This post was originally published on the Cato-at-Liberty blog here and is republished with the permission of the author.
In the Washington Post today, Jim DeMint and Robert Rector of the Heritage Foundation invoke the free-market pantheon in arguing their anti-immigration stance: “The economist Milton Friedman warned that the United States cannot have open borders and an extensive welfare state.”
They’re halfway right about that. What Friedman actually said was that immigration is “a good thing for the United States…so long as it’s illegal.” He meant that open immigration is highly beneficial to the economy, provided those productive but inexpensive laborers do not have access to welfare. Friedman later wrote that, “There is no doubt that free and open immigration is the right policy in a libertarian state.” Friedman’s problem was with the welfare state, not immigration. His remarks are fundamentally at odds with the position Heritage is trying to argue.
It’s not the first time that I’ve questioned the free-market credentials of my friends at Heritage lately, and that’s making me sad.
On Monday, Heritage released a new study entitled “The Fiscal Cost of unlawful Immigrants and Amnesty to the U.S. Taxpayer” by Robert Rector and Jason Richwine, PhD. I criticized an earlier version of this report in 2007, arguing that their methodology was so flawed that one cannot take their report’s conclusions seriously. Unfortunately, their updated version differs little from their earlier one.
I’m joined in this view by a host of prominent free-marketeers. Jim Pethokoukis at AEI, Doug Holtz-Eakin at American Action Forum, Tim Kane at the Hudson Institute, and others have all denounced the fundamentals of the Heritage report.
The new Heritage report is still depressingly static, leading to a massive underestimation of the economic benefits of immigration and diminishing estimated tax revenue. It explicitly refuses to consider the GDP growth and economic productivity gains from immigration reform—factors that increase native-born American incomes. An overlooked flaw is that the study doesn’t even score the specific immigration reform proposal in the Senate. Its flawed methodology and lack of relevancy to the current immigration reform proposal relegate this study to irrelevancy.
Even worse, the Heritage study recommends a “solution” to the fiscal problems it supposedly finds. It suggests:
Because the majority of unlawful immigrants come to the U.S. for jobs, serious enforcement of the ban on hiring unlawful labor would substantially reduce the employment of unlawful aliens and encourage many to leave the U.S. Reducing the number of unlawful immigrants in the nation and limiting the future flow of unlawful immigrants would also reduce future costs to the taxpayer.
Professor Raul Hinojosa-Ojeda of UCLA wrote a paper for Cato last year where he employed a dynamic model called the GMig2 to study comprehensive immigration reform’s impact on the U.S. economy. He found that immigration reform would increase U.S. GDP by $1.5 trillion in the ten years after enactment.
Professor Hinojosa-Ojeda then ran a simulation examining the economic impact of the policy favored by Heritage: the removal or exit of all unauthorized immigrants. The economic result would be a $2.6 trillion decrease in estimated GDP growth over the next decade. That confirms the common-sense observation that removing workers, consumers, investors, and entrepreneurs from America’s economy will make us poorer.
Would decreasing economic growth by $2.6 trillion over the next ten years have a negative impact on the fiscal condition of the U.S.? You betcha.
Do the authors consider the fiscal impact of their preferred immigration policy? Nope.
For those of us who “grew up” on the fine policy analysis long produced by Heritage, the immigration report is a supreme disappointment. No one has done more than Heritage to promote the importance of dynamic scoring, which is critical to understanding the true effects of government activity on the marketplace. For that organization to have seemingly abandoned its core principles for this important debate is a stinging blow to those of us who crave an honest, data-driven debate on the fiscal merits of policy.
The Heritage Foundation report on the cost of the immigration reform is flawed. It focuses on the government redistributed benefits not on the economic growth. Basically it means that the authors do not understand economy. The full critique is here:
http://www.henrykkowalczyk.com/immigration/rectors-sermon/
Richwine is now being fiercely attacked in the media for mentioning the existence of gaps in IQ and educational performance between Mexican immigrants and Mexican-Americans of later generations, and American descendants of other immigrant groups. The attacks usually deny his claims without any evidence, just denouncing them as racist.
But these are well-studied psychological and sociological facts. Here’s the American Psychological Association task force report on IQ, which discusses group differences in IQ in the United States, including Hispanic-American IQ:
http://en.wikipedia.org/wiki/Intelligence:_Knowns_and_Unknowns
The media are regularly claiming that Mexican-American educational and economic performance in the US will soon converge, with analogies to past immigration waves, but no mention of Mexican-Americans whose ancestors have already been in the US for generations. There are already enough 4th and 5th generation descendants of Mexican immigrants in the United States for sociologists to study, and educational performance stops converging after the 2nd generation (in other words, being raised in the US rather than Mexico matters, but the gaps stabilize after that):
http://csii.usc.edu/presentations/Ortiz_Presentation6_USC.pdf
If even well-established scientific consensus and empirical facts are censored out of the public debate, then it will proceed under false premises. How can we learn from experience in immigration policy if that experience is unmentionable?
See this study for quantitative evidence on how poor journalists are at reporting scientific opinion in this field (and how their beliefs diverge from those of scientists who are familiar with the issues):
http://en.wikipedia.org/wiki/The_IQ_Controversy,_the_Media_and_Public_Policy_(book)#Synopsis
And now he’s been fired for stating facts that most of the bloggers here, and the scientists who have worked on the topic, admit.
I can’t say I care for how the overall media atmosphere has been with Richwine’s IQ dissertation (it hardly seems like Harvard would allow poorly done racist dissertation to pass), and though I think many of the critiques of his actual Heritage study have merit, I think I’m with you on firing him being unjustified.