All posts by Michael Carey

Homes vs Detention Facilities

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As many of you know, there has been a recent influx of immigrants coming to the US from countries in central America due to violence in that region.  For example, Honduras may be more dangerous now than Iraq was in 2007.

Look here for a previous Open Borders post on the subject.

The US government has responded by putting many of the immigrants in detention facilities and attempting to speed up the deportation process.

Recently, my wife and I discussed the possibility of doing something more substantial to show our support for immigrants.  We decided to contact an organization that was negotiating with ICE to allow US citizens to temporarily house detained immigrants instead of keeping them in prison-like facilities.  Recently, we received notice that the US government would rather just spend more money and build more detention facilities. This despite the fact that alternate methods may be hundreds of times cheaper.  I am including the full text of the letter below:

(Note: I am not Catholic, but this happens to be from a Catholic charity.)

Greetings everyone—

First, thank you all for your expressed interest in responding with hospitality to the recent migrant families arriving to the U.S. this summer.

The response to our request for assistance has been tremendous. It is truly a testament to the good will present in so many communities that so many people are ready and willing to open their homes and as Jesus taught us “welcome the stranger”.

When we were approached by DHS in June, they were concerned about the number of families that they were forced to detain because they did not have family ties in the U.S. They asked us to reach out to our networks for help and you all responded with overwhelming compassion.

Unfortunately, the Department of Homeland Security’s Immigration and Customs Enforcement unit (ICE) has recently notified us that they do not intend to release the families arriving on the southern border currently held in their facilities. In addition, they will be increasing the capacity of their detention facilities and expediting the deportation of these families. This is a new policy decision that comes directly from the Administration.

As you can imagine, we are not only disappointed by the decision, but very concerned about the fate of these hundreds of families and future arrivals, which include a significant number of women and children. Several years ago, ICE detained families and the psychological impact on the families, particularly children, was devastating. So much so that, following a 2007 lawsuit, families have not been detained- until now. ICE is currently holding over 600 people at a newly opened detention center in Artesia, New Mexico and plans to begin housing families in a 600-bed detention facility in Karnes City, Texas.

As Catholics, we are not only called to show compassion and welcome the stranger, but protect family values, irrespective of one’s nationality or immigration status. Detaining families is inhumane, undignified, and violates basic human rights. In addition to the moral and human rights concerns, immigrant detention has proven to be costly to taxpayers and an ineffective migration deterrent.

Here at USCCB, we will be working diligently to continue to assist detained migrants through our Alternatives to Detention Program, as well as our advocacy work. We ask that you stand in solidarity with us and also work to ensure that the most vulnerable are protected.

So, while there does not appear to be an immediate need for housing, there is a clear need for advocacy on behalf of the detained families and there are likely local opportunities to assist with the families that were initially released (ICE reported that about 30,000 individuals in family units were released in the early weeks of the influx), as well as those families who are now caring for their children, nieces and nephews, etc. who arrived unaccompanied.

Here are a few things that you can do:

  • Reflect on Catholic Social Teaching on Migration. Pray that migrants all over the world are protect, provided with safe passages, and treated with dignity and respect.
  • Learn more about the issue of family detention by reading our backgrounder.
  • Advocate against family detention by contacting your congressional representative.
  • Contact your local Catholic Charities or other ministries that support immigrants and find out what support they may need.
  • For those located near the current family detention centers, consider providing pastoral or other services to the detained families (let us know at MRSHospitality@usccb.org
    if you are interested specifically in “visitation”)
  • Support the Alternative to Detentions program by donating to the National Catholic Fund for Migration and Refugee Services.

Caitlin Nuraliev

Program Associate

Migration and Refugee Services

United States Conference of Catholic Bishops

3211 4th Street, NE

Washington, DC 20017

MRS Vision Statement: “Creating a world where immigrants,  refugees, migrants, and people on the move are treated with dignity, respect, welcome, and belonging.”

Featured image credit: Los Angeles Times immigration detention report

Immigration vs Basic Income

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In a recent article about why a a guaranteed  income  won’t work in this country, Megan McArdle wrote that:

“There is no way that we are going to admit people to this country in order to hand them, and all of their descendants, a check for a thousand or two every month.”

It seems to be conventional wisdom that a basic income is incompatible with open borders.  Still, I am an advocate of both.  I understand that there is significant tension between them, so let me explain myself.

I may be preaching to the choir, but my primary reasons for supporting open borders are that I think it will result in increased economic activity, it will help many people escape poverty, and it may help avoid some of the tragic circumstances associated with living as an undocumented immigrant.

My reasons for supporting a basic income are probably a bit less familiar, and frankly they may sound a lot like some of the reasons that some people are opposed to open borders.  Namely, we have a duty to look out for our neighbors.

Just as we become vulnerable whenever we are close to someone emotionally, those who live near us gain a certain degree of economic and political power over us.  This is true even if they aren’t citizens.  If people work in our communities, the economy becomes dependent on them.  Thus, everyone who works has some degree of economic power in that they can refuse to continue working.  They also have some ability to actively disrupt economic activity.

Anyone who votes has political power, but even non-voters have some degree of political power because they can become part of a political conversation.  The closer they are, the more visible they are, the more likely it is that people will feel sympathetic to their concerns, and the more likely it is that political powers will take their interests into consideration.

Our duty to our neighbors becomes more pronounced in the face of high levels of inequality.  We cannot expect our neighbors to uphold the rule of law if they are starving.  What argument can I make to one who lacks food for their children that they ought not steal, other than the threat of violence?  Since my neighbors have power over me (for example, the potential to steal from me), I have a strong interest in making sure they respect the rule of law.  Thus, I have two options available to me in the face of high levels of inequality.  I can either increase my threats or I can make sure my neighbors don’t starve.

Let me clarify a bit about the moral responsibilities of starving people.  I personally am not a believer in absolute morality, but you might be.  I am not saying that you are wrong.  I am saying that if a moral relativist is starving and wants to steal from you, you are going to have a very hard time convincing them otherwise based on moral arguments.  The more desperate they are, the more that stealing (or cheating, or engaging in other anti-social behavior) might start to look appealing.

Pretty much every society uses some combination of both violence and welfare support.  But to the extent possible, I think we should always prefer the latter option.  Unless using threats is significantly easier than making sure people don’t starve, we should make sure people don’t starve.

So that is a basic outline of why I support a policy of providing a basic income for anyone living near me.  However, as Megan McArdle points out, giving everyone a basic income can cost a lot of money, and perhaps even worse, it can create a disincentive to work.

I do not take these issues lightly.  I believe that a disincentive to engage in productive work is one of the most serious downsides that a public policy can have.  Thus, my preferred basic income policy would take the form of a work subsidy (e.g., an expansion of the earned income tax credit program).

The simplest example would be to set some wage threshold, say $4,000 per month.  Anyone who accepts a job for less than this amount would be subsidized for half the difference.  Thus, for example, anyone who accepts a full time job that doesn’t pay anything would get a $2,000 check from the government every month.  People who earn more would pay taxes.

Such a program may have some enforcibility issues (people may take fraudulent full time “jobs” that don’t require them to actually do anything).  But people would still prefer to take higher paying jobs, and higher paying jobs would result in lower subsidies, so wage competition should mitigate some of the problems.

OK, so now that you know why I support a basic income, and what sort of basic income policy I prefer, we can get back to the original question.  Is this sort of policy compatible with open borders?

If it were the case that everyone who immigrated to the country just represented another $2,000 check from the government and tax revenues remained constant, the policy would clearly be unsustainable.  However, there is no reason to believe that the marginal immigrant has no impact on tax revenue.

The big question is: for a given level of immigration, are the marginal social externalities greater than or less than the marginal social costs?

I think most advocates of open borders tend to agree that in addition to the benefits that accrue to an immigrant from coming to the US, there are significant social benefits that are not captured by immigrants.  The simplest example is that those who hire immigrants profit from them.  So we should be asking ourselves whether immigrants are zero marginal product workers.

One of the big underlying reasons that I support open borders is that I think some societies are capable of employing workers much more efficiently than others.  That is, the same person working in the US has a higher productivity than they would if they were working in Haiti.

To the extent that workers are (sufficiently) productive, guaranteeing them a basic minimum income won’t really threaten to undermine our economic growth.  As long as our society keeps getting wealthier overall, we can support generous work subsidies.  Even if we don’t capture their productivity in income taxes, we can capture some of it in other ways (i.e., in taxes on the corporations employing them).  The problems arise if we end up guaranteeing the income of a bunch of non-productive people.

There are two parts to this problem.  The first is that people who are inherently non-productive may want to immigrate.  The second is that productive employment may require a certain level of capital, and immigration might outstrip capital growth.

Since I think that having high levels of local inequality is a big problem, I can see why one might be opposed to allowing a bunch of non-productive people into the country.  To mitigate this, we might only open our borders to those who can find productive employment.  But we shouldn’t let people into the country and then let them starve.  As long as people have an incentive to work, keeping people from starving is more efficient than keeping them in line using threats of force.

Limiting immigration to potentially productive people  won’t necessarily resolve the second issue (capital growth).   The main problem arises if there is some ideal level of immigration (based on the relationship between immigration and capital growth) and a basic income would push immigration levels past that limit.  While a basic income might impact actual immigration levels, I don’t think it will have a significant impact on the ideal immigration level.

Many open borders advocates question whether a sovereign nation has the right to control immigration levels.  I do not.  I think that letting people live near us gives them power over us and thus creates strong duties toward them.  It seems possible to me that some immigration scenario would actually overwhelm our society and economy, so we ought to at least think about what the proper level of immigration is.  However, I personally believe that allowing vastly more immigrants than we do now provides some “low hanging fruit” for economic growth and will improve many people’s lives.  If my belief that most immigrants are productive is true, there is no reason to think that allowing them to come would somehow undermine a policy of guaranteed basic income.

Basically, I don’t think that GDP is a zero sum game.  The more people we have, the bigger the pie will get.  As long as we don’t kill the goose that lays the golden eggs (that is, the ability of our economy to productively employ them), providing a basic income will be consistent with much higher levels of immigration.

Note: after reading Paul Crider’s recent post, I would like to note that while I do believe that IQ and culture have some impact on how productive immigrants might be, I am not an advocate of limiting immigration to those from certain countries or with certain job skills.  There are roles in the economy for many different kinds of people, and I don’t think the government should try to decide what kinds of labor we need to import.  I believe that the biggest threat to the “goose” is inequality that might result from having immigration rates higher than capital growth rates.  However, I also think that immigration is a cause of capital growth, so the relationship is complicated.

Immigration and Class Struggle

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Consider the following paragraphs from an article in Salon about a recent immigration proposal:

“The proposal, then, is to turn most of today’s illegal immigrants in the U.S. into a new, legally resident class of non-citizen foreign serfs. They will be allowed (i.e., compelled) to work for American employers. But they will be denied all the benefits that go to the working citizen poor. And none of them will be eligible to vote for a decade and a half, at the earliest.

Quite apart from its inhumane treatment of illegal immigrants, this proposal is a direct assault on the rights and interests of native and naturalized American citizen-workers. American citizen-workers are threatened by anything that creates a multi-tier labor market inside U.S. borders. Allowing workers with different levels of rights to compete for the same jobs in the U.S. economy permits employers to pit one category of workers against another. And when one group has fewer rights and less bargaining power, many employers will prefer to hire them rather than the workers with more rights and greater bargaining power.”

There are a few distinct strands here, but the basic idea is that we shouldn’t allow immigrants into the country under a system that affords them fewer rights than other citizens because a) it is inhumane to the immigrants and b) it hurts American workers.

Eventually, the article advocates giving “clean, swift amnesty followed by full, equal citizenship” to the undocumented immigrants that are here while hoping that “new waves of illegal immigration could be deterred in the future.”

The combination of preferring total amnesty for existing immigrants while deterring future immigrants seemed a bit contradictory at first to me.  Why consider the welfare of current undocumented immigrants over next years undocumented immigrants?

The answer is that I don’t think the welfare of immigrants is really the author’s driving consideration.  The author is considering immigration as one aspect of a class struggle between labor and capital:

Capitalists benefit from more unskilled immigration because it drives down wages. They prefer not to give the immigrants too many rights because this probably tends to raise reservation wages. Labor would prefer to keep out the competition, but if it can’t prevent immigration outright, they would rather have voting immigrant laborers join their side to bolster their political power.

In short, capital prefers high levels of  immigration and low levels of immigrant rights while labor prefers low immigration and high immigrant rights.

Of course, not everyone fits into these categories, so I present to you my two dimensional immigration Quadrant graph:

Immigrant Quadrants

Note that the origin of this graph does not represent zero immigration or no rights.  The axes just represent “more” and “less” along two different dimensions. Also, the representative groups are not necessarily the only inhabitant of their quadrant.  For example, territorialists also occupy the spot I have attributed to labor.  Finally, when I use the word “rights” I don’t necessarily mean that there actually exists a set of natural rights that everyone is entitled to. You can replace this axis with “privileges,” “entitlements” or whatever suits you.

Perhaps you don’t agree with my placement of labor in the lower right corner in the first place.  Before you object too much, let me concede that not all of those who identify with the labor movement would fit in this quadrant.  But I think there is a pretty significant trend in this direction.  See, for example, this rambling socialist essay noting that the AFL-CIO changed their position to one more in support of immigrant labor rights and sponsored a series of demonstrations in support of immigrant rights.  They go on to urge “immediate and unconditional amnesty for all undocumented workers” and even “a living wage of $12.50 and free universal health care.”  At the same time they concede that a demand for open borders would be an “obstacle to dialogue between socialists and native born workers.”  To help the poor in other countries they support “assisting in the economic and social development of poor countries.”

So, basically, they want to offer full citizenship and benefits to immigrants in order to achieve labor solidarity and prevent capital from pitting different groups of labor against each other.  But since high levels of continued immigration would drive down wages we need to slow the process down.  Granted, they don’t actually say we need to build a wall on the border.  Maybe they actually believe that global economic aid to poor countries will suddenly start to work.  But the overriding goal is labor solidarity and ultimately this requires accepting those who are already here and making sure that we don’t get too many more.

So, assuming you agree with my quadrants, there are a few things to note.  First, class struggle is relevant to the immigration debate, but it is orthogonal to the Open Borders/Nativism divide.  Second, open borders advocates usually don’t  insist on zero volume restrictions and full rights for immigrants — they often consider keyhole solutions that involve some trading off of volumes and rights.  And my sense is that most open borders advocates would restrict rights before restricting volume.  I am probably in this camp personally. The fact that so many people are willing to come here illegally is evidence enough for me that the benefits (for immigrants) of increased immigration are enough to justify sacrificing some political privileges.

So it seems my preferred immigration policy would probably be beneficial for capital and detrimental to labor.  Since I don’t really have a dog in that fight, maybe I should think more about ways of implementing immigration reform that explicitly favor labor, such as using immigrant fees to help support a guaranteed minimum income.

Or should I simply advocate the immigration policy I think is right and ignore the impact it might have on class struggle?

 

Poverty, International Aid and Immigration

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One of the main justifications for supporting open borders is that it has the potential to alleviate poverty.  But opening borders is not the first thing that comes to mind when people think of poverty reduction measures.  Most people tend to think of international aid programs. Trouble is, international aid isn’t that effective.

For a quick primer, see this report published by the Center for Global Development. The main points include the following:

  • International aid has four main objectives: stimulation of economic growth, strengthening local institutions, immediate humanitarian relief, and economic stabilization after a shock.
  • The evidence accumulated from numerous studies is that there is basically no correlation between international aid and economic growth even though many countries receive over 10% of their gross national income in aid annually.
  • Donors are faced with a significant Principal-Agent problem, which results in a lot of aid ending up in the hands of corrupt officials and useless bureaucrats, or being wasted in some other way.
  • There is some evidence that aid is (slightly) more effective when given to countries with better governance and policies in place, but this does not always correlate with who needs aid the most.

Basically, international aid doesn’t work that well in the long run. Interestingly, this does not mean that we are losing the war on poverty. In fact, according to this article in the economist, the world met the millennium challenge goal of cutting poverty in half between 1990 and 2015 five years early.  So how did it happen?

In a word, China. We are all familiar with the story of China by now. After China adopted meaningful economic reforms in the 1970’s, their economy exploded and millions of people got jobs in new industries making goods that are exported across the world.  What we don’t always take into account is that this massive economic growth depends on a massive level of economic migration.  Chinese cities have over 250 million migrant workers.  Some estimates claim that another 250 million will move to the city by 2025.  China’s migrant population will soon be greater than the entire population of the US.

China has hundreds of millions of internal migrants despite the fact that the government does not allow its citizens to freely move around the country.  Chinese migrant workers live under conditions similar to illegal immigrants in this country.  Millions of migrant worker children are not even allowed to attend school even though China’s leaders know that their urban industries depend on migrant labor.  Migration has been vital to China’s economic growth, but there is massive bureaucratic resistance to granting these migrants basic rights because of the strain it would put on local welfare and education systems.  Sound familiar?  Still, hundreds of millions of rural Chinese have decided it is better for them to live on the margins of an industrialized economy than to risk starvation in a backward agricultural area.

Despite government attempts to prevent it, migration has been a fundamental part of how the world has cut poverty in half.  The explanation is pretty simple. Prior to industrialization, pretty much everyone lives in poverty.  Individuals in agricultural societies don’t produce very much, and they are fairly evenly distributed across the land. Individuals who specialize in a modern economy are very productive but they need to live in close proximity to other people. Thus industrialization goes hand in hand with massive rural-urban migration.

China isn’t the only country that has been transformed by internal migration. 30 percent of India’s population are migrants, as that countries citizens search for better conditions. In Brazil, the urban population went from 36% to 81% of the total in the second half on the 20th century.  And of course, the United States has experienced several periods of migration that shaped our nation’s history.

When we talk about poverty reduction, migration should be the first word that comes to mind.  Of course, the movements discussed here have been internal.  Internal migration is a bigger factor than international immigration in global poverty reduction because it is easier for people to move around within their own countries (despite restrictions, as in China).  A few countries have both the massive rural populations and dynamic urban production centers that make economy changing rural-urban migration possible.  But many areas of the world are being choked off either because their rural population has nowhere to go or their aging economy lacks an influx of new workers.

The benefit of open borders is that it allows the process of industrialization and poverty reduction to proceed without artificial barriers.  The China miracle could become a comprehensive global solution to poverty.

 

Immigration and Cobb-Douglas: A Response to Eric Rasmusen

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Tyler Cowen recently linked to a piece by Eric Rasmusen about potential scenarios where immigration hurts the American economy.

Rasmusen considers a few variations on the Cobb-Douglas production function where the amount produced by the economy is given by the equation: $latex Q=L^{.7}K^{.3}$ where L is the total amount of labor and K is the amount of capital available for production.

According to this model, if L = 100 and K = 100, the total production is 100. Of this amount, 70 is divided among the laborers and 30 goes to owners of capital. If L increases to 140 due to immigration and K remains constant, total production increases to 126.6. 38 of this goes to capital, 63.3 goes to native labor and 25.3 goes to immigrant labor. So capital wins and native labor loses. The amount capital gains is a bit more than the amount native labor loses.

This is a pretty standard analysis, but we should note that it assumes that K remains constant. This is the sophisticated equivalent of assuming that the number of jobs is constant, so that when immigrants enter the country they take “our” jobs. In fact, the amount of capital devoted to production depends on demand, which depends on the number of consumers. Since immigrants are consumers in addition to laboersr, we can expect the amount of capital devoted to production to increase.

But this isn’t the biggest complaint I have with the paper. In his analysis of the standard Cobb-Douglas approach, Rasumsen makes some very confusing comments about the impact of taking the welfare of immigrants into consideration:

“What about the benefit to immigrants? Some readers will want to include those in the policy objective for the United States… Although American labor definitely loses, immigrant labor either wins or is unaffected. The aggregate benefit to labor can be negative because if foreign wages are just a little bit lower than American post-immigration wages, then the gain to the immigrant labor is very small, while the loss to American labor is unaffected and therefore exceeds the immigrant gain. In fact, one might expect that if there is open immigration and the amount of immigration is 40, it must be that wages in the other country are .63, i.e., immigration stops at 40 because foreign and American wages equalize. Suppose further that the rest of the world is large compared to America, so that the rise in wages elsewhere in the world as a result of emigration to America is trivial. Then, the immigrants have neither gained nor lost by immigrating to America. The only welfare effects are the loss to American workers and the gain to American capital-owners.”

This analysis is baffling. If we are using the Cobb-Douglas model to understand the impact of immigration on the US, let’s use the same model to understand the global impact. In particular, let’s assume that we have two countries. In the US, L=100 and K=100, so Q=100 just like in Rasmusen’s model. But then let’s assume that there is one other country where labor and capital are out of balance. That is, L = 1000 and K=50 with the result that Q=407.1. Total production between the two countries is 507.1. Now what happens if we open the borders between the two countries? Then we can combine L and K so that L=1100 and K=150. But we don’t simply add the Q’s. In fact, total production is now 605.1. We got an additional 98 production for free!

How did that happen? We even assumed that the US contribution to K didn’t go up in response to the open borders, a likely result that would push the numbers up even more (if K went all the way up too 1100, then production would go up to 1100 as well). The reason is that the best way to maximize output under the Cobb-Douglas model is to evenly distribute the capital among laborers, not to split it up in disproportionate pieces.

Of course, it remains true that if we prevent K from going up then native labor will suffer. In the closed borders regime, the 100 native laborers received a wage of .7 each and the 1000 foreign laborers got .284. Under the open borders regime, all laborers got a wage of .38. Again, this is because we assumed that K remained constant.

Rasmusen includes a few other scenarios in which not only does native labor lose, but net American output per person goes down. The most plausible of these is a scenario in which he assumes that the production function is a modified Cobb-Douglas function $latex Q=(L^{.7}K^{.3})^{.8}$, which represents the idea that we have diminishing returns to the combination of labor and capital. This could be due to a fixed amount of natural resources or land. In the basic model, the amount capital gains is more than the amount native labor loses. With this modified model, the amount capital gains from immigration is less than the amount lost by native labor.

The problem with this model is that it seems to run counter to experience. It would imply that as our population grows, there would be a very strong tendency for GDP per capita to decrease. That is, the result is not specific to immigration. It applies to any form of population increase. Our population has been growing steadily the nation was founded. Here is a graphic showing the results for GDP per capita:

Of course, Rasmusen doesn’t argue that any of his models actually represents reality. He is trying to explore scenarios in which immigration creates a net economic detriment to natives. In the basic model, cash transfers from capital to labor (e.g., progressive taxation) can be used to compensate native labor. In the modified scenario, the net loss to natives prevents such a program from working. Luckily, the model doesn’t seem very realistic, at least based on our historical experience.