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Vipul Naik founded the Open Borders website in March 2012. See also: Vipul Naik's personal statement Vipul Naik's description of open borders on his personal site Page about Vipul Naik on Open Borders

Funding compensation for natives who lose out: through the economy at large, or through migrants?

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Paul Crider’s recent blog post critiquing keyhole regimes, and his subsequent comment reply to Nathan regarding the appropriate keyhole solutions regarding the decline in the standard of living of some natives (due to wage decline) that might be engendered by migration got me thinking. Roughly speaking, we can summarize the effects of migration as follows:

  • Migrants benefit greatly from migrating. Economically, this is due to the huge place premium that many migrants benefit from.
  • The overall size of the economy that receives the migrants increases. On a per capita basis, the effect on the incomes and wages of prior residents of the economy is expected to be somewhat positive, but much less than the gains experienced by migrants.
  • There are some subsegments of the native population, particularly those at the low-skilled end, who might in expectation experience small economic losses due to migration.

So, some natives are expected to lose out. A number of people believe that political changes must be, to the extent possible, Pareto improvements: nobody’s worse off than before. This is not to be taken literally: it’s impossible to be sure that nobody would lose out from a change as large as significant liberalization of migration. So I’ll use Pareto improvement in the sense of Pareto improvement in expectation at the clearly identifiable subgroup level: no large subgroup of the population that can be identified clearly in advance should, in expectation, be worse off than before. On this view, then, one native being killed by somebody who migrated due to liberalization of migration does not violate migration being a Pareto improvement. But if high school dropouts can, in expectation, expect to see their wages go down by 5% due to migration liberalization, that is a no-no and we need to get back to the drawing board.

To the extent that “pure” open borders is not a Pareto improvement, i.e., we can clearly identify subgroups of the population that would, in expectation, lose out from open borders, what is the best that can be done to fix the problem? The simplest approach is to compensate them through lower tax rates, greater welfare state benefits, or direct one-time cash compensation. The compensation method should change how they fare in expectation to the point where they are no longer worse off than the status quo. Suppose you agree with all this. The question arises: how should the compensation be funded? Paul’s post and comment hint at the two competing schools of thought regarding this.

Funding through the migrants

Migrants are the ones who experience the largest per capita gains, and who make the most voluntary decision (by actually moving). Thus, it seems to make the most sense to put the direct obligation of funding native compensation on migrants’ shoulders. This doesn’t mean, of course, that the money is borne completely by the migrant, as any student of tax incidence can tell you. But it still is a tax on migration and all the activities made possible through migration, even if not completely borne by the migrants.

Co-blogger Nathan Smith has blogged about the three types of ways that money may be raised from migrants: auctions, tariffs, and taxes (his own preferred scheme, which falls in the “taxes” subcategory, is what he calls DRITI). Nathan’s goal in the post was a combination of discussing means of revenue generation and addressing concerns about swamping. And therein lies the problem: any attempt to raise money from migrants or migration-related activities curtails migration flows. Some ways of curtailing migration flows are more morally defensible than others. Selecting migrants through a random or opaque process is among the least morally defensible. Having a publicly available tariff or surtax is both more morally defensible and more efficient. A surtax on earnings after one migrates is more defensible than a tariff because it does not exclude cash-constrained migrants and allows people to migrate for free for non-work purposes. On the flip side, the surtax discourages migrants from working, although this effect would be most relevant for migrants who have moved for non-work purposes and are considering work on the side. (It would still be better than the status quo, which generally forbids most temporary immigrants from working unless they have a visa that explicitly allows them to do so. For instance, while people on student visas in the US can work for their universities, their spouses who come on spouse visas cannot work at all). [Incidentally, co-blogger Hansjoerg Walther has a somewhat different proposal, namely immigration-backed bonds. I still haven’t gotten around to thinking through the proposal in depth, so I won’t say anything specific, but read it if you like to consider this sort of stuff.]

Funding through the generally larger economy

Paul Crider’s comment points out a moral problem with funding through the migrants, and suggests the alternative — fund it through the economy at large (emphasis mine):

As I hinted in the post, I’m not overly concerned with the plight of low-skilled rich country natives. I believe it’s necessary to let people down easy when government-promised explicit entitlements are going to be reformed away, as could one day happen with social security or medicare in the US. But wage diminution by immigration liberalization is something else. It’s more similar to deregulation leading to rapid adoption of new technologies, to the detriment of the previously protected firms. It is just allowing creative destruction to do its work, where before it was prohibited. I don’t think morality demands buying off the losers of every new innovation. And to the extent that that is what you want, redistributing from the new blood to the old blood is not the right tool. If you want to soften the vicissitudes of the market, general social safety nets are better tools for the job.

To understand the rationale for this, it might be worth reiterating a few points.

  • From the point of view of the natives who lose out, losing out to immigrants isn’t qualitatively worse than losing out due to free trade or technological innovation, and should not be treated differently. If immigration tariffs or surtaxes are a good idea, so are trade tariffs and innovation taxes.
  • Immigrants were not causally responsible for the fact that some natives may have enjoyed higher wages than the wage rate under open borders, and they are not morally responsible or culpable for the wage decline that the natives experience. To the extent that migrants are “winners” it is only relative to their earlier (coercively) enforced loser status. The transfer cannot be justified on the grounds of moral culpability or blame.
  • In absolute terms, many of the migrants who will pay the huge tariff or surtax will be poorer than the natives who are being compensated. This form of compensation can therefore not be justified on egalitarian grounds.
  • Many writers with free market sympathies have argued that companies that hire low-skilled workers and pay them low wages are not morally responsible for giving the workers a wage well above where the market clears, and in so far as there are general moral responsibilities, these responsibilities need to be fulfilled by “society” as a whole, not by the particular employer (see here for instance). A similar argument could be applied in our context: migrants are not morally responsible for making up the wage decline that some natives experience.

Fortunately, the prediction is that liberalizing migration will expand the total economy considerably, and is also likely to increase the per capita income of prior residents on the whole (though probably not by a huge amount). Assuming that certain forms of government spending, such as defense, will not go up in proportion to the population increase, this leaves more room for an expanded social safety net, with the expansion largely targeted at subgroups of the native population that are most likely to lose out in expectation from migration liberalization. Further, since some subsegments of the native population, particularly the richer ones, are likely to benefit more from free migration, taxes on them could be raised by a small amount. Some concrete proposals in this direction:

  • Make the tax system more progressive while keeping it revenue-neutral. This effectively means some redistribution from high-earning people (who are likely to benefit the most from low-skilled migrants) to low-earning people (who are likely to benefit the least, and may even lose out). Note that the migrants themselves are low-skilled and end up paying low taxes, unless a separate surtax is imposed on them. A further modification would be to charge a surtax for migrants that brings their taxes up to the level that natives had to pay prior to the change in the progressive direction.
  • Provide one-time cash compensation or increased welfare benefits to natives based on income or skill level, funded through greater tax revenues on the economy as a whole (without necessarily changing tax rates). This compensation will not be available to migrants, but otherwise they face the same tax and legal regime as natives.

Where I stand

In this blog post, I considered, in the context of a keyhole solution A, the following three options for which one can have a rank-order preference:

  1. Open borders without keyhole solution A.
  2. Open borders with keyhole solution A.
  3. Closed borders and/or status quo.

Most people sufficiently committed to open borders, or to significant liberalization of migration in general, have a rank-order preference of either (1) > (2) > (3) or (2) > (1) > (3): open borders, with or without keyhole solutions, are preferable to the status quo. This is in contrast with some migrant rights activists who view some keyhole solutions as so bad that they prefer closed borders to the acceptance of such solutions — rank-order preference (1) > (3) > (2) or (3) > (1) > (2), and also in contrast with some keyholists who consider the keyhole solutions absolutely essential before they can even consider liberalizing migration — rank-order preference (2) > (3) > (1) or (3) > (2) > (1); hardcore restrictionists are either (3) > (1) > (2) or (3) > (2) > (1).

For the specific (potential) problem discussed in this blog post, namely, the existence of identifiable subsegments of the native population that are expected to lose out from migration, there are two alternate types of keyhole solutions being offered, namely:

  • (2G): Fund compensation of natives who lose out through the general economy.
  • (2M): Fund compensation of natives who lose out through migrants.

We can then consider rank-order preferences between (1), (2G), (2M), and (3). My personal rank-order preference is (1) > (2G) > (2M) > (3), which I believe would be the same as Paul’s, judging from his remarks. However, it would more accurately be described as (1) > (2G) > (2M) >> (3) — I think that the differences between (1), (2G), and (2M) are insignificant relative to their difference with the status quo. My relative rank-ordering between (1), (2G), and (2M) is also not too strong. While I do broadly agree with the arguments that Paul laid out, I don’t see this as an issue of comparable moral significance to closed borders. (Of course, when I say (2G) and (2M), I am assuming that the fees or taxes are “reasonable” in the sense of not being so large as to effectively work out to being equivalent to the status quo. It would be hard to quantify this, though, so I’ll keep things vague). Note that my rank-order preference deliberately focuses on permissibility and desirability and does not incorporate considerations of feasibility and stability, which would of course become very important when making proposals for actual political consideration. It is possible that accounting for questions of feasibility turns the rank-order preference to (2M) > (2G) > (1) >> (3), which is (I believe) the rank-order preference espoused by Nathan.

The stability of excluding migrants from the franchise: part 1

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One of the main concerns surrounding open borders, or radical immigration liberalization in general, is political externalities: migrants may vote in ways that destroy the prosperity-creating institutions of their destination countries. This would be bad not merely from a citizenist point of view, but could also entail killing the goose that lays the golden eggs, thus leading to an overall decline in global utility. To minimize this (potential) danger, a keyhole solution that has been advocated is to significantly increase the length and complexity of the path to citizenship.

My co-blogger John Lee has argued that open borders can be separated from open citizenship both in theory and practice. My co-blogger Nathan Smith, in his DRITI proposal for migration to the United States, has suggested that migrants have some fraction of their income be stored in a mandatory savings account, and once the amount in the account crosses a threshold, they can become citizens, if they are willing to forfeit the amount to the state. This creates a de facto waiting period as well as what amounts to a citizenship tariff.

Stability and other dimensions

In a previous blog post, I had written that any proposed keyhole solution needs to be evaluated along four dimensions:

  • Moral permissibility
  • Desirability
  • Feasibility
  • Stability

The purpose of this post is to consider the keyhole solution of an extended (or, in the limit, an infinite) waiting period for migrants to obtain citizenship (and hence access to the franchise) along the fourth of these dimensions, namely stability. In other words, I’m asking the question: suppose a political compromise were somehow worked out where a new visa class were created whereby it would be very easy to migrate — temporarily or permanently — but very difficult, or almost impossible, to obtain citizenship, and therefore, to vote. Would such a compromise be stable?

Before I begin discussing this, a few brief words about the first three dimensions. Each of these dimensions is very tricky:

  • Moral permissibility is something that many people would disagree on. Is a society where a large fraction of the resident population is disenfranchised morally permissible? I think it is, for similar reasons as those that John Lee offers in his blog post. But it’s a difficult and contentious issue, as Nathan has noted in the past. So I’ll duck the question entirely in this post. Obviously, one would need to seriously consider moral permissibility before actually advocating or lobbying for such a proposal, but the goal of this post is more limited: let’s first figure out if the solution can be stable! I do think that the keyhole solution is, at any rate, not so obviously morally impermissible as to make it pointless to even study it along the other dimensions.
  • Desirability would depend crucially on what we understand of the research on political externalities and the arguments that free migration might kill the goose that lays the golden eggs. My co-blogger Paul Crider recently argued that a lengthy path to citizenship was undesirable, contra co-blogger Nathan. To say something intelligent about this would require a lot of space. Suffice it to say that concerns about political externalities are sufficiently plausible that one can make at least a prima facie case that keyhole solutions should be investigated.
  • Feasibility would be something that depends heavily on the current political climate and the specific country where the proposal is being considered. It’s a topic worth exploring in its own right. I believe it makes sense to investigate stability before investigating feasibility, because one of the arguments for infeasibility is that people (whom one would need to get on board for feasibility) are concerned that the solution (of delaying or denying citizenship) isn’t stable.

Stability and the political tug-of-war

My ultimate goal will be to examine historical instances of disenfranchised segments of the resident population and when, if ever, these segments of the population got to vote. Prior to doing that, I’d like to explore a theoretical framework intended to address the question. The framework begins with the observation that decisions about enfranchisement and disenfranchisement are controlled by the elected governments, and the politicians here are concerned about getting re-elected. Although it is not the only motive, one major constraint affecting what politicians can afford to support is the effect it has on their electoral prospects.

A year ago, I had blegged for which of four possible positions on immigration and US politics readers found most plausible:

  1. Immigration good for Democrats, bad for Republicans regardless of either party’s position on immigration. In other words, even if the Republicans took a pro-immigration stance, more immigration would still hurt them. The electing a new people argument offered by Peter Brimelow of VDARE has this structure. Mark Krikorian of CIS also makes similar arguments. This argument naturally appeals to:
    • Those trying to sell restrictionism to the Republican Party.
    • Those trying to sell pro-immigration policies to the Democratic Party.
  2. Immigration good for Republicans, bad for Democrats regardless of either party’s position on immigration. I don’t know anybody who has taken this position, but I’m adding it for logical completeness. This argument naturally appeals to:
    • Those trying to sell pro-immigration policies to the Republican Party.
    • Those trying to sell restrictionism to the Democratic Party.
  3. Immigration good for whichever party adopts a more pro-immigration stance: In this view, both parties need to compete to be more pro-immigration, and whichever party manages to be more pro-immigration will benefit more from immigration. This seems to be the view of many open borders advocates and other pro-immigration forces, such as my co-blogger Nathan here and here. This argument naturally appeals to pro-immigration forces trying to simultaneously make inroads into both parties, setting up a “race to open borders” between both parties.
  4. Immigration bad for whichever party adopts a more pro-immigration stance: In this view, both parties gain from adopting a more restrictionist stance. Restrictionists who are trying to make a broad-based appeal to both parties would find this argument appealing. In this view, the vote of people with restrictionist sympathies matters a lot more than the votes of potential immigrants and their apologists. Thus, whichever party adopts a more pro-immigration stance will lose a lot more in terms of restrictionist votes, even if they gain a few immigrant votes. Such an argument, if believed, would lead to a “race to closed borders” between both parties. Some restrictionists have made these types of arguments, though they’ve largely focused on (1).

One can consider a similar story with respect to excluding migrants from the franchise. I’ll form the story more generally, since the purpose here is to consider historical examples around the world, not to study modern-day politics. Consider a country with a de facto two-party system where the parties are A and B. Consider the following possibilities for what might happen if migrants excluded from the franchise (under a keyhole solution compromise) were given the franchise:

  1. This would significantly improve the electoral prospects of party A, regardless of whether party A or party B plays they key role in granting them the franchise.
  2. This would significantly improve the electoral prospects of party B, regardless of whether party A or party B plays they key role in granting them the franchise.
  3. This would significantly improve the electoral prospects of whichever party were seen as taking the lead, or being more actively involved, in giving them the franchise.
  4. This would significantly improve the electoral prospects of whichever party were seen as less enthusiastic, or more opposed, to giving them the franchise. One possible story for this is nativist backlash against whichever party is seen to be championing migrants.

In the earlier discussion of Democrats and Republicans, (3) was the ideal position from the pro-immigration perspective, and (4) was the ideal position from the restrictionist perspective. In some sense, the story is flipped now: when trying to judge the stability of the keyhole solution, (3) is the worst possibility (both sides have incentives to compete for granting migrants the franchise), and (4) is the best (each side wants to avoid being seen as friendly to the idea of extending the franchise to migrants). (1) and (2) are intermediate: if it is known in advance that one specific party would benefit by granting the franchise, then the other party would oppose it. If decisions to grant the franchise require supermajorities in the legislatures, and political power is approximately evenly distributed in the legislature, the existing arrangement of denying the franchise would be relatively politically stable.

Although (3) is in some ways the worst for stability, it is plausible to imagine the keyhole solution being stable even if (3) were true, as long as one party had accumulated a huge lead over the other in terms of being seen as friendly to the idea of the migrant franchise. In this case, the other party would need to either expend a lot of effort overtaking its competitor in terms of how friendly it appears to the migrant franchise, or it could just block the legislation to grant migrants the franchise. The latter course of action might well prevail for a fair length of time, if for no other reason than status quo bias.

Stability and feasibility: it’s relative

One plausible argument is that if a keyhole solution were sufficiently feasible as to actually get implemented, it would also be stable. In this view, then, stability is not something to be worried about per se, and all our energies should be focused on the question of feasibility. However, this is not completely satisfactory particularly in the context of the franchise because of the incentives (for members who agree to the original compromise) to later defect and enfranchise the migrants, particularly if (3) is the most valid.

The relevant question (that we will consider for each example we explore) is what, historically, has been relatively easier: liberalizing migration, or enfranchising existing migrants?

Short versus long run: a brief note

The answer to the question of whether a particular electoral arrangement is stable depends to a considerable extent on the timeframe over which the arrangement is considered (as some of the historical examples below, that I’ll discuss in my next blog post, shall clarify). One can critique practically any arrangement by arguing that it will not be stable over the next 100 or 200 years. But such a critique, to be taken seriously, would need to be clarified in at least two ways.

  1. The critique should point out to specific features of the proposed arrangement that make it more unstable relative to other arrangements. It is not enough to point out that the arrangement will be unstable. Even the status quo isn’t particularly stable over a sufficiently long time frame. The world in 2013 looks different — very different — from the world in 1913.
  2. The critique should elaborate on whether the factors that make the arrangement unstable over the long run also affect our assessment of its desirability over the longer run. In other words: does the keyhole solution self-destroy because the problem to which it was a solution became irrelevant? To the extent that this is the case, the long-term instability of the keyhole solution is not a problem. Let’s say, for instance, that a concern is that if migrants are given a quick path to citizenship, then they will vote badly. Somebody proposes a keyhole solution of a lengthy path to citizenship. One might critique such a keyhole solution on the grounds that in a century, most people will be very loath to make any distinctions based on nationality of origin or length of stay in granting citizenship, due to a shift in global values surrounding human rights and the relationship between people and political institutions. This is plausible, but one would simultaneously need to consider whether this changed relationship also nullifies, or at any rate, weakens, the original political externalities concern. On the other hand, if the instability of the keyhole solution arises from factors that make the underlying problem worse (for instance, a world war or large-scale ethnic conflict) then indeed this is a problem.

As Nick Beckstead and Carl Shulman explained, the long run is very important, if we care about humanity without much bias for the present. And the long-run effects of open borders and/or keyhole solutions are very important. To the extent that we can speculate intelligently about these, or even better, make guesstimates, such speculation and guesstimates have considerable value. Nonetheless, we should be wary of the risk of making the future a Rorschach test for whatever we prefer to believe about the world, a point that Will Wilkinson eloquently made in a related context.

What historical examples are useful for understanding the question?

Any arrangement that has persisted for a reasonable length of time in the real world can safely be called stable, concerns of tipping points notwithstanding. There may well be other stable arrangements that have not yet existed in the real world, so this is just a starting point. The most direct evidence in this regard would be historical examples of large non-citizen populations that arose as a result of guest worker programs or illegal immigration, and the extent to which there were pressures to grant citizenship and the franchise to the large numbers of non-citizens that accumulated as a result of these programs.

In my next post, I will look at the following historical examples.

  • In the United States, slavery was ended after the Civil War of 1861-1865. However, blacks (including freed slaves) were de jure and de facto barred from political participation on a significant scale via Jim Crow-era voter literacy tests, until the Civil Rights Act of 1965 (there were admittedly a number of smaller civil rights acts in the years leading up to that). The arrangement appears to have been stable for a considerable length of time, and does not seem to have attracted any vocal political opposition until the end of World War II, although there were unsuccessful legal attempts to overturn other parts of Jim Crow-era legislation such as enforced segregation. In private conversation, Ilya Somin cited this as an example of how excluding people from the franchise can be stable for considerable lengths of time, and my co-blogger Chris Hendrix cited the same example in an EconLog comment. Is that a justified inference to draw? What other lessons can we draw from this historical fact? (Note that the purpose here is to assess stability, not to discuss the moral permissibility or desirability of the exclusion from the franchise).
  • In relative terms, have pushes for granting citizenship (and hence the franchise) to existing non-citizen residents (including both legal and illegal immigrants) been more powerful than pushes for expanding migration, or less? The answer is not clear-cut, and a reasonable case could be made either way. In the United States, for instance, a typical “comprehensive immigration reform” proposal typically focuses on (a) creating a path to citizenship for existing residents (the pro-immigration side), (b) more resources for enforcement and border security (the restrictionist side). This is what is considered a reasonable compromise. Even expanding high-skilled immigration gets low priority in comprehensive immigration reform bills, and guest worker programs are opposed by both the territorialist left and citizenist right (loosely speaking). On the other hand, “comprehensive immigration reform” proposals rarely make headway anyway (the only major amnesty in the US was in 1986, though Europe seems to have had amnesties on a more regular basis). Expansions of legal migration opportunities have happened in small steps, but more steadily. The evidence is decidedly mixed.
  • Germany has had a large Gastarbeiter (guest worker) program and it has been argued that, for a considerable period of time, there was no political pressure to grant citizenship to these guest workers (a large number of them from Turkey), despite their forming a large mass of possible voters. How true is this? This question is worthy of further investigation.
  • Other examples worth looking at might be: how did the Reform Act of 1867 (enfranchising the British working class and lower middle class), championed by Benjamin Disraeli, affect the electoral landscape in Britain? How did the 19th amendment to the United States constitution (granting women the right to vote), favored mainly by the Democratic Party, affect US electoral politics? How sensitive were the votes of Jews to the perceived anti-Semitism of European parties?

What I would like from Tyler Cowen

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Economist Tyler Cowen’s recent post was ostensibly about the labor market effects of immigration and emigration from OECD countries, but the latter half was devoted to a critique of open borders. Cowen:

And no I do not favor open borders even though I do favor a big increase in immigration into the United States, both high- and low-skilled. The simplest argument against open borders is the political one. Try to apply the idea to Cyprus, Taiwan, Israel, Switzerland, and Iceland and see how far you get. Big countries will manage the flow better than the small ones but suddenly the burden of proof is shifted to a new question: can we find any countries big enough (or undesirable enough) where truly open immigration might actually work?

In my view the open borders advocates are doing the pro-immigration cause a disservice. The notion of fully open borders scares people, it should scare people, and it rubs against their risk-averse tendencies the wrong way. I am glad the United States had open borders when it did, but today there is too much global mobility and the institutions and infrastructure and social welfare policies of the United States are, unlike in 1910, already too geared toward higher per capita incomes than what truly free immigration would bring. Plunking 500 million or a billion poor individuals in the United States most likely would destroy the goose laying the golden eggs. (The clever will note that this problem is smaller if all wealthy countries move to free immigration at the same time, but of course that is unlikely.)

The post seems to have generated a lot of buzz in the blogosphere (see here, here, here, here, and here for starters).

First off, although open borders advocates naturally concentrated on the latter half, it’s possible that Cowen actually intended to focus on the earlier half. The confusion about what Cowen intended to highlight is described in this comment by DJ10210:

Tyler’s strategy is interesting here. What’s the proper Straussian reading of this post? (A) Post is intended to be a critique of open borders proponents (e.g. Caplan), but opens with pro-immigration sentiment to signal that he is friendly to the cause he’s critiquing. (B) Post is intended to be a critique of immigration restrictionist, but closes with anti-open borders sentiments to signal that he understands that although he’s pro-immigration he’s not an extremist about it. (C) Both (A) and (B).

I lean toward (A) being the intended message.

I’m a great admirer of Cowen’s quality of thinking about empirical issues. In fact, right now, I’m reading his book, Average is Over, and I’m really liking it (I don’t have enough prior object-level intuition to have a strong view on the accuracy of Cowen’s predictions, but I find it plausible and well-argued). I felt that the post didn’t live up to the standard. So my first reaction to the post was to write something in between a criticism and a point-by-point response. However, after thinking it over, I see that there are a number of reasons why that would be misguided.

  • Cowen write about five posts a day, in addition to his teaching, research, administrative duties, and books. His high quantity of reasonably thoughtful output is one reason why he attracts so many readers. But this also means that many individual passages in his blog posts are not subject to the same careful scrutiny and analysis that some other bloggers (such as Bryan Caplan, or, I’d like to think, the Open Borders bloggers) give their own posts. So even though I feel that Cowen wrote these passages somewhat hastily, it’s part of the package one gets with Cowen, and nothing to complain about.
  • Cowen is in general skewed toward projecting an image of practicality and moderation, and that is part of what makes him influential as a blogger. This again is the package that his readers and those who choose to benefit from his wisdom sign on to.

With these in mind, I want to take a few minutes to note some possible messages people may take away from Cowen’s post, and why I believe these would be wrong. There is a subtext many people might be reading in Cowen’s text that open borders advocates are anti-empirical and careless and avoid obvious questions that anybody who thinks for a few minutes would come across. While I wouldn’t make generalizations about open borders advocates, I think that this site does not fit the stereotype. We have listed a wide variety of objections from both a restrictionist and a pro-immigration perspective, and attempted to address many of them — perhaps not to many people’s satisfaction, but I think it’d be fair to say that we haven’t ignored the issues. I think the menu options offer a reasonable summary (though doubtless the menu could be improved for better navigation, something that a co-blogger of mine will be working on). We have also discussed — more extensively than Cowen himself appears to have — the objections that Cowen raises in his post. If we haven’t covered a topic in sufficient depth, it is generally because (a) the existing literature and state of knowledge isn’t good enough, or (b) we simply haven’t gotten around it. We are very interested in the empirics of open borders — in understanding what might happen under borders that are open to various degrees. Let’s look at some of Cowen’s most remarkable claims.

Cowen writes:

Try to apply the idea to Cyprus, Taiwan, Israel, Switzerland, and Iceland and see how far you get. Big countries will manage the flow better than the small ones but suddenly the burden of proof is shifted to a new question: can we find any countries big enough (or undesirable enough) where truly open immigration might actually work?

A reader of this passage might believe that advocates of open borders are squarely disconnected from the empirical question of how many people would move under open borders, and that advocates of open borders seem to focus solely on open borders to large countries like the US. Neither assertion is true. Our world map for blog coverage shows how we cover migration-related issues around the world, including cases as diverse as Lebanon and Germany. Nor have we overlooked the significance of some countries being larger or having lower population densities than others. I made some very similar points about the dangers of extrapolating from existing data or historical experience in my blog post back in February 2013 titled open borders is a radical proposal. But for what it’s worth, the value of Cowen’s small country examples is unclear. For one, there does exist a large free movement zone — the Schengen Area, of which Switzerland is a part — and while there has been significant migration (enough to boost the case for the value of free movement) it has hardly been of cataclysmic or existentially threatening proportions. Or at least, that’s the way I interpret it. Does Cowen see things differently?

Cowen has much greater insight into the working of the world than I do, and possibly more than many of the other bloggers on this site. It’s possible that he has sound reasons for his intuition pertaining to Switzerland or Iceland or one of the other countries. It would be nice if he could elaborate more on these reasons.

Cowen also writes:

Plunking 500 million or a billion poor individuals in the United States most likely would destroy the goose laying the golden eggs.

How many would move under open borders? Cowen thinks the number is 500 million or a billion (and his language of “plunking” suggests that they’d all move more or less simultaneously and perhaps not even based on a conscious voluntary decision — but I’ll take that to be artistic license).

Now, I really like the fact that Cowen is providing a concrete estimate. It’s an important question, to be sure, because swamping is a major concern that moderate pro-immigrationers raise when faced with the prospect of open borders. And while there are many approaches (gradually increasing quotas, gradually lowering tariff rates to zero, gradually expanding a free movement zone, etc.) an answer to the abstract question “how many would move under complete open borders?” can be a useful analytical exercise in bounding the problem.

And it’s a question we have looked at repeatedly. We collected a number of links to polling data on migration — the best available data on the stated preferences of potential migrants (for what it’s worth, there are about 135 million people who want to move to the US if given the chance, and about 600-700 million people who want to move to a different country from where they currently are). I raised the “how many would move” question last July, and my co-blogger Chris followed up by asking a more specific question about open borders between Haiti and the US. These are the types of specific, concrete questions where somebody like Cowen can offer specific insight based on his deep understanding of the world — and elaborate on why he thinks open borders may be going too far. Offering the number is a great start. What I’d like from Cowen is an elaboration of how he’s getting at that number, what sort of timeframe he is talking about for the 500 million to 1 billion people, and how he thinks it might be a problem.

Cowen also talks about how open borders may be politically infeasible. We’ve asked this kind of question as well. For instance, this May, I blegged about whether open borders between the US and Canada might pass a referendum. And feasibility is certainly an important consideration when evaluating keyhole solutions.

Finally, the question of killing the goose that lays the golden eggs is an important one to us, and my co-blogger Nathan Smith views it as one of the potentially best arguments against open borders. Nathan wrote a three-part series (here, here, and here) attempting to defend open borders against this line of criticism. It’s one of the arguments we take more seriously on this website. Cowen probably has much to contribute to the discussion again, and I personally would really like to know more about what he sees as the biggest dangers to global innovation and technological progress that arise from moving in the direction of open borders, and how these might be mitigated.

Cowen has a cryptic parenthetical remark:

(The clever will note that this problem is smaller if all wealthy countries move to free immigration at the same time, but of course that is unlikely.)

The “of course that is unlikely” statement is puzzling. Of course, open borders is unlikely for the foreseeable future — whether for one country alone or for many countries together. The relevant question is not so much whether either is likely in absolute terms. The relevant question is about the relative likelihood of the US unilaterally opening its borders versus a number of countries opening borders together. I think history shows that the latter is more likely to happen — countries may form free migration zones, then gradually move to open borders for all. But I’m willing to stand corrected, since I don’t have strong knowledge here.

Perhaps Cowen’s concern is that open borders advocacy itself increases the relative likelihood of unilateral open borders relative to multilateral or universal open borders. I think that’s not the case at all. At least on the Open Borders site, we devote a fair amount of time to the immigration policy of countries around the world, including co-blogger John Lee talking about Malaysia. Does Cowen believe that the United States is uniquely susceptible to a few open borders ideologues promoting global open borders suddenly changing the minds of the powers-that-be? If so, that doesn’t square with what I believe, or what I think he believes, about the US political system. If the data on who favors open borders are any guide, the US is hardly in “danger” of any rapid shift towards open borders. The one rich country that may be in such “danger” is Sweden (also the first country to open its borders to Syrian refugees) but even Sweden has a fair degree of pushback against open borders. Note that, if anything, moderate pro-immigration advocacy tends to be much more rooted in country-specific rhetoric (such as “America is a nation of immigrants”) than the advocacy or discussion of open borders you’ll find on this site, and among other self-proclaimed advocates of open borders. (As a related aside, you might want to check our Carl Shulman’s post titled Open borders in (at least) one (developed) country on his personal blog, arguing that it might be better to attempt open borders in a single country with a relatively smaller population and then expand it to the world).

What I would like from Tyler Cowen is that, when he next discusses open borders, he gives the subject some of the same thought and attention that makes him such a great read on other subjects, and more importantly, that he share his reasoning (thereby avoiding the illusion of transparency and double illusion of transparency traps). Maybe there is a legitimate basis for his figure of 500 million to 1 billion. Perhaps Cowen has some interesting historical understanding that illuminates problems with open borders that we’ve overlooked. But we can only learn from his insight if he shares it.

A plausible response to the above is that it’s sufficient to rely on intuition here, because obviously what Cowen is saying is true. But it would be an inadequate response, given that Cowen himself is pushing back against the restrictionist intuitions expressed in his comment threads about immigrants stealing jobs from natives and turning their destination countries into economic basket cases. Intuition is a starting point, but to communicate and arrive at truths starting from one’s intuitions, it would be helpful to flesh out the rationales more explicitly.

Open borders advocacy: a Drake equation

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The Drake equation is a probabilistic argument used to estimate the number of active, communicative extraterrestrial civilizations in the Milky Way galaxy. The idea is to express the number of such civilizations as a product of quantities in a manner that’s true by definition, but also such that one can talk somewhat more intelligently about estimating the individual factors than one can talk about directly estimating the number of active, communicative extraterrestrial civilizations. XKCD has poked fun at the Drake equation in at least two comics. Viewed as an exercise aimed at obtaining precise actionable estimates, the Drake equation is probably futile. But viewed as a way to start thinking about the problem, it is arguably useful. The main reason it’s bad for estimation is that the multiplicative nature of the model means that the huge uncertainty in measurement for each of the factors is also multiplicative, leading to a gigantic uncertainty in the overall estimation.

Here’s my Drake-like attempt:

$latex \text{Utility of a particular form of open borders advocacy} = Wxyz$

Here:

  • $latex W$ is the naive estimate of the gains from complete open borders (using, for instance, the double world GDP ballpark).
  • $latex x$ is a fudge factor to represent the idea that “things rarely turn out as well as we expect them to.” If we set $latex x = 0.1$, for instance, that’s tantamount to saying that, due to all the numerous problems that our naive models fail to account for, the actual gains from open borders would be only 10% of the advertised gains. The product so far, namely $latex Wx$, describes what we really expect the gains from open borders to be.
  • $latex y$ is the fraction to which the world can realistically move in the direction of open borders. The product $latex Wxy$ is total expected gain from however far one can realistically move in the open borders direction.
  • $latex z$ is the extent to which a particular effort at advocacy or discussions moves the world toward open borders, as a fraction of what is realistically possible. For instance, setting $latex z = 10^{-4}$ for Open Borders the website would mean that the creation of the website, and work on the website, has moved the world 1/10,000 of the way it feasibly could in the direction of open borders.

The restrictionist or pessimist might well view $latex x$ as a negative number, making open borders advocacy a great disservice to humanity. For our purposes, however, we’ll consider estimates where the values are positive, yet sufficiently small as to account for considerable uncertainty. Let’s say that, for the Open Borders website, the numbers look as follows, with the numbers in US dollars (note that of the four numbers, $latex z$ is the only one that requires particular knowledge of the Open Borders website):

$latex W = \$ 50 \text{ trillion}, x = 0.01, y = 0.001, z = 0.0001$

The 50 trillion figure can be calculated as just one year’s gain based on the double world GDP estimates. Note that there are some complications when considering potential delays in opening borders, as well as discount rates for the future and economic growth in the future. But since the starting numbers are anyway very rough guesses, there’s not much point in trying to do a very elaborate estimation exercise to calculate $latex W$ (for what it’s worth, I did some estimates based on assumptions about discount rates and economic growth, and I got a figure of about twice that much in expected value even if open borders are delayed by several years and the gains are slow to arrive and temporary). Note also that the fudge factor $latex x$ of 0.01 is essentially taking a very pessimistic view of the estimation exercise, by claiming that 99% of the claimed gains will not in fact materialize, or will be canceled by other losses.

With these numbers, the value of the website comes out to 50,000 US dollars. That’s not huge, but it’s about the same order of magnitude as the cost of time spent on the website (about 1500-2000 hours). With these numbers, therefore, the site just about breaks even in terms of social value generated versus time spent.

Here’s an optimistic version of the numbers:

$latex W = \$ 50 \text{ trillion}, x = 0.1, y = 0.1, z = 0.0001$

With this view, the naive estimate overstates the gains, but only ten-fold, it’s also possible for the world to realistically move 10% of the way toward open borders, and Open Borders the website has moved the world 1/10,000 of the way toward the theoretically possible limit. With these numbers, the expected value of Open Borders comes to about $50 million.

Obviously, the above estimation exercises are very naive, and there’s a sense in which this might feel like Pascal’s mugging. The key point that emerges here, though, is that the position yes, open borders would have gains, but the gains from what’s realistically possible in that direction are too small to be worthwhile isn’t a very tenable position. Open borders is a radical proposal — for better or worse. To arrive at such a position, you’d need to have $latex x,y,z$ all very small — but still positive. If you’re coming that close to zero, then you might as well offer some good reason why you don’t go all the way to zero — or beyond, to the negative territory. If the restrictionist position were right, then, it would entail showing at least one of these (or more precisely, an odd number of these, but never mind that):

  • $latex x$ is zero or negative: Economists have badly estimated not just the magnitude, but rather, the sign of the effect of open borders. The best attempts in the direction of demonstrating that the expected sign is negative is the killing the goose that lays the golden eggs argument. And while I think there’s considerable plausibility to that argument, and it may well point toward certain keyhole solutions being desirable, I am not convinced that these come anywhere near toggling the expected sign of the gains from open borders.
  • $latex y$ is zero or negative: It’s impossible to move in the direction of open borders at all.
  • $latex z$ is zero or negative: Open borders advocacy (or at any rate, the specific advocacy effort being considered) hurts the move toward open borders more than it helps. Tyler Cowen took this sort of approach in his recent blog post that generated considerable response (including from Nathan and John).

An alternative position is that we just don’t know enough to even estimate the signs of the quantities, and that more research is needed. I certainly agree about the need for more research, and I think a strong case could be made for an agenda that focuses extensively on research before clearly coming down on one side or another, while favoring continued experimentation with liberalization and keyhole solutions at the margin. But what’s not justifiable is the absolute certainty that many people seem to have that the status quo is approximately optimal, or that radical liberalization of movement simply isn’t a paradigm worth investigating because the gains are too small.

Possible questions for the IGM: looking for comments

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I’ve written in the past about how there seems to be very little research on the effects of open borders beyond the labor market (though the effects of migration at the margin have been extensively studied). But even purely with respect to the economics, there’s a gap.

When it comes to what economists think about the effects of free migration, we know roughly two facts:

  • There is a strong economist consensus in favor of freer migration on the margin.
  • For the small subset of economists who have studied open borders, the average view seems to be that open borders would double world GDP. But there’s considerable uncertainty in the models, and the estimates range from 50-150% of current world GDP.

At least a priori, then, we could argue that the economist consensus points to open borders. But there may well be some selection bias in terms of the subset of economists who study the global effects of open borders. It would be interesting to know what economists as a whole, not pre-selected for having researched open borders, have to say about the effects of open borders. Also, given that the research tends to focus on immigration policies as they actually exist (which favor high-skilled workers to some extent) it’s somewhat less clear whether the economist consensus in favor of low-skilled migration is uniform.

The IGM Forum is one place where economists could be polled on their views. Bryan Caplan blogged about their results on high-skilled immigration. But open borders would mean open borders for people at all skill levels, and a huge part of the gain from doubling world GDP comes from the movement of people with low current skill levels.

In light of these considerations, Carl Shulman has recommended sending the following questions for inclusion in the IGM:

  1. effect of low-skill migrants on citizens (US-specific)
  2. effect of low-skill migrants on GDP, short-run (US-specific)
  3. effect of low-skill migrants on GDP, long-run (US-specific)
  4. effect of open borders on world poverty/GDP: (a) Would open borders eliminate most poverty? (b) Are the double world GDP estimates right?
  5. (This question was not suggested by Carl, but by John Lee): Importance of one’s country of birth in determining one’s income (this relates to the idea of the place premium).

Would these questions be good ones for the IGM? Which of the questions are more important? What variations would you recommend, and why? Suggestions for elaboration and improvement welcome.

Ideas on alternate places to post questions to ask economists, or other people with potentially relevant subject matter expertise, would also be much appreciated.