Uprooting yourself from your home and moving thousands of miles isn’t easy under the best circumstances (like I when I moved from Michigan to California for grad school); now imagine doing it when you are in crushing poverty and you have to learn a whole new language and culture once you arrive. People are only willing to do this when the stakes are high. The most extreme example is of course the children refugees from Latin America, who are finally getting some of the asylum they so greatly deserve, but even the “ordinary” immigrants coming from Mexico are leaving a society racked with poverty, endemic with corruption, and bathed in violence—most recently erupting in riots that have set fire to government buildings. These people are desperate; they are crossing our border despite the fences and guns because they feel they have no other choice. As a fundamental question of human rights, it is not clear to me that we even have the right to turn these people away. Forget the effect on our economy; forget the rate of assimilation; what right do we have to say to these people that their suffering should go on because they were born on the wrong side of an arbitrary line?
There are wealthier immigrants—many of them here, in fact, for grad school—whose circumstances are not so desperate; but hardly anyone even considers turning them away, because we want their money and their skills in our society. Americans who fear brain drain have it all backwards; the United States is where the brains drain to. This trend may be reversing more recently as our right-wing economic policy pulls funding away from education and science, but it would likely only reach the point where we export as many intelligent people as we import; we’re not talking about creating a deficit here, only reducing our world-dominating surplus. And anyway I’m not so concerned about those people; yes, the world needs them, but they don’t need much help from the world.
My concern is for our tired, our poor, our huddled masses yearning to breathe free. These are the people we are thinking about turning away—and these are the people who most desperately need us to take them in. That alone should be enough reason to open our borders, but apparently it isn’t for most people, so let’s talk about some of the ways that America stands to gain from such a decision.
First of all, immigration increases economic growth. Immigrants don’t just take in money; they also spend it back out, which further increases output and creates jobs. Immigrants are more likely than native citizens to be entrepreneurs, perhaps because taking the chance to start a business isn’t so scary after you’ve already taken the chance to travel thousands of miles to a new country. Our farming system is highly dependent upon cheap immigrant labor (that’s a little disturbing, but if as far as the US economy, we get cheap food by hiring immigrants on farms). On average, immigrants are younger than our current population, so they are more likely to work and less likely to retire, which has helped save the US from the economic malaise that afflicts nations like Japan where the aging population is straining the retirement system. More open immigration wouldn’t just increase the number of immigrants coming here to do these things; it would also make the immigrants who are already here more productive by opening up opportunities for education and entrepreneurship. Immigration could speed the recovery from the Second Depression and maybe even revitalize our dying Rust Belt cities.
Now, what about the downsides? By increasing the supply of labor faster than they increase the demand for labor, immigrants could reduce wages. There is some evidence that immigrants reduce wages, particularly for low-skill workers. This effect is rather small, however; in many studies it’s not even statistically significant (PDF link). A 10% increase in low-skill immigrants leads to about a 3% decrease in low-skill wages (PDF link). The total economy grows, but wages decrease at the bottom, so there is a net redistribution of wealth upward.
Immigration is one of the ways that globalization increases within-nation inequality even as it decreases between-nation inequality; you move the poor people to rich countries, and they become less poor than they were, but still poorer than most of the people in those rich countries, which increases the inequality there. On average the world becomes better off, but it can seem bad for the rich countries, especially the people in rich countries who were already relatively poor. Because they distribute wealth by birthright, national borders actually create something analogous to the privilege of feudal lords, albeit to a much larger segment of the population. (Much larger: Here’s a right-wing site trying to argue that the median American is in the top 1% of income by world standards; neat trick, because Americans comprise 4% of the world population—so our top half makes up 2% of the world’s population by themselves. Yet somehow apparently that 2% of the population is the top 1%? Also, the US isn’t the only rich country; have you heard of, say, Europe?)
There’s also a lot of variation in the literature as to the size—or even direction—of the effect of immigration on low-skill wages. But since the theory makes sense and the preponderance of the evidence is toward a moderate reduction in wages for low-skill native workers, let’s assume that this is indeed the case.
First of all I have to go back to my original point: These immigrants are getting higher wages than they would have in the countries they left. (That part is usually even true of the high-skill immigrants.) So if you’re worried about low wages for low-skill workers, why are you only worried about that for workers who were born on this side of the fence? There’s something deeply nationalistic—if not outright racist—inherent in the complaint that Americans will have lower pay or lose their jobs when Mexicans come here. Don’t Mexicans also deserve jobs and higher pay?
Aside from that, do we really want to preserve higher wages at the cost of economic efficiency? Are high wages an end in themselves? It seems to me that what we’re really concerned about is welfare—we want the people of our society to live better lives. High wages are one way to do that, but not the only way; a basic income could reverse that upward redistribution of wealth, taking the economic benefits of the immigration that normally accrue toward the top and giving them to the bottom. As I already talked about in an earlier post, a basic income is a lot more efficient than trying to mess around with wages. Markets are very powerful; we shouldn’t always accept what they do, but we should also be careful when we interfere with them. If the market is trying to drive certain wages down, that means that there is more desire to do that kind of work then there is work of that kind that needs done. The wage change creates a market incentive for people to switch to more productive kinds of work. We should also be working to create opportunities to make that switch—funding free education, for instance—because an incentive without an opportunity is a bit like pointing a gun at someone’s head and ordering them to give birth to a unicorn.
So on the one hand we have the increase in local inequality and the potential reduction in low-skill wages; those are basically the only downsides. On the other hand, we have increases in short-term and long-term economic growth, lower global inequality, more spending, more jobs, a younger population with less strain on the retirement system, more entrepreneurship, and above all, the enormous lifelong benefits to the immigrants themselves that motivated them to move in the first place. It seems pretty obvious to me: we can enact policies to reduce the downsides, but above all we must open our borders.