With Open Borders, Should Governments Facilitate Migration?

Michael Strain of the American Enterprise Institute has suggested helping America’s long-term unemployed by having the U.S. government subsidize their relocation from areas in the U.S. with poor labor markets to ones with stronger markets.  He states that “many of the long-term unemployed living in, say, New Jersey would likely have a much easier time finding a job in North Dakota.”  Noting that many of the unemployed don’t possess the resources to move, Mr. Strain states that the subsidies would cover a majority of their moving expenses.

Similarly, should governments of advanced countries subsidize the relocation (or even cover the total cost of moving) of destitute foreigners into their countries as part of open borders policies that hopefully will one day be adopted?  An impoverished Bangladeshi would seem to have even less ability to move to an advanced country than an unemployed resident of New Jersey would have to move to North Dakota, even without legal barriers to migration.  An impoverished Bangladeshi also would have greatly improved opportunities to better her economic situation in an advanced country.

There are many powerful moral arguments supporting open borders, but what are the ethics involved in helping individuals immigrate?  While this question does not appear to have been explored, one argument for open borders would seem to easily incorporate migration assistance into its case for unimpeded movement.  Joseph Carens  of the University of Toronto, using John Rawls’ question about what laws people would adopt if they knew nothing about their personal situations, concludes that people would choose the right to migrate since “it might prove essential to one’s plan of life…”   Since many impoverished people might not be able to take advantage of open borders, people who know nothing of their situations would probably support both the right to migrate plus government provided relocation aid to those who need it.  This  would ensure that if they were one of those needing aid they would have the opportunity to improve their lives through migration.

The moral philosopher Peter Singer’s  drowning child parable also seems to suggest that relocation aid for would-be migrants would be morally obligatory.  In the parable, which is meant to help Mr. Singer’s students “think about the ethics of what we owe to people in need,” a student sees that a child is drowning in a shallow pond.  Saving the child would be easy, although the student’s clothes would get muddy and, having to change clothes, the student would miss their class.  Mr. Singer notes that his students unanimously agree there is an obligation to rescue the child.  In addition, most students agree that it would not make any difference “if the child were far away, in another country perhaps, but similarly in danger of death, and equally within your means to save, at no great cost–and absolutely no danger–to yourself… distance and nationality make no moral difference to the situation.”  He then suggests that citizens of advanced countries can, at little cost, save lives in the Third World through donations to aid agencies, just like the student can easily save the life of the drowning child in the parable.

Some people desiring to migrate to an advanced country may be truly in mortal danger, whether through starvation or persecution, and helping them migrate would save their lives.  Like in Mr. Singer’s parable, citizens of advanced countries, acting through their governments, could help some of them migrate to their countries at little cost.  Thankfully most would-be immigrants aren’t in such dire situations, but many could see vast improvement in their lives by being able to migrate with the help of advanced countries.  (Would-be immigrants who aren’t in immediate danger would generally be easier and cheaper to assist than those who are starving or being threatened with violence.)  Furthermore, arrangements could be made for the migrants to reimburse governments for the migration assistance, perhaps through garnishment of wages from jobs they find in the advanced countries.

Other supporters of open borders may have a different perspective on using government funds to assist migration.  The economist Bryan Caplan writes that “Yes, you have an obligation to leave strangers alone, but charity is optional.”  Having a government compel its citizens to pay for the relocation of migrants from other countries into their country may not be morally justifiable in his opinion.  Private funding of migration would probably be Mr. Caplan’s preferred approach.

With the advent of open borders policies, perhaps aid organizations would shift their focus from providing help to the needy in the countries where they live to providing migration assistance that would allow individuals to move to advanced countries where they could help themselves through work.  Perhaps organizations or businesses in the home countries of would-be migrants would provide loans to help them emigrate, although in some instances these arrangements could be abusive.  Should these entities provide the resources necessary for people to migrate, then the question of migration support from governments of the advanced nations would be a moot point.

However, these resources from private sources may be insufficient to meet the needs of all who wish to migrate.  The availability of government support would help ensure that all those who wished to migrate could do so.  Unlike private entities, governments could also more easily employ transportation assets to facilitate migration, such as the U.S. sending ships or planes to Haiti to collect migrants and bring them to the U.S.

Under open borders, related questions also arise.  In countries with murderous conflicts like the one in Syria, should advanced countries intervene to create safe passages for those who wish to flee the countries and settle in a different country, most likely an advanced one?  Should advanced countries punish countries like North Korea that forbid or severely impede emigration?  Hopefully open borders will be embraced in the not too distant future, and questions about the extent of government facilitation of migration will constitute the debates citizens in the advanced countries have over immigration.

In a future post, Vipul will discuss whether migration flows under open borders would be too large, too small, or optimal.  Government intervention to facilitate migration would be another factor when considering the amount of migration under open borders.

The image featured at the top of this post is a 1917 painting depicting Armenian refugees at Port Said, Egypt.

Against conflating open borders with other migration-related beliefs

For a lot of people, both “pro-migration” and “anti-migration” people, questions about how open the borders should be are almost synonymous with their answers to questions such as:

  • Do you believe that immigration (or its correlates, such as diversity of various sorts, or a larger population) is good for your country?
  • Do you believe that having more people, or people of diverse (races/religions/ethnicities) is consonant with the values of your country?
  • Do you identify with the idea of having more people, having immigrants, and/or having people of diverse (races/religions/ethnicities)?
  • Do you think immigrants are really awesome people?

The reason for the perceived equivalence in most people’s minds is, I think, that people:

  • fundamentally concede the state’s authority to have carte blanche control of migration,
  • view moral obligation to migrants per se as having minimal relevance, so that the decision of how to answer these questions is driven more by one’s belief about the benefits to current citizens and/or one’s general mood affiliation with the sort of people one wants to be physically close to, and
  • link the question of the morality of migration restrictions in a strong way with how much they like migrants or consider them exemplars of virtue.

I think that it’s somewhat unfortunate that people conceptually conflate these questions. Just to clarify:

  • It’s not unexpected or unfortunate that people’s views about the effects of migration correlate with their views on open borders — clearly, if you’re a hardcore consequentialist, then effects are all that matter, but even if you mix deontology and consequentialism, consequences have some relevance.
  • It’s also not unexpected that many open borders advocates have resoundingly positive views about how nice immigrants are, or how much they enjoy interacting with immigrants, or how good immigration is for their native economies. Both the objectively measurable and the subjective aspects of these may well be true. I’m not being critical of people for holding these views while simultaneously supporting open borders.
  • It’s more unfortunate that the focus seems to be on hinging the case for open borders on a framing that views migrants, or potential migrants, as a tool to enrich oneself, or provide one with diversity value, and setting unusually high standards of belief about the awesomeness of migrants (which may well be satisfied in some circumstances, but would not be robust to significant liberalization of migration).

When I say that both pro-migration and anti-migration people seem to make this mistake, I’m not trying to make a half-hearted attempt to be evenhanded — I think that in some ways, pro-migration people might be more susceptible to these problems in how they articulate their case. Part of this is seen in pro-migration forces congratulating themselves on being less bigoted and more tolerant of diversity than their anti-migration counterparts. But a bigger aspect might be the extent to which they tend to valorize migrants as uniquely awesome and courageous people in a manner that suggests that such beliefs are central to the arguments for free migration. “The immigrant works 16 hours a day to send money to his family, and you don’t want to let him in!” This can certainly be a valid counterpoint to the claim that migrants are lazy, but ultimately the point worth stressing is that lazy people have the right to freedom of association as well.

Apart from people debating the merits of migration, many social scientists seem to reinforce this conflation in their analyses of attitudes to migration. This type of conflation isn’t unique to migration — for instance, beliefs about the abilities or moral character of people of different races, and beliefs about how helpful it is to have people of different races around, are often treated as proxies for attitudes to treatment of people based on race, with all of them being grouped under the comprehensive header of racial attitudes.

I’m not the first to make this point. Responding to commenter Brian, Bryan Caplan had written this:

For many other important libertarian issues, appeals to self-interest are factually correct but, to use Brian’s word, “unworthy.”  Immigration is such an issue.  Yes, doubling GDP by opening world borders will enrich most people in the First World.  But these economic benefits for First Worlders are not the main reason why I advocate open borders.  The main reason I advocate open borders is that immigration restrictions are a terrible injustice against people from Third World countries.  Once someone retreats to, “Yes, immigration restrictions are a terrible injustice, but doing the right thing would be very costly,” I’m happy to delve into the social science with them.  Until then, they’re just missing the point.

Similarly, when writing about Mark Zuckerberg at the time of launch of FWD.us, co-blogger Nathan Smith had written:

Immigrants who are sort of dumb and/or a bit lazy can also gain by coming here, and we can gain by hiring them, renting them accommodations, selling goods to them, maybe even marrying them (e.g., if we have no other marital options, or if in addition to being sort of dumb and/or a bit lazy, they’re beautiful and nice). Meritocracy has its place, but is there really a good reason for the mere right to reside in the US to be allocated in a meritocratic fashion? And even if you want to discriminate in favor of the “smart and hardworking,” how?

Yet I think the point can sometimes be forgotten.

What do other think of the extent to which such conflation occurs? In particular, I’m curious to hear people’s views on questions such as:

  • Do you think such conflation is more common among pro-migration or anti-migration people? My impression is that it’s about equally common on both sides.
  • How do you think moderate pro-migration forces and radical open borders advocates compare with respect to such conflation? My impression is that moderate pro-migration forces engage in it more, because they do not fully embrace the moral presumption in favor of free migration, so see migration policy as more closely tied to beliefs about the virtue of migrants or how much they think natives can benefit.
  • Do you think the conflation is epistemically unsound? How unsound is it? Just a minor matter, or as serious as I’m making it out to be?
  • Do you think such conflation has strategic benefits when appealing to a large audience, and is that one reason why many people engage in it? I think that when appealing to larger audiences (that tend to take a more citizenistic perspective), we’re tempted to conflate the issues, and this might lead to corrupting (in my judgmental view) our own thinking on the subject as well.

PS: The Frameworks Institute has put out some memos on immigration where they claim that talking about the goodness of particular migrants actually makes listeners more resistant to migration liberalization, because once they start thinking about the moral character of migrants, they are also reminded of the bad ones, and the bad stuff is more salient in their decision-making process than the good stuff. The Frameworks Institute calls this the “Bill Cosby effect.” What they suggest is emphasizing moral arguments as well as general “the economy will grow”-type arguments. I blogged about the memos a while back.

Slippery slopes to open borders

One of the topics that came up at the Open Borders Bay Area Meetup (Sunday January 12) was the idea of slippery slopes towards open borders. My post is based on ideas raised in the discussions, but since the participants’ comments were largely off the record, I’ll take full responsibility (but not necessarily credit) for everything I write here.

Immediate, unconditional open borders, or even something fairly close to it, is unlikely to materialize in the near future. From a practical perspective, then, the best route to open borders is a long series of gradual steps. One key concern of people who have their eyes set on the end goal of open borders is that the first few steps should make future steps easy to achieve. A path that is ostensibly in the direction of open borders, but where the first few steps might lead to a shift backward (such as a nativist backlash that turns public opinion against more liberal migration) would be a bad path. A better choice would be a slippery slope: one where the initial steps may not necessarily look as “extreme” as open borders to the people who might object to them, but once those steps are taken, the next steps towards open borders become easier to accomplish. (UPDATE written after the post was drafted: Tyler Cowen’s recent post makes this type of backlash argument to explain a Swiss referendum to restrict immigration from the EU; see also responses from Bryan Caplan and Jason Brennan).

Some possible slippery slopes

  • Gradual expansion and merging of free migration zones: For instance, the EU is a free migration zone for European countries, and it is gradually adding countries. Suppose the United States and Canada created their own free migration zone, Southeast Asian countries created their own free migration zone, and a few free migration zones emerged in Africa and Latin America (South America). The US-Canada free migration zone could, after some time, add Mexico and the Caribbean Islands, and then merge with the South American free migration zone. The European free migration zone could eventually merge with the new unified American migration zone. Over time, as the threat of terrorism, and the subjective sense of the threat, receded more and more into the past, the Gulf states could merge with the European free migration zone. And so on, until eventually the whole world would be a free migration zone.
  • Gradual lowering of admissions standards for migrants: The idea here would be to begin with complete open borders for migrants who meet a particular skill level threshold or income threshold, and then to gradually reduce the threshold over time, either directly, or by failing to index for inflation, or by relying on global economic growth. A plausible argument for why this might work is that high-skilled and high-income migrants lead to fewer problems, both real and perceived, for natives, making the natives somewhat more pro-migrant (based on their experience interacting with migrants so far). It might therefore be easier to cross historical thresholds of migrant proportions in the population without any visible difficulties experienced by natives. Australia, Canada, and Singapore might be examples to look at, and it would be interesting to see the extent to which they avoid the nativist backlash phenomenon through an initial focus on high-skilled migration.
  • Gradual increase in quotas: Hard quotas in various migrant categories may be gradually expanded, and new categories that permit more general forms of migration may be added, initially with low numerical caps but with the caps steadily rising. Although this could in principle be huge, it doesn’t seem to have had much slipperiness historically in and of itself.
  • Family reunification, with a gradually expanding definition of “family”: Family reunification may begin small, with, for instance, the spouses or children, then it may expand to siblings, parents, or cousins, and finally it may expand to close friends or anybody whom a resident can provide some sort of sponsorship guarantee as a “personal acquaintance.” For a fixed definition of family, too, the amount of “chain migration” can be significant, and although insufficiently slippery to get to open borders all by itself, it can act as an amplifier to any other slippery tendencies. Quantitatively, this has been significant in both the US and Europe, and quite difficult to stop, even though governments have often attempted to crack down on various aspects of family reunification to prevent what they see as abuse.
  • A tariff/tax scheme with a gradually declining tariff or tax rate: A DRITI-type scheme that begins with high surtaxes and high mandatory savings, to a level that meets the concerns both of restrictionists and people who want the government to earn revenue. If the revenue-earning part of it goes well, that would create a strong impetus to create and expand the program, and lower the surtaxes and mandatory savings in order to attract more migrants and generate more revenue. Even though staunch restrictionists may oppose that second step, governments and the majority of voters may have become too addicted to the revenue streams and expanded economy size afforded by the program to backtrack from it. Over time, the rates would come down to the point that it would look more like a bureaucratic inconvenience than a program specifically designed to regulate migration. At this stage, general egalitarian concerns, or general philosophical views about taxation, may take over and lead to an abolition of the surtax and of the forced savings program.

Reasons for continued slipping

  • Growing tangible benefits (real or perceived) feeding into growing support for more migration at the margin: People see tangible benefits from the expansion so far, and want to keep going further in that direction. This may be because the constituency that has been created by partial expansion of migration is more eager for further expansion than the original set of natives (for instance, recent migrants might favor more liberal migration policies — something that seems empirically borne out). It may be because people get addicted to the revenues from a DRITI-like scheme and feel the need to expand it.
  • Support for steady expansion as long as there are no tangible or major harms, based on a presumption that ceteris paribus, allowing more people to migrate is better: People don’t actually see much by way of tangible benefits, but they don’t see any tangible changes at all, so, given that they concede some sort of “presumption in favor of cautious expansion of migration as long as there are no visible drastic damages” they are happy to let it expand. Or perhaps the people aren’t even that aware of the exact state of things, but their representatives in government are willing to let migration gradually expand barring any unexpected developments.
  • Slippery slope in people’s perception of the forms of migration that morality or justice require should not be forbidden: Each step in the slippery slope changes people’s perception of the moral necessity of open borders. For instance, people may go from “it’s unjust to forbid somebody from migrating if they have family in the country or are fleeing persecution” to “it’s unjust to forbid somebody from migrating if they are going to be a net fiscal plus for the nation” to “it’s unjust to forbid somebody from migrating if they’re honest and hardworking” to “it’s unjust to forbid somebody from migrating unless it can be demonstrated that they pose a significant threat to the life and liberty of people in the country.”
  • Increasing share of the decision-making population that has a personal positive connection with migration: Migrants tend to be somewhat more pro-migration than natives (see the quote below), so increasing the proportion of migrants would increase the proportion of residents with pro-migration views. This may not have much effect alone, because migrants may be ineligible for direct participation in political decision-making, but they could influence the views of others they interact with. Natives who interact with migrants on a personal level may also become more pro-migration simply because of the “human face” of the issue, even if the migrants themselves don’t try to convince them. The children of migrants are also somewhat more pro-migration than natives. A caveat: the support for further migration may be limited to the migrant’s ethnic, racial, or religious group or socio-economic class.

The following quote from Bryan Caplan’s Cato Journal piece is relevant to the assertion made above about migrants having more pro-migration views:

Finally, there is at least one issue where immigrants are sharply more libertarian than natives: immigration itself. Materially, recent immigrants have the most to lose from additional immigration. Ottaviano and Peri (2008: 59) estimate that immigration from 1990–2006 depressed foreign-born workers’ wages by over 7 percent. But immigrants, like human beings generally, do not derive their political philosophies from material self-interest (Mansbridge 1990). The General Social Survey asks respondents to put their views on immigration on a 1–5 scale, with 5 being most hostile. People with two native-born parents have an average response of 3.9, with a
median of 4; people with at least one foreign-born parent have an average response of 3.1, with a median of 3. By way of comparison, people who call themselves “extremely liberal” have an average response of 3.3—versus 4.0 for the “extremely conservative.” People with foreign-born parents rarely favor open borders, but economists
and libertarians aside, no one is less opposed to immigration.

Reasons why we might expect slipping to not happen

Slipping is not an inevitability of nature. Without concerted effort, it may not happen. Some reasons:

  • It is very difficult to keep making changes steadily. In general, we should expect change in fits and starts.
  • As the proportion of migrants in the population reaches historically unprecedented levels, migration becomes a lot more visible as a phenomenon. Even with a moderate level of anti-foreign bias, people are likely to blame migration for any problems that arise. Also, appear to historical analogy fails to be a powerful argument for further expansion. The possibility of nativist backlash remains strong, and recent pushback to migration in the UK and Australia might be evidence of some natural limits in the amount of migration people will naturally tolerate given their current beliefs about how the world works.

Braking mechanisms

Braking mechanisms could matter for two reasons. First, we may be genuinely unsure of the extent to which open borders would be a blessing, even if we think it’s quite likely to be one. In this case, having a slope that slips by default, but that can be braked if things are turning out badly would be helpful. Just how much importance we place on a braking mechanism depends on what level of badness we deem sufficient to halt further progress. That level could vary between hardcore open borders advocates and people whose support for free migration is highly conditional to specific consequences.

Second, even if we (as open borders advocates) don’t believe that the braking mechanism would be necessary, others who are more skeptical of the change might be reassured by the presence of a braking mechanism. The braking mechanism would be like the chain passengers can pull for emergency-braking in some trains: it is rarely pulled, but its presence adds to the (perception of) safety (though the analogy also highlights that the braking mechanism may end up getting used for spurious reasons, just as miscreants misuse emergency brakes to get down wherever it’s convenient for them).

There could be different senses of braking and reversal:

  • Outcome reversal: Additional migrants who have come in through the expansion so far are deported, bringing the situation as close as possible to how it would have been if the expansion had never occurred. Note: This isn’t intended to endorse such “outcome reversal” as either moral or even practically feasible; see the discussion below.
  • Policy reversal: The migration policy for new migrants reverts to what it was before we started slipping the slope, but people who already migrated under the temporarily more liberal migration policy are not forced to leave. A slight variant of policy reversal, that I call punitive policy reversal, would be where policy is not just reverted, but made even more strict than it was in the past until such time as we effectively have an outcome reversal. For instance, if quotas are doubled for the next three years, and people then want to reverse the effects, quotas may be set at zero for the three years after that, and then returned to current levels. Note that punitive policy reversal can accomplish outcome reversal only in cases where the original quota was nonzero, and is best suited to numbers-based increases rather than the addition of totally new categories of migration.
  • Policy freeze: The policy remains stuck at the new, expanded level, but further expansion becomes difficult.

(For the mathematically inclined, each sense references the derivative of the preceding one with respect to time).

(For an example of confusion that arose because of people in a conversation talking of reversibility in different senses, see the comments starting here).

Outcome reversal is nearly always difficult and often impossible to accomplish directly. Even if it were possible to force all the additional migrants to leave, the level of (visible) coercion and disruption necessary could give pause even to people highly critical of the expanded migration policy. Even those who wish to accomplish outcome reversal may end up suggesting the route of punitive policy reversal. Policy reversal is somewhat easier to accomplish if people feel the expansion has not worked well. Policy freeze, where further liberalization of migration is blocked, might be the easiest in so far as status quo bias argues in favor of it.

  1. Gradual expansion of free migration zones can be stopped by the participating countries, even though it would be relatively hard to undo an existing free migration zone. Outcome reversal is near-impossible, policy reversal is very difficult, but policy freeze is relatively easy.
  2. Gradual lowering of admissions standards can be stopped, and even reversed, if the results are deemed bad. Outcome reversal is near-impossible, policy reversal is of moderate difficulty (less so than with free migration zones), and policy freeze is relatively easy.
  3. Gradual increases in quotas can be stopped, and even reversed. Outcome reversal is near-impossible, policy reversal is of moderate difficulty (perhaps a little easier than with admissions standards, because “how to get in” is anyway a sufficient mystery that people don’t feel they are being deprived of something they were definitively promised), and policy freeze is relatively easy. Note that punitive policy reversal can be accomplished in principle in cases where the original quota was substantially greater than zero anyway, and would be easier than outcome reversal through deportation, but would still be pretty difficult.
  4. Family reunification would be difficult to undo. Outcome reversal would be near-impossible, policy reversal would be fairly difficult (though not impossible, and it might be easier to partially reverse at later stages), and policy freeze would be relatively easy.
  5. For tariff/tax schemes, a continued reduction in the tariff or tax rate will happen only if there is sufficiently high revenue (so that it’s a quantitatively significant source of revenue, making revenue considerations more important relative to other considerations) plus strong evidence to suggest that lowering the tax or tariff rate would attract even more revenue by increasing the “customer” base considerably. Here, outcome reversal is near-impossible, while policy reversal and policy freeze are relatively easy.

The type of braking mechanism available for the policy might be a consideration in the choice of slippery slope. If you’re fairly confident that the braking mechanism is more likely to be abused than used out of necessity, then it makes sense to choose a slippery slope where braking is harder. If, on the other hand, you anticipate that the initial stages could reveal information that could lead to the need to brake, it makes sense to choose a slippery slope where braking is easier.

The utility of different slippery slopes in relation to estimates of the global impact of open borders

In a recent post, I argued based on Carl Shulman’s post that, since existing estimates of the global economic impact of open borders rely on more people moving than may be realistic, estimates may have to be adjusted downward to 20-60%. Whether this affects the overall utility of a particular partial move towards open borders depends on whether that move is targeted at increasing numerical caps on how many people may move, or at removing other policy barriers to movement (whose effect in terms of the number of people that move at the margin might change once we correct our estimates). In the Drake equation language, we are interested in the product $latex Wxy$, and the downward adjustment of $latex W$ might be accompanied by different compensating adjustments for $latex y$ depending on the sort of measure. The sensitivity of expected utility to uncertain estimates of the global economic impact of open borders might be a consideration in comparing different slippery slopes.

Slippery slopes versus keyhole solutions

On this site, we’ve discussed keyhole solutions a lot. Some people might use “keyhole solutions” and “slippery slopes” interchangeably, but there is a difference:

  • A slippery slope involves a series of steps with each step liberalizing migration relative to the previous one, and with the end goal coming reasonably close to open borders. It represents a means or path.
  • A keyhole solution is a (typically policy-based) modification of pure open borders that addresses a significant real or perceived problem with open borders while disrupting open borders as little as possible. It represents an end goal.

Slippery slopes and keyhole solutions could be related: the final stages of a slippery slope might resemble “open borders with a keyhole solution” and the initial stages might also be so described if “keyhole” is interpreted very generously. Also, some keyhole solutions with adjustable parameters (such as the surtax and mandatory savings parameters in DRITI) may lend themselves to a slippery slope: begin with highly restrictionist values of the parameters (so restrictionist that it would be a stretch to call it a “keyhole solution”), then gradually move the parameters in the direction of open borders.

PS: Also relevant is our moderate versus radical open borders page and Joel Newman’s blog post If Open Borders Are Instituted Gradually, What Should Be The Initial Number of Immigrants Admitted?
Thanks to Carl Shulman for helpful comments on a draft.

Open Borders the website: penetration with Internet libertarians

This post was originally drafted in October and November 2013. I have kept the post largely as is, with some updates clearly marked as such. At the time of my late October 2013 editing round, the page had between 750 and 800 likes, it now has over 1000 (see historical Facebook data for more context).

Clarification: This post concentrates on the reach of “open borders” among “Internet libertarians” but I don’t intend to indicate that this is the only target audience for the site. So far, Internet libertarians, and people who are at the edges of that category, have been a major source of likes and engagement for the site. I expect that Internet libertarians will continue to have a high, but (proportionally) declining contribution to the like counts for the site.

A few weeks ago, I played around with Facebook Graph Search with the goal of trying to figure out how close Open Borders: The Case is to exhausting its potential target market among various segments of the world population. None of the findings were particularly surprising, but I think they’re still worth recording and sharing. The numbers here relate somewhat with my discussion of open borders and the libertarian priority list (part 1 here, part 2 here, part 3 pending). They also relate with the Drake equation-style estimation of the value of open borders advocacy. However, in this post, I’ll concentrate mostly on reporting the numbers, along with a bit of background on my prior speculation and my speculation after seeing the numbers.

My prior views

Prior to looking at these numbers, I had been of the view that there’s a broad category of person called “Internet libertarian” who likes websites that make arguments from libertarian premises, and that:

  • Of the category of “Internet libertarians”, a reasonable percentage (say 10%) would be in a position to like Open Borders: The Case if they came across the site and browsed it a decent bit. When I talk of “the site” I mean the site as it currently stands, without any changes being made to tailor to the audience. Note that my guess would be that about 50% of Internet libertarians would claim to be for radically freer migration in principle, but only about 20% would care about the issue sufficiently to be willing to publicly like our site.
  • My original estimate of “Internet libertarians” was that it would be something in the range of 50,000 (I was going off the estimates of how many people like mainstream libertarian-leaning websites and looking at the lower end of the range).

Combining the above, my original estimate was that there would be about 5,000 “Internet libertarians” who would be willing to like the site if they came across it and read it a bit. As of the time of writing this post, the website has between 750 and 800 Facebook likes. This suggests that there would be low-hanging fruit of about 4,000 people who would be willing to like the site more or less as is, but simply haven’t yet encountered the site (or have, but not for long enough or frequently enough to consider hitting the “Like” button).

My views after looking at the data

Although the numbers don’t definitively falsify the hypothesis, a close look at the numbers did lead me to update my model. My overall conclusion (POOTA numbers alert): is that one can subdivide libertarians into roughly three clusters (note that the clustering is quasi-arbitrary, and there is in reality a continuum, but it’s easier pedagogically to frame things in terms of clusters):

  • A core (perhaps 2,000 people or so) of relatively hardcore libertarians — including people who work in academia, for think tanks, or for libertarian publications, and people who maintain active libertarian-leaning blogs — who are disproportionately likely to like many libertarian pages (including Open Borders). This core of people does not necessarily include only libertarian extremists. The people here may include anarcho-capitalists or moderate minarchists. It may range from social justice-loving bleeding-heart libertarians to dogmatic natural rights believers. The key feature of this core of people would be that they spend considerable effort researching, writing, or in other ways promoting libertarian ideas. Many of them may have jobs in academia or think tanks where libertarian writing is part of their professional work. The website’s penetration with this group of people seems fairly strong. I would guess about 25% of the people in this group (total: 500) would be willing to like Open Borders, and about half of those who would be willing to like it have already encountered it and liked it (total: 250). Update: As of February 2014, I think we have covered about 70% of such potential likers.
  • A much larger pool of people (about 50,000 by my estimate, based on feedback from some others) who like reading libertarian material on the Internet and occasionally comment on libertarian websites. Not all of these people need identify with the label of libertarian: many of them may consider themselves free-market liberals or free-market conservatives or perhaps “fiscally conservative, socially liberal” and some may even oppose key tenets of libertarianism. But they do engage regularly, and at least in some cases actively (for instance, by leaving comments on blogs), with libertarian content on the Internet and in real life (for instance, by attending local Students For Liberty events or going to Cato talks). My guess is that of this group, perhaps 5% or so would be willing to like the Open Borders website as is if they saw it (total: 2500), and we have probably penetrated about 10% of this market (about 250 people).Update: My guess is that we may have gone up to about 15% of the people in this group.
  • An even larger pool (about 150,000 by my estimate) of people who like libertarian websites on Facebook and occasionally read libertarian blogs but aren’t really into closely following them. I expect that only about 1% (total: 1,500) or so would like the Open Borders website, and perhaps about 5% of the people in that group have liked the site already (total: 75). Update: My guess is that we are now at 7-8% of this group.

Note that the numbers I provided in this paragraph are very rough guesstimates based on the numerical intuition I acquired after compiling the numbers below. I certainly did not derive the numbers using any sort of mathematical procedure from the data.

Note also that this should not be taken to construe that the site’s long-term appeal among “libertarians” is limited to the ~4,500 or so people that my above guesstimates suggest would like it if they saw it today. As the site gets redesigned to have more visual appeal and as the ideas become more mainstream within libertarian circles, the number of people who like it may go up. But that’s not low-hanging fruit — it requires site redesign effort and effort in making open borders more mainstream within loosely libertarian circles.

Data based on Facebook Graph Search

A few limitations of graph search worth keeping in mind:

  • Due to privacy settings, some people may not appear in the lists, even though they do affect the counts. Thus, the manual counting for the “Fewer than 100 people” cases is in most cases an underestimate.
  • Facebook does not provide exact counts, instead generally saying “fewer than 100 people” or “more than 100 people” if the number of people is more than (about?) 15.

Below is a partial list of libertarian Facebook pages that had more than 100 common likers with Open Borders as of October 26, 2013.

Page Number of likes as of October 26, 2013 Link to Facebook Graph Search query for intersection
Economic Freedom 297,158 intersection
Independent Institute 246,138 intersection
LearnLiberty 245,830 intersection
Cato Institute 186,186 intersection
Reason Magazine 109,485 intersection
Students for Liberty 98,135 intersection
Mises Institute 87,911 intersection
Libertarianism.org 72,953 intersection
EconLib 41,341 intersection
Institute for Humane Studies 31,774 intersection
Skeptical Libertarian 21,935 intersection
Mercatus Center 18,405 intersection
Bleeding-Heart Libertarians blog 5,191 intersection

Here is a list of websites I checked that had less than 100 likes in common with Open Borders: The Case as of October 26, 2013. For those where the intersection is now estimated as over 100, I have indicated that parenthetically. For others, a guesstimate of the new value is provided.

(now about 60)

Page Number of likes as of October 26, 2013 Size of intersection as of October 26, 2013, along with link to Facebook Graph Search query (parenthetical value is estimate as of February 8, 2014)
Punk Rock Libertarians 58,998 35 (now more than 100)
Libertarian Troll 8,208 17 (now about 30)
Center for a Stateless Society 6,059 50 (now more than 100)
Cafe Hayek 5,018 53 (now more than 100)
Liberty Fund 1,319 40 (now about 50)
Future of Freedom Foundation 485 39

Multiple intersections (main information October 26, 2013, updated information February 8, 2014):

  • The intersection with the three most liked libertarian pages in the list was fewer than 100 people (it is now more than 100 people).
  • On the other hand, the combined intersection with the Cato Institute, Reason Magazine, and the Independent Institute was more than 100 people. All three of these are relatively famous libertarian pages.
  • The combined intersection with EconLib and Bleeding Heart Libertarians was fewer than 100 people, with 40 visible search results (now, about 56 visible search results).

I noticed from the above that the intersections with much smaller and more hardcore libertarian pages are not that much smaller than the intersections with relatively more widely liked pages. This suggests that our likers have a significant fraction of “movement libertarians” — people who have strong commitment to libertarian ideas and for whom it may even be part of their professional work. To test this hypothesis, on November 3, I considered intersections with people who had ever worked at a number of libertarian places. Note that many people don’t fill out their employer information on Facebook, so these numbers are all almost certainly underestimates.

Libertarian institution or publication Number of people who like Open Borders and have ever worked for this institution or publication (link to Facebook Graph Search query) (numbers as of November 3, 2013)
Cato Institute 6 people
Reason Magazine 1 person
The Independent Institute 1 person (but this is an underestimate relative to what I know)
Students for Liberty 3 people
Institute for Humane Studies 3 people
Ludwig von Mises Institute 1 person

Although these numbers do not seem to work out to very high values, anecdotal evidence of the relatively high degree of commitment to libertarianism of people who like the site seems to bolster the hypothesis.

Penetration rates for blog subcultures

Libertarians are not a homogeneous group. There are different subcultures within libertarianism, and each subculture has a slightly different typical mix of blogs followed.

Currently, Open Borders has been mentioned in a number of libertarian blogs, but to widely varying degrees. Here’s my sense of things, based on data collected at the external coverage page (Update February 2014: I expect each of these to have moved up a couple percentage points, but not significantly, since Open Borders did not receive much additional coverage in the blogs listed below)

Libertarian (or libertarian-leaning) blog Extent to which it’s mentioned Open Borders Estimate of penetration: (number of regular or semi-regular readers who have liked Open Borders)/(number of regular or semi-regular readers who would like Open Borders if they visited the site), expressed as a percentage
EconLog 1 post about the site, 4 links to site posts with substantive discussion, about 5 other links to site posts, plus 2 posts about EconLog blogger Bryan Caplan’s guest posts on Open Borders 80-90%
Volokh Conspiracy 1 post linking to a page on the site, 1 post about a guest post on the site by the author Ilya Somin 30-40%
Cafe Hayek 2 posts mentioning the site in link roundups. 20-30%
Bleeding Heart Libertarians 1 post mentioning a substantive post 20-30%
Marginal Revolution 2 brief mentions of the site, 1 brief mention of a post on the site 5-10% (update: now 10-15%)

The Global Economic Impact of Open Borders: My Take

To estimate the global economic impact of opening the world’s borders to migration involves heroic extrapolation. It is therefore a task in which theory must do most of the heavy lifting, with empirical work limited to determining plausible parameter values. To people who are cynical about economic theory, this makes the double world GDP literature so speculative as to be irrelevant. And cynicism about economic theory is a reasonable attitude to have. After all, economic theories, especially the most abstract ones, tend to start from very questionable assumptions, and they usually make some very implausible predictions, too, if one knows how to tease them out. (Often, theorists hide these.)

I was reminded of this recently by Carl Shulman’s take on the “double world GDP” literature, in which he pointed out something I didn’t notice about John Kennan’s “Open Borders” paper when I tried to summarize it for general audiences a few months ago: the enormous size of predicted migrant flows. Carl writes:

To estimate migrants from a country Kennan multiplies an estimate of a country’s national labor force by 1 minus 1/(the relevant place premium)… In the appendix of his paper, Kennan lists relative wages, labor forces, and other information on 40 less-developed migrant source countries. This leaves out many other countries, but since the world’s most populous ones are included the group would still account for most migrants…

From this sample over 75% of the labor force are predicted to migrate. As noted above, this leaves out many countries, children, and women not in the labor force, among others. If we included family members and other countries the implied number of migrants looks like it would exceed 3 billion.

Kennan doesn’t mention explicitly how many migrants his theory predicts, possibly because it would make his theory too easy to mock. The prediction, once Carl brought it to my attention, struck me as implausible, and provoked me to develop my own model to extrapolate the impact of open borders, which is the topic of this post.

I haven’t calibrated my model to the data yet, so I can’t say in this post whether my theory confirms the “double world GDP” estimates or not, or how many migrants it will predict. But further thinking about Kennan’s model has made me less skeptical of Kennan’s high estimates of how much of the world population would move. Emigration sources like Iowa and Ireland have a fraction of the population that they would, had they retained all their natural increase over the periods when emigration was rife (most of the 20th century for Iowa, the 19th century for Ireland). Granted, the cultural barriers to emigration from Iowa and Ireland were unusually low for their times– Iowa and Ireland are both English-speaking places whose emigrants went to English-speaking places– but (a) I suspect people overestimate cultural barriers to migration, and (b) American-led cultural globalization is such a powerful force these days that I suspect emigration from Tajikistan or Mali to America today faces smaller cultural obstacles than emigration to the US by, say, Russian Jews in the 19th century.

In developing a theoretical model to facilitate extrapolation of the impact of global migration flows, one problem is that “general equilibrium” models do a lousy job of explaining the current global distribution of income, and therefore seem like unreliable guides to the hypothetical global distribution of income under open borders. Some time ago, Robert Lucas pointed out that if the Solow model, still the most influential model of long-run economic growth, is used to explain global income differences, it would also predict vastly higher returns to capital in poor countries than in rich countries, and that if capital is mobile, all new investment should occur in poor countries.  Mankiw, (David) Romer and Weil (1992) “fixed” the Solow model by augmenting it with human capital, only to generate the absurd counter-factual prediction that returns to human capital should be far higher in poor countries, and skilled workers should be migrating from rich countries to poor countries, rather than other way around. Later, Mankiw and (Paul) Romer (1995) had a standoff in which Romer pointed out this glaring weakness in the “human-capital-augmented” Solow model. Romer (1990) has become one of the most cited papers in development economics and the flagship of the “endogenous growth” literature, but Romer’s ideas about ideas only underline the point that since ideas are non-rival and only partially excludable, they can’t do much to explain international differences in income. The conventional wisdom at this moment in time can probably be summed up: “ideas explain long-run growth, institutions explain cross-sectional income differences,” with institutions, about the definition of which there is little agreement and which formal economic theory is mostly unable to elucidate, winning by default because theories that are clear enough to be falsifiable have tended to be falsified. To me, it’s a rather glaring and obvious weakness that totally different theories are invoked to explain international and intertemporal income differences.

My own belief is that the original sin of the growth literature is that it neglects the division of labor, specialization and trade, increasing returns, in short, the first three chapters of The Wealth of Nations. It neglects them because these happen to be inconsistent with general equilibrium and “competitive” markets in the peculiar sense which 20th-century mathematical formalism in economics gave to that word. This blind spot also makes mainstream economics unable to explain why there are cities. And so it is with cities that my model begins.

Warning: from here on, non-economists will have to pick their way through the technical apparatus of a formal economic theory. I’ll explain as I go as best I can, but the content of the model is really explained in the equations. At a later stage, I plan to calibrate this to the data– or perhaps get a co-author to do so– and generate one of those rather spuriously precise estimates of how much open borders would raise GDP, followed by remarks on parameter sensitivities that hardly anyone really reads, etc. More interesting than the final numbers are the reasoning and scenarios one passes through along the way.

The starting place for my model is the city-level production function…

(1)Equation 1

where Y is the city’s GDP, A is the “total factor productivity” of a city, h is the average level of human capital in the country (not just the city), N is the population of the city, and α and β represent the “output elasticity of capital,” i.e., the % change in output for a % change in capital, holding all else constant, and the “output elasticity of (effective) labor,” i.e., the % change in output for a % change in (effective) labor, that is, the number of workers multiplied by their average human capital.

Importantly, I do not assume that α+β=1. On the contrary, my presumption is that α+β>1, that is, that there are increasing returns at the city level, for the reasons Adam Smith understood well, namely, that the division of labor is limited by the extent of the market. Because of increasing returns, we cannot interpret α and β as Cobb-Douglas exponents. We cannot assume that if capital receives 30% of national income, then α=0.3. I tend to think that, as Paul Romer among others has suggested,  the output elasticity of capital, i.e., α, is more than capital’s share of income, and I suspect that labor may get more than its marginal product, too, due to various political distortions.

By the way, the model can accommodate the case of decreasing returns, α+β<1, as well. This assumption, too, can be plausible at the city level, given the scarcity of land. It would not imply the obvious counter-factual prediction of “backyard capitalism,” with people spreading out evenly over the land, or among the cities, because some cities have higher “total factor productivity” than others. But generally I think increasing returns are the most likely.

Multiplying population by average human capital to get “effective labor,” a method adopted for convenience, tends to downplay potential complementarities between skilled and unskilled labor. In effect, I assume that tools and/or time can substitute for skill. This assumption is not entirely satisfying, but at least it avoids the very counter-factual prediction that skilled labor will emigrate to where it is scarce and can earn more.

“Total factor productivity” deserves comment. This term is borrowed from the large “growth accounting” literature, which grew out of Solow (1957), and I believe the concept is fundamentally flawed, because it assumes away for no good reason what Adam Smith and I think a real understanding of economic growth starts with: increasing returns, gains from specialization and trade. Think of “total factor productivity” as a black box: for reasons we don’t understand, some places/times are more productive than others. However, the fact that I make “total factor productivity” a city-specific parameter has ramifications for its interpretation. A is a kind of pure place premium: it’s the (cultural, historic, geographic, political, whatever) difference between London and San Francisco and New York and Mexico City and Fresno and Gary, Indiana, etc., not the (political) difference between being under US sovereignty and being under British or Mexican or Tibetan or Malawian sovereignty. And because I am determined to accommodate increasing returns, the place premium won’t have to do nearly as much work as it does in some theoretical models.

Imputing “total factor productivity” to cities might seem to give the cities an anomalously large role in determining living standards. After all, aren’t national and regional policies important too? Actually, I am not assuming that productivity is entirely locally determined. If national or regional policies are important to productivity, they would be reflected in higher A for all the cities in the nation or region.

My assumption is that labor is mobile within each country, but not internationally, and the wage in each city must be competitive with other cities. But big cities have to pay higher wages, because there are “congestion disutilities,” which reduce a worker’s utility, as follows:

(2)  Equation 2

where U is the worker’s utility when w is his wage and N is the population of the city he lives in. The parameter σ regulates the extent of congestion disutilities. For example, if σ=1/3, then if City M is eight times as big as City N, the prevailing wage in City M must be twice as high as that in City N. To be competitive, then, the wage w in a city must be:

(3)  Equation 3

where w0 is the “base wage” in the nation as a whole. This “base wage” is probably the single best indicator of worker utility in the model. Its definition is a bit subtle, though. It is the wage a worker would earn in a hypothetical city of population 0, where he would suffer no congestion disutilities at all. All workers will actually earn more than this, because they all live in cities with at least some population.

How should “congestion disutilities” be interpreted? Many options here: pollution, crime, the absence of green grass and fresh air, tighter regulation of land use. But probably the best interpretation is: high urban rents. Land markets are difficult to model, and congestion disutilities are an indirect way of taking land scarcity into account. You can build high-rises to economize land, but people tend to prefer houses (with yards) to high-rises, and high-rises are expensive to build.

Note that without the congestion disutilities, the model would become degenerate, because the nation’s whole population would concentrate in one city, except in the special case of decreasing returns. This would occur for two reasons. First, the city with the highest “total factor productivity” would always outbid other cities for population. Second, increasing returns would continually reinforce its advantage as it grew. Congestion disutilities, however, may put a limit on metropolitan growth, as the higher wages the city can pay because of increased productivity are eventually overtaken by workers’ aversion to overcrowding and high rents.

The next step in the model may seem odd, but it is necessitated by the need to accommodate increasing returns. I assume that the city determines labor demand collectively in order to maximize “rents,” that is, to maximize:

(4)   Equation 4

“Rents,” in a somewhat Ricardian sense, represent the difference between what the city produces and what it has to pay in competitive factor markets for its capital and labor. Who gets these “rents?” One obvious answer is landlords. Those who have the good fortune to own prime urban land in a modern economy can get very rich without doing a whole lot. Another is the government. When a city can offer higher “total factor productivity” than rival cities, or when increasing returns raise the productivity of its labor and capital, then it can afford to extract extra revenues through taxes and regulations which can then be distributed to various political stakeholders. Rents might also be used to benefit broader humanity or posterity, and I think many great cities really have used their extra productivity in generous ways. We all owe much to the intellectual and architectural attainments of the Greek poleis of the golden age, or the Italian cities of the Renaissance, and probably, also, to some great urban universities of our own day, whose work is meant to, and does, enrich many people beyond the narrow confines of the university or the city.

By the way, if it seems odd to treat cities as rent-maximizing corporations, bear in mind that this is part of my strategy for escaping the trap of “general equilibrium” thinking, whose repeated failures I explained above. I think a deeper revolution in economic theory is needed to escape the legacy of general equilibrium and the constant returns assumption. I’m working on that. But in the meantime, one must make do with these awkward expedients.

Whatever the cities do with their R, to maximize R, they should employ capital K*:

(5)  Equation 5

for any given quantity of labor N; and they should employ labor N*:

(6)    Equation 6

Since the expression on the right-hand side of (6) is very complex, we can define…

(7)    Equation 7

… and …

(8)    Equation 8

… (or “τ” in this font) and rewrite (6) as:

(9)  Equation 9

So far, then, our theory predicts the size of city i, given the cost of capital (r), the average level of human capital (h), the prevailing wage (w0), city-specific total factor productivity (A1, that is, in the constant returns case, then is simply 1/τ.

The most interesting case, in my view, is where there are city-level increasing returns, but not enough to induce τ<0. For example, if α=0.5, β=0.6, and σ=0.3, then τ=10. See empirical evidence for city-level scale economies here. It seems that moving someone to a city twice as big will typically raise their economic activity of all kinds by 15%, which is consistent with plugging the parameters α=0.5, β=0.6 into equation (12) below. This yields the surprising yet plausible prediction that small differences in total factor productivity can drive huge differences in city size. For example, if City M is 20% more inherently productive than City N, City M would be over six times as large.

We have determined “population demand” at the level of the city, as a function of the base wage. At the national level, population demand must equal population supply, and the base wage will adjust to ensure this. That is, equation (10) must hold…

(10) Equation 10

… and w0 is the variable that must move to make sure it does, since other variables are either exogenous endowments (A and h), or set at the global scale (r, because of the assumption of international mobility of capital).  The base wage that clears the national labor market turns out to be:

(11) Equation 11

The base wage is a variable of considerable interest, since it is crucial to the living standards of the populace. Equation (11) shows how it is determined. Several points may be made here:

  • The base wage is a decreasing function of the global price of capital. This is not too hard to understand. Labor and capital are complements. If it’s cheap to equip workers with machines, bosses will equip them, make them more productive, and pay them more. If capital is expensive, workers will be less well equipped, and will produce and earn less.
  • The base wage is an increasing function of average human capital in the nation. This is rather a welcome prediction since, in fact, workers of a given skill level do tend to earn more in places where the average skill level is higher. Part of the “place premium,” then, is explained not by the black box of “total factor productivity,” but by differences in human capital, and increasing returns. This also suggests a reason why wealthy democracies seem to have such a strong bias in favor of “high-skilled” immigration.
  • The base wage is a decreasing function of population. It will turn out on further examination that workers do not actually produce or earn less when the population grows; rather, the decline in the base wage reflects increased congestion disutilities. The elasticity of the wage with respect to population is -1/τ, so if τ=10, as I suggested above as a plausible estimate, then the depressing effect of population on the base wage is rather slight.
  • The base wage depends a good deal on a special kind of weighted average of the “total factor productivities” of the nation’s cities, for which summation I will suggest a label: “the national endowment.” Think of the national endowment as including many things: a pleasant climate; beautiful beaches; fair landscapes; good institutions; historic art and architecture; the special beauty of a city skyline; the culture, the feel, the ethos, of famous cities. It includes everything about a country that is valued, beloved, and not readily replicable. In various ways, the national endowment will probably be reflected in market prices and measured GDP, and it will certainly affect utility.

By the way, the model is a bit pessimistic about what is non-replicable. Congestion disutilities would be mitigated if open borders would lead to the founding of new towns. Doubtless it would, and the assumption of this model that no new towns can be founded is extreme, but I think founding new towns does tend to be difficult, and new towns can be a bit dull and blank. Cities that have grown up organically over many generations tend to have a charm about them that’s difficult to reproduce. So while “no new towns” is too extreme an assumption, it does take into account something that is worth taking into account.

On the other hand, the model is rather optimistic in that place premia and the national endowment are not easily diluted. A critic of immigration might expect that if one dilutes the population of a place with hordes of foreigners from poor countries, the special assets that made it productive will be diluted. I don’t think history supports that claim, and the model concedes nothing to it. But while immigrants don’t dilute the basic place premium, they do cause congestion, and low-human-capital immigrants cause congestion while offering relatively little compensation in the form of increased economies of scale. Increasing returns depend on effective labor, congestion on mere population. So it’s not irrational for natives to look askance at mass immigration of poorly educated foreigners.

From here, it is fairly easy to calculate city-level GDP…

(12)  Equation 12

… and national per capita GDP…

(13)  Equation 13

… which, unlike the base wage, is positively related to national population (at least if α+β>1), I think because a higher population attracts more capital investment and increases the economic rents enjoyed by the nation’s cities.

Now, the way I extrapolate the economic impact of open borders using this model is simply that open borders cause their human capital averages and national endowments to be pooled. If Country C and Country D open their mutual borders, their cities are included in a single list and a joint national endowment calculated, and a new human capital average is calculated, as a population-weighted average of human capital in each country.

The assumption that human capital will average out across the two countries is a rather strong one. Is it plausible? While there are, in fact, differences in education and other human capital measures across US cities, they are nothing compared to the differences in human capital between the US and most developing countries. While complementarities between different skill levels are left out of the production function, they are in a sense reintroduced at this stage. Presumably, the interpretation of human capital averaging is that job availability and wages for different types of workers motivates human capital to move to where it is scarce, within a region of free migration. If the internal open borders of the US are one case where human capital averaging seems to have roughly worked, 19th-century open borders in the northern Atlantic region and internal open borders in the EU are two other cases which, if they don’t strictly confirm the “human capital averaging” assumption, at least lend it plausibility. Average human capital converged between the US and Europe in the 19th century, and it is relatively homogeneous across the contemporary EU.

If  the link below works…

Open Borders Impact Example

… it will give you an Excel simulation of US-Mexico open borders that I made, calibrating the above model with crude numbers from off the top of my head. The simulation isn’t super user friendly, but in principle, you could download it yourself, play with the parameters, and see the results. Rather than trying to state in one number what the model “predicts,” I’d rather summarize my preliminary results in a set of scenarios. In all scenarios, the population of “USA” is 300 million, that of “Mexico” is 100 million.

Scenario 1. (parameters: α=0.5, β=0.6, σ=0.35, h in “USA”=20, h in “Mexico”=12, r=5%)

In this scenario, US GDP per capita starts out at $50,500, and Mexican GDP per capita starts out at $15,686. The base wage in the US is 21.9, and in Mexico, 16.7. Under open borders, net emigration from Mexico is 61,632,000, well over half the Mexican population. Joint GDP for the US and Mexico rises from $16.7 trillion to $17.5 trillion, a 5% increase. In both countries, the new base wage is 20.9. This represents roughly a 5% fall in wages in the US, but a 20% rise in wages in Mexico.

Scenario 2. (parameters α=0.55, β=0.6, σ=0.5, h in “USA”=20, h in “Mexico”=10, r=5%)

In this scenario, US GDP per capita starts out at $51,075, Mexican GDP per capita at $10,811. The base wage in the US is 4.76, in Mexico, 3.49. Under open borders, the base wage becomes 4.47, representing a 6% fall in the US, a 22% rise in Mexico. Net emigration from Mexico is 31,352,000.

Most surprisingly, joint GDP for the US and Mexico actually falls in this case, by a little over 2%, from $16.4 trillion to $16.0 trillion. How can that be? How could the movement of millions of Mexicans to a more productive country reduce world GDP? At first, I was baffled by this, but then I saw why it makes sense: under open borders, there is an emigration of “effective labor” from the US to Mexico, as Americans with relatively high human capital emigrate to Mexican cities to escape urban congestion at home. Human capital averaging makes it possible for Mexico’s population to fall by 31% through emigration, even as “effective labor” in Mexico increases by 20% due to immigration of labor with higher human capital.

This is where theory pays off. It expands your mind. I found this scenario hard to believe at first, but after thinking about it a bit, I decided it was plausible after all. Lots of young 20-somethings like to bounce around Europe for a year or two, or ten. You meet American expatriates all over the world. I’ve been one a few times. What are they looking for? “Adventure,” “culture,” “‘romance,” “experience,” “permanent vacation,” joie de vivre… one could toss out a lot of words groping for it, and of course it varies from person to person and place to place, but in terms of this model, it’s (a) to enjoy another country’s “national endowment,” and (b) to escape congestion disutilities.

I can easily imagine a world in which open borders between the US and Mexico leads, not only to massive emigration of unskilled labor from Mexico, but at the same time, to a large influx of college-educated Americans eager to enjoy the Mexican sunshine and beaches, and to live in historic centers without paying the exorbitant rents of Boston or San Francisco. In a country where college-educated people are relatively scarce, young college-educated Americans could often find good jobs, or start businesses. They would earn somewhat less than at home, but it would be a price worth paying for sunshine, adventure, and history.

A few more comments relevant to the plausibility of this scenario. 1) There is already an American diaspora of maybe 6 million. 2) While the fact that most Americans don’t choose to emigrate might suggest the scenario lacks realism, Americans can’t automatically work in foreign countries. See here for a story about the difficulties faced by an American working in France. 3) Under open borders, emigration would become more attractive for Americans, because wages would rise abroad, and there would be more congestion in American cities and less in foreign cities. 4) If nonetheless large-scale emigration of Americans under open borders seems implausible to you, you can pick parameter values that don’t predict that.

Scenario 3. (parameters α=0.45, β=0.6, σ=0.25, h in “USA”=20, h in “Mexico”=8, r=10%)

In this scenario, Mexico essentially empties out. The initial gap is larger: US GDP per capita is $50,232, Mexican GDP per capita, $6,691. The real US/Mexico gap is not that large, but plenty of other countries are even poorer than that relative to the US. Under open borders, net Mexican emigration is 98,743,000. A mere 1.26 million Mexicans stay in Mexico. The base wage falls by 6% in the US and rises by 53% in Mexico. Joint GDP rises from $15.7 trillion to $17.2 trillion, a 9.5% increase.

Tentative conclusion so far: My sense is that economic models predicting that open borders will “double world GDP” will continue to depend on extremely large movements of people. Again, I will not say that such predictions are unrealistic, upon reflection they seem plausible to me. But we should avoid breezily quoting “double world GDP” predictions while allaying or minimizing people’s fears about epic movements of peoples. It is possible that open borders will prove to be a good less radical in its impact than the available theories suggest. But in that case, it won’t double world GDP, or at least, not in the ways that models like Kennan’s suggest.

Some important benefits of open borders, especially the stimulus it would provide to idea generation and institutional export, are omitted from the extant models, including this one. These factors are difficult to incorporate into theoretical models because there is relatively little agreement about what determines the rate of idea generation, or the quality of institutions. I expect that open borders probably would double world GDP with a mere hundreds of millions, not billions, of people actually migrating, but that may be more than I can say with my economic theorist hat on.