All posts by Nathan Smith

Nathan Smith is an assistant professor of economics at Fresno Pacific University. He did his Ph.D. in economics from George Mason University and has also worked for the World Bank. Smith proposed Don't Restrict Immigration, Tax It, one of the more comprehensive keyhole solution proposals to address concerns surrounding open borders. See also: Page about Nathan Smith on Open Borders All blog posts by Nathan Smith

Open borders and the economic frontier, part 2

14 Comments

In the first post in this three post series, I gleaned a theory of the economic frontier from some of BK’s comments and offered a few of my own responses. In this post, I’ll expound my own theory.

Two general points. First, how the economic frontier advances is both enormously important for human welfare and quite mysterious. It is important because long-run economic growth will determine how well we can mitigate world poverty and deliver ever-improving lives to future generations. A tiny increase in the rate of advance of the economic frontier, say from 3% to 5%, would make our descendants a century hence almost an order of magnitude wealthier. Second, open borders would likely affect the rate of advance of the economic frontier. Before reading BK’s comments, I had pretty much taken it for granted that open borders would boost growth, at least in the short run, as people move from low-productivity countries to high-productivity countries. Based on Clemens (2011)  and Kennan (2012), the modal result of formal studies so far seems to be that open borders would double world GDP, and the assumptions on which this result is based are actually conservative in some ways, e.g., they don’t assume that everyone would migrate to where their marginal product is highest. Negative institutional/productivity side-effects of open borders on frontier countries would have to be very large to offset this, but such effects are not beyond the range of plausibility.

My theory, which I’ll call the “Endogenous Division of Labor” or “EDOL” model, was the topic of the second chapter of my dissertation, Complexity, Competition and Growth (but don’t pay $103, it’s available here for free). More recently, and I think more accessibly, I published a new version as an SSRN working paper here, under the title “Development as Division of Labor: Adam Smith Meets Agent-Based Simulation.” All the data is drawn from a simulation I wrote, which is introduced in this video, and I’ll be happy to send the simulation (as a runnable JAR file) if you’re interested in exploring its properties on your own. It’s not that user-friendly, but I’ll even be glad to give you a tutorial via Skype. I’ll also be glad to present it at academic conferences or seminars or whatever. I think it would lend itself to public presentation quite well, though I haven’t got the chance to transfer. I’m trying to publish it. So far, the Journal of Political Economy rejected it, with some harsh but useful feedback. I plan to submit a completely rewritten version to the Journal of Economic Growth. Any feedback is welcome.

Continue reading Open borders and the economic frontier, part 2 →

Poor countries and IQ externalities

7 Comments

BK helps make the case for open borders in poor countries:

Interesting point by Jones: if high-IQ people produce positive externalities well above their market wages in poor countries, then citizenists in poor countries should be willing to offer larges subsidies for high-IQ immigration:

“If IQ has the sizeable positive externalities posited here, then there may be room for a Coasian bargain between countries with low current LV IQ and higher IQ individuals in other countries.  One purely suggestive possibility: If the ratio of private to public benefits of higher IQ are even half as large as the 6:1 ratio suggested by Jones and Schneider (2010), a low LV IQ country could rationally offer a 100% subsidy for any wages a high IQ immigrant earns in excess of that nation’s median wage.  In practical terms, a 10 year income tax holiday for permanent immigrants with engineering degrees could accomplish the same goal of encouraging high IQ immigration. “

Favoring engineers seems too much like “picking winners,” and I don’t think the research is really there to support anything so specific (don’t forget that the most obvious externality of engineers, that they invent things, is global in nature) but a simpler policy recommendation to derive from this argument would probably imply that poor countries should simply open their borders to immigrants from rich countries. Rich countries generally have higher average IQ, certainly higher levels of education, and probably other traits– work ethic, perhaps, or trustworthiness– that make their home countries productive. I don’t have great data on this– go, IMPALA!— but I’m pretty sure it wouldn’t be very easy for an immigrant from the US or Western Europe, with or without an engineering degree, to migrate to India or Malawi or China or Russia and just get a job, never mind a tax holiday. Why don’t poor countries offer free immigration to holders of US, EU, Japanese or South Korean passports? I suspect that it’s some combination of (a) elite protectionism– a corrupt business elite makes the rules and doesn’t want the competition from capable Westerners or East Asians– and (b) global norms– rich countries have migration restrictions and they’re either blindly imitating or else retaliating out of pride against countries that exclude them. But it would be interesting to investigate further.

Related thoughts: (1) Would it be easy for rich countries to negotiate away restrictions against their nationals working in poor countries, in return for a bit more openness to migrants from those countries, or perhaps other concessions, e.g., aid or trade? (2) Would a high-profile open-borders movement in the US and/or Western Europe, even while unsuccessful domestically, change the climate of ideas and persuade poor countries to open their borders to migration, to gain the “moral high ground?”

The border as blindfold

38 Comments

For the record, I thought it might be worth jotting down what I think is really the reason people reject open borders. Maybe it would be better to say the deepest, most fundamental, most difficult-to-negotiate-with reason people reject open borders. I don’t mean for the restrictionist commenters here or at EconLog: they’re unrepresentative. I mean the reason for the typical person in a typical rich democratic country, the person who hasn’t specially thought about the issue a whole lot. And this is only a hunch. Not only is my evidence merely anecdotal, but it involves a lot of interpretation on top of those anecdotes.

The welfare state / fiscal burden argument against open borders, as well as the political externalities argument, are, as I see it, easily defeasible via keyhole solutions. I think the arguments themselves haven’t occurred to a lot of ordinary people, but the answers to them are simply (a) don’t make immigrants automatically eligible for welfare, and (b) don’t automatically give immigrants the vote. Problem solved. Of course, that’s not all there is to be said. It is possible to argue that excluding immigrants from the welfare state, or from the franchise, isn’t really feasible. I don’t think it is possible to be justifiably confident that excluding immigrants from the welfare state, or from the franchise, isn’t really feasible. At any rate, the difficulty of persuasion does not seem to lie there. Some restrictionists don’t make these arguments, or after making them at first abandon them when they hear the answers to them, yet still resist open borders.

Why? Partly it’s just a natural conservatism of the mind which doesn’t accept novelties, no matter how strong the case may seem to be at the moment. I think this can be wise. Confronted with an articulate advocate of an eccentric view, one may feel oneself bested in the argument but still have good reason to refuse to be persuaded. One hasn’t had time to collect all one’s arguments and/or articulate all one’s intuitions in favor of the mainstream view. One hasn’t had time to consult all the other people who agree with the mainstream view and figure out why they hold it. One may raise one’s estimate of the plausibility of the view, and put it as it were on probation, but reserve judgment until one has had time to absorb a broader range of evidence. “Some clever and earnest people think this,” one might think, “and on the surface they seem to make a strong case. They’re probably wrong because everyone disagrees with them, and most people with such atypical views are wrong. Still, I’ll be on the lookout now for what good arguments there really are for the prevailing view. They might have passed me by before without my noticing. Now I’ll notice them if I hear them. And if they don’t seem to come along, I’ll gradually raise my subjective probability that these eccentrics have really hit on the truth.” That’s how I hope Open Borders: The Case might be influencing some readers. It’s also sort of my response, as of now, to BK’s advocacy of an IQ and the Wealth of Nations-type thesis (see here for more of my take on that).

Anyway– now I’m finally getting to the point– the most stubborn reason I run into, which often seems to be at the bottom of all the others, is that the border protects people from seeing the poverty that it shuts out. As I put it in Principles of a Free Society:

So what an argument like Paul Krugman’s [that once they’re here, we have to take care of them] is that America’s moral obligation to “assure health care and a decent income” for a person is completely non-existent when that person is located outside America’s borders, then magically appears when a person crosses the Rio Grande.

The only guess I can offer as to why anyone would hold this belief is that people want to avoid, not actual guilt, but feelings of guilt that result when one has to see poverty close up. Migration controls serve as a blindfold, enabling Americans to ignore most of the poverty, deprivation, and vulnerability that exist in the world by keeping it physically at a distance. In the past, people lived without this blindfold. The wealthy lived amidst poverty, sometimes engaging in generous charity to the poor, sometimes learning, perhaps callously, to ignore them.

Citizens of a modern welfare state, by contrast, feel that the state should coerce people to give to the poor so as to remove from the streets the kind of visible poverty that would make them feel obliged to give, allowing them to feel conscientious and affluent at once. The price of this moral complacency is paid by would-be immigrants who are not allowed to come to America to better their condition by honest labor, lest their poverty trouble the consciences of affluent Americans. (Principles of a Free Society, p. 148)

Sometimes, people seem to think that immigration creates the poverty because people come here and are poor. Sometimes this is an argument of unguarded moments. Surprised by the failure of one or two favorite arguments, an until-recently-complacent restrictionist says, “But I don’t want to see people starving on the streets!”– even if they recognize that the people would be worse off elsewhere. Sometimes people seem to sense the weakness of the border-as-blindfold argument, and I get the feeling they’re casting about for other arguments, but that not wanting to see a lot of poverty on the streets of American cities is part of what is motivating them. In other cases, people are unapologetic. (I’ve argued this issue with a lot of people over the years.)

For example, one version of the argument I heard is that open borders would reduce private charity by inducing donor fatigue. That is, currently private charity plays an important role in helping the poor, but under open borders, people would see a lot more poverty and become callous, feeling the cause was hopeless, so private charity would fall in absolute terms. To this I would say (a) I doubt it: I think more visible poverty would evoke more private charity, though the average poor native might see less of it; and (b) even if private charity completely disappeared, that would be dwarfed by the benefits, according to the modal estimates, of open borders. But it was interesting to hear a conscientious defense of a position prima facie so embarrassing.

As I have noted elsewhere, using the border as a blindfold is analogous to the priest and the Levite in the Good Samaritan parable, who crossed to the other side of the road to avoid helping the wounded man. It is a self-interested rationale for closed borders, but self-interested in an odd way, since it presupposes that people feel empathy for their fellow human beings, but also that that empathy is situation-specific and instinctive rather than rational, and that the rational aspect of a person can avoid situations in which his instinct for pity will be awakened to his disadvantage. Maybe some of these people would, as Jesus told the rich young ruler in vain (Mark 10:21), sell all they had and give to the poor, if the world’s poor appeared on their doorstep, and they want the government to protect them from their own generous impulses by keeping the poor out of sight.

Again, all this is just vague guesswork about the thought processes of the typical restrictionist, derived from impressions in a variety of debates with many different kinds of people. I could be wrong, but anyway I think the phrase “the border as blindfold” is worth introducing to the conversation.

Open borders and the economic frontier, part 1

66 Comments

This will be the first of three posts on the topic of “open borders and the economic frontier.” 

I am indebted to commenter BK for making the major subject of my academic research, on the basis of which I hope to make my name as an academic economist, relevant to this blog. In a long series of comments at my post “The American polity can endure and flourish under open borders,” and previously at “Garett Jones responds…” BK digs up some numbers and makes a sort of loose empirical case, based on the experience of what Amy Chua calls “market-dominant minorities” in many countries around the world, that segregation of humanity based on cognitive ability, with race as a proxy, actually makes the world economy as a whole more productive:

Chinese-Singaporeans generate income almost twice as great in mostly Chinese Singapore as the large Chinese-Malaysian minority does in Malaysia (about $70,000 per annum vs about $38,000), even though there are less than 3 million Chinese in Singapore but almost 7 million in Malaysia. But the Chinese make up 75% of Singapore vs 25% of Malaysia…

There is a Chinese elite, but this isn’t enough to fix the institutions, which have to represent the general population. All this occurred in the context of strong legal discrimination in favor of Malay majority, racialized anti-business sentiment, and big gaps in political views between Chinese and non-Chinese Malaysians. Using the above statistics, if the Chinese-Malaysians could have done as well as Singapore by also seceding from Malaysia into Chinese-dominated countries, total GDP of the region would rise substantially just from letting the Chinese-Malaysians free of the Malaysian electorate, even if incomes back in Malaysia plummeted. But it gets even better: Singapore lets in millions of guest workers from non-Chinese Malaysia, among other places, who send back huge quantities of remittances. Singapore generates more innovations in science and technology with positive spillovers for the rest of the world.

Basically, patterns like this seem to suggest that total GDP and welfare are much increased by international segregation by IQ and other characteristics contributing to productivity and performance, and that giving every country in the world demographics representative of the world would be devastating…

I’ll try the analysis again for a different region, randomly selected to be Africa.

The obvious data are the economic evolution of Zimbabwe (formerly Rhodesia) and South Africa after universal suffrage and the end of apartheid. This is complicated by the fact that both countries were suffering economically from crippling sanctions before majority rule, as well as internal racial conflict which were then lifted and replaced with foreign aid as part of an intentional effort to make post-suffrage conditions better than pre-suffrage conditions. Continue reading Open borders and the economic frontier, part 1 →

Are immigration restrictionists pirates?

1 Comment

My co-blogger John Lee recently wrote a post with the intriguing title “Are immigration restrictionists pirates?” It turned out that by “pirates,” John meant, not Bluebeard or the Dread Pirate Roberts, but people who pirate music and videos off the internet. John’s point was that if immigration restrictionists are pirates, i.e., illegal downloaders of music and videos– and haven’t we all done it, at least a bit?– then they’re in no position to mount their moral high horse when talking about undocumented immigration. Commenter Leo was disappointed:

The title of this made it sound a lot more exciting than it was… I was hoping for some sort of metaphor of countries as ships or something… Yeah the title makes sense but the post isn’t as exciting as the title …I’m obviously just childish but the word pirate made me hope for a story of plunder on the high seas…

Based on this reaction, I thought there might be interest in a post comparing immigration restrictionism to plunder on the high seas. So here goes.

First, like pirates, immigration restrictionists have skills. Pirates need to have navigation, combat, recruiting and negotiation skills. They need to know a good deal about recruiting and trade routes. Immigration restrictionists need skills, too. Steve Sailer of VDARE is good at writing. Joe Arpaio has skills at prisoner abuse and attracting national media attention.

Second, like pirates, immigration restrictionists are organized. Pirates had captains, crews, even “pirate codes” which Peter Leeson (author of The Invisible Hook) has argued were sometimes strikingly democratic, a Skull-and-Bones flag. Immigration restrictionists have organizations like VDARE and CIS, as well as ICE, the Minutemen, and so forth.

But clearly, I’m not getting to the heart of the matter.

Let me start over by using a recent Bryan Caplan post as a point of departure. Caplan’s point of departure was a Steve Sailer post (previously quoted here and here at Open Borders). So first, Steve Sailer: Continue reading Are immigration restrictionists pirates? →