Tag Archives: Detroit

Can Open Borders Save Detroit and Other Ailing Cities?

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The American city of Detroit is in terrible shape.  An online piece in The New York Times by Joseph Stiglitz summarizes its ills: “… 40 percent of streetlights were not working this spring, tens of thousands of buildings are abandoned, schools have closed and the population declined 25 percent in the last decade alone. The violent crime rate last year was the highest of any big city. In 1950, when Detroit’s population was 1.85 million, there were 296,000 manufacturing jobs in the city; as of 2011, with a population of just over 700,000, there were fewer than 27,000.”  The city government filed for bankruptcy in July.

Witold Rybczynski of the University of Pennsylvania has described the negative impact of depopulation on cities: “When a city loses population, it loses residents, but keeps the same amount of infrastructure. The same streets must be policed and maintained, the same streetlights repaired, the same water and sewer systems operated, the same transit systems run. It is like an (impoverished) elderly couple having to keep up a large house after all the kids have grown up and moved out.  This imbalance has several deleterious effects. Because the city has fewer taxpayers, the quality of its municipal services goes down. For example, police response time to 911 calls in Detroit is currently said to be 58 minutes. It expends scarce resources on nonproductive uses; Philadelphia pays $20 million a year just to maintain 40,000 vacant properties. Moreover, because urban vitality depends on density, without an adequate concentration of people, corner stores close, streets become empty — and dangerous — and abandoned buildings become haunts for criminal activities. According to a 1973 study by the Department of Housing and Urban Development, the tipping point in a community occurs when only 3 percent to 6 percent of properties are blighted; many neighborhoods of shrinking cities passed that point decades ago.”

Mr. Rybczynski, like Detroit’s outgoing mayor, advocates “planned shrinkage” of Detroit.  Declaring that “Detroit has no other realistic option,” he suppports  “consolidation,” in which people living in underpopulated areas of the city move to other parts of the city.  City services to the abandoned areas are then discontinued.  Mr. Rybczynski states that “Experience has shown that voluntary displacement of residents is unlikely to succeed, and some version of eminent domain with regard to nonviable neighborhoods is required.”

In contrast, others have offered immigration as a solution to Detroit’s problems.  Michael Bloomberg, New York City’s outgoing mayor, has stated that “if I were the federal government… Assuming you could wave a magic wand and pull everybody together, you pass a law letting immigrants come in as long as they agree to go to Detroit and live there for five or ten years, start businesses, take jobs, whatever.  You would populate Detroit overnight because half the world wants to come here… You can use something like immigration policy – at no cost to the federal government – to fix a lot of the problems that we have.”  Similarly, the Boston Globe’s Leon Neyfakh calls attention to proposals for “…‘regional visas’ that would open up additional slots for newcomers but limit them to specific destinations within the United States, while giving state and local officials a role in deciding how many immigrants—and which ones—to let in. Under this system, states that want to attract more foreign workers could do so, and perhaps even target people with the kinds of skills and training that local businesses are looking for… many parts of the country–especially depopulated cities like Detroit, Cleveland, and Pittsburgh–would love to welcome motivated new residents.” (John Lee has noted that Canada allows its provinces to issue immigrant visas.)

In fact, in Detroit and other depopulated cities, there are currently active efforts to attract immigrants.  Organizations in Detroit, Cleveland, and St. Louis are seeking immigrants to help their economies.   For example, the non-profit Global Cleveland focuses “on regional economic development through actively attracting and retaining newcomers (defined as ‘immigrants and international and domestic individuals’)…”  The goal of the St. Louis Mosaic Project is to have “the fastest immigration growth of any big city in the U.S. by 2020.”  In Dayton, Ohio, the city itself “… voted to make the city “immigrant friendly,”  with programs to attract newcomers and encourage those already here, as a way to help stem job losses and a drop in population.”   (These efforts recall similar ones in 19th century America.  Maldwyn Jones, in American Immigration, notes that “After 1865… practically every northwestern state and territory from Wisconsin to Oregon embarked upon a policy of encouraging immigration.” (p. 188)  Mr. Jones explains that states sought immigrants because “… they were anxious to dispose of their unsold lands, and they recognized that increased population was essential to material growth.” (p. 187))

There is evidence to support the efforts of these local entities and those who propose regional visas. The key findings of the recently released report “Immigration and the Revival of American Cities” are that immigrants create and preserve manufacturing jobs, increase housing wealth, and make the areas they populate more attractive to U.S. citizens, who follow in response. (pp. 2-3)  The study “shows that immigrants are more than just our neighbors; they’re a key part of the way local areas grow and thrive.” (p. 3)  Likewise, in his report “The Economic Impact of Immigration on St. Louis,” Jack Strauss of St. Louis University concludes that “there is one clear and specific way to simultaneously redress the region’s population stagnation, output slump, tepid employment growth, housing weakness and deficit in entrepreneurship – Immigration. This report provides considerable economic evidence and statistical analysis using U.S. Census data that increasing immigration will significantly raise employment and income growth as well as boost real wages in the St. Louis region. An influx of foreign-born could reverse the region’s housing prices declines and lower unemployment rates for both whites and African Americans in our region.” (p. 3)   (In a previous post of mine, Mr. Strauss’s research showing the positive impact of Latino immigration on African Americans was noted)  In Dayton, immigrants have “have started restaurants and shops, as well as trucking companies to ferry equipment for a nearby Air Force base. And they have used their savings to refurbish houses in north Dayton, where Turkish leaders estimated that they had invested $30 million so far, including real estate, materials purchases and the value of their labor.”

Adding a regional visa category to the current immigration system would allow additional people to legally immigrate to the United States.  Moreover, they would enter communities where many would welcome them.  However, from an open borders advocate’s perspective, there are downsides to a regional visa category.  First, it would be limited numerically.  Second, it would limit the freedom of immigrants to live where they want during the period of regional residency that probably would be required under the visas.

But would open borders provide the immigrants Detroit and other depopulated cities need for revival?  It is conceivable that even with increased immigration flows under an open borders policy, newcomers would go to areas of the country which are thriving, bypassing Detroit and similar cities; open borders doesn’t offer the control over immigrants‘ destinations as a regional visa program would.  However, there are factors that would lead at least some of the flow to Detroit and similar cities.  First, of course, is the increased flow itself.  If only a small portion of new immigrants went to these cities, their immigrant populations could be boosted substantially.  Second, there are the aforementioned functioning compaigns to attract immigrants to these localities.  Third, these areas may attract immigrants by offering a lower cost of living than more successful cities.

If needy cities didn’t receive enough immigrants under open borders, the federal government could provide additional incentives.  These might include an accelerated path to citizenship (based on an idea from Mr. Bloomberg) for immigrants who live in these cities for a certain number of years and, should an open borders system be established involving surtaxes on immigrants’ wages, relief from these taxes for immigrants while they reside in these areas.  (Unlike  under a regional visa system, failure to comply with residency requirements would mean not deportation but a longer path to citizenship and/or higher taxes.  Immigrants would be free to move to a different part of the country at any time.)  Local, state, and/or federal governments could also arrange for newcomers, whether immigrants or American-born, to take possession of abandoned housing on the condition that they restore such housing.

Another consideration is that, by supplying a larger supply of immigrants, an open borders policy would prevent a situation in which localities compete with each other to attract people from relatively small pool of immigrants (those already in the U.S., the limited number of immigrants allowed in through the current system, and, potentially, a number of regional visa immigrants).  There would be enough immigrants to revive ailing communities throughout the country.

With open borders Detroit and other cities can be revitalized without having to compromise the freedom of immigrants to choose where they want to live, without localities having to compete over a small number of immigrants, and without adding a new layer of rules for regional visas on the current labyrinthine immigration legal system.  At the same time, the enthusiasm in these cities for attracting immigrants as a tool for urban renewal aids the open borders cause.  Open borders will be attained not only through rigorous ethical arguments but also through a recognition by the native-born population that immigration is not a threat but an opportunity.

Open borders and the Curley effect

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James Michael Curley, a four-time mayor of Boston, used wasteful redistribution to his poor Irish constituents and incendiary rhetoric to encourage richer citizens to emigrate from Boston, thereby shaping the electorate in his favor. As a consequence, Boston stagnated, but Curley kept winning elections.

Thus begins the abstract to an interesting 2005 paper by Edward Glaeser and Andrei Schleifer that formally models what they term as the “Curley effect”. With the Curley effect, an incumbent can almost guarantee reelection by instituting policies that result in the mass exodus of that part of the electorate likely to vote against him/her (such as the “rich” or a different ethnic group). These policies are most certain to reduce the welfare (sometimes in a drastic way) of the entire jurisdiction under the incumbent’s control. Among the politicians who put the Curley effect to “good” use, in addition to James Michael Curley, were the former mayor of Detroit Coleman Young and the current president of Zimbabwe Robert Mugabe. Glaeser and Schleifer have this to say about Young:

Coleman Young was elected the first black mayor of Detroit in 1973 in a four percentage point victory over John Nichols, the white police commissioner. The election split along racial lines. Every white precinct and more than 90% of the white vote favored Nichols. Every black precinct and more than 90% of the black vote favored Young.

Young’s racial favoritism can be seen in his tax policy and his distribution of city services. A 1982 referendum tripled the commuter tax from 0.5% to 1.5%, and raised the residents’ income tax rate from 2% to 3%. This tax, which had no impact on Young’s poorer black supporters, strengthened the incentive for the better off to leave Detroit.

Did Young hurt Detroit? Did he hurt the black residents of Detroit? There is no question that Detroit was in much worse shape when Young left office than when he first entered it. Its population fell from 1.51 million in 1970 to 1.03 million in 1990, a 32% decline. The unemployment rate as a percentage of the civilian labor force rose from 10.3% in 1969 to 20.6% in 1990. The percentage of households living below the poverty line rose from 18.6% to 29.8%. Nearly all the victims of this unemployment and poverty were Young’s black supporters. Over Young’s 20 years, surely in part due to his policies, Detroit became an overwhelmingly black city mired in poverty and social problems.

And this about Robert Mugabe:

Twenty years after Mugabe took over, Zimbabwe descended into a mire of poverty, corruption, and anarchy. Mugabe himself did not appear to care for wealth, but he did single-mindedly pursue power and office. To that aim, his policies induced the whites, and others with skills and capital [such as middle and upper class black Zimbabweans], to flee. He pursued these policies knowing, and encouraging, the emigration that would follow.

Global open borders are likely to reduce the costs of emigrating (no need to obtain travel visas, apply for asylum, obtain work permits and so on) and in this way might enhance the appeal of the Curley effect to the type of autocrat described by Glaeser and Schleifer. This is likely to be so in Africa where ethnicity is often exploited by politicians. If my hypothesis about an open borders-encouraged Curley effect is true, then one might raise the followng question: might the heightened prospect of the Curley effect (and the ensuing across the board reduction in welfare) constitute a reasonable objection to global open borders?

I don’t think so. Even if open borders led autocrats to implement the Curley effect in great numbers, the same open borders would stand to counteract the negative welfare effects. Open borders would, for instance, allow a greater proportion of those targeted by the autocrat’s policies to easily relocate to some other jurisdiction than would have been the case had there been no open borders with a Curley effect.  Those leaving would  include both the well-off  who would have emigrated anyway (have specialized skills, wealth or connections in high places across the border) and those who otherwise would not have left due to the prohibitive costs associated with moving to another country (facing border patrol, obtaining work visas, risking your life at illegal crossing points, facing the prospect of being placed in some notorious refugee camp, etc…).  In the extreme case, everyone who was not on the winning side would relocate leaving only those deriving some benefits (however short-lived) to remain. It is reasonable to presume that some blacks must have left Detroit for greener pastures during Coleman Young’s term as mayor, if only because it is difficult to account for Detroit’s substantial population decline by appealing to white emigration only. This was probably more blacks than would have left if citizens of Detroit had been required to obtain entry visas into the United States. In the more recent case of Zimbabwe, approximately 1 million Zimbabweans had by 2008 left Zimbabwe for South Africa. The sense I get from speaking to Zimbabweans living in South Africa is that a lot more of their brethren (spouses, children, brothers, sisters, parents and friends) would have escaped Mugabe’s ruthlessness had it been easier to relocate south of the border without having to meet many unreasonable requirements to work and live in South Africa or any other country bordering Zimbabwe for that matter. So even if global open borders were to encourage the Curley effect, it is very likely that the great portion of the negative welfare effects would be counteracted by migration – in the extreme case, all negative welfare impacts would disappear since everyone affected would find it in their best interests to leave.

I however don’t think that the sort of autocrat described by Glaeser and Schleifer is really responsive to open borders in the way suggested by my hypothesis. For one thing, the Curley effect has been documented among autocrats facing relatively open borders (Curley and Coleman) to those facing relatively closed borders (Mugabe) that it is somewhat far-fetched to suggest that being a Glaeser/Schleifer-like autocrat becomes an even more attractive proposition under open borders. But what seems likely is that open borders would present a way out for those who find themselves victims of the Curley effect. 

HT David Henderson

The Case of Detroit

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Between 1900 and 1950, the population of Detroit increased more than six times over. But this understates how radical the growth really was at its peak—between 1900 and 1930, the population grew by 4.5 times. In the decade between 1910 and 1920 alone, the population grew by nearly 115 percent.

A lot of this population increase was due to inflows from other regions of the United States, but no small fraction of it can be attributed to foreign born immigrants. In Wayne County, where Detroit is located, the foreign born population increased by about 326% between 1900 and 1930. If our current foreign born population increased by a similar proportion, it would add another 130 million to their numbers.

And it’s not as though the native-born Americans who migrated there were cut from the same demographic cloth as the Detroit residents of 1900. African Americans from the south, for example, migrated to Detroit by the tens of thousands during that time period.

Moreover, the migrants to Detroit were overwhelmingly competing for very similar factory jobs–foreign in origin or not, the straightforward supply analysis of immigration restrictionists would suggest that wages for these jobs should have plummeted due to all the new arrivals. After all, the people who were there in 1910 had to compete against a labor market that was more than twice as large a decade later! To say nothing of the people who were there in 1900 and in three decades had to compete in a labor market that was more than four times as large as the one they started in!

But this is exactly the opposite of what occurred. It was precisely during this time period that the median wage of low-skilled workers in Detroit was exploding, rather than falling. The reason was largely the auto manufacturing revolution, an economic phenomena that owed quite a lot to one son of an immigrant. The innovation in manufacturing drew over a million people to Detroit like a magnet, and still a huge portion of the benefits of the innovation ended up with the average worker, even with the dramatic expansion in the supply of their competitors.

If we had gone back in time and closed America’s borders prior to 1900, hundreds of thousands of the people who helped make the Detroit boom happen would never have come. And if we applied the same restrictionist logic to Wayne County and limited the inflows from the rest of the country, far from helping out Detroit’s residents, the city would have played no part in the auto manufacturing revolution whatsoever; it would have gone to another, less restrictive city.

Immigration inflows are not random. They are likely to occur where the labor is most highly valued–and the increase in scale can have dynamic effects beyond simple supply and demand analysis. In Detroit, it made an entirely new industry possible.

So what can we learn from this specific episode in one city’s history? In my next post, I will discuss that very question.