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

The “Melting Pot”

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Wikipedia’s article on the “melting pot” is interesting. Here’s a quote from J. Hector St. John de Crevecour:

“…whence came all these people? They are a mixture of English, Scotch, Irish, French, Dutch, Germans, and Swedes… What, then, is the American, this new man? He is neither a European nor the descendant of a European; hence that strange mixture of blood, which you will find in no other country. I could point out to you a family whose grandfather was an Englishman, whose wife was Dutch, whose son married a French woman, and whose present four sons have now four wives of different nations. He is an American, who, leaving behind him all his ancient prejudices and manners, receives new ones from the new mode of life he has embraced, the new government he obeys, and the new rank he holds. . . . The Americans were once scattered all over Europe; here they are incorporated into one of the finest systems of population which has ever appeared.”− J. Hector St. John de Crevecoeur, Letters from an American Farmer.

And from a magazine article in 1875:

“The fusing process goes on as in a blast-furnace; one generation, a single year even– transforms the English, the German, the Irish emigrant into an American. Uniform institutions, ideas, language, the influence of the majority, bring us soon to a similar complexion; the individuality of the immigrant, almost even his traits of race and religion, fuse down in the democratic alembic like chips of brass thrown into the melting pot.”[1]

And Henry James:

“Understand that America is God’s Crucible, the great Melting-Pot where all the races of Europe are melting and re-forming! Here you stand, good folk, think I, when I see them at Ellis Island, here you stand in your fifty groups, your fifty languages, and histories, and your fifty blood hatreds and rivalries. But you won’t be long like that, brothers, for these are the fires of God you’ve come to – these are fires of God. A fig for your feuds and vendettas! Germans and Frenchmen, Irishmen and Englishmen, Jews and Russians—into the Crucible with you all! God is making the American.”[3]

Continue reading The “Melting Pot” →

Deepening the Peace

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If I were a foreign-policy advisor to a major presidential candidate, I’d suggest a foreign policy platform labeled “Deepening the Peace.” What would it consist of? First, celebrate the fact that the world has gotten a lot more peaceful in the past few decades, as many have observed, but most impressively Steven Pinker in The Better Angels of Our Nature: Why Violence Has Declined and the authors of the Human Security Report. This shows that something is going right, and to some extent suggests we should “stay the course.” However– second– the trend towards world peace is less secure because of the persistence of many frozen conflicts: Georgia vs. Russia over South Ossetia and Abkhazia; Israel vs. Palestine; Japan and Russia over the Kuriles; Japan and China over the Senkaku Islands (the cause of a dangerous kerfuffle at the moment); India and Pakistan over Kashmir; the Kurds vs. various Middle Eastern states; Northern Ireland; Kyrgyz vs. Uzbeks in southern Kyrgyzstan; Taiwan; Transnistria; Crimea; Cyprus; Serbia vs. Kosovo; the Falkland Islands; and Azerbaijan vs. Armenia over Nagorno-Karabakh. There are probably a lot more that I’ve never even heard of, but which the relevant locals care about intensely.

What does this have to do with open borders? Well, to begin with, whether or not these questions have anything to do with open borders, they clearly have to do with borders. Continue reading Deepening the Peace →

Is Immigration the Best Way to Fight Crime?

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I just came across this report from the Immigration Policy Center in 2008.

Numerous studies by independent researchers and government commissions over the past 100 years repeatedly and consistently have found that immigrants are less likely to commit crimes or be behind bars than the nativeborn. In the early decades of the 20th century, during the previous era of large-scale immigration, various federal commissions found lower levels of crime among the foreign-born than the native-born. More recently, the U.S. Commission on Immigration Reform reached a similar conclusion in a 1994 report, as have academic researchers using data from the 1980, 1990, and 2000 Census; the National Longitudinal Study of Adolescent Health; and the results of community studies in Chicago, San Diego, El Paso, and Miami.

The problem of crime in the United States is not “caused” or even aggravated by immigrants, regardless of their legal status. This is hardly surprising since immigrants come to the United States to pursue economic and educational opportunities not available in their home countries and to build better lives for themselves and their families. As a result, they have little to gain and much to lose by breaking the law. Undocumented immigrants in particular have even more reason to not run afoul of the law given the risk of deportation that their lack of legal status entails.

And:

In 2000, among men age 18-39 (who comprise the vast majority of the U.S. prison population), the incarceration rate for the native-born (3.5%) was five times higher than the rate for immigrants (0.7%).

And

In stereotyping immigrants as criminals, some anti-immigrant activists have pointed to estimates by the U.S. Government Accountability Office (GAO) that one quarter of all federal prisoners in the United States are “criminal aliens.”

However, these estimates are highly misleading for two reasons:

Only about 8% of the 2.2 million persons behind bars in the United States at the end of 2005 were in federal prisons. The majority of inmates are in state prisons (57%) or local jails (34%).

Undocumented immigrants are likely to be transferred into the much smaller federal prison system simply on the basis of their immigration status even if they have not committed a criminal offense, or have committed an offense that is relatively minor.

I still think that completely open borders probably would cause a spike in crime. Immigration => poverty => crime is the chain of causation in my mind. That’s one of the only arguments against open borders that’s at all creditable, even if there’s no real evidence for it; crude theories are sometimes right, and sometimes the best guides we have to guess the effects of policies that step well outside the range of experience. I still support open borders, of course, but I think crime risks are a good reason to open the borders carefully and in a somewhat gradual manner. But we should always bear in mind that nothing remotely like an immigration-induced crime wave has actually happened. On the contrary, immigrants are more law-abiding than natives. The easiest way to keep crime down is probably to let in a few more of these law-abiding foreigners to restrain unruly natives.

UPDATE: I had planned to make this a simple “utility” post with a link to an interesting study, but I’m afraid I added more verbiage than I planned, and may have caused confusion. The last statement “let in a few more of these law-abiding foreigners to restrain unruly natives” may have come across as flippant. It actually conflates an obvious point with a more subtle, speculative point. The obvious point is that if immigrants have lower crime rates than natives, they’ll bring down average crime rates even if they don’t affect crime rates among natives. In that case, though, one couldn’t say except as a joke that they were “restraining unruly natives.” Continue reading Is Immigration the Best Way to Fight Crime? →

Response on Charter Cities and Extraterritoriality

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This post is a response to Tyler Cowen’s recent post on the topic of charter cities and extraterritoriality, prompted by the recent charter city experiment in Honduras (more background on immigration and charter cities here). Cowen is sympathetic to the idea of charter cities, but he has some concerns. Cowen:

It would be a mistake to equate charter cities with extraterritoriality.  For one thing, a charter city has its own laws and governance, possibly enforced by overseas courts, rather than imposing foreign courts upon domestic governance, a’la Shanghai through the early 20th century.  Still, the history of extraterritoriality gives us some sense of what it looks like to have foreign courts operating outside their usual domestic environment.

The problem with extraterritoriality, as I read the literature, is not the Chinese courts had a superior system of commercial or criminal law which was tragically pushed out by inferior Western ideas.  The problem was that the foreign courts were not supported by comparably strong domestic interest groups and there was a clash between the foreign courts, national symbols, fairness perceptions, domestic rents and the like, all in a manner which led to eventual talk of foreign devils and violent overreaction against the influence of outsiders.

The history of extraterritoriality focuses one’s attention on the question of who has an incentive to support the external system of law, when such a system is transplanted abroad.  This question does seem relevant to charter cities and related concepts.

Hong Kong worked because the UK and USA were able to exert enough control at a distance, at least for a long while, and because China was weak.

One vision is that a charter city works because a dominant hegemon — perhaps at a distance — supports the external system of law.

A second vision is that a charter city works because the external system of law serves up some new and especially tasty rents to domestic interest groups.  In the meantime, avoid Tongans.

A related question is what it means for the external legal system to be “invited” in, and how much such an invitation constitutes prima facie evidence of real domestic support.

I would like to see these topics receive more discussion.

Happy to oblige! Continue reading Response on Charter Cities and Extraterritoriality →

Honduras’s Great Experiment

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There’s been a bit of content at this site previously about charter cities. See my posts “Open Borders and Derrida’s Cities of Refuge” and “Hong Kong: City of Immigrants,” as well as this page, with a Bryan Caplan video and several more links. Here’s Bryan Caplan’s open letter to the Gates Foundation on the topic. It also links to this brilliant Michael Strong post, “Gated Communities and Nation States: The Cartel Responsible for Global Poverty.” The same blog (different writer) links to this Guardian article about the project in Honduras. I had heard about this project before, but I thought they were of limited relevance, because I didn’t realize that:

The “model cities” will have their own judiciary, laws, governments and police forces. They also will be empowered to sign international agreements on trade and investment and set their own immigration policy. (my emphasis)

Well, now, that makes things even more interesting. Or shall we say, more relevant, closer to my thinking. Three cheers! Sure, it’s risky, it’s a long shot– but very worthwhile! We should all wish it the utmost success. And while there are plenty of failure scenarios, what’s really striking is that some of the success scenarios are really big success scenarios, and they’re remarkably plausible. As Paul Romer… but let me stop a moment and introduce Paul Romer, because he’s a big player in all this. Here’s Paul Romer in a recent interview. Romer is one of the leading thinkers, possibly the leading thinker, on economic development in the world. His academic work elucidated the way technological innovation adds new non-rival ideas to the endowment of mankind, thus driving long-run economic growth, since ideas accumulate. For the past few years, Romer has been championing the idea of charter cities. The idea of charter cities isn’t, as I see it, directly related to Romer’s distinctive contributions to growth. Romer is, in effect, deferring to the institutionalists here, and attributing development mainly to laws, norms, and social infrastructure. He wants to export good institutions.

Immigration policy is the key. Social infrastructure depends on, among other things, having the right people. One needs complex networks of specialization, and it’s unlikely that all the people to fill those niches are now living in Honduras. But if you can let people come in from all over the world, you have huge networks of people to draw on, and you should be able to thrive. Of course, just because you’re able to let them in, doesn’t mean they’ll want to come, even if– a big if– you can offer them good money. There are a lot of local non-tradable or public goods that will be hard to reproduce in a new city being built from scratch, and the absence of which will deter people from coming. Still, the world has a very large population, and even if a lot of them don’t want to move, and many more don’t like Honduras’s climate, and others aren’t adventurous enough to go to such a novel and experimental kind of place, you can probably still find a lot of people willing to come. In many parts of the world there are people that Amy Chua, in her book World on Fire, called “market-dominant minorities.” When I was working for the World Bank in Africa, I saw this phenomenon vividly. Every business in the city operating out of a proper building was run by some kind of foreigner. There were four main groups: Europeans, Chinese, Indians, and Arabs. People from civilizations, as V.S. Naipaul puts it in his book A Bend in the River. Of course, some of these minorities had lived in Africa for two or three generations, so in a sense they could have called themselves “natives,” but they were not at all assimilated to the black Africans they lived among. They didn’t want to be, mostly, but probably couldn’t have even if they tried. The government, meanwhile, was run by black Africans. The market-dominant minorities lived fairly well, at levels comparable to Westerners, albeit with a very different mix of consumption goods. They couldn’t go down the street to the hardward store and buy something they needed: they had to know how make it themselves. On the other hand, they could hire as much labor as they liked for next to nothing, and land was cheap, too. Now, I think it would be easy for a charter city to attract these kinds of people. They know the value of good laws, and they know the nuts-and-bolts of how to get from primitive point A to developed point B. Later on, you could attract Western do-gooders, NGO types, out-of-work academics, and a variety of talented people who fall through the cracks of the global visa regime. You might get Romeo-and-Juliet types, tragically separated by visa regimes, willing to try an adventure in a new place to be together. Maybe you could be a magnet for deportees from the United States. Clever Indians might come too. Missionaries. Dissidents. One can’t really predict it exactly: the idea is too new. And there’s a hugely important expectations game here: early arrivals would be banking on success. There are “multiple equilibria” here, with a vengeance. People like to be around other people, and that gives the whole game an all-or-nothing dynamic. But it could work.

Let me adopt the mode of giving advice to Michael Strong, or whoever the decision-maker is, maybe the first governor of one of the privately-run cities. Even I wouldn’t be so bold as to advocate immediate open borders, or even open-borders-with-migration-taxes. I advocate that for the United States because the US has huge reserves of stability and could manage the flow to its advantage, and because it’s so large that it can buffer some uncertainty in the scale and nature of global for migration that an open borders policy would reveal. Even then I wouldn’t mind the change being gradualized somewhat. In the case of a charter city, I’d recommend a visa policy that is quick and transparent but initially with some room for discretion. Later, you would try to develop rules, and at some point, you might move to a full-fledged open-borders-with-migration-taxes policy.

An early step might be to outsource some visa issuance. That is, you might make deals with corporations that set up shop in the charter city, authorizing them to issue visas. Let’s say Nestle wants to establish a major production facility. You could say, “OK, Nestle, if you invest $20 million and show us plans that will create 6,000 jobs, you can recruit anywhere in the world you want to, and issue visas to whomever you recruit. Just collect a bit of data on them and let us know who you’re letting in.” Or again, I think it would be a great idea to encourage some US universities to set up satellite campuses in the new cities. You could tell them, “Anyone you admit to your Honduras campus, you can write a visa for.” You’d eliminate a lot of uncertainty. You might actually create the only place in the world where certain kinds of teams could be put together quickly and without any risk of adverse visa decisions disrupting your plans. Now, if there were enough demand for migration to the charter cities, agencies might actually have an incentive to seek visa-issuance authorization and then just sell visas. That might be fine: the visa distributers would become a revenue source. Or it might be better to set up a visas-for-taxes scheme and run it through the government.

My guess is that there will initially be a big role for the governor in negotiating with private businesses, building confidence, coordinating. Some businesses might want to invest only if others did. Thus, Verizon might be willing to set up a cell phone network if a garment manufacturer is going to build a factory, so that there will be sufficient demand. There’s a snowball effect here, or positive externalities if you prefer. You might assemble a portfolio of provisional deals, and then sign them all when it is clear you have critical mass. One important business to establish early, I think, is university campuses. This is the age of human capital. Education pays like never before. Institutionally, it’s one of the hardest things to replicate. So I would go after US universities early, and encourage them to set up satellite campuses in Honduras. Why would a US university want to risk its reputation on a campus in Honduras? Well, for one thing, even if most wouldn’t, there are a lot of US universities, so some might. Universities might have a charitable motive, to try to promote global development. But from a business point of view, it allows them to recruit globally. They do that anyway, but student visas can be a headache. There are a lot of students who might not come because they can’t get visas, others who don’t apply because they’re not sure they can get visas, others who don’t come because even if they can get visas, their family members can’t, or they can get student visas but can’t work. University satellite campuses would attract crucial high-quality personnel. You could probably find a lot of unemployed American academics who would go to Honduras for the sake of an academic position. Of course, Hondurans will have automatic access to the charter cities, which should hopefully allay their concerns about ceding sovereignty.