Tag Archives: place premium

Risking death to get into South Africa

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The supposedly horrible socioeconomic consequences of South African apartheid’s abolition are sometimes used as a cautionary tale against open borders. But this story of Ethiopians and Somalians risking life and limb to get into South Africa serve as a potent example of how much people are willing to risk in search of a better life:

41 young Ethiopians suffocated to death inside an overcrowded van in Tanzania. With the aid of human traffickers, they had been hoping to start a new life in South Africa.

Some ended up paying with their lives, while those who survived will be deported back to their home country.

…Most refugees from Ethiopia and Somalia are economic refugees, says Getachew. But others flee also from war and political persecution. 32 year-old Mohad Abdul is among those who fled to South Africa because of violence in Somalia….Integration in South Africa was relatively easy for Abdul. He quickly obtained a residence and work permit. Today he is a businessman in Johannesburg and watches closely as more and more Somalis and Ethiopians flock into the country.

In no other country are there so many asylum applications. In 2011 alone, there were 100,000 applications. The authorities can scarcely keep up with processing them.

There is no accounting for such reckless risking of life without considering the place premium: the same person doing the same job in one country can earn dramatically more than he or she would in a different country. The Somalian fleeing lawlessness is almost certain to be more productive in any other society in the world, since that country will at least have a half-functioning legal system. It is not difficult to imagine that even countries in less anarchic states might not offer their citizens the institutions conducive to productivity and prosperity which do exist a country or two away.

The international wage discrimination created by closed borders is literally the worst that has ever been measured. That conclusion may sound shockingly strong, but when you consider that there are Indonesians who literally migrate to Australian jails (because to them it’s better to be in a jail in Australia than free in their homeland) or Afghans who risk being shot to death to get into Iran, what’s shocking is how blind we are to the suffering which closed borders create.

The image featured at the top of this post is of a mother with her child crawling under the South African fence bordering Zimbabwe, taken by Themba Hadebe for the Associated Press in 2010 and published in The Guardian.

Skirting Around the Restrictions: Will Technology Make Borders Obsolete?

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The rise of modern communications technology has drastically changed the way humans interact with each other. Physical distance matters less than ever. You my dear reader may be seeing this post of mine from 10 minutes away from my apartment or from 12,000 miles away. Indeed the difference in time which you might theoretically be able to first read this is insignificant between those two locations. Compared to times when it took six months to traverse the silk road from Europe to China that is absurd. And this technology is not limited by borders (with some important exceptions, though just like real borders people find ways to sneak around that). Looking at the author list for this site even it’s possible to find people from across the globe writing about open borders. Technology might be beating us to the punch on open borders (for a similar argument that poverty might end before we open the borders see Vipul’s earlier post). So if this is all true does this mean there’s no point to open borders advocacy? Has technology already won the battle for us?

Sadly this post doesn’t end with me cracking open a bottle of champagne and celebrating victory (or maybe just a beer, champagne isn’t really my thing…anyways…). Continue reading Skirting Around the Restrictions: Will Technology Make Borders Obsolete? →

Place premium versus race premium

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Co-blogger John Lee has written an interesting post on the place premium — the extent to which a person’s current location affects that person’s earnings — and how it compares with various estimates for the “gender premium” — the estimates for how much less females earn than males with the same skills and qualifications. John focused on the gender premium, but pretty much the same observations can be made about the “race premium” — for instance, about the wage differences between whites and blacks in the United States with the same skills and qualifications. I was planning to write this current post before I saw John’s, but since he’s already written his, I’ll stick to a few points that I think are important but that I think were not salient in John’s post.

My main point is this: race and gender are intrinsic to a person’s identity. Sex change operations are rare, though not unheard of. Race change isn’t possible — though a person can change the race he/she self-identified with, the person’s race as perceived by others cannot be changed through an act of fiat. This is important in two ways.

Measurement uncertainty

The ideal way to measure a “premium” (place, race, or gender) is to take a fixed person, start that person in one place (respectively race, gender), then change the person’s place (respectively race, gender) and then measure how much this affected that person’s earnings. Now, in the case of race and gender, this type of ideal “controlled experiment” is almost impossible. In the gender case, it’s impossible unless you can persuade people to undergo sex change operations — but people who undergo sex change operations are likely to not be representative either before or after their operations. In the race case, it’s also impossible or nearly so.

There is considerable debate on the gender premium in the United States, for instance, largely because it’s very difficult to figure out what exactly it means for a female and a male to be identical in all respects other than gender. Are we accounting for various unobserved characteristics? Different choices of how to break the data down (by profession, sub-profession, years of experience) yield different estimates. Which of these choices is justified? The Atlantic interview that John linked to from his blog post highlights some of the points of contention. Bryan Caplan, who is skeptical of the existence of a huge gender premium or race premium in the United States, has lecture notes on the key points of contention. Continue reading Place premium versus race premium →

Wage discrimination’s elephant in the room

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Besides illuminating the horror of both candidates’ immigration policies, the 2nd US presidential debate this year was noteworthy for other reasons, such as Mitt Romney’s by-now infamous “binders full of women” remark. Romney was responding to a question about what he would do to erase the wage gap between men and women. The questioner specifically asserted that women make “only 72 percent of what their male counterparts earn.”

The Atlantic has an interesting interview with labour economist Francine Blau on this; it seems clear from the data that some statistically-inexplicable wage gap exists between male and female workers, although the difference is closer to 9% than the 28% suggested at the debate. What didn’t come up in the debate, and what Blau failed to highlight, is that these wage gaps, appalling as they are, are the tip of the iceberg. I refer, of course, to the horrifying place premium. Continue reading Wage discrimination’s elephant in the room →

Closed borders kill people

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Open borders advocates have long seized philosophical hypotheticals to argue that open borders would, quite literally, save lives. Restrictionists tend to jump through all kinds of hoops to argue that preventing someone from earning an honest living isn’t economically equivalent to robbing that person of some of their income — which, in extreme cases, can obviously cause death. But it isn’t hard, at all, to find cases where closing the borders quite literally kills people.

Historically, developed countries have welcomed political refugees, knowing that to turn someone away would likely lead to their death. We regret and condemn cases where the civilised world has failed to do this, such as when the 1940s US denied visas to European Jews (perhaps the most famous victim of American oppression here being Anne Frank). West Germany welcoming East German escapees or the US welcoming Vietnamese refugees come to mind; even today, the US near-automatically grants residency to Cuban refugees.

While reading an article in the New York Times today about the corner of the world where the borders of Pakistan, Afghanistan, and Iran meet, all I could think about was the power of open borders to transform people’s lives. I don’t know many people who would find it appealing to live in Iran, yet there are literally people willing to run the risk of death just to get into Iran (over 2 million of them, by one estimate from the article). That’s the immense power of the place premium.

I don’t have extremely strong views on Iran, but after reading the article, I don’t think I had a very positive impression of the country — to put it mildly. The way it treats undocumented Afghan workers, literally murdering people for crossing a line someone drew on a map, is unconscionable. Yet almost everything about Iranian immigration policy, short of murdering immigrants, resembles immigration policy in almost every country of the world. What makes Iranian immigration policy barbaric, but US or European immigration policy civilised?

Something else to chew on: Australia’s policy of jailing immigrants has backfired, because Indonesians are willing to risk death on the open seas to immigrate to Australian jails. The place premium’s existence and power are undeniable: people risk life and limb to get into Iran. They risk life and limb to get into an Australian jail, because that’s still a better life than what they had before. If closing the borders isn’t equivalent to taking food away from a starving man, it’s pretty damn close — especially when you need to literally kill some people to keep the borders closed.