Category Archives: Uncategorized

The story behind the “double world GDP” estimates

1 Comment

[UPDATE: I have added a new blog post titled gains from migration: GDP versus surplus that covers an issue that I didn’t adequately address in this blog post: that even though the contribution to GDP is largely made directly through the migrant, the “benefits” of this, in terms of the social surplus, are captured more broadly.]

Critics of immigration generally spend very little effort critiquing the strongest quantitative argument in favor of open borders: that they would result in a one-time increase in world GDP by 50-150%, or, in short, slogan form, double world GDP (the canonical literature review is this paper by Michael Clemens and the slogan “double world GDP” seems to have first been used in this blog post by Bryan Caplan). Many of these critics are citizenists, and frankly couldn’t care less about world GDP. But others have scoffed at these estimates without providing a clear-cut argument against them.

To my knowledge, the best critique of these estimates is expressed in a series of blog comments by Ghost of Christmas Past, a commenter on EconLog. The most complete versions of the critique are in this comment by Ghost of Christmas Past on Caplan’s “National Egoism” post and this comment by Ghost of Christmas Past on Caplan’s persuasion bleg post. I would like to provide a detailed point-by-point response to Ghost of Christmas Past’s critique. Prior to that, however, I need to establish more clearly just where the “double world GDP” estimates come from and what I think are the weaknesses of these estimates.

The first question: how are these world GDP estimates calculated?

One of the things that Ghost of Christmas Past glosses over in his/her critique is that the “double world GDP” estimate is not simply the estimate made by Michael Clemens. Rather, Clemens does a literature review and considers the many different estimates, showing that they are in a range of 50-150%. The back-of-the-envelope estimate by Clemens is more of a sanity check of the following sort: okay, assume that gains are half of what we observe today, how much can that give us? Then, Clemens goes over the various aspects that go into computing these estimates and the degree of uncertainty behind each of these factors. For those who don’t have the time to read Clemens’ paper, a quick list of the factors that would need to be considered, solely from the migration of labor, are: the effect on migrants, the effect on competing labor, employers, and consumers in the target country, and the effect on competing labor, employers, and consumers in the source country. Of course, when people move, it’s a migration of both labor and consumers, as well as, possibly, a migration of capital. This would further complicate the analysis.

The overall story behind the double world GDP estimate is that the first-order effect on migrants — aka the benefit to migrants — is huge, thanks to the place premium. In other words, migrants gain a lot by migrating. What they do with these gains (for instance, whether they send part of the money to their home countries as remittances, or save and invest in businesses in the country they migrated to) is not directly relevant to the GDP gain estimate.

What about the gains and losses by others, including competing labor, employers, and consumers, in the source and target countries? These gains and losses could both be important, but they are quantitatively likely to be substantially smaller than the gains to migrants. There could be considerable debate about the sign of these effects. For instance, the debate surrounding the suppression of wages of natives is about the extent to which competition in the labor market from immigrants drives down native wages. Pessimists believe that the driving-down effect from three decades of immigration to the United States has been about 4.8% for high school dropouts in the United States, and closer to zero for other categories of workers. Optimists see the effects as zero or slightly positive at current levels of immigration to the United States (more US-specific stuff at the link). Both optimists and pessimists believe that substantially more open borders would probably lead to a bigger decline in native wages, though less so in the long term than the short term. The overall magnitude and sign of the effects is up for empirical debate. Note: Even with a modest wage decline, natives may still be better off if price declines and the expansion in the range of consumption options makes up for this decline. They may also be better off as employers and land-owners. It’s only a small fraction of natives who are unambiguously likely to be worse off — those who depend primarily on wages (i.e., don’t own land), work in unskilled jobs that directly compete with unskilled immigrant labor, and don’t value the expanded range of consumption possible through immigration.

So how does this fit in with the “double world GDP” estimate arguments? The crux is that these gains and losses figure as rounding errors compared to the huge gains experienced by migrants. Continue reading The story behind the “double world GDP” estimates →

Open borders, political externalities, and tipping points

5 Comments

In a comment addressed to David Henderson, Mark Crankshaw makes an interesting argument about the political externalities of immigration, raising the concern that unrestricted immigration may lead to a tipping point toward left-wing populism in the United States:

Here’s a hypothetical: what if, prior to 1989, there was a substantially supported political party in West Germany that favored the establishment of a Communist dictatorship and German re-unification under East German rule? And further that this party received about 45% of the vote (needing only 5% for a majority) and that this party was actively encouraging militant East German citizens and all others sympathetic to communism to immigrate to West Germany to tip the electoral balance in their favor? If you were a West German, would you welcome such immigration?

In my view, this is similar to the conditions in the US today. Admittedly, the Democratic Party may not wish to install a Communist dictatorship at present. However, I do believe that Democrat party policies are sufficiently noxious enough and that these policies will cause me substantial long-term economic and political injury if not sufficiently opposed. This substantially supported party has also proven very adept at building permanent racial-ethnic voting blocks based on a “share-the-wealth” platform.

I agree that immigrants are no threat to “impose” their political will against that of the indigenous population. However, what if the indigenous population is evenly divided ideologically and immigrants could permanently tip the balance in one direction? Wouldn’t immigrants from left-of-center countries side with our indigenous leftists and be quite vulnerable to “share-the-wealth” leftist populism? As one who favors limited government, I certainly see immigration as tilting the ideological balance to my ideological opponents–perhaps permanently. The re-election of Hugo Chavez this past week amply demonstrates that democracy offers no protection from leftist populism and the establishment of semi-permanent leftist rule. If it can happen in Venezuela, why not here?

Crankshaw expressed a similar concern in an earlier comment addressed to Bryan Caplan:

I’ve read your paper summarizing the arguments against open borders (http://econfaculty.gmu.edu/bcaplan/pdfs/whyimmigration.pdf) and your counter-arguments against them. Your argument is persuasive. However, in the back of my mind, I fear that I can still see open borders going very wrong.

My fear of open borders doesn’t center on the immigrants per se, but with the anti-libertarian forces native to the US. Would not these non-libertarian groups attempt to co-opt immigrants and use them to subvert libertarian ideals?

The current presidential election appears, at least to me, that left liberals are able to co-opt recent immigrants much more readily than libertarians. Immigrants may not vote much, and may tend towards the status quo, but it appears that the status quo they lean heavily towards is the anti-libertarian left liberal status quo. Take away the African American vote and the votes of recent immigrants and Obama loses in a humiliating landslide. Does anyone really believe that if Romney were not the candidate opposing Obama, but that the opponent were a libertarian, that these recent immigrants would be voting libertarian? Or would they remain firmly supporting left liberals?

Here’s my framing of Crankshaw’s tipping point-style model:

  • The median American voter holds fairly anti-free market views.
  • The Democratic Party in the United States is moderately more anti-free market than the median American, whereas the Republican Party holds moderately more pro-free market views.
  • Elections are usually a close call between the two parties. If we exclude immigrants, then the Republican Party would win. But the inclusion of immigrants tips the balance partially in favor of the Democratic Party.
  • Slightly more immigration would tip the balance (possibly irreversibly and creating permanent damage) in favor of the anti-free market position of the Democrats.

Before responding, let me say that I have very little knowledge about the specifics of the platforms of the Democratic and Republican Party, and even less knowledge about the nitty-gritties of party politics. That said, I think that Crankshaw’s model is flawed. It is not the case that the political parties have ideologically rigid positions, and that there is a kind of binary decision about which political platform gets adopted based on who gets the majority of the votes. Here’s my model.

  • The median American voter holds fairly anti-free market views.
  • Both parties (the Democrats and the Republicans) use feedback mechanisms such as polling data to gauge where the median American voter lies. Then, they try to carve out niches fairly close to the median position, but that can still be rhetorically distinguished from each other and that extremists can identify with (apropos Hotelling’s law in politics and the median voter theorem). On the issue of free markets, the Democrats have rhetorically chosen a niche slightly more hostile to free markets and the Republicans have chosen a niche slightly less hostile to free markets compared to what the median voter prefers.
  • When there are changes in the nature of the median voter, whether through immigration, generational change, or the publication of an Ayn Rand novel, both parties will move their platforms to stay in the same position relative to the median voter. If the median voter becomes moderately more hostile to free markets, both parties will adopt policy platforms that are moderately more hostile to free markets, though the Democrats will still be relatively more anti-free market and the Republicans relatively less hostile to free markets than the median voter. If the median voter becomes moderately more pro-free market, both parties will shift their platforms to become more free market, but the relative positions will again be unaffected.
  • Switches in the relative position can occur, but these polarization reversals are relatively rare (one of them occurred with respect to race relations and voting blocs in the Southern United States with the Civil Rights Act in the 1960s).

If my model is more accurate, then immigration is unlikely to lead to tipping points. If the immigrants who tend to vote tend to be more hostile to free markets, this will move the needle a bit away from the direction of free markets. But I would not predict a tipping point toward left-wing populism. Both parties will modify their stances toward somewhat higher marginal tax rates, a few more regulations, etc., and the tightness of political races will be largely unaffected.

Is this something for a pro-free market person to worry about? Yes, and I will address the nature of immigrant political views in separate posts (for now, see the links from the political externalities page). But qualitatively, this is different from a “tipping point” concern. I think that the standard framework, that treats such political externalities as a cost of immigration that scales continuously with the amount and type of immigration, is adequate to deal with political externalities.

PS: This post is written from a US-specific perspective, but the basic insights, if correct, should apply in many other countries.

If I Had a Million Dollars…

3 Comments

… here’s what I would do with it. I would start a foundation in DC dedicated to measuring and comparing the policy openness to migration of all the world’s countries. The measures would include:

Right to invite. This would measure the ease with which residents of the country who want foreigners to visit or move to the country could get visas for them. Can firms and individuals who want to hire foreigners, or invite them as conference guests, procure visas for them? How fast? How easily? How transparent is the process?

Welcoming to sojourners. This would measure the ease of getting a visa for someone who wants to come to the country on their own initiative, without having received any particular invitation from anyone. Is it easy to get tourist or student visas? Once sojourners arrive, can they work? Are they quite free to move about the country and interact with whom they will, or are they restricted somehow?

Family values. This measure would focus on whether migration restrictions separated families, or allowed them to reunite. If a country frequently separated families, that’s a minus. If it allows families to reunite whom other countries’ immigration laws separated, that’s a plus.

Social integration. This would measure how easily immigrants who want to stay– sojourners or temporary migrants are less important here– can integrate into society, making friends, being accepted, attaining citizenship. It’s not entirely a policy measure but might look at the nature of the society as well. Intermarriage might be a plus here. Xenophobic political parties and hate crimes would be a minus.

Refuge. This measure would focus on political and religious refugees, and a country’s willingness to admit them.

Opportunity. How well do immigrants and sojourners do once they arrive– economically? Do they flourish, or get stuck in low-end jobs or demoralizing welfare-dependency?

Civil rights. Are immigrants’ civil rights respected? Are they subject to police harassment or intimidation? Do they feel safe? Continue reading If I Had a Million Dollars… →

Immigration and institutions

4 Comments

I had the idea of writing one post to respond to Vipul’s last post, “Free speech absolutism versus viewpoint-based immigration restrictions,” and another one to add to Vipul’s response to Ghost of Christmas Past. Then I realized the posts cover some of the same ground. So this post conflates the two putative posts into one.

First, Vipul suggests a plausible rule of thumb which a few paragraphs in my book Principles of a Free Society would contradict:

My thumb rule for blanket denials is: anything that constitutes sufficient reason for blanket denial of migration should also constitute sufficient reason for punitive measures under criminal or civil law in the target country of immigration… The most interesting case is [that] of people holding and espousing viewpoints that are perfectly legal — in compliance with criminal law and unlikely to be successfully litigated against. First Amendment protections in the United States give people wide latitude to say a lot of things as long as these do not constitute libel/slander, infringe on copyrights, trademarks, or patents, or provide direct incitement to violence in a situation where such violence may be carried out. There are various restrictions in the United States on pornography and speech directly related to political candidates, but I’m ignoring these for the moment. In particular, it is perfectly okay from a legal viewpoint to say positive or negative things about century-old religious doctrines, regardless of the truth or falsehood of these. You could praise Christianity or Islam or Buddhism or Hinduism, or condemn these, and no legal action against you would plausibly succeed. It is also perfectly okay from a legal viewpoint to hold and espouse practically any political position from communism to Nazism to anarcho-capitalism.

Going by my thumb rule, then, viewpoint-based immigration restrictions are not morally justified. However, a number of people, even those broadly supportive of open borders, do express some sympathy for the concerns that underlie the advocacy of viewpoint-based immigration restrictions… [An] example is offered by my co-blogger Nathan Smith, who, in his book Principles of a Free Society, carves out a possible viewpoint-based exception to his general advocacy of open borders — the case of Islam.

He then quotes the relevant passage in my book, where I suggest a “moderate approach [that would] screen carefully for known terror suspects and extremists, to keep a close watch on Muslim immigrant communities, and to inquire into the ideology of Muslim DRITI migrants applying for citizenship to make sure they convincingly disavow the death penalty for apostasy and other traditional Islamic beliefs inconsistent with the principles of a free society, perhaps with the help of oaths or signed statements to that effect.” As he says, this is inconsistent with his rule of thumb against view-point based immigration.

First, I’d point out that since Principles of a Free Society advocates a comprehensive open borders policy (albeit with migration taxes), I was eager to make what concessions I thought I justly could to make the policy less frighteningly radical. That wouldn’t be a good excuse, though, if I were advocating a policy that was positively unjust. Is it? At issue here is freedom of conscience, which I covered in another part of the book. This passage is especially relevant: Continue reading Immigration and institutions →

Why the deficit of immigration advocacy? A deficit of demand, not supply

5 Comments

Adam Ozimek at Modeled Behavior argues that “Bloggers and Economists are Failing on Immigration“:

This is a point I hinted at in this previous post but I wanted to make more explicitly. Bloggers and economists are failing when it comes to their coverage and discussion of immigration as an economic policy lever. Despite the occasional coverage it does get, the fact that we should have more high-skilled immigration (HSI) remains an extremely under-blogged topic. Yes, there are many things that “deserve more attention”, especially many third-world tragedies. But this is domestic policy of extreme importance, and it is a solution rather than an unsolvable problem in a faraway land.

I know that most bloggers do a pro-immigration piece occasionally, but there is nothing like the outrage, urgency, and ceaselessness that comes with other domestic policy blogging topics. Compare the pro-HSI blogging to posts that are pro or con fiscal policy. Or monetary policy. Where is the tirelessness of the market monetarists when it comes to high skilled immigration? Or how about the ceaselessness and outrage that liberal economists bring when arguing for fiscal stimulus?

My tentative conclusion is that people don’t blog this because there is no argument to have with each other. You can see this is true in the fact that I’m not even mentioning any facts or arguments for immigration in this post. High skilled immigrants are entrepreneurs, it would help ameliorate our long-run demographic problems, etc., etc. You know the arguments. The downside is, this means this issue can’t be used as a cudgel against intellectual opponents because few reasonable people disagree. We cannot raise or lower each others status by writing about this. If this is indeed why the topic is so under-blogged, it may well be an unmovable reality of blogging, but it is a pretty poor excuse and we should be challenging each other to do better…

There are some good guys here. Michael Clemens is one of the strongest voices out there regularly arguing for more immigration. Noah Smith dedicates a high percentage of his writing to this.  But few write about this issue as it deserves to be written about. Bloggers and economists respond to their individual incentives, so I’m not sure what can be done to motivate more here…

I’m not calling out any individuals here, but I am challenging bloggers and economists to answer these questions: are you writing and talking as much about high-skilled immigration as you should be? And if not, why aren’t you doing it more?

I’d nominate my co-blogger Vipul Naik as one of the “good guys.” Actually, Bryan Caplan is even more deserving of mention, being more long-standing and prominent. But I doubt that Ozimek has ever heard of Vipul Naik, or myself. I would suggest that Ozimek think about the demand side. Maybe bloggers don’t blog about immigration that much because readers don’t want to read about it. Maybe a blog devoted full-time to immigration, like Open Borders: The Case, would struggle to build a big enough readership to get the attention of a Forbes journalist like Ozimek, no matter how scintillatingly smart Vipul and I were. I get the sense from the comments on Caplan’s immigration posts that many readers read him in spite of his open borders views. If he blogged about immigration all the time, he might lose those readers.

I think the topic of immigration makes people uncomfortable. People like to think of themselves as fair-minded, favorable to equal opportunity, generous to the poor, and so on. But anyone who is fairly smart and well-informed can’t think about immigration for long without becoming uneasily aware that open borders holds all the moral aces, and the whole system of nation-state sovereignty and migration control must be re-examined and to some extent eviscerated. The usual food chain of ideas, with elites producing ideas that non-elites want to consume, breaks down, because honesty would force the elites to say things that non-elites would angrily refuse to listen to. I’m oversimplifying a bit, but my tentative hypothesis is that bloggers and economists are relatively silent on immigration because rank-and-file readers can’t handle the truth.