When are we going to get serious about climate change?

Oct 8, JDN 24578035

Those two storms weren’t simply natural phenomena. We had a hand in creating them.

The EPA doesn’t want to talk about the connection, and we don’t have enough statistical power to really be certain, but there is by now an overwhelming scientific consensus that global climate change will increase hurricane intensity. The only real question left is whether it is already doing so.

The good news is that global carbon emissions are no longer rising. They have been essentially static for the last few years. The bad news is that this is almost certainly too little, too late.

The US is not on track to hit our 2025 emission target; we will probably exceed it by at least 20%.

But the real problem is that the targets themselves are much too high. Most countries have pledged to drop emissions only about 8-10% below their 1990s levels.

Even with the progress we have made, we are on track to exceed the global carbon budget needed to keep warming below 2 C by the year 2040. We have been reducing emission intensity by about 0.8% per year—we need to be reducing it by at least 3% per year and preferably faster. Highly-developed nations should be switching to nuclear energy as quickly as possible; an equitable global emission target requires us to reduce our emissions by 80% by 2050.

At the current rate of improvement, we will overshoot the 2 C warming target and very likely the 3C target as well.

Why aren’t we doing better? There is of course the Tragedy of the Commons to consider: Each individual country acting in its own self-interest will continue to pollute more, as this is the cheapest and easiest way to maintain industrial development. But then if all countries do so, the result is a disaster for us all.
But this explanation is too simple. We have managed to achieve some international cooperation on this issue. The Kyoto protocol has worked; emissions among Kyoto member nations have been reduced by more than 20% below 1990 levels, far more than originally promised. The EU in particular has taken a leadership role in reducing emissions, and has a serious shot at hitting their target of 40% reduction by 2030.

That is a truly astonishing scale of cooperation; the EU has a population of over 500 million people and spans 28 nations. It would seem like doing that should get us halfway to cooperating across all nations and all the world’s people.

But there is a vital difference between the EU and the world as a whole: The tribal paradigm. Europeans certainly have their differences: The UK and France still don’t really get along, everyone’s bitter with Germany about that whole Hitler business, and as the acronym PIIGS emphasizes, the peripheral countries have never quite felt as European as the core Schengen members. But despite all this, there has been a basic sense of trans-national (meta-national?) unity among Europeans for a long time.
For one thing, today Europeans see each other as the same race. That wasn’t always the case. In Medieval times, ethnic categories were as fine as “Cornish” and “Liverpudlian”. (To be fair, there do still exist a handful of Cornish nationalists.) Starting around the 18th cenutry, Europeans began to unite under the heading of “White people”, a classification that took on particular significance during the trans-Atlantic slave trade. But even in the 19th century, “Irish” and “Sicilian” were seen as racial categories. It wasn’t until the 20th century that Europeans really began to think of themselves as one “kind of people”, and not coincidentally it was at the end of the 20th century that the European Union finally took hold.

There is another region that has had a similar sense of unification: Latin America. Again, there are conflicts: There are a lot of nasty stereotypes about Puerto Ricans among Cubans and vice-versa. But Latinos, by and large, think of each other as the same “kind of people”, distinct from both Europeans and the indigenous population of the Americas.

I don’t think it is coincidental that the lowest carbon emission intensity (carbon emissions / GDP PPP) in the world is in Latin America, followed closely by Europe.
And if you had to name right now the most ethnically divided region in the world, what would you say? The Middle East, of course. And sure enough, they have the worst carbon emission intensity. (Of course, oil is an obvious confounding variable here, likely contributing to both.)

Indeed, the countries with the lowest ethnic fractionalization ratings tend to be in Europe and Latin America, and the highest tend to be in the Middle East and Africa.

Even within the United States, political polarization seems to come with higher carbon emissions. When we think of Democrats and Republicans as different “kinds of people”, we become less willing to cooperate on finding climate policy solutions.

This is not a complete explanation, of course. China has a low fractionalization rating but a high carbon intensity, and extremely high overall carbon emissions due to their enormous population. Africa’s carbon intensity isn’t as high as you’d think just from their terrible fractionalization, especially if you exclude Nigeria which is a major oil producer.

But I think there is nonetheless a vital truth here: One of the central barriers to serious long-term solutions to climate change is the entrenchment of racial and national identity. Solving the Tragedy of the Commons requires cooperation, we will only cooperate with those we trust, and we will only trust those we consider to be the same “kind of people”.

You can even hear it in the rhetoric: If “we” (Americans) give up our carbon emissions, then “they” (China) will take advantage of us. No one seems to worry about Alabama exploiting California—certainly no Republican would—despite the fact that in real economic terms they basically do. But people in Alabama are Americans; in other words, they count as actual people. People in China don’t count. If anything, people in California are supposed to be considered less American than people in Alabama, despite the fact that vastly more Americans live in California than Alabama. This mirrors the same pattern where we urban residents are somehow “less authentic” even though we outnumber the rural by four to one.
I don’t know how to mend this tribal division; I very much wish I did. But I do know that simply ignoring it isn’t going to work. We can talk all we want about carbon taxes and cap-and-trade, but as long as most of the world’s people are divided into racial, ethnic, and national identities that they consider to be in zero-sum conflict with one another, we are never going to achieve the level of cooperation necessary for a real permanent solution to climate change.

The temperatures and the oceans rise. United we must stand, or divided we shall fall.

I think I know what the Great Filter is now

Sep 3, JDN 2458000

One of the most plausible solutions to the Fermi Paradox of why we have not found any other intelligent life in the universe is called the Great Filter: Somewhere in the process of evolving from unicellular prokaryotes to becoming an interstellar civilization, there is some highly-probable event that breaks the process, a “filter” that screens out all but the luckiest species—or perhaps literally all of them.

I previously thought that this filter was the invention of nuclear weapons; I now realize that this theory is incomplete. Nuclear weapons by themselves are only an existential threat because they co-exist with widespread irrationality and bigotry. The Great Filter is the combination of the two.

Yet there is a deep reason why we would expect that this is precisely the combination that would emerge in most species (as it has certainly emerged in our own): The rationality of a species is not uniform. Some individuals in a species will always be more rational than others, so as a species increases its level of rationality, it does not do so all at once.

Indeed, the processes of economic development and scientific advancement that make a species more rational are unlikely to be spread evenly; some cultures will develop faster than others, and some individuals within a given culture will be further along than others. While the mean level of rationality increases, the variance will also tend to increase.

On some arbitrary and oversimplified scale where 1 is the level of rationality needed to maintain a hunter-gatherer tribe, and 20 is the level of rationality needed to invent nuclear weapons, the distribution of rationality in a population starts something like this:

Great_Filter_1

Most of the population is between levels 1 and 3, which we might think of as lying between the bare minimum for a tribe to survive and the level at which one can start to make advances in knowledge and culture.

Then, as the society advances, it goes through a phase like this:

Great_Filter_2

This is about where we were in Periclean Athens. Most of the population is between levels 2 and 8. Level 2 used to be the average level of rationality back when we were hunter-gatherers. Level 8 is the level of philosophers like Archimedes and Pythagoras.

Today, our society looks like this:
Great_Filter_3

Most of the society is between levels 4 and 20. As I said, level 20 is the point at which it becomes feasible to develop nuclear weapons. Some of the world’s people are extremely intelligent and rational, and almost everyone is more rational than even the smartest people in hunter-gatherer times, but now there is enormous variation.

Where on this chart are racism and nationalism? Importantly, I think they are above the level of rationality that most people had in ancient times. Even Greek philosophers had attitudes toward slaves and other cultures that the modern KKK would find repulsive. I think on this scale racism is about a 10 and nationalism is about a 12.

If we had managed to uniformly increase the rationality of our society, with everyone gaining at the same rate, our distribution would instead look like this:
Great_Filter_4

If that were the case, we’d be fine. The lowest level of rationality widespread in the population would be 14, which is already beyond racism and nationalism. (Maybe it’s about the level of humanities professors today? That makes them substantially below quantum physicists who are 20 by construction… but hey, still almost twice as good as the Greek philosophers they revere.) We would have our nuclear technology, but it would not endanger our future—we wouldn’t even use it for weapons, we’d use it for power generation and space travel. Indeed, this lower-variance high-rationality state seems to be about what they have the Star Trek universe.

But since we didn’t, a large chunk of our population is between 10 and 12—that is, still racist or nationalist. We have the nuclear weapons, and we have people who might actually be willing to use them.

Great_Filter_5

I think this is what happens to most advanced civilizations around the galaxy. By the time they invent space travel, they have also invented nuclear weapons—but they still have their equivalent of racism and nationalism. And most of the time, the two combine into a volatile mix that results in the destruction or regression of their entire civilization.

If this is right, then we may be living at the most important moment in human history. It may be right here, right now, that we have the only chance we’ll ever get to turn the tide. We have to find a way to reduce the variance, to raise the rest of the world’s population past nationalism to a cosmopolitan morality. And we may have very little time.

What Brexit means for you, Britain, and the world

July 6, JDN 2457576

It’s a stupid portmanteau, but it has stuck, so I guess I’ll suck it up and use the word “Brexit” to refer to the narrowly-successful referendum declaring that the United Kingdom will exit the European Union.

In this post I’ll try to answer one of the nagging questions that was the most googled question in the UK after the vote was finished: “What does it mean to leave the EU?”

First of all, let’s answer the second-most googled question: “What is the EU?”

The European Union is one of those awkward international institutions, like the UN, NATO, and the World Bank, that doesn’t really have a lot of actual power, but is meant to symbolize international unity and ultimately work toward forming a more cohesive international government. This is probably how people felt about national government maybe 500 years ago, when feudalism was the main system of government and nation-states hadn’t really established themselves yet. Oh, sure, there’s a King of England and all that; but what does he really do? The real decisions are all made by the dukes and the earls and whatnot. Likewise today, the EU and NATO don’t really do all that much; the real decisions are made by the UK and the US.

The biggest things that the EU does are all economic; it creates a unified trade zone called the single market that is meant to allow free movement of people and goods between countries in Europe with little if any barrier. The ultimate goal was actually to make it as unified as internal trade within the United States, but it never quite made it that far. More realistically, it’s like NAFTA, but more so, and with ten times as many countries (yet, oddly enough, almost exactly the same number of people). Starting in 1999, the EU also created the Euro, a unified national currency, which to this day remains one of the world’s strongest, most stable currencies—right up there with the dollar and the pound.

Wait, the pound? Yes, the pound. While the UK entered the EU, they did not enter the Eurozone, and therefore retained their own national currency rather than joining the Euro. One of the first pieces of fallout from Brexit was a sudden drop in the pound’s value as investors around the world got skittish about the UK’s ability to support its current level of trade.
There are in fact several layers of “EU-ness”, if you will, several levels of commitment to the project of the European Union. The strongest commitment is from the Inner Six, the six founding countries (Belgium, France, the Netherlands, Luxembourg, Italy, and Germany), followed by the aforementioned Eurozone, followed by the Schengen Area (which bans passport controls among citizens of member countries), followed by the EU member states as a whole, followed by candidate states (such as Turkey), which haven’t joined yet but are trying to. The UK was never all that fully committed to the EU to begin with; they aren’t even in the Schengen Area, much less the Eurozone. So by this vote, the UK is essentially saying that they’d dipped their toes in the water, and it was too cold, so they’re going home.

Despite the fear of many xenophobic English people (yes, specifically English—Scotland and Northern Ireland overwhelmingly voted against leaving the EU), the EU already had very little control over the UK. Though I suppose they will now have even less.

Countries in the Eurozone were subject to a lot more control, via the European Central Bank controlling their money supply. The strong Euro is great for countries like Germany and France… and one of the central problems facing countries like Portugal and Greece. Strong currencies aren’t always a good thing—they cause trade deficits. And Greece has so little influence over European monetary policy that it’s essentially as if they were pegged to someone else’s currency. But the UK really can’t use this argument, because they’ve stayed on the pound all along.

The real question is what’s going to happen to the UK’s participation in the single market. I can outline four possible scenarios, from best to worst:

  1. Brexit doesn’t actually happen: Parliament could use (some would say “abuse”) their remaining authority to override the referendum and keep the UK in the EU. After a brief period of uncertainty, everything returns to normal. Probably the best outcome, but fairly unlikely, and rather undemocratic. Probability: 10%
  2. The single market is renegotiated, making Brexit more bark than bite: At this point, a more likely way for the UK to stop the bleeding would be to leave the EU formally, but renegotiate all the associated treaties and trade agreements so that most of the EU rules about free trade, labor standards, environmental regulations, and so on actually remain in force. This would result in a brief recession in the UK as policies take time to be re-established and markets are overwhelmed by uncertainty, but its long-term economic trajectory would remain the same. The result would be similar to the current situation in Norway, and hey, #ScandinaviaIsBetter. Probability: 40%
  3. Brexit is fully carried out, but the UK remains whole: If UKIP attains enough of a mandate and a majority coalition in Parliament, they could really push through their full agenda of withdrawing from European trade. If this happens, the UK would withdraw from the single market and could implement any manner of tariffs, quotas, and immigration restrictions. Hundreds of thousands of Britons living in Europe and Europeans living in Britain would be displaced. Trade between the UK and EU would dry up. Krugman argues that it won’t be as bad as the most alarmist predictions, but it will still be pretty bad—and he definitely should know, since this is the sort of thing he got a Nobel for. The result would be a severe recession, with an immediate fall in UK GDP of somewhere between 2% and 4%, and a loss of long-run potential GDP between 6% and 8%. (For comparison, the Great Recession in the US was a loss of about 5% of GDP over 2 years.) The OECD has run a number of models on this, and the Bank of England is especially worried because they have little room to lower interest rates to fight such a recession. Their best bet would probably be to print an awful lot of pounds, but with the pound already devalued and so much national pride wrapped up in the historical strength of the pound, that seems unlikely. The result would therefore be a loss of about $85 billion in wealth immediately and more like $200 billion per year in the long run—for basically no reason. Sadly, this is the most likely scenario. Probability: 45%
  4. Balkanization of the UK: As I mentioned earlier, Scotland and Northern Ireland overwhelmingly voted against Brexit, and want no part of it. As a result, they have actually been making noises about leaving the UK if the UK decides to leave the EU. The First Minister of Scotland has proposed an “independence referendum” on Scotland leaving the UK in order to stay in the EU, and a grassroots movement in Northern Ireland is pushing for unification of all of Ireland in order to stay in the EU with the Republic of Ireland. This sort of national shake-up is basically unprecedented; parts of one state breaking off in order to stay in a larger international union? The closest example I can think of is West Germany and East Germany splitting to join NATO and the Eastern Bloc respectively, and I think we all know how well that went for East Germany. But really this is much more radical than that. NATO was a military alliance, not an economic union; nuclear weapons understandably make people do drastic things. Moreover, Germany hadn’t unified in the first place until Bismark in 1871, and thus was less than a century old when it split again. Scotland joined England to form the United Kingdom in 1707, three centuries ago, at a time when the United States didn’t even exist—indeed, George Washington hadn’t even been born. Scotland leaving the UK to stay with the EU would be like Texas leaving the US to stay in NAFTA—nay, more like Massachusetts doing that, because Scotland was a founding member of the UK and Texas didn’t become a state until 1845. While Scotland might actually be better off this way than if they go along with Brexit (and England of course even worse), this Balkanization would cast a dark shadow over all projects of international unification for decades to come, at a level far beyond what any mere Brexit could do. It would essentially mean declaring that all national unity is up for grabs, there is no such thing as a permanently unified state. I never thought I would see such a policy even being considered, much less passed; but I can’t be sure it won’t happen. My best hope is that Scotland can use this threat to keep the UK in the EU, or at least in the single market—but what if UKIP calls their bluff? Probability: 5%

Options 2 and 3 are the most likely, and actually there are intermediate cases between them; they could only implement immigration restrictions but not tariffs, for example, and that would lessen the economic fallout but still displace hundreds of thousands of people. They could only remove a few of the most stringent EU regulations, but still keep most of the good ones; that wouldn’t be so bad. Or they could be idiots and remove the good regulations (like environmental sustainability and freedom of movement) while keeping the more questionable ones (like the ban on capital controls).

Only time will tell, and the most important thing to keep in mind here is that trade is nonzero-sum. If and when England loses that $200 billion per year in trade, where will it go? Nowhere. It will disappear. That wealth—about enough to end world hunger—will simply never be created, because xenophobia reintroduced inefficiencies into the global market. Yes, it might not all disappear—Europe’s scramble for import sources and export markets could lead to say $50 billion per year in increased US trade, for example, because we’re the obvious substitute—but the net effect on the whole world will almost certainly be negative. The world will become poorer, and Britain will feel it the most.

Still, like most economists there is another emotion I’m feeling besides “What have they done!? This is terrible!”; there’s another part of my brain saying, “Wow, this is an amazing natural experiment in free trade!” Maybe the result will be bad enough to make people finally wake up about free trade, but not bad enough to cause catastrophic damage. If nothing else, it’ll give economists something to work on for years.

What are we celebrating today?

JDN 2457208 EDT 13:35 (July 4, 2015)

As all my American readers will know (and unsurprisingly 79% of my reader trackbacks come from the United States), today is Independence Day. I’m curious how my British readers feel about this day (and the United Kingdom is my second-largest source of reader trackbacks); we are in a sense celebrating the fact that we’re no longer ruled by you.

Every nation has some notion of patriotism; in the simplest sense we could say that patriotism is simply nationalism, yet another reflection of our innate tribal nature. As Obama said when asked about American exceptionalism, the British also believe in British exceptionalism. If that is all we are dealing with, then there is no particular reason to celebrate; Saudi Arabia or China could celebrate just as well (and very likely does). Independence Day then becomes something parochial, something that is at best a reflection of local community and culture, and at worst a reaffirmation of nationalistic divisiveness.

But in fact I think we are celebrating something more than that. The United States of America is not just any country. It is not just a richer Brazil or a more militaristic United Kingdom. There really is something exceptional about the United States, and it really did begin on July 4, 1776.

In fact we should probably celebrate June 21, 1789 and December 15, 1791, the ratification of the Constitution and the Bill of Rights respectively. But neither of these would have been possible without that Declaration of Independence on July 4, 1776. (In fact, even that date isn’t as clear-cut as commonly imagined.)

What makes the United States unique?

From the dawn of civilization around 5000 BC up to the mid-18th century AD, there were basically two ways to found a nation. The most common was to grow the nation organically, formulate an ethnic identity over untold generations and then make up an appealing backstory later. The second way, and not entirely mutually exclusive, was for a particular leader, usually a psychopathic king, to gather a superior army, conquer territory, and annex the people there, making them part of his nation whether they wanted it or not. Variations on these two themes were what happened in Rome, in Greece, in India, in China; they were done by the Sumerians, by the Egyptians, by the Aztecs, by the Maya. All the ancient civilizations have founding myths that are distorted so far from the real history that the real history has become basically unknowable. All the more recent powers were formed by warlords and usually ruled with iron fists.

The United States of America started with a war, make no mistake; and George Washington really was more a charismatic warlord than he ever was a competent statesman. But Washington was not a psychopath, and refused to rule with an iron fist. Instead he was instrumental in establishing a fundamentally new approach to the building of nations.
This is literally what happened—myths have grown around it, but it itself documented history. Washington and his compatriots gathered a group of some of the most intelligent and wise individuals they could find, sat them down in a room, and tasked them with answering the basic question: “What is the best possible country?” They argued and debated, considering absolutely the most cutting-edge economics (The Wealth of Nations was released in 1776) and political philosophy (Thomas Paine’s Common Sense also came out in 1776). And then, when they had reached some kind of consensus on what the best sort of country would be—they created that country. They were conscious of building a new tradition, of being the founders of the first nation built as part of the Enlightenment. Previously nations were built from immemorial tradition or the whims of warlords—the United States of America was the first nation in the world that was built on principle.

It would not be the last; in fact, with a terrible interlude that we call Napoleon, France would soon become the second nation of the Enlightenment. A slower process of reform would eventually bring the United Kingdom itself to a similar state (though the UK is still a monarchy and has no formal constitution, only an ever-growing mountain of common law). As the centuries passed and the United States became more and more powerful, its system of government attained global influence, with now almost every nation in the world nominally a “democracy” and about half actually recognizable as such. We now see it as unexceptional to have a democratically-elected government bound by a constitution, and even think of the United States as a relatively poor example compared to, say, Sweden or Norway (because #Scandinaviaisbetter), and this assessment is not entirely wrong; but it’s important to keep in mind that this was not always the case, and on July 4, 1776 the Founding Fathers truly were building something fundamentally new.

Of course, the Founding Fathers were not the demigods they are often imagined to be; Washington himself was a slaveholder, and not just any slaveholder, but in fact almost a billionaire in today’s terms—the wealthiest man in America by far and actually a rival to the King of England. Thomas Jefferson somehow managed to read Thomas Paine and write “all men are created equal” without thinking that this obligated him to release his own slaves. Benjamin Franklin was a misogynist and womanizer. James Madison’s concept of formalizing armed rebellion bordered on insanity (and ultimately resulted in our worst amendment, the Second). The system that they built disenfranchised women, enshrined the slavery of Black people into law, and consisted of dozens of awkward compromises (like the Senate) that would prove disastrous in the future. The Founding Fathers were human beings with human flaws and human hypocrisy, and they did many things wrong.

But they also did one thing very, very right: They created a new model for how nations should be built. In a very real sense they redefined what it means to be a nation. That is what we celebrate on Independence Day.

1200px-Flag_of_the_United_States.svg

Why immigration is good

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 schoolwhose 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.