Tag Archives: remittances

What open borders advocates and scholars of migration and development can teach each other

I’ve recently been reading the scholarly literature on migration and development. In this blog post, I attempt to summarize my understanding of important ways in which researchers in the area are similar to and important ways that they differ from open borders advocates. Then, I’ll discuss what I think both sides can learn from each other.

For examples of the sort of things I’ve been reading, consider this 2007 report for the Department for International Development in the UK, this article on labor migration in India, the World Bank People Move blog, and the websites of KNOMAD and Migrating out of Poverty.

Who are the migration and development scholars who’ve explicitly endorsed radically freer migration?

Some scholars of migration and development are quite sympathetic to the logic of open borders, want the world to move as far as possible in that direction, and explicitly say so. One example is Michael Clemens. While he has expressed some terminological disagreement with “open borders” as a term, he accepts the basic moral logic, he’s all for the main aspects of open borders, and he supports moving as far in that direction as is feasible. Clemens is a co-creator of the place premium and income per natural concepts. He has raised the status in the economic development community of the idea that development is about people, not places. And he wrote the paper that prompted Bryan Caplan to come up with the double world GDP slogan. Note that Clemens isn’t famous solely as a migration researcher; he has also been at the forefront of critiquing some aspects of the Millennium Villages Project.

Another migration scholar who’s expressed considerable sympathy for the open borders position is Lant Pritchett. Pritchett co-authored the place premium paper with Clemens, and has also written a book advocating for freer migration. Pritchett is a renowned development economist who has done considerable work on many areas unrelated to migration, including the return to schooling worldwide and the relation between desired and actual fertility and the importance of contraception to fertility reduction.

How has the community of development scholars changed its views on migration?

I haven’t been able to get a very clear picture, but it seems to me that the international development community as a whole used to be more hostile to migration as a poverty reduction strategy, but they are now more open to it. The following are some general observations:

  • Brain drain was considered a major argument against migration among development scholars, but the balance of the evidence in recent years has moved scholars to the view that the problem is not severe, with many scholars believing that brain circulation and idea flows can be beneficial on net.
  • Historically, the dominant view in the international development community has been similar to the view of many mainstream moderate pro-immigration people that John Lee described here, namely, that migration is not natural, that barriers to it are natural, and that removing migration barriers creates an artificial subsidy encouraging people to move. They’ve also taken the view that suggesting migration as a solution to poverty is essentially a cop-out that accepts defeat in tackling the harder problem of how to get countries to develop. These views again seem to be declining somewhat. It’s more common now for development scholars to consider migration a legitimate part of a strategy that can facilitate improvements in the living conditions of people who migrate and people who stay behind.
  • Dilip Ratha’s work on remittances (see also this New York Times article) got people more interested in the idea that migration can benefit the people who are left behind. Robert Guest’s book on the importance of diasporas encapsulates the growing recognition among migration scholars of how migration can benefit people everywhere, not just those who migrate.

Some other people weighed in on the topic on the comments on this post on the Open Borders Action Group on Facebook.

How do the mainstream migration and development scholars differ from open borders advocates in their views and in their rhetorical emphasis?

In general, mainstream scholars of migration and development are quite similar to the mainstream moderate pro-immigration people John Lee described. In some respects, however, the scholars of migration and development come closer to the open borders position. In particular, compared to mainstream pro-immigration people, and perhaps even compared to some open borders advocates, they differ in these respects:

  • They have a clearer understanding of what poverty and wealth mean, and how rich and poor people are in different parts of the world. And they confront these facts on a regular basis in their work, so it’s harder for them to simply brush these under the carpet. Even somebody like Paul Collier, who wrote the book Exodus that took a lukewarm stance to migration, showed clear understanding and concern about just how big the differences in living standards are.
  • Even if they don’t use the term, they understand the concept of the place premium — the idea that an individual can improve his or her earnings just by crossing borders, with no change in skills, and that much of this improvement is attributable to differences in the value of what the person produces rather than a result of labor legislation or government redistribution.
  • They understand that governments often pander to nativist, citizenist, and territorialist sentiments to an extent that goes beyond what they think is morally appropriate, and also that the sentiments they are pandering to often rely on misguided economic logic. They themselves personally lean more universalist, sometimes in the additive utilitarian sense, sometimes in the egalitarian sense.
  • Even if they’re not themselves libertarians, the libertarian argument in favor of the right to migrate is something that stands out to them more than it does to moderate pro-immigration folks who haven’t thought much about international development. To them, it’s not just an armchair hypothetical. They are also aware of arguments based on human capabilities, even if they haven’t encountered the explicit framework.

On the other hand, they still differ from us “tear down the borders” folks:

  • Their more laser-like focus on poverty alleviation can make them seem somewhat lacking in moral qualms as they discuss issues of optimal migration policy, even when they favor freer migration.
  • Even when they do favor dismantling border controls or other regulations, they’ll frame it in language that suggests more government management of migration. For instance, a concrete recommendation like “get rid of Know Your Customer regulations that forbid migrants from opening bank accounts” would be framed as “facilitate migrant access to banking through reform in Know Your Customer regulations.”
  • Many of their recommendations are focused on strengthening existing patterns of migration that already exist, rather than on loosening border controls that could facilitate new patterns of migration. This may be partly because they’re too anchored to the status quo to consider radical changes. More defensibly, diaspora dynamics suggests that it’s easier to facilitate the expansion of existing migration patterns than create new ones.
  • Related to the preceding, migration and development scholars are a lot more focused on intranational migration as well as international migration among low-income countries and between low-income and middle-income countries.
  • For policy questions, migration and development scholars concentrate their energies on thinking about how to tweak existing systems rather than coming up with new systems from scratch (such as DRITI).
  • Migration and development scholars are very focused on other aspects of the welfare of migrants that are not directly related to open borders. These include migrant childrens’ access to schools, migrants’ access to government-provided and private sector services, and facilitation of communication between migrants and their relatives back home.

What can open borders advocates learn from migration scholars?

Here are some things I believe open borders advocates should learn from migration scholars:

  • More attention to the actual experiences of poor people who migrate: Open borders isn’t purely about poor people, and in particular I believe that there will be a strong imperative for open borders even in a world without poverty. But certainly, freer migration should be an important part of the toolkit to end poverty, and the current state of world poverty considerably raises the importance of the issue. To the extent that open borders advocates are interested in the issue not just theoretically but at a practical level, a closer empirical look at how poor people fare under migration is warranted. Migration and development scholars spend a large part of their life thinking about poverty, and we can be inspired to spend at least a few hours on it.
  • More focus on intranational migration, migration between low-income countries, and migration from low-income to middle-income countries: Open borders advocacy can sometimes seem like too much speculation about something that doesn’t exist at all. And to an extent, that’s right: open borders across a huge place premium (of 5X or more) hasn’t happened. But it might be worth looking at the huge amount of migration that already exists and understanding its implications. While still arguing morally for open borders worldwide, we can focus more on understanding what already exists and making changes to it. Often, there is little reliable data and little interest among readers in such matters (such as Nepal and India, or North Korean refugees), simply because blog readers are highly likely to be in First World countries and are more aware of First World issues. But I think that pushing more in the direction of better understanding migration as it’s actually happening is worthwhile, even if it doesn’t make us popular. We can be inspired here by migration scholars, who have worked very hard to compile data and collect anecdotes to further the world’s understanding of migration.

What can migration scholars learn from open borders advocates?

I think migration scholars can also take a few lessons from open borders advocates:

  • The moral case for free migration matters. It’s the foundation of everything else. Make the case boldly wherever possible.
  • It helps to consider the radical proposal that is open borders, and ask just how far one can get there. Bold policy changes can be useful to consider, even if they aren’t possible to directly implement. It’s not good to stay anchored to the present all the time.
  • When advocating for reductions in government restrictions on migration, it may make sense to not obfuscate this with the “more government management of migration” language. Further, in cases where the optimal policy comes very close to complete deregulation, consider advocating complete principled deregulation instead of trying to target the specific optimal policy. Complete principled deregulation, even if not optimal on paper, leaves less room for governments to re-institute the counterproductive controls seen in current policy.

The photograph of an open borders campaigner at the top of this post was taken by Jonathan McIntosh at a rally in Los Angeles, California, and is licensed under a Creative Commons Attribution licence.

Vivek Wadhwa, and the moral contradictions of mainstream liberal views on immigration

Last week, I attended the Intelligence Squared debate on the motion “Let anyone take a job anywhere”, with Open Borders guest blogger Bryan Caplan and tech entrepreneur Vivek Wadhwa speaking for the motion, facing conservative intellectual Ron Unz and migration policy wonk Kathleen Newland in opposition. I’ve already given my take on the debate: Bryan fought the good fight, but Unz and Newland threw up too many blatant inaccuracies and moral contradictions for any single debater to feasibly bat down in the time allotted. I said then that I thought Wadhwa was an ineffective advocate, primarily because he seemed like a moderate open borders supporter who hadn’t thought through things very well. I take that back: Wadhwa was not an effective speaker for the motion, primarily because he is a moderate open borders opponent who hasn’t thought through things very well at all.

I was originally thrown off by Wadhwa’s seeming endorsement of low-skilled migration during the debate: “if an employer thinks that this Mexican gardener is more qualified to do this job than someone else they can hire locally, let them do it.” Sure, Wadhwa endorsed Ron Unz’s proposal for a high minimum wage, even though Unz’s proposal is explicitly intended to bar most immigrants from coming — but paying lip service to the minimum wage is par for the course for any mainstream left liberal. What changed my mind was Wadhwa sending Bryan a harshly-worded missive which accused Bryan of failing the motion because Bryan used “silly analogies”, and failed to demonstrate how the US welfare system would provide for foreigners who come to the US. Wadhwa made it clear: “I do not advocate open borders.”

Bryan republished Wadwha’s missive on EconLog, at his request, and Wadhwa waded into the EconLog comments to defend his views. I give Wadhwa a lot of credit for this. Not many public intellectuals venture into blog comments, let alone get as deeply engaged as he did. However, I found Wadhwa’s elaboration even more disappointing than the seemingly-unwarranted missive he sent Bryan. Wadhwa first stated that he was upset with Bryan because Bryan made the focus of the debate turn on open borders, instead of “jobs”. What exactly Wadhwa intended to debate about “jobs” remains quite unclear to me, but his lack of clarity here explains in hindsight his unfocused opening statement at the debate. In response to his opening statement, Kathleen Newland chided Wadhwa that the motion was “let anyone take a job anywhere”, and not “let anyone take an anywhere job”.

I asked Vivek why exactly he opposes open borders. He’s made it clear that he wants to ban immigrants from coming to the US if they are going to work minimum wage jobs. But what is his alternative then? As I’ve written before, the primary alternative for immigrants and prospective immigrants if they are banned from coming is sweatshop or slave labour, at wages on the order of a few dollars a day, in workplaces where they run the risk of dying daily. If they can find a job here paying $8/hour (the approximate US minimum wage), I say bully for them. The remittances they send home to other poor foreigners already dwarf the foreign aid packages our governments send by 3 to 1. What humanitarian case is there for destroying the global flow of remittances and forcing hundreds of millions to live lives of sweatshop slavery?

When I posed these questions to Wadhwa, he responded:

Why do you assume that the best way of helping poor workers in Bangladesh and other developing countries is to bring them here to the US? Trust me, these people don’t want to leave their families and friends, culture, heritage, and homes to be here. They would rather stay where they are and make a living minimum wage.

It’s a neat story. But I have a hard time squaring this with the fact that immigrants routinely pay thousands or tens of thousands of dollars to be smuggled into the developing world, running the risk of death in the desert or on the high seas. If they are so happy at home, why are they doing these things? And why is it more humane for us to interdict them with gunboats, for the sake of banning them from earning the “inhumane” wage of $8/hour? Is that really the most humane thing we can do? What is inhumane about allowing these people to buy their own plane ticket, pay the government a visa fee or surtax, and come here to work for wages higher than they would ever dream of earning at home?

Mind you, it’s our guns and border fences that force Bangladeshis to choose between backbreaking farm work and murderous sweatshop hours. If you’re going to tell me this is more humane than allowing those Bangladeshis to seek minimum wage work outside Bangladesh, you’d better be prepared to defend it. Even if you think allowing these people a choice won’t actually result in much migration, simply the fact that these workers now have an opportunity to exit will force their employers to pay better wages and improve working conditions. Making some handwavy arguments about brain drain won’t cut it, considering the paucity of evidence of any tangible harms to the developing world from “brain drain”. The burden of proof here is high: you’re asserting that it’s basic humanitarian policy to point a loaded gun at an unarmed human being and force him to turn around, because the alternative of allowing him to go on his merry way in search of a better job is simply too inhumane to tolerate.

Wadhwa at this point departed the comments, but closed on a gracious note, with words of praise for Bryan (albeit, words I find hard to square with his missive, which claimed Bryan’s arguments failed to convince a single person). He also acknowledged that they were likely mismatched partners as a result of a misunderstanding about the motion’s wording. The discussion continued, though, with EconLog commenters trying to make sense of Wadhwa’s position.

It seems quite clear to me now that Wadhwa and Kathleen Newland from the debate are actually kindred spirits. Both believe that it’s inappropriate to permit immigrants entry unless the government guarantees them a social safety net of some kind — and that because it is impossible to extend a single country’s social safety net to every single human being, there must be strict border controls of some kind. Both favour relatively liberal immigration policies, but policies still very far from open borders: they essentially want the status quo, with slightly fewer restrictions.

Wadhwa and Newland seem to be adopting a territorialist view of some kind, whereby a government owes greater obligations to people within its territory, citizens or non-citizens, than it does to people outside its territory. This is why both favour legalising the US’s population of undocumented immigrants and why both believe it’s fatal for open borders to point out that a single government’s welfare system cannot guarantee equal benefits to every single person on earth. There seems to be “local inequality aversion” at play: Wadhwa and Newland feel uncomfortable about admitting more poor people to the US (Wadha calls this “importing poverty”) unless the government can guarantee these poor people socioeconomic uplift.

But moderate territorialism is actually quite compatible with open borders, just like moderate citizenism. During the IQ2 debate, Bryan’s retort to “but they’ll burden our welfare system” was to essentially say: “we can ban them from enrolling in welfare”. This is going to strike most people as too harsh. But more than that, it’s also not really necessary for most developed countries.

The extreme territorialist thinking that pervades mainstream discussions of immigration concludes that the moment we admit a foreigner to our territory, we assume strong moral obligations, especially socioeconomic ones, towards that person. One obligation might be, say, to ensure that every person in our territory is guaranteed a job at a good wage — perhaps one much higher than $8/hour. Now, I’m happy to admit that sure, we assume moral obligations of some kind. (Providing non-citizens the equal protection of our labour laws would be a good start!) But I reject the extreme territorialist view that our obligations to all people in our territory, citizen or not, are identical.

Open borders skeptics say it’s inhumane to allow people to starve in our streets. But we don’t need to see starvation in our streets under open borders: we can simply subsidise the return ticket home for poor foreigners who lose their jobs. Let’s say you reject that as too inhumane. But we don’t need to break the bank still; we don’t need to furnish foreigners with all the same guarantees we make to citizens. We can offer them a basic social safety net: access to some form of healthcare, perhaps unemployment insurance, etc. All these can be guaranteed at levels lower than what we guarantee natives, but levels that still prevent people from dying in our streets.

To put this concretely, government can restrict an immigrant’s access to the state’s retirement funds while still giving the immigrant basic healthcare coverage. Something similar is already the case in the US and most developed countries today. Few, if any, countries give foreigners equal access to their state benefits as they do to citizens — but similarly, few totally deny foreigners access to any benefits. Yet when economists look at the most generous welfare states, even Sweden’s, they find no evidence of the supposed looming fiscal disaster that immigration is supposed to cause. It is perfectly possible to say, as a moderate territorialist-cum-citizenist, that you support open borders with a limited welfare state for non-citizens. Feasibility is not an issue; this is the exact course our governments are already charting capably (though one could argue they could cut foreigners’ access to welfare more). Economists agree that with a limited welfare state, immigrants are not a fiscal burden.

This is not a hamhanded attempt to dismiss the implications of open borders for the welfare state. This is the ultimate implication of the moderate citizenist and moderate territorialist views that most people hold. If the state has to choose who to spend its limited resources on, there is a prima facie case for prioritising citizens. Newland breezily dismissed the claim that immigration restrictions are unjust discrimination against foreigners at IQ2 by saying: “I think our governments are obliged to discriminate in our favour.”

I completely disagree: if anything, governments are obliged to enforce labour and contract laws equally, without regard for national origin! What I am happy to say is that governments are obliged to discriminate in citizens’ favour when it comes to the social safety net. It seems absurd to me to take the stand Wadhwa and Newland have staked out: that it is just and moral to discriminate against foreigners in labour law, but completely unethical to discriminate against foreigners in the social safety net.

But this absurdity may yet be reconcilable, if you stretch territorialism and citizenism to their extremes. The flipside of territorialism and citizenism is that if someone is not currently in our territory, and not a fellow citizen, then they aren’t our problem. Sure, some bricklayer might be dying of cholera in Haiti right now — but that’s not my problem. I don’t live in Haiti, and he doesn’t live in my country. It’d be my problem if I lived in Haiti and elected the Haitian government — or if he lived in my country, subject to the administration of the government I elect. But otherwise, that Haitian’s poverty isn’t my problem, and he should bugger off.

As a result, the perverse conclusions that Wadhwa and Newland seem to endorse — that it is better to prevent the entry of an immigrant if we can’t afford to give him the same healthcare subsidies as a citizen — can actually make eminent sense. It’s not inhumane to use your guns and tanks to keep a poor person trapped in Haiti. You’re just preventing the Haitian government from “exporting poverty”. You’re preventing them from dumping their problems of poverty and squalor into your government’s lap. It’s not your problem; it’s Haiti’s problem!

But this completely denies the agency of individual migrants. No government forces these people to leave Haiti, or wherever they came from. The Haitian government can barely keep the lights turned on! They certainly don’t have the capacity to subsidise emigration or to brainwash their citizens into leaving, or to force their own people at gunpoint into boats headed for the US. And even if they did, so what? That is exactly what Cuba and Vietnam did to their own people, and the free world welcomed these people with open arms. In fact, that is what the US still does today for Cubans — allowing the Castro regime to dump the people it doesn’t want in the US’s lap.

That you have to jump through so many intellectual hoops to morally justify forcing people at gunpoint to turn away from your shores, on the basis that it’s inappropriate for them to work for the wage of $8/hour, suggests something is wrong with your thinking. These people spend thousands of dollars and risk their own lives in deserts or on the high seas to get those $8/hour jobs. That indicates strongly that what they’re fleeing is even more of a bum deal than minimum wage — perhaps, say, a sweatshop, or worse. How can anyone conclude that it is more humane to force these people at gunpoint to go back to a life — and quite possibly death — toiling away for cents an hour in a sweatshop somewhere, than it is to permit them to come in peace in search of minimum wage $8/hour jobs?

When our taxpayer-hired guns force unarmed civilians seeking work to turn back and go home, we make their poverty our problem as well. When they were suffering in Haiti, or Bangladesh, or wherever they came from, their troubles were of no consequence to us. We did not put them in the plight they faced, nor did we hinder them from uplifting themselves. But when they sought work from an employer willing to pay them a wage multiples of what they might ever hope to earn at home, we put our guns in the way. If we’re going to stop them from solving their own problem, we’d better damn well have a better solution to offer them. Nobody asked us to interfere with their job search; we took it upon ourselves to do this. It’s our duty to figure out what to do with these people now.

Now, Wadhwa and Newland believe quite strongly that a high minimum wage and greater foreign aid (or some other mechanism of “exporting prosperity”, as Wadhwa puts it) is the more humane thing to do. Wadhwa seems to think enforcing a “living minimum wage” in the developing world would slow immigration to a trickle. Supposedly this is the liberal solution to the conundrum of immigration; this is the fulfillment of the developed world’s responsibilities to the developing world citizens whom it has arbitrarily banned from its labour markets.

But are a high minimum wage, high levels of foreign aid, and government-enforced social justice in the developing world realistic options? How would we ever find the money to spend on the vast amounts of foreign aid that would be necessary to “level” the world economically, as Newland put it at the debate? How would the governments of the developing world build the capacity to enforce just labour laws — to say nothing of the capacity needed to enforce a high minimum wage? The answer is clear: Newland herself said at the IQ2 debate that there is no apparent way we can accomplish such “leveling”. So what’s the next least inhumane alternative?

Economist and mainstream liberal Paul Krugman once wrote a seminal essay justifying the toleration of sweatshops as the least inhumane thing we can do for the world’s poor. I excerpted Krugman for my piece on how open borders would abolish Bangladeshi sweatshops. His logic holds true as ever — but it really applies to immigration, not sweatshops:

You may say that the wretched of the earth should not be forced to serve as hewers of wood, drawers of water, and sewers of sneakers for the affluent. But what is the alternative? Should they be helped with foreign aid? Maybe–although the historical record of regions like southern Italy suggests that such aid has a tendency to promote perpetual dependence. Anyway, there isn’t the slightest prospect of significant aid materializing. Should their own governments provide more social justice? Of course–but they won’t, or at least not because we tell them to. And as long as you have no realistic alternative to industrialization based on low wages, to oppose it means that you are willing to deny desperately poor people the best chance they have of progress for the sake of what amounts to an aesthetic standard–that is, the fact that you don’t like the idea of workers being paid a pittance to supply rich Westerners with fashion items.

In short, my correspondents are not entitled to their self-righteousness. They have not thought the matter through. And when the hopes of hundreds of millions are at stake, thinking things through is not just good intellectual practice. It is a moral duty. (emphasis added)

I hope Wadhwa and Newland, and all the liberals who share their views, will do their moral duty, and think things through.

The photograph of Vivek Wadhwa used in the header of this post was taken by John P. Harvey and is licensed under the Creative Commons Attribution-Share Alike licence.

A reply to “Direct Economic Democracy”

Direct Economic Democracy has measured the open borders movement and found it wanting. I couldn’t find any biographical information on the blog other than that the author lives in the UK, so for now the author is just DED to me. Judging by the two posts, DED and I (and probably most advocates of open borders) have substantively different worldviews, but I think there is potentially some common ground. So in addressing our differences I’d like to keep an eye toward our shared aims as well. After all, DED’s tagline is “Everybody matters”, a statement probably every free migrationist would heartily endorse. We advocate open borders in most cases because we think it’s a good way to empower people in poor countries to escape poverty. Likewise, DED is not a committed adversary of open borders, but instead seems to think the world is not yet ready for open borders and demanding free migration too early may evade or worsen the fundamental causes of world poverty:

In principle I share the libertarian ideal of everyone being able to live wherever in the world they fancy. I think the way to go about realising that aim is to first address the issues that create the disparities between rich and poor countries. Once that is (even if only partially) achieved, then the vast bulk of people would no longer have any desire to migrate. A few people would because of personal reasons and for exchange of specialist expertise. However opening borders would then not be opening the floodgates to a torrent of people driven by macroeconomic forces. It is only the prospect of such a torrent that keeps the borders closed now. My total disagreement with the Open Borders campaign is that they advocate opening the borders to a torrent of migration as a first-line response to the disparities between rich and poor countries.

DED begins the (second) post by criticizing free migrationists for describing labor in the rich world as “more productive” than identical labor in the poor world.

To my mind it is grossly insulting to describe that as “less productive” than working in yet another New York restaurant where insufficient custom means the food largely ends up down the sluice. Yet, in terms of how much the workers earn, it is “less productive”. It is all down to the fact that diners in New York have massively more money to spend than diners in Dhaka.

I agree that “productivity” is an unfortunate phrase, especially among non-specialists. It’s important to note that productivity is value-neutral as a technical term. Discussions of productivity differences between rich and poor countries, or similarly between rural and urban environments, have nothing to do with moral character. Because of the potential for connotative misunderstanding though, I prefer not to discuss “worker productivity” but simply wages instead. The pertinent fact is that wages for similar labor and skill sets are higher, sometimes vastly so, in the rich world than in the poor world, and liberalizing migration is the quickest and most straightforward way to eliminate this form of wage discrimination, to the immediate benefit the global poor.

DED suggests this approach is misguided because it fails to address the root causes of global poverty and assumes that such poverty is the result of bad governance in poor countries.

It could be argued that those in the rich world have little capacity to eliminate poverty in foreign countries and so have a greater chance of benefiting the lives of poor people by opening borders to immigration. That argument hinges on the idea that poverty is due to bad governance abroad and that the only answer is for the population to vote with their feet and emigrate. Firstly, I don’t think it is actually true that the rich world is a mere passive observer of poverty abroad. From what I can see, much of the blame for that poverty lies with active policies conducted by the developed world.


Much of the Open Borders logic seems to stem from the idea that market finance already has an inbuilt characteristic that would always lead towards an optimal solution for the world’s problems if only meddling governments were to stand aside.

I agree that the rich world is not merely a passive observer, but actively enforces policies that inhibit effective development in much of the world. Such policies include the arbitrary borders imposed by Western colonialism, agricultural subsidies cosseting rich farmers and tariffs inflicted on poor farmers, and, I must include, the coercive restrictions on movement known as border controls. I do think that another culprit behind persistent poverty in the world is bad governance. It seems hard to deny that governance has at least some impact in a world that has supplied such natural experiments as the Korean peninsula and East/West Germany. Although too often even the fault of bad governance can be laid at Western feet: the governments of the rich world have exhibited a nasty habit of propping up authoritarian dictators who are friendly to Western interests, or at least the interests of insiders. Then again, it’s important to remember that the “natural state” of humanity is grim poverty and early graves.

My point is not to enumerate the causes of world poverty but only to demonstrate that advocating open borders is consistent with any number of causes of world poverty, including causes DED likely favors. DED rather unfairly implies that advocates of open borders believe that our favored policy is the one true Way to cure what ails the world. But nothing about our advocacy suggests that other complementary policies should not be pursued as well. “Complementary” here is, to some extent, to taste. DED and I will likely disagree on the most effective and most just package of policies to subdue world poverty, but I see no reason in principle why DED, who has no fundamental problem with the freedom to migrate, should not include the opening of borders among their favored policies. Simon Caney’s slate of proposals might be of interest to readers of DED’s ideological persuasion (unfortunately gated). If DED fears the effects of a “torrent” of immigrants, (see here and links therein for a discussion of how likely this is) then the appropriate response is to advocate a gradual opening of borders, rather than defending the status quo.

Even by DED’s own standards of wanting to “address the issues that create the disparities between rich and poor countries” and getting the money to go to where the people are, liberalizing migration is effective. Remittances sent by immigrants to their countries of origin move resources directly into the hands of the poor by magnitudes greater than current official aid from the rich world. Diasporas facilitate investment in the poor world by increasing information flows between agents in rich and poor countries and, importantly, providing economic links augmented by trust and long-term commitment that is absent from far-removed investors.

I have tried to be constructive and non-confrontational in this post because at the end of the day, someone with DED’s concerns and commitments is exactly whom I want to reach (I speak personally here, and not necessarily for my fellow bloggers). But I do want to address some distracting and unnecessary provocations in DED’s posts. Linking to a study relating migration to schizophrenia in a throwaway comment (first post) is insulting to migrants. Hopefully we can all agree that restricting the freedom of movement of people around the world is not an effective way to prevent schizophrenia. And the mention of the Highland Clearances was jarringly irrelevant. No advocate of open borders is proposing a forced relocation of anyone anywhere. It shouldn’t come as a shock that we would decry the Trail of Tears as a blight on American history as well. These were brutally coercive policies that have nothing to do with a liberal migration regime.

It’s reasonable to highlight the abuses that can occur when people migrate to places with minimal standards for human rights protections, as in DED’s link to the story of indentured labourers in Dubai. But I see this as an argument for nations more committed to human rights to open their borders to provide more and better options for the world’s inevitable migrants. This story “underlines a wider phenomenon of migrant workers being in a less assertive position to ensure that they receive a fair level of pay”, something advocates of open borders seek to correct by bringing migration into the formal, regulated economies of democratic societies.

I’ll just close by urging Direct Economic Democracy and their readers to reconsider open borders, or at least reform in that direction, as a policy that could bring substantial benefit to millions of people, even as other systemic maladies of our imperfect world continue to demand solutions.

Gains from migration: GDP versus surplus

A couple of days back, I wrote a blog post titled the story behind the “double world GDP” estimates. Yesterday, I chanced upon a blog post by Michael Clemens titled Do the Gains from International Migration “Go to the Immigrants”? (do read that — it makes a lot of points which I make in a slightly different way in this post). And reading that, I now think that some of what I said in my original blog post was, although not quite wrong, misleading.

GDP is roughly calculated by adding up the (price times quantity) of all final goods and services produced within a country’s domestic territory in a calendar year. World GDP is the sum of the GDPs of all nations. In the previous blog post, I tried to get into the story behind the double world GDP estimates. My overall statement was that the gain is seen largely through a direct effect in an increased value of production of the migrants themselves. This increase is not due to an increase in the skills of the migrants (though that might also eventually occur) but rather, is due to the place premium, whereby the exact same worker with the exact same skills produces more values, and gets paid more, in some places than others. That “more value” could be due to higher total factor productivity. Or it could simply be because the job the migrant does is more valued. For instance, a nanny in the United States may earn more than a nanny in India, because parents in the United States have more to gain by leaving their babies in a nanny’s hands and going to work instead.

On the other hand, a utilitarian or welfare-based analysis looks, not at price times quantity, but at the social surplus: difference between the reservation prices of buyer and seller, multiplied by (or rather, integrated over) the quantity. Graphically, it’s the area of a certain “triangle” between the demand and supply curves. Part of the social surplus is captured by the buyer, and part of it by the seller.

For any individual economic transaction, the social surplus can tell a very different story from the “GDP contribution” of that transaction (examples below). At a macro level, I think GDP offers a reasonable approximation to “utility” concepts, but it’s mathematically different.

Why is this relevant? As I said in my previous post, most of the GDP gain from migration is due to the increased value of production of the migrants — though there are also secondary occupational mix effects (see this paper by Dixon and Rimmer, for instance, or more general discussion at the suppression of wages of natives) where natives are relieved of some aspects of their jobs by immigrants and can switch to other jobs that create more value. However, even ignoring the occupational mix issue for the moment, the claim that the GDP gain is mostly registered to the migrant is quite different from the claim that the social surplus is largely captured by the migrant. Certainly, the claims are related, but they aren’t the same. I will make four points to clarify this.

  • Consumer surplus: When Apple introduces a new iPhone, the gains in world GDP are registered to Apple and their suppliers, manufacturers, retailers, and employees. There may also be some compensating losses as other phone manufacturers lose out on buyers. However, the welfare gains are experienced not just by phone producers, but by phone consumers — aka all iPhone users. They’re the ones, after all, who are buying the phones, which means that they value the phone at least as much as Apple prices them. It’s the same story with migrant labor — the welfare gains go to the migrants, their employers, and all the customers of their employers who benefit from the employer’s ability to hire better or cheaper labor in the form of better quality or lower prices.
  • Shifting of non-economic activities into the economic realm: This is a somewhat complicated point. The key idea is that part of the gain to world GDP will happen because non-economic activities return to the market. For instance, suppose I value my time spent cleaning up my apartment at $18. I value a clean apartment at $20, but the cheapest cleaning service costs $25. So, I choose to clean my apartment myself, getting a private surplus of $2, but there is no economic transaction. Now, suppose an immigrant arrives, who would be willing to clean my apartment for $11 or more. We negotiate and agree to a price of $14. The immigrant gets a surplus of $3, and my surplus is $6. My surplus has gone up by $4 (from an original of $2). But the GDP shows a gain of $14 corresponding to the shifting of the activity into the market realm.

    A slight variant of this example — one where I value my own time spent cleaning the apartment more than $20 — would result in a situation where an apartment I would leave dirty getting cleaned up, so my social surplus went from zero (leaving the apartment dirty) to $6. In this variant, non-activity is replaced by activity. But in the original example, non-economic activity is being replaced by economic activity.

    In both versions, though, we see that the GDP gain is much larger than the social surplus created. Does this mean that “double world GDP” estimates are gross overstatements? Not quite. Social surplus as a concept here makes sense for a single transaction with a fixed backdrop, and it’s not easy to generalize macroeconomically. Further, the “double world GDP” estimates are proportional estimates, and so even if you say that GDP vastly overstates social surplus, the overstatement is prima facie likely to be proportional. To actually provide an argument against, you’d need to show that the kind of gains to world GDP that would accrue from migration are not the kind that tend to increase social surplus that much in proportional terms.

  • Occupational mix: Combining the occupational mix idea and the “cleaning my apartment” hypothetical: whether there are further increases in GDP depends on what I do with the time I’ve freed up by having somebody else clean the apartment. Do I use it for activity that would show up as economic production? Do I use it to consume more goods and services that would show up in somebody else’s production statistics? Or do I use it to just relax without producing or buying anything? In the first two cases, there will be a secondary effect of GDP gain from whatever activity I undertake instead of cleaning my apartment. In the third case, there is no secondary effect on GDP.
  • Intra-family transfers: If the income of the parents in a family goes up, does that mean that the gains go “only to the parents” and not to the children in the family? Probably not. The increased parental income probably means gains for the children as well in material and other terms. The key here is intra-family transfers. Certainly, many parents are not completely altruistic regarding their children (though some are more than altruistic), so the extent of intra-family transfers can be debated, but the phenomenon does exist. The same argument can be made regarding cases where only one parent is earning an outside income — in this case, increases in this parent’s income are likely to improve the standard of living of everybody in the family, and the way in which the gains are distributed remains an empirical question. The analogous phenomenon in the context of migration is in terms of remittances. Note, however, that as far as the GDP gain is concerned, the gain is registered only to the person who actually works and/or migrates, not to the other family members who share in the benefits.

So the overall welfare analysis, as we’ve just seen, is a lot more complicated than the GDP contribution analysis. Again, even in a welfare analysis, I think it would still be true that “most of the gains go to the migrants” — though less sharply so than for a GDP contribution analysis. The benefits to migrants are at the heart of the utilitarian case for open borders. However, even after you take out “most” of a doubling of world GDP, there’s still a lot left in terms of benefits to immigrant-receiving countries, benefits to immigrant-sending countries, and global benefits.