I’ve been reading Paul Collier’s Exodus, and plan to write a series of posts in response to it soon. Meanwhile, I might as well lay the groundwork for that by jotting down a few reflections.

Here’s one. I’ve commented before on Robert Putnam’s research about immigration and social capital, or really, about ethnic diversity and social capital. He finds that in ethnically mixed settings people tend to “hunker down,” become less sociable, not only with other ethnic groups, but even among themselves. Putnam suggests, and Collier expands on the idea, that immigration could harm social capital. See our page on social capital decline. Also related are the writings of Hans-Herman Hoppe on immigration as “forced integration,” which I have previously responded to here. Thomas E. Woods recently wrote in this vein at The Freeman. Woods’ article, which contains phrases like “immigrants and the American bureaucracy that serves them” (!), is basically silly, but it does contain some serious ideas. In particular, Hoppe and Putnam have a point about “forced integration,” though it’s not the one they think they have.

Hoppe’s starting point is a “pure private property” society in which even streets are privately owned. This is completely unworkable, since it would create endless hold-up problems, and also unjust, since there is no just way for this kind of property regime to originate. As my theory of streets Principles of a Free Society elucidates, natural easements arise from people’s need to move onto and off of their property, and where these easements coincide to form streets, there is a place where over-lapping non-exclusive transit rights prevent individual appropriation. Consequently, no one can be excluded, including immigrants. There is some scope here for gated communities and other explicit contractual arrangements to “privatize,” as it were, streets that serve functions that go beyond mere transit. If a road also serves as a place for your club to meet and socialize, and no one outside the club has any claims on it, you might be justified in restricting access to it. That leaves some space in which Hoppian local communes, so to speak, might be carved out. But to say that immigration should be left to local communities to decide and then use that as a platform from which to demand harsh national immigration restrictions is absurd. Local communities are not, in general, well-defined. There would rarely be local agreement on whom to let in. Enforcement would be an insuperable problem. Some communities would choose to be largely open to the world, and would expand. The Hoppe plan would basically break down, resulting in some combination of open borders and local squabbling lead to the arbitrary denial to many individuals of the full and proper use of their own property. It is completely untenable to regard the mere entry of foreigners into the country, without the state using force to stop them, as “forced integration” by the state. Nativists are lying to themselves if they think is open borders advocates, rather than themselves, who are using force.

But if the government not only permits the entry of immigrants, but also requires native citizens to interact with them on equal terms, on pain of falling foul of anti-discrimination laws, then a complaint of “forced integration” has merit. More generally, all manner of state-mandated equal opportunity and anti-discrimination rules amount to “forced integration.” That’s not to say we shouldn’t have them. Here my attitude is ambivalent. On the one hand, anti-discrimination law is an extremely sinister extension of the state’s jurisdiction. If a classic liberal state only enforces contracts, an anti-discrimination state micromanages what contracts you can sign, and, worst of all, does so on very subjective and non-transparent grounds. On the other hand, the evil which anti-discrimination law in the US was instituted to deal with– the vast historic crime of slavery, and its legacy of segregation– was very great. I am inclined to feel that the state’s act in prohibiting private discrimination was an intolerable affront to the rights of private contract, and at the same time, that it might have been worth it.

Of course, we don’t know what would have happened if the state had simply abolished de jure discrimination on the part of the government, and left private discrimination to individual conscience and civil society. There has been a revolution in values over the past generation to the point where I highly doubt that much private racial discrimination would occur, even if it were absolutely legal. Perhaps the achievements of the civil rights movement could have been accomplished without the sinister extension of state power to micromanage private decision-making. Indeed, perhaps it would have been even more successful. After all, there is a sense in which affirmative action makes racism true. If a university deliberately seeks to hire a diverse faculty, it will face trade-offs between racial/diversity criteria, which favor minorities, and other criteria. Ceteris paribus, that will mean that minority faculty will be lower in quality in other respects. If that’s the hiring process, it will be quite rational for faculty to think, even if they wouldn’t dare say, “He’s black, so he’s probably not that smart.” That may not be a valid statement globally, but it will be valid locally, precisely because affirmative action engineers things to be that way. Of course, affirmative action violates the norm of color-blindness, and it would be difficult to imagine in what sense it could fail to be regarded as unfair. It may lead to resentment, but even if not, people are rational, and if conditions have been created such that there is a local negative correlation between minority status and intelligence, experience, conscientiousness, or whatever, then their beliefs will reflect that.

Discrimination is regarded nowadays as almost the one unforgivable sin. One is indoctrinated against it in school, as one is not indoctrinated against fornication, adultery, or even theft. This is very misguided. It’s highly questionable whether discrimination, in general, is even wrong. Consider the following three motives for discrimination:

1. Hatred of the other. You don’t hire, don’t want to work with, don’t want to be served by, don’t want to rent a room to, don’t want to sell to, etc., members of a minority group, because you hate them. You regard them as inferior and/or bad, and find interaction with them unpleasant.

2. Statistical discrimination. You are aware that many personal traits which are relevant to you as an employer, landlord, teacher, waiter, or whatever, and which are not easily observable, are correlated with race. You therefore make probabilistic assumptions about a person based on their race.

3. Desire to help. You feel particular liking and sympathy for members of your own group, however defined, and when you know that some action of yours, whether purely altruistic or partially self-interested, will benefit another, you are more eager to do it if the benefit is conferred on a group you specially love. You may or may not be a member of that group yourself.

Now, it seems pretty clear that discrimination which proceeds from motive (1) is bad. But it’s not clear that discrimination from motives (2) or (3) is bad, and it might even be good.

It can be proved that statistical discrimination is sometimes efficient. As an example, consider the well-known complaint that it’s harder for African-Americans to catch a cab. This might be because taxi drivers are racist in sense (1), but I doubt it. More likely, taxi drivers are engaged in statistical discrimination. Cab driving is a rather dangerous business, because among patrons there are a few bad apples who might rob or even kill you. Doubtless, the vast majority of black taxi customers are law-abiding, but it is nonetheless a statistical fact that crime rates are higher among blacks, so the cab driver runs a greater risk. From an economist’s point of view, a smart solution would be to allow cab drivers to practice statistical discrimination by charging black clients more! The higher price would compensate for the greater risk, and blacks would have just as easy a time catching a cab. By that logic, explicit racial price discrimination by cab drivers might make the world a better place. But we’re unwilling to tolerate that, so cab drivers probably optimize by avoiding black clients. The somewhat serendipitous nature of customer-taxi contacts– Did he avoid me or did he just not see me hail him?— makes statistical discrimination difficult to regulate. Statistical discrimination in hiring seems harder to justify, since a job application and interview would seem to provide better information than crude racial patterns can supply. But maybe not. If Irish, say, are particularly sociable, or Asians particularly conscientious, it might be a profit-maximizing strategy to discriminate in favor of Irish people for head-hunters and salesmen, and Asians for analysts and accountants.

As for discrimination in favor of one’s own group, this has several things going for it. First, it seems like a good thing if one’s job isn’t just a paycheck, but is about making the world a better place. One way you might make the world a better place is by giving someone a service, or a job, that they love. But knowing whether they love the service, or the job, will have a lot to do with knowing them. Maybe you know via ethnic networks that your co-national Mr. X really needs the job, whereas you have no way to find out whether outsider Mr. Y does. Second, working with someone you like and identify with might just be fun, in a way that working with a stranger isn’t. Third, there may be a tacit “gift exchange” dynamic in hiring an insider, which is missing in the case of an outsider. In short, discriminating in favor of insiders may build social capital, the merits of which Robert Putnam has amply explained in his writings even if he is too much of a cheerleader for it.

American society has won a massive victory over racism in the past few decades. This is something to be proud of. It is, by and large, a step forward for justice. And yet in many respects it has gone too far, and impinged too much on freedom of association. I suspect that is part of the reason for the social capital decline that Putnam has exhaustively explored in the course of his career. Anti-discrimination norms in both law and personal ethics have severely restricted our ability to associate with those we like associating with. We have imposed an arm’s-length principle on the realms of commerce and to a considerable extent civil society as well, and paid the price in lost fraternity and neighborliness. It may be a price worth paying as regards blacks, who really were terribly oppressed for much of American history. That is something to atone for. But only in the case of blacks. Non-discrimination is not a general moral principle. It is only tenuously related to justice. It is not wrong to hire a family man, or a single mother, in preference to a bachelor or bachelorette, on the grounds that they need the job more, or are likely to be more stable. It is probably right to suppress the urge to engage in statistical discrimination with respect to blacks, even when that means sacrificing a bit of profit, though I think cab drivers who avoid a real risk of being crime victims by not picking up black customers are probably justified.

Now, let’s bring this back to immigration. With respect to immigrants, lots of discrimination with motives (2) and (3) will be warranted. Immigrants will often lack the language skills, cultural understanding, and perhaps values systems to be suitable for certain jobs or inclusion in certain clubs. More subtly but no less importantly, types of immigrants may tend to lack certain traits. It’s unfair, in a sense, if private discrimination denies to certain immigrants opportunities for which they are really qualified, simply because the groups of which they are a part tend to lack suitable traits. But we can’t make the world perfectly fair. And all the private discrimination on earth could never come close to the unfairness of migration restrictions.

It’s absurd to exclude a person from a country on the grounds that if he comes, he’ll face private discrimination. If that’s a price he’s willing to pay, let him. Very likely, the opportunities from which he is excluded, he wouldn’t have wanted anyway. Meanwhile, native citizens who are forced to integrate with immigrants– meaning, not just to see them on the street, which involves trivial harm and no violation of rights, but to be forced to hire them, rent apartments to them, accept them in a school, etc.– do have a valid grievance. Something has been taken away from them. Possibly– it’s an interesting question– the optimal world would involve both open borders and anti-discrimination laws, and native citizens should just be forced to integrate with all manner of immigrants, regardless of the psychic cost. One thing is clear, though: if we think native citizens should be spared from forced integration, the way to achieve that is to permit them to engage in private discrimination against immigrants, not to exclude immigrants by force from the territory of a country.

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In an article at The Freeman, “Bring Back the Gilded Age” (part 1 and part 2), I argue that the Great Stagnation is a result of the exhaustion of the technological legacy of the Gilded Age, of which I claim that:

In the decades before World War I, sometimes called “the Gilded Age,”  institutions in America and Europe were more conducive to progress than they are  today. Old bonds of class and custom had lost most of their power to lock people  into traditional roles. Absolutist and arbitrary government had lost ground to  the rule of law. The limited-liability corporation had taken shape and was in  the ascendant. In short, capitalism had taken command. But socialism, communism,  progressivism, fascism, the welfare state, migration control, and other bad  ideas that bedeviled the twentieth century were still young and weak. The result  was a mighty wave of betterment of the human condition whose momentum carried it  well into the twentieth century—long after the eclipse of the nineteenth-century  liberalism that had set the wave in motion.

One of the features that made the Gilded Age more conducive to progress was open borders:

4. Open immigration. “Give me your tired, your poor / Your huddled  masses yearning to breathe free / The wretched refuse of your teeming shore /  Send these, the homeless, the tempest-tossed to me / I lift my lamp beside the  golden door.” The famous Statue of Liberty poem, written by Emma Lazarus in  1883, is still sometimes quoted with some patriotic feeling, but modern America  is unworthy of it. Not only does the United States turn away the vast majority  of applicants for immigration visas, but it especially discriminates against the  poor, homeless, huddled masses whom the Statue of Liberty welcomes in the poem,  in favor of the highly educated. In the Gilded Age, though, it described a  reality. Not only the United States but all of the world’s leading countries  kept their borders almost entirely open to immigration then, not so much out of  generosity, as because the bad idea that it is somehow acceptable to exclude  peaceful migrants by force from a country through a comprehensive passport  regime had not yet darkened the mind of man.

Considering that the United States was absorbing so many low-skill  immigrants at that time, the statistics probably understate the superiority of  U.S. economic performance in the Gilded Age, since productivity statistics do  not even capture the jump in productivity that occurs when a person from an  impoverished country in eastern and or southern Europe joined the population of  the much wealthier United States. But immigrants also contributed to U.S. growth  in several ways. First, then as now, some of the leading entrepreneurs, like  Andrew Carnegie, and inventors, like Nikola Tesla, were immigrants. Nowadays,  many advocate discrimination in favor of “high-skill” immigrants, but Carnegie  was not “high-skill” when he arrived: He was born in a poor weaver’s cottage in  Scotland. Immigrants also supplied a mass workforce and a mass market for  factory-produced goods. A great theme of nineteenth-century capitalism was the  drive for cheapness, as goods once enjoyed by the rich became affordable for the  masses. Today, the world’s poor are kept out of America, so it’s harder for  American capitalists to make fortunes by serving them.

It occurred to me after I sent the article to press that Henry Ford and Norman Borlaug might serve as symbols of innovation with and without open borders. The two men are arguably the greatest benefactors of mankind in the last 150 years or so. Ford, by mass-producing automobiles and bringing them within reach of the common man, was the single most important contributor to the upsurge in living standards which occupied the first few decades of the 20th century. Borlaug invented disease-resistant and high-yielding strains of wheat that vastly increased food production in many developing countries, and thereby averted the major famines that would have occurred due to population growth, without these increases in agricultural productivity. Borlaug has been called “the man who saved a billion lives.” But here’s the crucial difference: Ford was financed by venture capital, and ended up an extremely rich man; Borlaug worked with governments and private charities, such as the Rockefeller Foundation, and as far as a little online research has revealed, he never got rich. Why not? Because when poor people can come to America, as did millions of immigrants who became Ford’s customers, they become a lucrative mass market; but when they are scattered all over the world and living under governments whose respect for property rights is imperfect, you can’t make much money by serving them. Borlaug is a more appealing figure than Ford for not being in it for the money. But free-market capitalism with sophisticated property rights protection incentivizes individual effort and private capital to benefit the public. See my post “Innovation and open borders” for more on this.