Immigration vs Basic Income

In a recent article about why a a guaranteed  income  won’t work in this country, Megan McArdle wrote that:

“There is no way that we are going to admit people to this country in order to hand them, and all of their descendants, a check for a thousand or two every month.”

It seems to be conventional wisdom that a basic income is incompatible with open borders.  Still, I am an advocate of both.  I understand that there is significant tension between them, so let me explain myself.

I may be preaching to the choir, but my primary reasons for supporting open borders are that I think it will result in increased economic activity, it will help many people escape poverty, and it may help avoid some of the tragic circumstances associated with living as an undocumented immigrant.

My reasons for supporting a basic income are probably a bit less familiar, and frankly they may sound a lot like some of the reasons that some people are opposed to open borders.  Namely, we have a duty to look out for our neighbors.

Just as we become vulnerable whenever we are close to someone emotionally, those who live near us gain a certain degree of economic and political power over us.  This is true even if they aren’t citizens.  If people work in our communities, the economy becomes dependent on them.  Thus, everyone who works has some degree of economic power in that they can refuse to continue working.  They also have some ability to actively disrupt economic activity.

Anyone who votes has political power, but even non-voters have some degree of political power because they can become part of a political conversation.  The closer they are, the more visible they are, the more likely it is that people will feel sympathetic to their concerns, and the more likely it is that political powers will take their interests into consideration.

Our duty to our neighbors becomes more pronounced in the face of high levels of inequality.  We cannot expect our neighbors to uphold the rule of law if they are starving.  What argument can I make to one who lacks food for their children that they ought not steal, other than the threat of violence?  Since my neighbors have power over me (for example, the potential to steal from me), I have a strong interest in making sure they respect the rule of law.  Thus, I have two options available to me in the face of high levels of inequality.  I can either increase my threats or I can make sure my neighbors don’t starve.

Let me clarify a bit about the moral responsibilities of starving people.  I personally am not a believer in absolute morality, but you might be.  I am not saying that you are wrong.  I am saying that if a moral relativist is starving and wants to steal from you, you are going to have a very hard time convincing them otherwise based on moral arguments.  The more desperate they are, the more that stealing (or cheating, or engaging in other anti-social behavior) might start to look appealing.

Pretty much every society uses some combination of both violence and welfare support.  But to the extent possible, I think we should always prefer the latter option.  Unless using threats is significantly easier than making sure people don’t starve, we should make sure people don’t starve.

So that is a basic outline of why I support a policy of providing a basic income for anyone living near me.  However, as Megan McArdle points out, giving everyone a basic income can cost a lot of money, and perhaps even worse, it can create a disincentive to work.

I do not take these issues lightly.  I believe that a disincentive to engage in productive work is one of the most serious downsides that a public policy can have.  Thus, my preferred basic income policy would take the form of a work subsidy (e.g., an expansion of the earned income tax credit program).

The simplest example would be to set some wage threshold, say $4,000 per month.  Anyone who accepts a job for less than this amount would be subsidized for half the difference.  Thus, for example, anyone who accepts a full time job that doesn’t pay anything would get a $2,000 check from the government every month.  People who earn more would pay taxes.

Such a program may have some enforcibility issues (people may take fraudulent full time “jobs” that don’t require them to actually do anything).  But people would still prefer to take higher paying jobs, and higher paying jobs would result in lower subsidies, so wage competition should mitigate some of the problems.

OK, so now that you know why I support a basic income, and what sort of basic income policy I prefer, we can get back to the original question.  Is this sort of policy compatible with open borders?

If it were the case that everyone who immigrated to the country just represented another $2,000 check from the government and tax revenues remained constant, the policy would clearly be unsustainable.  However, there is no reason to believe that the marginal immigrant has no impact on tax revenue.

The big question is: for a given level of immigration, are the marginal social externalities greater than or less than the marginal social costs?

I think most advocates of open borders tend to agree that in addition to the benefits that accrue to an immigrant from coming to the US, there are significant social benefits that are not captured by immigrants.  The simplest example is that those who hire immigrants profit from them.  So we should be asking ourselves whether immigrants are zero marginal product workers.

One of the big underlying reasons that I support open borders is that I think some societies are capable of employing workers much more efficiently than others.  That is, the same person working in the US has a higher productivity than they would if they were working in Haiti.

To the extent that workers are (sufficiently) productive, guaranteeing them a basic minimum income won’t really threaten to undermine our economic growth.  As long as our society keeps getting wealthier overall, we can support generous work subsidies.  Even if we don’t capture their productivity in income taxes, we can capture some of it in other ways (i.e., in taxes on the corporations employing them).  The problems arise if we end up guaranteeing the income of a bunch of non-productive people.

There are two parts to this problem.  The first is that people who are inherently non-productive may want to immigrate.  The second is that productive employment may require a certain level of capital, and immigration might outstrip capital growth.

Since I think that having high levels of local inequality is a big problem, I can see why one might be opposed to allowing a bunch of non-productive people into the country.  To mitigate this, we might only open our borders to those who can find productive employment.  But we shouldn’t let people into the country and then let them starve.  As long as people have an incentive to work, keeping people from starving is more efficient than keeping them in line using threats of force.

Limiting immigration to potentially productive people  won’t necessarily resolve the second issue (capital growth).   The main problem arises if there is some ideal level of immigration (based on the relationship between immigration and capital growth) and a basic income would push immigration levels past that limit.  While a basic income might impact actual immigration levels, I don’t think it will have a significant impact on the ideal immigration level.

Many open borders advocates question whether a sovereign nation has the right to control immigration levels.  I do not.  I think that letting people live near us gives them power over us and thus creates strong duties toward them.  It seems possible to me that some immigration scenario would actually overwhelm our society and economy, so we ought to at least think about what the proper level of immigration is.  However, I personally believe that allowing vastly more immigrants than we do now provides some “low hanging fruit” for economic growth and will improve many people’s lives.  If my belief that most immigrants are productive is true, there is no reason to think that allowing them to come would somehow undermine a policy of guaranteed basic income.

Basically, I don’t think that GDP is a zero sum game.  The more people we have, the bigger the pie will get.  As long as we don’t kill the goose that lays the golden eggs (that is, the ability of our economy to productively employ them), providing a basic income will be consistent with much higher levels of immigration.

Note: after reading Paul Crider’s recent post, I would like to note that while I do believe that IQ and culture have some impact on how productive immigrants might be, I am not an advocate of limiting immigration to those from certain countries or with certain job skills.  There are roles in the economy for many different kinds of people, and I don’t think the government should try to decide what kinds of labor we need to import.  I believe that the biggest threat to the “goose” is inequality that might result from having immigration rates higher than capital growth rates.  However, I also think that immigration is a cause of capital growth, so the relationship is complicated.

Leave a Reply