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

Double World GDP? Another Economic Model of Open Borders

The claim that open borders would “double world GDP” is one of our side’s better talking points. Of course, it’s just a guess, based on theoretical models calibrated to the data, which amounts to a sophisticated, but still very fallible, form of extrapolation. These models are easy to mock if you understand them well enough to see their weak points. Yet, what alternative is there? The question of what the global economic impact of open borders would be is interesting enough to be worth answering tentatively. I’ve been working on my own, which has evolved somewhat since I wrote about it a few months ago. Meanwhile, I came across a new one, “The Global Welfare and Poverty Effects of Rich Nation Immigration Barriers,” by Scott Bradford (2012).

First, Bradford’s conclusions. Under open borders (with an exponential distribution of skills, more realistic than the uniform distribution that Bradford also considers), total world output would rise from $74 trillion to $130 trillion. Not quite “double world GDP,” but a more than 75% increase. Wages in rich countries would fall by 7.5%. Since Bradford, like John Kennan, does not model human capital as an independent factor of production, but simply interprets “skill” as multiplying a person’s labor power, this 7.5% wage drop would equally affect workers at all skill levels. There would be a 46% increase in wages for those who stayed in poor countries, and migrants to rich countries would see their wages rise by 157%.

Bradford chooses to focus on the poverty impact of open borders, but this turns out to be sensitive to an assumption about the inherent fixed cost of migration. If this cost is $10,000, the fraction in poverty would fall by 66%. Raise it to $20,000, and poverty is reduced by only 42%.

Now for the model’s Achilles heel:

[The model] implies that 94-97% of the poor region workforce, or about 2 billion workers plus their depends, would move to [the rich countries] if they could. That is unrealistic. As long as total factor productivity is higher in the rich region, and capital can move along with labor, our analysis implies that the great majority of poor region workers would be economically better off, and would increase world output, if they could move freely to the North. Even if the results in this paper are off by an order of magnitude due to elements not captured by our simple model, opening up migration has great potential to boost incomes around the world.

Where does this concession leave the model? If the author’s verdict on his own projections of migrant numbers is “That is unrealistic,” then what exactly is he claiming? He can’t be claiming that the prediction of 94-97% migrating won’t come to pass, but the prediction of raising world GDP by 75% will, since the latter depend logically on the former. What does the “even if the results in this paper are off by an order of magnitude…” sentence mean? It could be read as, “For some reason that I don’t really know, let’s assume ten times fewer people would migrate. If the effects are proportional, you’d still see a big increase in global incomes and a lot of poverty reduction.” But to conclude with such vague hand-waving as that seems to render pointless the paper’s effort to give a logically precise description of the world and assign precise, empirically-grounded values to certain parameters and variables. If the predicted migration flows are unrealistic, then the model is leaving out something important– or many things. If those things were understood and incorporated, we have little reason to think the model’s other results would be preserved, or scaled down in any predictable way.

Actually, given his other assumptions, Bradford’s estimates of the number of migrants are, if anything, indefensibly low. You might ask how 90%+ of the population could afford to migrate at all if migration costs are assumed to be $10,000 or $20,000. But Bradford’s migrants optimize an intertemporal utility function, and migration is a long-term investment in living in a better place. But it’s hardly plausible that the cost of migration would be $10,000, let alone $20,000. Bradford cites empirical evidence for this, but here, extrapolation is illegitimate. If only a skilled elite is migrating, they’ll do it in a relatively comfortable and expensive way. Under open borders, there’d be economies of scale in the migration process itself, and mass migration would find the cheapest ways to move. You would expect, for example, to see a revival of people traveling by ship. There’s no point in that now, because anyone who can hope to travel internationally values their time enough to prefer a plane ticket and a few hours’ journey to spending weeks on a boat. The market for international passenger travel by sea would be tiny. Under open borders, with billions of poor people on the move, ocean-going ships would offer international travel for a fraction of the cost of a plane ticket. So even the fig leaf of respectability that Bradford’s model derives from the 3% of people in poor countries that are predicted to stay put, we must take away. (I think a tiny number of poor people would still stay home without that, merely for the sake of the cheap land left behind by the mass exodus.)

I don’t want to come across as too negative, though, because I know by experience how difficult it is to do what he is attempting. You can’t project what the global distribution of income would be like under open borders without first having a fairly thorough explanation of what it is like now. You really need a theory of the wealth and poverty of nations even to get a model of the global economic impact of open borders off the ground. And economists haven’t exactly covered themselves in glory by their successes in explaining the wealth and poverty of nations.

Bradford (2012) could have followed Kennan (2012) by simply assuming that “strong attachment to home locations” will prevent everyone from wanting to move, and then adopting an arbitrary assumption, or an assumption with very weak empirical motivations, about what share of people would. I respect Bradford’s frankness about his model’s failure to predict realistic numbers of migrants as much as (not necessarily more than) I respect Kennan’s ad hoc measures to reduce the number of migrants his model predicts. The question which brings both of them to grief, in different ways, is: Given the opportunity to migrate to countries that are much more productive and have higher standards of living, why would anyone stay home? It’s not that answers to this question are difficult to propose. The trouble is that it’s very hard to quantify them, even in the loosest and most arbitrary way.

So, can I do better? I think so. My model will include human capital as an explicit factor of production; economies of scale at the city level; and differences in the cost of capital across countries due to country risk premiums. But what it will predict, I won’t know until I’m done calibrating it. Stay tuned!

How (Open Borders Can Help) to Win Cold War II

It took two World Wars to defeat German imperialism. Now it looks like it will take two Cold Wars to defeat Russian imperialism. Unless the West chooses not to. If the West declines to resist Russian expansionism, or dilly-dallies too long, expect a crescendo of chaos. The world order subsists on a fine web of international law norms, foreign policy doctrines, tacit and explicit guarantees and threats, precedents and balances of power. That’s why “isolationism” is at bottom just a naïve failure to recognize that people respond to incentives. In the 1930s, aggression was contagious. Italian, German, Japanese, and eventually Soviet aggression encouraged and accelerated one another because they were all testing and eroding the same system of international law. If Putin’s conquest of Crimea is allowed to stand, it will not be the last.

But in a confrontation with Russia, does the West actually have the moral high ground? The democratic governments of the West are really rather wicked institutions. The deportation of millions by the US regime over the last 20 years is a crime considerably less than slavery, but on the order of Jim Crow segregation, and worse than the WWII internment of the Japanese. US fiscal policy preys ruthlessly on the young, sucking away their earnings to finance retirement programs that will be bankrupt long before they retire. Religious freedom, for the sake of which America was founded, is under unprecedented attack. Putin’s claim that Russia is standing for Christian values over against a decadent West is not wholly spurious: his regime has banned abortion advertising, and abortion has been plummeting, and Russians are surely less afraid than Americans that their churches will be harassed or closed down by the LGBT lobby. Russia is decent on immigration, too. It has the largest foreign-born population in the world after the United States, and accepts many immigrants from places like Central Asia who could hardly hope to get into the West.

As for Crimea, what exactly is wrong with Russia’s annexation? That it violated “sovereign” borders? But so did the US-led campaigns in Kosovo and Iraq. While the West obviously had far stronger humanitarian reasons to intervene in Kosovo and Iraq than Russia did in Crimea, the strength of a humanitarian case for intervention is a fuzzy variable. And while the Crimean referendum was obviously a farce, it’s surely true that many, and likely true that most, Crimeans prefer to join Russia. “Consent of the governed” as a political principle seems to imply a right of secession. Of course, that’s not a principle international law recognizes, and it would lead to chaos if it did. But democracies need noble causes to be willing to fight, and insisting on the integrity of the historically accidental borders of Ukraine against the will of the Crimean people hardly qualifies.

The trick, then, is to wage Cold War II in ways that will both be effective, and will make the West’s cause more just. Here, open borders can help. The ideas below are selective applications of the open borders ideology, which would be of great practical value in defeating Putin. I recently discussed them with a foreign policy specialist who knows a lot about Russia. Such ideas had never occurred to her before– they’re not the sort of things Washington talks about– but she agreed they’d be effective, albeit they’re politically infeasible. Well, perhaps. But sometimes geopolitical struggles can move the Overton window very far and very fast. Here’s hoping.

1. Insist on freedom of movement within Ukraine, including Crimea.

Never mind who rules Crimea. Insist that all Ukrainian citizens should have free access to it. Russia has hitherto been pretty accessible for Ukrainians, so Russia might concede this, but to the extent that there’s any interference with Ukrainians’ freedom of movement “within their own country,” make that a cause celebre. This will help to prevent the legitimacy of the annexation of Crimea from congealing. International non-recognition of Crimea will keep getting talked about. There will be no normalcy for Crimea until it is under Ukrainian rule.

2. Insist that Russians traveling to Crimea need Ukrainian visas, but make them available easily.

On a related point: let Ukraine offer Russians visas to visit Crimea, but insist that they need them. When ordinary Russians want to travel to Europe, ask them whether they have been in Crimea since April 2014. If so, charge a fine, which will be forwarded to the Ukrainian government as compensation for trespassing on their territory without permission. (I consider it legitimate for a properly constituted and internationally recognized government to demand that foreigners visiting their territory have visas, provided that the visas are freely available and can only be denied on very limited grounds related to public health or safety.)

3. Let Russians visit Ukraine and the West freely to live and work; but tax them to compensate Ukraine; and require them to take civics classes, so as to bring them up to the standard of decent, civilized conduct which their homeland lacks.

This is a variation of the DRITI policy. Let Russians come to the West to work. But impose a special tax, and use the proceeds of the tax to finance Ukrainian resistance to Russian aggression. Say: “Yes, Russians, you can live and work in the West. We even exhort you to do so, so as to avoid supporting Putin by paying taxes to him and listening to his propaganda. But you have to show penitence for your homeland’s aggression by paying taxes to help its victims fight back against it.”

Also, set up classes in the West, and require Russians to attend them occasionally– don’t make it too burdensome, once per three months is enough– to instruct them in the values that peaceful, civilized, democratic nations live by. Some will scoff at them, no doubt, but I think they could be fairly effective. And the fact that the courses would be mildly humiliating is useful. It would make it clear to Russians that their country’s behavior puts them a step below citizens of other nations on the moral scale.

4. Welcome young Russian men of conscription age to enter the West, and even bribe them.

Russian conscription is rife with human rights abuses, with draftees sometimes being treated little better than slaves. So there is a human rights case for treating all young Russian men of conscription age as refugees. But there is also a ruthless realpolitik logic to welcoming young Russian men to the West: it directly depletes Russia’s military resources. I would go further than just letting them in, without the usual taxes and civics classes. I would pay them to come, e.g., $1,000/month. If we end up hosting, say, 3 million young Russian men, that’s $30 billion a year. A small price to pay to defuse the greatest military threat the West faces today. And it would drive Putin crazy.

5. Make this offer to China: if China joins in sanctions against Russia, the West will demand that Taiwan gradually open up to immigration from the Chinese mainland; but if China ever recognizes Russia’s annexation of Crimea, the West will immediately recognize Taiwan’s independence.

The contribution of open borders ideology here is that, while China’s claim to territorial sovereignty over Taiwan seems hard to justify, open borders principles would support recognizing the right of Chinese from the mainland to travel to or settle in Taiwan. And that might certainly be a step towards the reintegration of Taiwan with China, so China would welcome it.

I could write a lot more about how the West should deal with Russia (but just this one: turnabout is fair play, so the West should say that by violating the territorial integrity of its neighbors, Russia has forfeited its own, and declare that Chechnya and Kaliningrad can expect the West’s support for their independence whenever they want to seek it). But I think the strategic use of key open borders tenets would be very effective, far more so than anything the West is doing now, maybe more effective than anything else the West could do. The beauty of it is that while these policies would be extremely damaging to the Russian state, they would on balance be beneficial to the Russian people. And for that reason, they would make it much harder for Putin to promote Russian solidarity against the West. They would also make it more difficult for Putin to claim the moral high ground. Russians are obsessed with moral equivalence and claiming that whatever their government is doing, the West does it, too. So you might really see Russia competing with the West to use open borders as a geopolitical weapon, e.g., trying to deplete Western military resources by welcoming Western young men to Russia. That would be good for freedom of migration, but it would also show that Russians are far more willing to “vote with their feet” in favor of the West, than vice versa.

Make More Singapores!

I have advocated the DRITI policy– instead of coercively restricting migration, tax it and use the proceeds to compensate natives– for years, and Principles of a Free Society was written, if you like to think of it that way, as a political philosophy suited to undergird DRITI policies. By now, this has become a standard part of the case for open borders. Thus, in “Meant for Each Other: Open Borders and Western Civilization,” Bryan Caplan writes:

Still worried [about open borders undermining natives’ wages]?  There’s a cheaper and more humane remedy than keeping foreigners out: Charge them an admission fee or surtax, then use the proceeds to help displaced native workers.

Which is the same idea as DRITI. Not that I’m blaming Caplan for borrowing the idea from me without acknowledgment. Caplan knows I advocate migration taxes. He even wrote one of the blurbs for Principles of a Free Society. But Gary Becker proposed a migration tax to the IEA back in 2010. Actually, that was four years after I published the idea, but Becker had written about it before, in an op-ed in the 1980s. Recently, at the APEE conference in Las Vegas last April, Richard Vedder also proposed a migration tax. The idea is really too obvious to quibble over its paternity. It’s a simple cross-application of the standard free-trade advocacy truism– “yes, free trade has winners and losers, but tax the winners to compensate the losers”– to migration policy. I’m not sure whether Caplan got the idea from me. I’m pretty sure that if he hadn’t got it from someone, he’d easily have thought it up on his own. It’s a no-brainer for economists, but somehow policymakers are blind to it. Or so I thought.

What I didn’t realize is that Singapore already has something close to a DRITI policy in place, as Carl Shulman reports. From 1970 to 2010, the number of foreign workers in Singapore rose from just over 20,000 to more than a million, a third of the labor force, and still rising. Most of these are not the high-skilled workers that OECD democracies tend to privilege. Nearly a million are here on low-skilled “work permits,” including foreign domestic workers (214,500) or construction workers (319,100). How is the number of immigrants regulated? First, by Foreign Worker Levies, i.e., migration taxes, a policy variable. There are also Dependency Ceilings, maximum foreign shares of an employer’s workforce. Shulman doesn’t say how often these are binding, but they seem liberal, e.g., 87.5% of construction crews can be foreign. And how much do migration taxes raise?

Levies for unskilled workers range from $3,600-$9,000 per annum. With around a million workers subject to levies, the proceeds to Singapore should be in the billions of dollars (all figures are Singaporean dollars, about 0.8 $USD each).

Total levies collected amounted to $1.9 billion in 2010 and $2.5 billion in 2011. Total government operating revenues in 2010 were $45.5 billion and $50.5 billion for 2011, so worker levies alone accounted for 4-5% of operating government revenue. Since then the migrant population has grown substantially and levies have been hiked, by a third or more in many cases, with further increases scheduled, so the current percentage is likely significantly higher. Even so, the figure will be small compared to the economy, because low-skill workers contribute disproportionately little to economic output, but is high as a proportion of compensation costs. While Singaporean natives with such low incomes would pay no income tax, the top levy rates for unskilled workers (charged to employers) can be half or more of wages.

In short, while we can quibble about details, Singapore more or less understands and is applying and applies the citizenist case for open borders. Singaporeans benefit from cheap cleaners, bus drivers, and domestic workers. And they don’t just benefit themselves; foreign workers also gain opportunities. As Vipul Naik pointed out in conversation, if all developed countries adopted policies like this, migrant wages and wages in migrant source countries would be competed up. I might argue for slightly different moral side-constraints (e.g., I wouldn’t endorse deportation of pregnant women), but it would be a great thing for both economic development and freedom if other developed countries followed Singapore’s lead.

Lastly, a more general point. Singapore is amazing. Every time I read about policy in Singapore, I find myself involuntarily thinking Wow! This is the most enlightened regime on earth. Perhaps that’s a slight exaggeration, but few would deny that Singapore is a spectacular success. So why don’t we make more of them? Much of the key to Singapore’s success seems to be simply that it’s a sovereign city-state. In general, sovereign city-states make wildly disproportionate contributions to civilization. Think of the city-states of ancient Greece, Athens and Sparta and Corinth, birthplaces of philosophy, history, science, and democracy. Or the city-states of Renaissance Italy– Venice, Florence, Genoa– which were also gloriously accomplished in arts and letters and sciences. Today, Hong Kong has a kind of partial sovereignty. It, too, is a dazzling success, whose success has spilled over in a massive way. Hong Kong has been a major catalyst for China’s economic take-off. Yet, perversely, we have established a system of international sovereignty which makes it impossible to found new sovereign city-states. We need charter cities.

Piketty, inequality, and open borders

A society in which the rich have a very high degree of economic, political, and sociocultural influence is an unpleasant society in many ways.
Read more at http://www.project-syndicate.org/commentary/j–bradford-delong-is-surprised-by-the-poverty-of-conservative-criticism-of-capital-in-the-twenty-first-century#OS2DZ3JavDCdtOT1.99

Thomas Piketty’s just-released Capital in the 21st Century has been much talked about, e.g. by Greg Mankiw, Brad DeLong , Reihan Salam, Megan McArdle and Tyler Cowen, for starters. Reviews aside, Bryan Caplan’s post about (the myth of) the “hollowing out” of the economy, or Scott Sumner’s (tentative) advocacy of 80% marginal tax rates on consumption (more here) seem to show how Piketty’s influence has steered the conversation towards more talk about inequality.

I’ve read only a little, but already Piketty has opened my eyes to a possibility I had never before seen. Let r be the return on capital, e.g., the 7% long-run average return on US stocks. Let g be the (per capita) growth rate of the economy as a whole, e.g., 2%. An abstract “capitalist” will see his wealth, and therefore income, grow at rate r, minus his consumption, which is perhaps small compared to his income. An abstract “worker” will see his income rise at (roughly) rate g. So what happens to inequality? As long as r>g, it keeps increasing. Without limit. While r>g seems to be true, there are a lot of reasons why r>g as a story of ever-increasing inequality probably isn’t a good description of the real world. But I’m indebted to Piketty for elucidating the conceptual possibility.

Is ever-increasing inequality driven by r>g disturbing? Maybe not. As long as g is positive, the workers are still getting better off. Moreover, for r>g to drive ever-increasing inequality, the capitalists have to be rather abstemious, which takes some of the sting out of increasing wealth inequality. Capitalists have more, but don’t live that differently. If, on the other hand, capitalists dissipate their wealth on luxury consumption, that seems more offensive, then r>g increasing inequality.

Much depends on one’s “social welfare function” (SWF), that is, on how much you value the welfare of different people, and how much you think the millionaire’s marginal dollar is worth, compared to the pauper’s. Suppose desirable outcomes for society are defined by V=a1*f(W1)+a2*f(W2)+…+an*f(Wn), where individuals 1… n are all the members of society, a1… aN are parameters that govern the importance we replace on the welfare of difference individuals (in a “democratic” SWF a1=a2=…=aN), W1… Wn represent (in a concession to Piketty’s preoccupations) the wealth of the individuals (though Scott Sumner would rightly stress that consumption inequality is what we should really care about), and f is some function, the shape of which is the crucial, defining feature of the entire SWF (assuming that we’re all “democrats” and value everyone’s welfare equally). Presumably the first derivative of f is positive (each marginal dollar is worth something) and the second derivative of f is negative (each marginal dollar is worth less than the last), but– this is the key– by how much does the marginal value of a dollar decrease as one gets richer? A SWF in which the second derivative of f is only slightly negative might be called “right-wing” or “conservative,” in the sense of being relatively indifferent to inequality, while a SWF in which the second derivative of f is more negative is “left-wing,” more sensitive to inequality.

Here John Rawls offered an implausibly extreme answer: that society should only maximize the welfare of the worst-off, and in effect, should be completely indifferent to whether the not-worst-off are only slightly above the minimum, or enjoy vast prosperity and affluence. This is very odd. The wealth of millionaires is doubtless less good than the same wealth would be spread out among the poor; but surely it is worth something. I would have called Rawls the “far left” of the plausible set of SWFs. Yet as far as I can tell, Piketty’s social welfare function is to the left of Rawls’! The (unsympathetic) Wall Street Journal writes that…

Mr. Piketty urges an 80% tax rate on incomes starting at “$500,000 or $1 million.” This is not to raise money for education or to increase unemployment benefits. Quite the contrary, he does not expect such a tax to bring in much revenue, because its purpose is simply “to put an end to such incomes.”

while the (sympathetic) Brad DeLong, summarizing Piketty’s argument, does not say that capitalists are in any way impoverishing the workers by their epic feats of accumulation, but rather, that “A society in which the rich have a very high degree of economic, political, and sociocultural influence is an unpleasant society in many ways.” If DeLong and the WSJ (as I read them) are correctly characterizing Piketty’s position, then in his SWF, the first derivative of f is negative at some point. We should not just want to burden the rich a bit in order to bring ourselves up a bit. We should actually want to pull the rich down, even if we hurt ourselves in the process. I’ll be on the lookout, when I get a chance to read the book through, for whether Piketty really believes this. It would be an intriguing oddity.

My response to what I’ve gleaned about Piketty’s argument so far is twofold:

1. Western society already has a sufficient response to excessive wealth accumulation in monogamy. I like Scott Sumner’s 80% MTR on consumption, in principle, though I think it would be hard to implement. But I think monogamy basically is an 80% MTR on consumption, or more. If an amoral rich man could buy a harem, he could really hit the poor where it hurts. But if he can’t, the joke is on him. It would take some ingenuity for a monogamous man to come up with a way to spend tens of millions of dollars without generating major positive spillovers. If he sends his mediocre kids to Yale, they might not learn that much, but he’ll be subsidizing scholarship and science, as well as cross-subsidizing the educations of other, brighter students on financial aid. Or, if he hires a scholar (e.g., Adam Smith) to accompany his kid on a Grand Tour of Europe, the scholar will probably use the time to write a magnum opus on the side (the Wealth of Nations). If he goes to the opera, the music his money buys will soon get recorded and show up on everybody’s iPod. If he buys great paintings, which he probably doesn’t have the capacity to appreciate that much, cheap prints of those paintings, almost as good as the originals, will get made and sold by the thousands to middle-income art lovers to decorate their walls with. And the paintings will end up in museums sooner or later, to edify the common man. If he buys a huge mansion or yacht, his small body can’t occupy most of its rooms. To get any use of it at all, he needs lots of guests. Spillovers again. And of course, he’d have to be an idiot not to see that he’ll get far more satisfaction from giving his money away to a chorus of praise and gratitude, than from attempting to “consume” far more he can use to satisfy his needs. And so the rich become the great philanthropists, and I think a marginal dollar in the hands of the Gates Foundation is worth about a hundred times as much as a marginal dollar in the hands of any democratic government on earth. The Rockefeller Foundation financed the Green Revolution while the US government pours most of its money into pampering the elderly. Again: inequality without monogamy– harems and eunuchs and child brides, etc.– really is horrible. But the West has achieved the inestimable triumph of caging the selfish genes even of the very rich.

2. To the extent that inequality is an evil worth worrying about, there is no justification for diverting our attention from any policy response other than that of opening borders to migration. Fortunately, Piketty is not one of those contemptible humbugs who profess to care about inequality, yet oppose or ignore immigration. He has a few pages on immigration reform late in the book, and is unabashed in his support for more freedom of migration, with essentially no qualifications. But the passage doesn’t suggest that he has anything like an adequate appreciation of its importance. A vast amount of inequality depends merely on the luck of what country one is born into. While global wealth taxes would presumably weaken incentives and reduce global GDP, even if they made it more equally distributed– and it would require a terrifyingly invasive state to enforce them– open borders would double world GDP and make it more equitably distributed. So, let’s open the borders first. We’ve got plenty of work to do to get there. Then, if inequality still seems like too much of a problem, we can talk about whether a more invasive state, and weaker incentives to work, save, innovate, trade, economize, etc., are a price worth paying for still more equality.

P.S. It’s a little off-topic, but if we’re worried about r>g, the real fix is Social Security privatization. Forcing up the savings rate would mean more capital, lowering its marginal product– lower r— and raising the growth of the economy– higher g.

UPDATE: Minor corrections were made after this was first posted.

A society in which the rich have a very high degree of economic, political, and sociocultural influence is an unpleasant society in many ways.
Read more at http://www.project-syndicate.org/commentary/j–bradford-delong-is-surprised-by-the-poverty-of-conservative-criticism-of-capital-in-the-twenty-first-century#OS2DZ3JavDCdtOT1.99
A society in which the rich have a very high degree of economic, political, and sociocultural influence is an unpleasant society in many ways.
Read more at http://www.project-syndicate.org/commentary/j–bradford-delong-is-surprised-by-the-poverty-of-conservative-criticism-of-capital-in-the-twenty-first-century#OS2DZ3JavDCdtOT1.99
A society in which the rich have a very high degree of economic, political, and sociocultural influence is an unpleasant society in many ways.
Read more at http://www.project-syndicate.org/commentary/j–bradford-delong-is-surprised-by-the-poverty-of-conservative-criticism-of-capital-in-the-twenty-first-century#OS2DZ3JavDCdtOT1.99
A society in which the rich have a very high degree of economic, political, and sociocultural influence is an unpleasant society in many ways.
Read more at http://www.project-syndicate.org/commentary/j–bradford-delong-is-surprised-by-the-poverty-of-conservative-criticism-of-capital-in-the-twenty-first-century#OS2DZ3JavDCdtOT1.99

Wielding Power

In the third issue of Wielding Power, the winning essay in response to the question “Should Nations Restrict Immigration?” is written by me. Open Bordersreaders, an intelligent lot as far as I can tell, might consider submitting to future competitions. The editor, Ryan K. Johnson, who blogs here, is an astute reader and critic, open-minded, and a lover of good arguments, who skillfully outlines the arguments of contributors in the margins. Interestingly, all three winners favored open borders! But Ryan Johnson himself doesn’t.

In a blog post introducing the issue and inviting further debate, Johnson offered me this challenge:

Nathan- I’m curious what you think about the risk of political instability or nativist backlash from open borders. Why do you think those aren’t serious concerns?

I wouldn’t say they “aren’t serious concerns,” I’d say that these arguments against open borders are overwhelmed by the case in favor. But it’s worth explaining why I give them limited weight.

“Nativist backlash” might mean different things, ranging from scattered grumbling to ferocious ethnic violence. Grumbling is of minor importance. People grumble about high gas prices and the inconvenience of complying with the tax code, but those are minor problems. Violence, of course, would be a dire concern, but first, I doubt it would come to that, and second, it’s ethically undesirable to reward violence-prone natives by giving them what they want.

My other response to the “nativist backlash” concern is that, as I explain in the article itself, I advocate taxing migration, and using the proceeds to compensate natives, and I think this would be quite effective in defusing nativist backlash. To the complaint, “They’re taking our jobs,” would come the answer, “Yes, but we’re getting checks in the mail from the IRS, financed by their taxes. Some of us may be earning less, but just about everybody’s living standards are higher.” I don’t think that would completely eliminate nativist backlash. Some would just hate to see the streets cluttered by impoverished foreigners. Maybe some would feel that a certain dignity associated with self-reliance had been lost, and that they’d prefer a lower living standard from one’s own wages to a higher living standard financed by foreigners via the government. On the other hand, one would hope that there would be at least some public understanding of the absolutely enormous power of open borders to raise global income and alleviate world poverty, and some pride in being part of that. All in all, if you could get over the huge hurdle of passing open borders (with migration taxes) in the first place, I doubt there would be all that much backlash afterwards.

Political stability is related to nativist backlash, but in some respects a distinct concern. Even if natives were wholly welcoming, on principle, or because they liked getting immigration-financed checks from the government, immigration might lead to political instability because immigrants would make public opinion more fragmented and multipolar, or because they were more prone to extremism, or tolerant of corruption. And since immigrants to a country like the US would be, on average, much poorer than natives at first, they might have an incentive to vote for distribution.

Except that they wouldn’t have the vote for a while. I advocate a rather long-drawn-out path to citizenship, involving mandatory savings which must be accumulated and then forfeited in return for becoming an American. Immigrants under this visa would have an attractive alternative to staying in America: return home, with a good deal of money to start a new life. Those who don’t especially like America, those unwilling or unable to learn the language and assimilate, and those whose economic prospects in America are poor, would probably find it in their best interest to sojourn in America for a few years, then return home to a life of comparative affluence on the money they were forced to save in the US. Those who chose to stay would likely have an economic profile closer to that of natives. How they would vote, I can only speculate; but I doubt they would deviate from natives in a radical or destabilizing way.

Of course, immigrants could destabilize the American polity through street activism or violence. Violence, I consider unlikely. Even if immigrants under open borders numbered well over 100 million, as Gallup has suggested they might (and I agree), they would still be outnumbered by natives, and more importantly, any immigrant group, e.g. based on ethnicity or nationality, would be vastly outnumbered by natives plus other immigrants, who would likely side with natives against violent activism. Fundamentally, immigrants would have agreed to come into the US under certain policies, and while not all of them would continue to accept the legitimacy of those policies, I think most would. People’s promises do generally mean something to them. But if systematic, political violence from immigrants were a clear and present danger, that would be a ground for restricting immigration by the groups most inclined to foment it. As for street activism, that wouldn’t matter much as long as natives are unpersuaded by their protest slogans. If crowds of immigrants march through the streets demanding equal taxes and voting rights, natives can just shrug and say, “Whatever. When you came, you agreed yourself to pay extra taxes and not have the right to vote. You’re a lot better off than you were in Bangladesh. Get over it.”

In his response to my essay in the issue itself, Johnson writes:

Is there no value in the group and its culture?

The short answer here is “Of course there is… but what does that have to do with anything?” I have a network of friends, family, and acquaintances that I value so much, that without them, life would lose much, perhaps most, of its meaning and value. But to suggest that that’s a reason to exclude immigrants is prima facie a complete nonsequitur. How do the immigrants impair my enjoyment of this network of friends at all, let alone significantly? Would they somehow clog the channels of communication, so that I couldn’t send my friends text messages or e-mails? Would they create so much traffic on the roads that I couldn’t visit my friends?

Yet it may the case– here, see Robert Putnam’s work on social capital and immigration— that immigration dilutes the population of people who are enough “like me” to have valuable interactions. Maybe there’s a lot of value in just being able to walk down the street and start socializing with the first person you meet, having enough in common with them to make this feasible and worthwhile. Let in lots of immigrants, and you have to start picking and choosing who to interact with, if you want to avoid the labor of constantly trying to bridge large cultural gaps. Maybe.

But my experience suggests otherwise. There just don’t seem to be many occasions where significant, valuable actions occur that aren’t filtered by some social setting. Thus, I make friends among colleagues, that is, among people selected for profession and institutional affiliation to resemble me. I make friends at my church, that is, I make friends with people self-selected for a highly specific set of beliefs and values. I have friends from grad school, that is, from a selective educational institution which we both attended. Etc.

I have a feeling that fifty years ago, the US was less fissiparous and fragmented, and that a kind of grass-roots solidarity with the neighbors was more of a reality than it is today. We may have paid a high price for that in conformism and the suppression of creativity and authenticity, and a kind of cultural liberation has taken place which has been at once exhilarating and alienating. That may be the reason for my impression that mere neighborhoods are no longer an important kind of community, and the kinds of community that do matter are immune to geographical dispersion. Whether immigration restrictions would be justifiable if neighborhood solidarity were a more important form of community is a large too large a question for me to deal with just now. (But I think not.)

Meanwhile, never forget that immigration restrictions separate groups as well as binding them together (if they actually do the latter at all). Many people are separated from loved ones by borders.