Tag Archives: European Union

Free Havens for Refugees (mostly by Pieter Cleppe)

Pieter Cleppe, head of the Brussels office of the think tank Open Europe, has written a piece advocating something akin to my idea of passport-free charter cities. (Also see my thoughts on charter city constitutions here and here,  my post about the abortive charter city experiment in Honduras, and my post “Make More Singapores!”) Cleppe advocates “free havens” in response to the recent tragedies in the Mediterranean. The rest of this post is by Cleppe (see the original piece here, it is reprinted with his permission), except a few comments of mine at the end:

Free havens as a solution to the refugee crisis

The latest tragedies in the Mediterranean once again highlight that migration is without any doubt one of the challenging issues of our time. Few dispute that it would be a bad idea to close borders completely. On the other hand, few support opening borders completely, recognising the obvious downsides to this.

The debate mostly focuses on the type and number of immigrants allowed into wealthier societies. There is very little debate about what to do with those wanting to leave their country when even the most generous quotas would have been filled.

Since 2011, 3 million people have already fled Syria, and 6.5 million are internally displaced. The EU hasn’t accepted more than 200.000 of them, while it faces ever increasing numbers of refugees, from Syria and other places, attempting to enter illegally. Even if Western countries drastically increased their willingness to welcome refugees, this would in no way serve demand. Nearly everyone agrees refugees should have the right to flee war-torn countries, but politically, there is no willingness to welcome everyone, whether one agrees with that or not.

The solution proposed below is a humble attempt to launch this debate and provide a more sustainable solution than the ones offered in the past.

One way to deal with this challenge has been to ignore it and to let people sort it out themselves. The result has been that the most vulnerable were delivered to human traffickers, at best reaching the Western world as an illegal immigrant, at worst finding the Mediterranean Sea as their graveyard.

A better solution has been to provide shelter for them in refugee camps. This clearly is an honourable attempt to minimise suffering. There are currently estimated to be up to 50 million refugees. The United Nations High Commission on Refugees offers them protection and life-saving supplies at refugee camps in more than 125 countries. Often, these camps aren’t temporary and sometimes conditions are horrendous. Often, refugees are also banned from becoming economically active. Thailand, for example, banned Burmese refugees living on the Thai-Burmese border from leaving their camps in 2014.

One of the 120.000 Burmese refugees in Thailand describes how living in such a camp, with its travel and work restrictions, while being forced to be nearly completely dependent on outside help for food, shelter, protection and other basic needs, have adverse psychological and social effects on the refugees:

“Living in the camp is similar to living in prison because I can’t go outside or make my own decision. I can commute only in the camp. The camp is surrounded by barbed wire. If we go outside of the camp, Thai police will arrest us. In the long run, it affects not only my physical but also my mental health.” (Christine, 22, refugee, who spoke with Burma Link in Mae La refugee camp in May 2014)

Lebanon’s 470,000 Palestinian refugees, of whom over 50 percent live in 12 refugee camps who’re controlled by competing Palestinian armed groups, face restrictions to practice about 30 different professions. Whatever solutions one has for the Israeli–Palestinian conflict, surely condemning generations of Palestinian refugees to this fate can’t be one of them.

A preferable solution could be to create “Free havens”: a refugee zone but then one with stable rule of law, protection and opportunities for economic investment, where refugees can actually build up a life and aren’t condemned to wasting their precious time.

This has been tried, but only very occasionally, although with extraordinary success. Most prominently in the last century, it was applied in Hong Kong, effectively a refugee zone, governed by the British rule of law, welcoming millions of Chinese wanting to fled war, totalitarian rule and turmoil in mainland China. Refugee camps at best offer refugees safety, but Hong Kong offered those Chinese refugees something which even the best refugee camps can’t offer: the opportunity to develop yourself.

Refugees, broadly defined as people fleeing from both war and economy misery, aren’t asking for a lot. They want a better life. Not necessarily a whole of a lot better. Only slightly better, if nothing else is possible. Refugees don’t only want shelter. They want to be able to develop themselves. Why would they need to wait before their country returns to the better or before wealthier countries decide they’re willing to welcome them?

A tiny percentage of land in the world is urbanized, perhaps around three percent. Would it really be so impossible to identify a place where no-one lives and welcome anyone willing to go there? Would it really be impossible to identify a place where really no-one would be bothered? If a city the size of Las Vegas can be successfully developed in the middle of a desert, there shouldn’t even be any requirements in terms of average temperature or access to the sea, although a climate like California would clearly be preferred.

It’s highly likely that such a place would be part of the territory of a State. But why would this State not allow “Free havens” to be hosted? Perhaps in some remote part of it, not to bother any of its citizens with any possible burden, especially if it would be financially compensated for it, for example by charity organisations wanting to offer refugees a better perspective or by companies investing in these Free havens, which could attract a lot of skilled individuals?

Why would companies not be interested to invest in these Free havens, just as they invest in the poorest parts of the world already, which often would not offer the same standards of justice and safety that such a Free haven would offer, given that these Free havens could be administrated by officials from countries with a certain level of rule of law?

Why would such a Free haven offer standards of justice and safety that are sufficiently high to make such a project succeed, so people would actually voluntarily want to go there, and companies would actually want to invest, thereby freeing up the resources needed to compensate the host State to actually allow such a Free haven to exist on its territory?

The answer is simple: For this project to be a success, it needs to become more safe than the most unsafe place in the world and its investment climate should beat the most horrible place on earth to do business, to attract those fellow human beings who actually have to survive there at the moment. Surely that shouldn’t be too much of a challenge. Would it really be so hard to do better than North Korea, Syria or Congo?

This project, which could be driven by the private sector, states, supranational organisations or various actors working together, doesn’t exclude everything that’s already happening: opening borders for trade, trying to develop poor countries, attempting to pacify violent conflicts, providing emergency aid to the most needed, allow more migrants to enter wealthy countries or develop refugee camps when no other option is there. This project simply offers a solution for immigrants who are not or insufficiently helped by what is already been done: the vast majority of them. If it is so simple, why not just take action?

So what is this again?

Let’s create “Free havens”: refugee zones but then with rule of law, protection and opportunities for economic investment, where refugees can actually build up a life and aren’t condemned to wasting their precious time

Which countries would allow such zones on their territory?

That’s a challenge the EU is currently facing, at least if it continue with its idea to establish immigrant-processing centres outside the EU. These offshore centres may be based in key transit countries such as Niger, Egypt, Turkey or Lebanon. France, Germany and Malta would reportedly be keen on the idea. When seeking refuge there, asylum seekers would get the chance to indicate in which EU country they’d like to apply for asylum, and at one point there may even be a system of forced “burden sharing”, which is however unlikely, given that national politicians in the EU rightly think such sensitive policies should be decided at the national level.

To convince them, Niger, Egypt, Turkey, Lebanon or maybe even Morrocco would logically need to be compensated for hosting such centres. Given the huge amount of funds available in national and European aid budgets, reaching a compromise shouldn’t be impossible.

The only element the EU Commission would need to change in its current plan, is to combine its welcoming of refugees offshore with a rule of law – mission. The EU has some experience with “rule of law”-missions. Part of its EULEX-mission in Kosovo was to administer justice in the most delicate sectors over there. It must be said that there have been major problems with the implementation, but at least Kosovo has known some kind of stability. Either way, the main difference between Free havens and the mission in Kosovo would be that anyone moving to such a Free haven would do so voluntarily.

Has something like this ever been tried?

As I made clear earlier: yes, indeed. Hong Kong effectively served as such a Free haven to Chinese refugees. It probably also served to convince mainland-China to choose the path of international trade.

Why would companies want to invest there?

Fair question. The likes of Ikea or Coca Cola would certainly need to consider this carefully, but a safe investment zone governed by officials from countries with a relatively high level of rule of law surely should be able to compete with countries where a revolution or social unrest is always only around the corner?

How much would this cost?

The Belgian police and justice system costs around 3 billion euro per year, to serve 11 million people. With 10 billion per year, which is not even 10 percent of the EU’s 130 billion euro budget, 20 million refugees could already be welcomed, as 7 billion euro would be reserved for basic infrastructure. Also co-financing from investors could be attracted. Even if only 1 million out of 50 million refugees could be welcomed at first, it would be a massive step forward.

Anyone dealing with the EU budget knows massive spending improvements could be made. More than 270 billion euros are still being sent to agricultural landowners, including the Queen of England, between 2014 and 2010. Given how the EU’s agricultural policies have been hurting developing countries for decades, it wouldn’t be such a bad target to find funds.

Is it politically feasible?

Former UK Prime Minister Tony Blair once proposed off-shore asylum centres, the European Commission is keen them, several member states are open to something like this. The whole idea really comes down to accepting two realities: one reality is that many people currently want to flee their country. Another reality is that a large majority of the European population, rightly or wrongly, is only willing to accept a tiny part of all the refugees in the world. So welcoming them in a safe place somewhere else is not more than obvious solution.

What if it goes wrong?

Amnesty International has criticized the European Commission’s suggestion to externalize refugee policy, warning that there may be “human rights violations” in many countries outside of the EU. Fair point, but this is being addressed when EU countries themselves would run these zones. What if EU countries would still mismanage the whole thing, and these Free havens wouldn’t be so nice at all? Even in that case, given that every refugee would obviously only go there voluntarily, people would only come if the welcoming zone would be nicer than refugee camps or the places from which they are fleeing. Surely, it can’t be hard to beat these standards?

Won’t it lead to a brain drain?

In the event that these Free havens turn out to be a massive success and start attracting not only desperate refugees but also people that are already relatively well off, we would indeed face this discussion. I won’t go into detail here, but there are also upsides to intelligent people moving to work in wealthier countries, given the fact that they can send more money back home to help their families than if they had stayed.

Isn’t this “apartheid”?

When you accept that migration should be limited, you accept a certain form of “apartheid” already. To support unlimited migration is a fair position to hold, but has very little support. Why then not try to improve the fate of those who’re not welcome in wealthier countries?

Pieter Cleppe

There’s no explicit open borders advocacy here. (Open borders is a “fair position to hold, but has very little support.”) But if a global archipelago of passport-free charter cities were established, the right to emigrate would be effectively realized, even if the more general right to migrate were not. I’m all for it. And this is a good example of how human rights can be the thin end of the wedge for open borders, as religious freedom was once the thin end of the wedge, first for freedom of speech, expression, and conscience, then for democracy. If we take seriously the responsibility of the international community not to drown desperate people or trap them in places where their lives are in danger, we will be on a path that, if followed devoutly enough, leads quite far in the direction of open borders. It would be, among other things a fitting Western repentance for the blood of the Jews of the MS St. Louis.

Related reading

In addition to the links included by Smith in the leading para, the following might be of interest to readers:

What will the rapid economic growth under open borders look like?

Open borders will lead to rapid economic growth in some countries, particularly the countries that receive migrants. This will be true even if the per capita income of natives doesn’t rise much (or even if it falls). The total size of the economy will grow. The situation with countries sending migrants is more complicated: the decline in population means that the size of the economy could shrink, even if per capita income rises. On the other hand, very high remittances or reverse migration and joint multinational businesses could offset the huge population loss. This blog post explores the sorts of things that could happen under open borders.

A few historical and current examples worth considering:

  • The United States in the second half of the 19th century: The example fits well in the following ways: immigrants were quite poor, the economy as a whole was backward but improving fast, and the immigrants were from many different cultures and spoke many different languages. The example fits badly in the following ways: the US was at the technological frontier, the place premium wasn’t huge (both sending and receiving countries were poor), and the whole event occurred in a time when many other aspects of global culture and technology were different. In particular, due to greater costs of transport and communication, and many other reasons, the total foreign-born proportion of the population was not too high: it peaked at 15% in 1910, compared to about 13% now under fairly closed borders in the US (more here).
  • China from after the death of Mao Zedong in 1976 (we expect to write more about China later; for now, check out our blog posts tagged China): The very rapid “catch-up” economic growth in China is comparable to the sort of growth we’d expect to see in migrant-receiving countries under open borders. The scale of rural-urban migration over the preceding and coming decades is in the hundreds of millions, comparable to the levels we’d expect with a decade or more of open borders. The proliferation of cities in China in recent years provides a model for what might happen under open borders. On the flip side, migration in China is happening across a far more homogenous linguistic and cultural milieu than what we’d expect under open borders. Moreover, China has a single government that can (and to some extent does) coercively restrict and coordinate migration in ways that wouldn’t work for global open borders unless there is world government or some supranational body that exerts heavy control over the coordination of international migration. China is also unrepresentative of global open borders because the place premium isn’t that huge.
  • India since its economic liberalization beginning in the late 1980s and with the main big step around 1991 (more on India here; see also all blog posts tagged India): India offers an example that’s both better and worse than China in terms of predicting what will happen under open borders. On the “better” side, there’s the fact that India is linguistically more diverse, so that many of the global challenges faced by migrants are experienced on a smaller scale in India. Although India is also religiously diverse, the religious diversity isn’t too strongly linked to location (the major religions are dispersed over many locations). India also offers a better model of a situation where the government does not plan either to stop migration or to prepare to accommodate it, unlike China, where both national and local governments have taken a more proactive approach to regulating flows. As of 2001, India measured 191 million internal long-distance migrants, about 20% of the population then. This number is comparable with the sort of migration magnitude we’d see under open borders, though it’s somewhat less than the amount of rural-urban migration in China. As with China, the place premium isn’t big enough to test some of the concerns associated with open borders. On the “worse” side, India is an even poorer country than China, so the parts of India that receive immigrants serve as bad models of how the destination countries under open borders would look.
  • The European Union today (see this related post by Hansjoerg and all our posts tagged the EU): This example is better suited in the respect that the target countries of migration are wealthy First World countries, which we expect will see a lot of immigration under open borders. But none of the source countries is too poor: the poorest countries in the EU are Romania and Bulgaria, which are middle-income countries (things will become more interesting once Albania joins). Quantitatively, migration between EU states on the whole is much lower than intranational migration in India and China, and much lower than what we’d predict under global open borders. About 3.2% of EU residents were born in another EU country, compared to 6.3% who were born outside the EU (see here and here).

The following table provides a comparative summary of the four cases considered above in terms of how good they are in their similarity to how we expect open borders to unfold (so “good” here means “good as a model for figuring out how things will be under open borders”, not “normatively good” or “desirable”):

Attribute 19th century US China India EU
Scale of migration Moderate Good Good Bad
Absolute poverty in source countries Good Good Good Bad
Absolute wealth in target countries Moderate Moderate Bad Good
Place premium Moderate Moderate Moderate Moderate
Cultural heterogeneity Moderate Bad Moderate Moderate

A few other examples that aren’t quite as good because the scale involved is too small, but are still interesting in some respects:

  • Open borders between Puerto Rico and the United States (see this blog post by Bryan Caplan): The place premium was moderate, the cultures were different (English versus Spanish). The scale of migration, over the long term, was huge relative to the sending country, but small relative to the receiving country. This example isn’t so helpful for our purpose because the US is too huge relative to the Puerto Rico for the migration to have had huge effect; however, some parts of the US (such as New York and Florida) have been influenced by Puerto Rican migration.
  • Israel has had open borders of sorts for Jews from around the world. A large number of East European and Russian Jews have migrated to Israel. Joel Newman crunched the numbers in this blog post. Although this is open borders of sorts, the small absolute size of the experiment makes it uninteresting in terms of figuring out how migration works at scale and can lead to rapid economic growth.
  • South Africa’s end of internal apartheid (discussed by Grieve Chelwa here) is also interesting, but again the scale of migration is insufficient to provide a clear sense of how things will proceed under open borders. The South Africa example is more interesting in that it involves a significant policy change in the open borders direction, but the focus of this blog post is more on the economic growth facilitated by mass migration than on the suddenness of the change.

The mix of labor and capital

Economic growth has been classified as intensive growth and extensive growth. Intensive growth involves changes in the mix of inputs and/or changes in the production technologies, i.e., the introduction of new ideas or new methods to produce more from the same inputs. Extensive growth involves an increase in inputs.

Now, to some extent, the change under open borders is extensive: a lot more labor is being added to the world economy. But in another respect, the change is intensive: the ratio of labor to capital shifts drastically worlwide, and even more so in countries that are migrant destinations. For more on this point, see Nathan Smith’s blog post on John Kennan’s paper on open borders. I quote a part of Kennan’s original paper that Nathan quoted; Nathan’s elaboration is worth reading at the link:

These gains are associated with a relatively small reduction in the real wage in developed countries, and even this effect disappears as the capital-labor ratio adjusts over time; indeed if immigration restrictions are relaxed gradually, allowing time for investment in physical capital to keep pace, there is no implied reduction in real wages.

I see two sorts of trajectories that could unfold:

  • The planned trajectory is one where borders are opened gradually and labor regulations are modified to better use the new labor mix. In this case, people have more time to accumulate more capital stock. I would expect that in this case, industry will play a big role in migrant-receiving countries: entrepreneurs and industrialists will set up large factories in anticipation of the huge migrant workforce they can have access to. They will undertake huge construction projects or expand agribusinesses.
  • The unplanned trajectory, where migration barriers are removed quickly with little coordination and planning, would probably see more of a shift to the services sector, which is less capital-intensive and where new people can join quickly.

Indeed, of the examples of China and India, the more planned and controlled case (China) has had more reliance on industry whereas the more chaotic case (India) has had more reliance on services (see more here). Note that in the longer run, I’d expect everything to move in the direction of services, when industry becomes so efficient that adding more people isn’t worthwhile at all (even at zero wages). But we’re far from there yet.

What about growth due to technological progress at the frontier? It’s possible that the progress of the frontier will not be affected much by open borders, but I personally expect that frontier progress will happen somewhat faster under open borders than under the counterfactual. This is the basis of the innovation case and the one world vision of open borders. I do expect that sending countries are likely to experience intensive growth and technological progress due to the circulation of people and ideas, though whether their economies as a whole grow or shrink would depend on how the magnitude of this effect compares with the decline in population. For arguments that open borders impede the progress of the technological frontier, see our page on killing the goose that lays the golden eggs.

The creation of new cities

There’s evidence to suggest that migrants who travel long distances tend to move to cities, for a variety of reasons. While living in one’s own village or small town may be preferable for many, living in a small town that one does not have connections with is hard. Cities are more conducive to strangers from faraway lands. They offer a wider range of job opportunities as well as amenities. The existence of a larger population allows for restaurants and supermarket products offering ethnic cuisine that wouldn’t be economically feasible in a smaller town.

It’s likely that there will be a lot of migration to the existing top cities of the world, but these cities have sky-high rents and are unaffordable to many poor migrants who don’t have enough skills to find jobs that could pay those rents. What I expect to see is many new cities crop up. Most likely, these cities will grow from existing small towns, potentially disrupting the lifestyles of residents of those towns. Natives are likely to have a mixed reaction: those who wanted city life but didn’t have the money for the big cities can benefit from the greater urbanization of their small town, and those who didn’t like city life may experience a decline in their quality of life (some of them may migrate to other places in their own country to get away from the overcrowding). Recall also Nathan Smith’s land value windfall argument: the price of new housing of a given quality can remain the same or even decline, even as the price of existing housing can keep rising due to an increase in the demand for living in established cities and towns.

It’s also possible that entire new cities can be created from scratch. One can imagine, for instance, a few companies setting up large factories in an area, and a huge amount of cheap housing for the people working in those factories. Another possibility is that new cities will emerge in wasteland that is at the periphery of existing cities, or from suburban or exurban regions of existing cities.

A useful historical model is China, which is undergoing the world’s most rapid and large-scale urbanization. For more, see Wikipedia, the McKinsey Global Institute report, and this presentation for a Stanford University course. In 1976, about 18% of China’s population was urban, and now about 52% is. It is estimated that by 2025, China will add over 350 million more people to its urban population, of which 240 million will be migrants. That 240 million is more than the number of people who indicate the US as their first-choice migration destination. The following are some key features of growth in China:

  • The rate of migration itself has been accelerating and may be plateauing now, though it will eventually start decreasing once rural areas have depopulated. While part of the mechanism here is diaspora dynamics, the more likely explanation is simply the increasing rate at which the economy is restructuring to increase demand for labor in urban areas and decrease it in rural areas.
  • The creation of new cities is concentrated in the middle phase (city creation was most intense around 1990-2005) rather than very early (when migration is still just beginning, existing cities have enough room for the initial migrants, and it’s not clear where more people will want to settle) or very late (when the patterns of migration are already set).
  • New cities are generally created close to existing cities.

Increase in international trade and foreign direct investment

Immigration and trade can be both complements and substitutes, but I expect that, unless tariffs are raised havily, more migration will facilitate more trade. Multinational small businesses run by family members around the world will become more common. Larger businesses will find it easier to set up shop in a greater range of countries. Diaspora will be eager to invest or get their associates in their new countries to invest in ventures in their source countries, so there will be more foreign direct investment. As people become better connected, there will be a reduction in the anti-foreign bias that motivates restrictions on trade and FDI. Another relevant point is that the move towards open borders is likely to be accompanied by a move towards free trade and FDI, because both proceed through the gradual expansion of free trade and free migration zones (such as the European Union).

A somewhat different vision

I’ll quote below Nathan’s detailed questionnaire answer (this is answer #4 in this very long blog post):

Some of the major problems of developed countries today would be solved by open borders. Government debt becomes less burdensome when population and total GDP rise, even if per capita GDP falls. As mentioned above, long-term demographic problems of shrinking and greying populations would be mitigated or eliminated by open borders (this does depend on the composition of immigrants, but given the relative youthfulness of the world population as a whole and the greater propensity of the young to move, the prediction that open borders would help can be made fairly confidently). Almost all homeowners and owners of real estate would enjoy a windfall benefit from rising population as demand and prices rise. This effect would not be offset by losses to renters, or to people unwilling to sell, from higher rents and property taxes. As cities expanded, renters could still live in comparably dense, interesting places, and homeowners who stayed put would get the windfall not in cash but in being through the midst of more economic activity (i.e., more shops, restaurants, entertainment, interesting streets, jobs and business opportunities, etc.– all the amenities of urban living for which people pay high urban rents).

Savers and owners of capital would tend to benefit as well, from an abundance of investment opportunities, but there would be downward pressure on wages. Crudely speaking, “unskilled” workers would see their wages fall, while some “skilled” workers would probably see their wages rise. But then, some of the basic skills Americans take for granted, like speaking native English, cultural fluency, and driving cars, would become “skills” for which premia could be earned. Immigrants would help poorer natives as customers, by creating a mass market for low-price goods, and giving companies a stronger incentive to pursue “frugal innovation.” There might be more business opportunities for entrepreneurially inclined natives even without a lot of education. Overall, it is extremely likely that natives as a whole would benefit, but without deliberate efforts to prevent it via fiscal policy, a substantial minority of natives would be likely to see their living standards fall due to open borders.

I would both advocate and anticipate that policy would do much to protect the least fortunate natives against a fall in living standards due to open borders. Moreover, this would be fiscally feasible, because open borders would greatly expand the tax base. Some natives might find jobs scarce and/or wages very low, yet receive transfer payments from the government which would enable them to live a “middle class,” house-and-car-in-the-suburbs, lifestyle. Others would see their wages fall but find themselves more than compensated by a rise in the price of their home and the value of their stockmarket portfolio– while also, perhaps, enjoying new transfers and/or tax cuts from a government flush with revenues from immigrant taxes. The hardest part of adjustment would be the moral impact of labor falling in value. One tenet of what I call “the macroeconomic social contract”– that anyone who is willing to work should be able to find a job that enables them to earn a decent living standard– would be further undermined.

Also discombobulating for natives would be the emergence of vibrant shantytowns and ethnic districts on an enormous scale. Pre-assimilation would mitigate the problem of absorbing immigrants into mainstream society, though on the other hand the number of immigrants would be larger than in the 19th century both in absolute numbers and as a share of the population. But Americans would hear more languages spoken on the streets, see more holidays celebrated, see a wider variety of religious buildings and of clothing. There would be neighborhoods where native-born US citizens would have the experience, charming to some but frightening to others, of being on American soil yet feeling like they were abroad. European countries, I expect, would face a different problem, namely, that some immigrants would prefer to assimilate to an “Anglobalized” international bourgeoisie, rather than to Dutchness or Norwegianness or Italianness. They would have to cope with large populations of foreigners who seemed content to reside permanently in their countries, getting by with English. Sweden or the Netherlands might see their living standards rise under open borders, even as Swedish and Dutch faced displacement by English as the nation’s first language. (That might happen anyway, but open borders would accelerate it.)

While the native-born citizens of the rich world need not see their living standards fall and most to all would probably see them rise, likely by a lot, under open borders, there would be far more poor people in the rich world. Germans and Danes and Italians and Washingtonians and Californians would have to get used to seeing a lot more deep poverty on the streets, and content themselves with knowing that there was much less poverty in the world because there was a little more at home. The moral underpinnings of the national socialist models of society that prevailed in the 20th century would have to be abandoned. Territorialism as a meta-ethical prejudice would have to be refuted at the level of reason and then wrung out of people’s intuitions.

A Country Deep in Trouble?

I understand that the following is not a rigorous argument, just something to check intuitions that come so easily to many people.

Here’s the set-up: I will tell you about a country and its situation and you try to judge what happened to them. Are they being swamped by immigrants? Is there a threat of societal breakdown? Do they suffer economically? Is the political system in trouble? Etc.

However, I will not tell you which country I am talking about. For the moment it is just “Openbordia.” To obfuscate it a little, I will change some of the magnitudes. But you will see that I do it only on the side that goes against the usual intuitions. Then I will disclose the name of the country.

Just a fun game. Ready to play?

Okay, here goes …

Openbordia is a rather small country surrounded by much larger countries. There are four countries closeby. And there are plenty of other countries in the wider region. If the population of Openbordia is 100, the four closest countries come in at more than 1,000 each, and all the countries in the region together at more than 10,000. So it does not look good for Openbordians as they are outnumbered at least 100 to 1.

What makes the situation even more desperate is that Openbordia is also richer than the surrounding countries. Here’s GDP per capita (PPP, Worldbank figures for 2005-2012): If Openbordia is at 100, then the four closest countries only muster a meager 40, 44, 45, and 47. And it gets worse. One country in the region with already many emigrants to Openbordia stands at just 28. To be sure: they alone have more than ten times the population of Openbordia. And then there are other even poorer countries of similar sizes where it goes down to dismal levels of 24 for two countries much larger than Openbordia. And a little further away, there are two countries with more than ten times the population of Openbordia, but only levels of 18 and 17. So there are plenty and plenty of poor people surrounding Openbordia.

For comparison: If the US is at 100, then Russia is at 47, Mexico at 33, Venezuela at 27, China at 18, and Nigeria at 17. So if Openbordia decided to open its borders it would be like the US opening its borders for all those countries. But then the US is a much more populous country. It should be worse for Openbordia.

Now you would think that the Openbordians had learned something from reading restrictionist websites. But guess what, they have not. In a fit of complete delusion they threw their borders open with their two closest neighbors already decades ago. But remember: those two countries are still not even half as rich as Openbordia. So probably there was a lot of pressure from unchecked immigration.

With such an experience, you might guess that Openbordians had now at last read up on restrictionism. Well, they stayed completely deaf to it. Instead, they pushed for even more open borders. More then a decade ago, they got their two other close neighbors to open their borders, too. As those two countries are even larger than the first two countries, that should have made the situation untenable. However, the Openbordians ignored the peril they were in and, hard as it is to believe, even prided themselves that the open border treaty was named after a town in their country!

At that point, you’d expect some prominent restrictionist to intervene and write a blog post telling the Openbordians that they were headed for doom. As far as I can see, restrictionists completely missed the problem. And Openbordians went on with their rampage against borders. Already years ago they did away with them also for lots of other countries in the region, all the way down first to the level of 24% of relative GDP per capita and then even to the level of 17%.

This is a disaster waiting to happen, right?

No, this is Luxembourg. The “poor” countries in their neighborhood are The Netherlands, Belgium, Germany, and France. The country many immigrants have come from is Portugal. The countries in the region at 24% of GDP per capita are Poland and Hungary. Romania is at 18% and Bulgaria at 17%.

Luxembourg has been in a customs union with The Netherlands and Belgium since 1948, and completely opened its borders in 1960. The Schengen Treaty with those two countries as well as France and the Federal Republic of Germany was signed in 1985, has been effective since 1995, and is named after the town Schengen in Luxembourg. The Schengen Area grew from there and now encompasses countries with a population of more than 400 million people. Since Luxembourg only has about half a million inhabitants, they are outnumbered not just 100 to 1, but almost 800 to 1.

The last time I was in Luxembourg is more than a decade ago. It looked rather tranquil then. But I may have missed something and things went downhill from there. Give me a little time to do the research. Restrictionist websites will certainly have lots of posts on Luxembourg …

Additional Remarks

  • One objection might be that GDP per capita is not the correct measure here. However, other measures do not yield materially different conclusions about the relative position of Luxembourg vis-à-vis its neighbors. Take e.g. average net monthly wages. Luxembourg has an average of $4,230. The Netherlands, Belgium, Germany, and France come in at $2,671, $2,496, $2,865, and $2,845, or roughly 60% to 70% of Luxembourg wages. Portugal has $1,164 or 28%, which is about the percentage also for GDP per capita. Poland and Hungary at $866 and $856 look even poorer with a level of only about 20%. And Romanians and Bulgarians at $485 and $414 earn only 11% and 10% of Luxembourg wages.
  • As I said at the start, this is not a rigorous argument that can prove all that much about other countries. Or at least I would have to work harder. However, I don’t think the example of Luxembourg can’t prove anything at all. It is a counter-example to many common intuitions:
    • “With lots of potential immigrants that are poorer and often much poorer, a small country is bound to be swamped.” — Foreigners are making up 38% of the population (the most for any European country), but Luxembourgers are still a majority. There is no takeover going on that I am aware of.
    • “With so much immigration, a country runs into economic problems. Competition from poor people will make domestic citizens poor, too.” — But Luxembourg is doing fine economically, as the country with the highest GDP per capita in the world according to Worldbank figures. Wages are a lot higher than in Germany or in France.
    • “Their wealth and the steep differentials with other European countries will attract lots of criminals.” — But then the homicide rate is at 0.6 per 100,000 a year, which is way lower than in the US at 4.7, and even lower than in neighboring Germany at 0.8 and France at 1.1.
    • “They must be overrun by people only trying to collect welfare.” — Still they have one of the lowest unemployment rates in Europe, lower than Germany and much lower than France. And if the Luxembourg government had to shell out so much in welfare, how come they have much lower tax rates than Germany and France?
  • I really ran a search for “Luxembourg” at the VDARE website, but could not find anything. That’s strange. Luxembourg should be a poster child for demonstrating all the pathologies of immigration. In every dimension, it looks like Luxembourg is in the worst possible position of any European country. This should be a bonanza for restrictionists, and I am giving it away for free.
  • You may ask: How can wage differentials persist for long times? One reason is that labor is not homogeneous, so many potential immigrants do not compete for the same jobs because they do not have the respective skills. Luxembourg is geared towards the banking sector, so competition comes from other such cities, e.g. Zurich, Frankfurt, and London, where wages are also high. It is not as if hundreds of millions could “take away” specialized jobs and drive down wages only because they come from poor countries and are willing to work for low wages. Another possible reason might be cultural and/or linguistic. Many immigrants find it easier to emigrate to countries that are culturally and linguistically similar to their home country. Luxembourgers are fluent in both German and French, and in addition speak their own language, Lëtzebuergesch, which could be viewed as a German dialect strongly influenced by French. The francophone component may explain the rather high proportion of Portuguese immigrants (as for France, but unlike Germany). In general, migration within the EU is lower than would be expected from wage differentials. Here are two papers on the phenomenon:

    Linguistic and cultural barriers may make it harder to capture gains from open borders as predicted by models that only rely on wage differentials as the driving force. This perhaps cuts somewhat against the most optimistic predictions on the open borders side — but also against restrictionist predictions of large inflows of culturally dissimilar immigrants. According to the Gallup Survey on International Migration 35 million people worldwide are interested in migrating to Spain, but only 25 million to richer Germany.

The photograph of Luxembourg featured at the top of this post was taken by Marcin Szala and is licensed under the Creative Commons Attribution-Share Alike licence.

Croatia, the EU, and Yet Another Experiment in Open Borders

Yesterday Croatia became the 28th member of the European Union. In doing so joined Europe’s great experiment in free trade and free immigration across diverse languages, beliefs, and cultures. The EU is not without its issues, but creating a large open borders region across Europe has not been the reason countries like Greece, Spain, Italy, Portugal, and Ireland have gotten into trouble.

Croatia is currently looking at a  18% unemployment rate and increasing options to move to a country like Germany with its 5% rate should be welcome. There are limitations still in place however. Croats won’t be able to go work in the United Kingdom for another seven years, and the country won’t enter the passport-less Schengen Area until 2015 at the earliest. Part of being able to do means clamping down harder on the country’s borders with countries outside the EU, a process that will require some significant investments.

Joining the EU probably won’t solve all Croatia’s current woes. But every person from Croatia who gets to try life somewhere else in Europe, and every European who finds a place to live or work in Croatia is a little improvement in the world. And every time a country opens itself up to freer migration without causing disaster the empirical case for open borders gets just a little stronger.

Open borders: the solution to conflict in the Middle East

Anne-Marie Slaughter, a respected US academic and former bureaucrat in the field of international studies, recently authored an interesting piece highlighting an unconventional 2-state solution for Israel and Palestine:

“Two-state condominialism” is as visionary as the name is clunky. The core idea is that Israelis and Palestinians would be citizens of two separate states and thus would identify with two separate political authorities. Palestine would be defined as a state of the Palestinian people, and Israel as a Jewish state. Under “condominialism,” however, both Palestinians and Jews “would be granted the right to settle anywhere within the territory of either of the two states, the two states thus forming a single, binational settlement community.”

…Palestinians “would have the right to settle anywhere within Israel just as Jews would have the right to settle anywhere within the territory of the Palestinian state. Regardless of which of the two states they lived in, all Palestinians would be citizens of the Palestinian state, all Jews citizens of Israel.” Each state would have the authority and the obligation to provide for the economic, cultural, religious, and welfare needs of its citizens living in the other state’s territory.

Condominialism recognizes the reality of the deep interconnectedness of Israeli settlers in the West Bank with the rest of Israel – through roads, water supplies, electricity grids, administrative structures, and economic relationships (just as Israeli and Palestinian parts of Jerusalem are interdependent). Instead of trying to separate and recreate all of these structures and relationships, it makes far more sense to build on them in ways that benefit both states’ peoples and economies. And, in a world in which many citizens spend an increasing proportion of their time in virtual space, de facto condominialism is already happening.

As ideas go, I’ve seen worse. I like this a lot. In fact, I like this enough to the point that I would like to know: what’s keeping the rest of the world from trying this out? In many parts of the world, the forms of “deep interconnectedness” Slaughter describes already exist in total defiance of arbitrary, human-defined borders. In fact, I am a bit surprised she almost seems to gloss over the human relationships and communities that constitute the most important interconnectedness here.

To take an example I’m familiar with, it matters little to a Malaysian living in East Malaysia on the island of Borneo where the technical border is. Not when he and his family have been living and moving across the land long before any international border sprung up separating Malaysia and Indonesia. Across the South China Sea in West Malaysia, Malaysians who live in the north are permitted to cross our border with Thailand without passports or visas, a governmental nod to our deep interconnectedness. Stories like these can be found across the world, including in the southern US, where people still recall how, before paranoia post-9/11 set in, communities divided by a border paid it no heed, their lives bonded together by social and economic ties that matter far more than arbitrary lines drawn on a map.

And to her credit, Slaughter closes by obliquely pointing to the relevance of open borders outside the Middle East:

In the 1950’s, after four decades of war across Europe, the idea of a European Union in which member states’ citizens could live and work freely across national borders while retaining their political allegiance and cultural identity seemed equally far-fetched. (Indeed, the name of the political process by which the EU was to be constructed, “neo-functionalism,” was every bit as abstract and cumbersome as “two-state condominialism.”) Yet French and German statesmen summoned the vision and the will to launch a bold experiment, one that has evolved into a single economy of 500 million people.

The EU has proven that on a fairly large scale, open borders work. (I am not too sure about the feasibility of a single currency, though.) To the extent that open borders in the EU have been detrimental, they have been addressable by keyhole solutions (such as transparent, clearly-defined temporary restrictions on immigrant flows to allow societal adjustment). And to the extent that they have been harmful in spite of keyhole solutions, it is absolutely clear that most, if not all, predictions of catastrophe have not come to pass.

Borders may be arbitrary, but we don’t need to abolish them to have open borders. Indeed, Slaughter says: “To make this work, the borders of each state would first have to be defined – presumably on the basis of the 1967 borders, with mutually agreed territorial swaps.” Borders define the area of a state’s sovereign jurisdiction. But they don’t define the human relationships that form the warp and weave of everyday life. Fundamental morality and economics agree: we need open borders.