Steve Sailer writes:

For many years, the Wall Street Journal editorialized in favor of a five word Amendment to the U.S. Constitution: “There shall be open borders.” So, I’ve long been interested in trying to estimate just how many people would move to the U.S. if this highly respectable policy recommendation were ever actually implemented.

George Borjas pointed out that about 1/4th of all Puerto Ricans moved to the U.S. mainland after open borders started. The flow was only slowed by granting immense tax breaks to American companies who set up shop in Puerto Rico.

Even without open borders, over one-fifth of all Mexicans in the world live in the U.S.

And, as I pointed out in VDARE in 2005, about five billion people live in countries with lower average per capita GDPs than Mexico.

So, open borders advocates ought to at least provide us with an estimate of what fraction of that five billion they would expect to immigrate here (assuming, for the sake of argument, that the effects of open borders wouldn’t diminish the appeal of the United States to immigrants, which it no doubt would)…

[quoting the New York Times] A 1986 compact gave the United States continued military access, while the Marshallese got the right to work and live in the United States indefinitely without visas. More than a third of the Marshallese — about 20,000 — have seized the opportunity.

I may attempt a numerical estimate of this sort at some point. But my main response to the concern about being swamped is that immigrants get surplus value from coming, and some of this can be taxed away to hold native harmless, for example via DRITI taxes. A few very crude calculations may illustrate.

1. Suppose the 1/3 rate from the Marshall Islands applied to the 5 billion in countries poorer than Mexico. Roughly 1.5 billion immigrants come to the United States, where they earn average incomes of, say, $40,000. (This is a concession to Sailer’s suggested assumption that “the effect of open borders wouldn’t diminish the appeal of the United States to immigrants.” If immigrant incomes fell sharply under open borders, though this is plausible, Sailer’s assumption wouldn’t come close to holding.) In this case, immigrants would be earning $60 trillion of GDP. If we tax this income at a 10% rate, that gives us $6 trillion with which to compensate natives. If we distribute this among (roughly) 300 million native and naturalized citizens, we could pay out $20,000/year to every citizen, or $80,000 to every family of four. Alternatively, we could structure it progressively, with, say, $50,000/year minimum income for every citizen, which would then be reduced by 25% of labor income, so that individuals earning $200,000/year or more would get no benefit. For the moment I’m assuming that (a) all currently existing taxes remain in place, (b) immigrants pay currently existing taxes in addition to the surtax, and (c) government spending per capita remains roughly constant. But very likely the best plan would involve large tax cuts, and government might be able to provide services to a larger population without a proportional increase in its costs. I’m talking about the medium-to-long run here. Granted, to scale up the US population by six quickly would be difficult.

2. Suppose, more conservatively, that 1/10 of the people in countries poorer than Mexico, i.e., 500 million, moved to the US, and earned an average of $20,000/year. That’s $10 trillion of immigrant-generated GDP. We could tax that at a 20% rate and get $2 trillion of GDP, enough to pay benefits averaging $20,000 per person per year to the poorest one-third of Americans, in cash and in kind.

3. Maybe the “worst case” scenario is if a whole lot of people come but don’t earn much. Suppose 2 billion people immigrate to the United States and earn an average of only $10,000. That’s $20 trillion of immigrant-generated GDP. We could tax that at a 15% rate and get $3 trillion worth of revenue with which to hold harmless native-born US citizens (now a small minority of the resident population), for example by providing benefits at an average rate of $20,000 per person per year. Owners of real estate– that’s most Americans– would enjoy huge windfall gains by selling out to developers as the greatest building boom in the history of the world erected teeming hordes of tenements to house the huddled masses. Water prices would probably rise a lot, and huge quantities of food would have to be imported, but on the other hand, many, many factories would open, as the US would swiftly rise to overwhelming dominance in manufacturing. Not only affluent families, but probably unemployed natives dependent on transfers from the government, could hire personal servants.

As I said, these estimates are crude, even fanciful, and I’m not sure how useful it would be to attempt to make them more precise. (For example, do the costs of government scale linearly, super-linearly, or sub-linearly with population? An interesting question, but too controversial for any answer to be of much help– though “linearly” would be my first approximation.) It seems clear open borders wouldn’t be introduced overnight in this fashion. In all the scenarios suggested, native-born US citizens would comprise an absolute minority of US residents, and within US residents, transfers would be going from the relatively poor to the relatively rich. Would such an arrangement be politically sustainable? Well, there are plenty of precedents, e.g., pre-revolutionary France. But that parallel might suggest another danger: a kind of immigrant French Revolution, with the huddled masses overthrowing the privileged natives by force. Having raised that specter, let me add that it is not a remotely plausible threat for now. Anyway, the crude calculations should make it clear that as far as the mere economics are concerned (putting institutions to one side, and assume one doesn’t scruple to redistribute surplus value through tax-and-transfer policy), the upsides of being swamped swamp the downsides.

Nathan Smith

Nathan Smith is an assistant professor of economics at Fresno Pacific University. He did his Ph.D. in economics from George Mason University and has also worked for the World Bank. Smith proposed Don’t Restrict Immigration, Tax It, one of the more comprehensive keyhole solution proposals to address concerns surrounding open borders.

See also:

Page about Nathan Smith on Open Borders
All blog posts by Nathan Smith