Tag Archives: Singapore

How rational can we expect nation-states to be in setting immigration policy?

A recent comment by Christopher Chang made a point that I feel we haven’t adequately addressed on this site: if open borders is such a great deal, why has nobody tried it? Using a similar structure of argument as Bryan Caplan employed in his blog post on motivating sheep or Gary Becker employed in the now-standard argument that market forces gradually erode discrimination, Chang writes:

It does not matter if 90% of actors are inefficiently biased, as long as some subset of the other 10% knows what they are doing; that subset, and its future imitators, win in the long run. This has happened over and over and over again in political, economic, and military history. Both you and Paul fail to comprehend the nature of “collective assessment” that requires only one yes vote. As I’ve mentioned numerous times, you can even provide much of the yes vote yourselves, and according to all your economic claims, this would be quite lucrative. (This does not mean that any particular individual’s failure to do so is damning; life circumstances frequently interfere. But the fact that none of you have done anything like this does, in fact, add up to a strong revealed preference against your claims. Your failure to even seriously openly discuss this among yourselves strongly implies that you do not actually want your rosy projections tested.)

I like the general reasoning behind the generation of these types of questions. Claims that the status quo is radically suboptimal should be met with skepticism, and should be taken seriously only if the people making the claims can offer a convincing explanation for why the suboptimal system is stable. In this post, I explore some possible explanations. Read and judge their strength for yourself!

Note that this post is not, in and of itself, a complete argument for open borders, or open borders with keyhole solutions, being optimal. It’s rather an explanation for how the current state of the world (far from open borders) is consistent with the possibility of open borders being a lot better. It seeks to address a potential inconsistency, rather than offer complete proof. Therefore, my rhetoric in the post will assume the open borders position and simply demonstrate that there are no obvious contradictions.

There’s a connection between this post and my earlier post on whether migration levels under open borders would be optimal, too high, or too low. But whereas that post is about the decisions of individuals holding state policies constant, this post is about the creation and tweaking of the policies themselves.

#1: The gains from pure open borders go to quite an extent to migrants and their descendants, and even though existing residents of migrant-receiving countries gain somewhat, the gains are a lot less

Why don’t we have pure open borders, if it benefits the world so much? The short answer is that the people with the power to decide this (the people in political power and the voters and special interests that they cater to) are not the people who benefit the most from open borders. As Nathan Smith notes here and here, immigration policy is quite “undemocratic” in the sense that potential immigrants have no (direct) electoral say in a matter that affects their freedom.

This point has a number of different aspects:

  • If the gains from migration went mostly to the immigrants and not to non-immigrants in the target country, the people who gain the most don’t have a say in the electoral process. Note that this point is valid even in the absence of disparity or asymmetry between nations. If immigration from Canada to the US significantly enriches the Canadians who migrate to the US, but has little effect on US natives, then US natives (who vote in the elections) have little incentive to push for freer migration from Canada.
  • One possible remedy to the above would be to push for free migration through reciprocity, for instance, freeing migration from Canada to the US in exchange for freeing migration from the US to Canada. This would work in the case that the fraction of the population in either country that has an interest in the option of migrating is large enough: if enough Americans want the freedom of easy migration to Canada, they may vote for a treaty that frees migration both ways. If, however, the fraction of people interested in migrating is small, then they may not be able to push for freer migration even if the absolute gains they experience are huge. That’s because democracy is based on counting votes, rather than on winners compensating losers.
  • In the current world, there are significant international disparities in wealth and wages, and a strong directionality to potential migrant flows. In light of this, the spotlight falls on the migration policy of countries that have greater per capita income or wages or are otherwise attractive migrant destinations. The degree of solidarity between potential migrants and the set of people who have the most influence over the most relevant migration policy is now quite low: the former are people from low-income countries, and the latter are people of prosperous countries. Even though the latter set is expected to gain somewhat in expectation, the gains are smaller in absolute terms, and even smaller when viewed as a proportion of how well off they currently are.

Note that many of these can be fixed, at least in principle, if we relax from pure open borders to open borders with appropriate keyhole solutions such as pro-native tax-and-transfer schemes. So why don’t we have instances of the latter? Actually, we do, to some extent. We’ll get to this later in the post.

#2: The full gains from open borders take time to materialize

Estimates of significant increases in world production after open borders are not estimates of overnight gains. Rather, these are estimates of how the world would look a decade or two from the opening of borders, relative to how it might look in the counterfactual. Even if the estimates were correct, the full magnitude of the gains would be felt after a fairly long time-lapse. Thus, there may not be good electoral incentives for democratic governments to support freer migration for the economic benefits. Some of the economic benefits would be reaped immediately, but it would be an order of magnitude less than the long-term gains. Note that this is similar to the reason why we expect individual migration to be less than what seems economically optimal, as discussed in my other post.

#3: In so far as there is a citizenist case for open borders, it relies on a tax-and-transfer scheme combined with somewhat draconian enforcement

Nathan Smith has previously argued that there is a citizenist case for open borders: use a tax-and-transfer scheme such as immigration tariffs or DRITI to hold natives harmless and distribute the gains away from migrants and towards natives.

Schemes like DRITI present a dark side: they exacerbate the visibility of poverty and, even as they reduce the unfairness of the system as a whole, make it more visible. So, in addition to open borders advocates who’d worry about such schemes (see, for instance, here and here), there are many others, such as immigrant rights activists, who would reject these schemes. Even if open borders started out with such “keyhole solutions” it’s not clear that they’d be stable.

The combination of citizenism and the form of local inequality aversion make tax-and-transfer-based keyhole solutions a hard sell in many countries. I don’t think the problems are insurmountable. But I don’t think it’s surprising that we haven’t seen a lot of progress on these so far. It’s fruit, but it’s not very low-hanging fruit.

Incidentally, one prediction of this setup is that countries that are less democratic, and where governments have more authority to carry out more draconian enforcement, might be more likely to have implemented citizenistic migration liberalization. This is indeed the case, as we’ll see in #5.

#4: The incentives of democracy

The incentives of the politicians and bureaucrats running the government are not perfectly aligned with the long-term interests of the citizens. There are two broad problems:

  1. Citizens themselves don’t know what’s best for them, so they may not reward their representatives in government for choosing better policies or delivering better outcomes.
  2. Politicians often cater to special interests rather than the needs of citizens.

In the context of why there hasn’t been more significant migration liberalization, I expect (1) to be a far bigger reason than (2). The general phenomenon of political ignorance in the electorate in advanced democracies has been well-studied (the political knowledge elsewhere is highly unlikely to be better, and quite likely to be worse). Explanations such as rational ignorance and rational irrationality have been offered. Given generally low levels of political knowledge and decision-making skill on the part of the electorate, we shouldn’t have strong reason to expect a democracy to converge to a good outcome. But we might still expect that, by random chance, some democracies would converge to good outcomes in a given area. So a bit more is needed.

Bryan Caplan has posited that one particular aspect to voter irrationality is anti-foreign bias: people systematically underestimate the benefits of interactions with foreigners. Are people inherently anti-foreign? I think that people have inherent tendencies to support their ingroup and resent or discount the welfare of outgroups. But the particular use of nationality as the criterion to define ingroup and outgroup is probably an artifact of the political process: there is an existing governance infrastructure that facilitates discrimination on the basis of nationality, and an existing ideological infrastructure that gives particular importance to national identity. So people’s diverse ingroup-outgroup choices get projected to divisions based on nationality and citizenship even if that’s not the best way of describing the distinctions in their own minds. The upshot is that we might expect the political process to produce an anti-migration bias relative to what’s optimal, and while this reflects some discomfort that individuals experience interacting with foreigners, it’s often a result of a political process translating other forms of discomfort people have to the language of discrimination based on nationality (this is a somewhat tricky point, and I hope to elaborate in a future post).

#5: Some countries that are undemocratic or less democratic, and have more deference for elites, tend to have citizenistic and numerically liberal migration policies

Carl Shulman has been doing yeoman’s work of late examining some interesting “open borders with keyhole solutions”-type regimes. He looked at Singapore in a blog post titled Migration levies and unskilled labor mobility in Singapore, where he discussed Singapore’s large temporary guest worker program for low-skilled migrants, that combines fairly huge numbers of migration with fairly stringent restrictions on what migrants can do, as well as taxes on the migrants that make them fiscally good for the government. In a blog post titled What does migration to the United Arab Emirates tell us about labor mobility?, he looked at the UAE, where a significant majority of the population is foreign-born, and where there are significant differences between the rights and privileges accorded to a native elite and a large foreign-born workforce. In both cases, their policies created a win-win for natives, the government officials, and migrants. In Singapore, the success of these policies arises from an effective one-party system and considerable deference to elites in policymaking, despite the general population being less pro-migration than in many First World countries with far stricter limits on migration. The UAE is a federation of hereditary monarchies, which insulates it from the pressures of competitive democracy. The population is also less likely to push for liberal ideals of equality that jeopardize the stability of keyhole solutions.

Relatedly, a recent book called The Price of Rights by Martin Ruhs (to be reviewed later) empirically came to the conclusion that there’s a trade-off between the number of migrants a country admits and the package of rights that are accorded to people after they migrate. A similar point had been made in a post by Michael Carey a while back on immigration and class struggle. If modern liberal democracies tend to be strong on the package of rights and privileges, this (often) comes at the expense of the number of migrants they admit.

#6: If many countries tried citizenistic open borders, competition would drive down tariffs eventually, bringing the world closer to open borders

In #1, we (sort of) ruled out the plausibility of pure open borders (barring dramatic changes in people’s views of moral permissibility and side-constraints). But in #5, we pointed out that we do have partial approximations to “open borders with keyhole solutions” and these could be taken further. So how far are “open borders with keyhole solutions” from pure open borders?

We can think of pure open borders as migration with zero government-imposed barriers or taxes. Suppose most countries have prohibitively high barriers, and a few countries experiment with selectively reducing taxes to the level of “open borders with keyhole solutions.” These few countries can still afford to keep the taxes at their profit-maximizing level, because they’re effective monopolists: all the other countries are out of the running because their barriers are too high. The policies of these few countries are a Pareto improvement over the status quo, but they still carry the inefficiencies of a monopoly. If, however, more countries start getting drawn into the game of open borders with keyhole solutions, then there is more competition between countries that exerts a downward pressure on the taxes and barriers. Thus, as more countries do it, we get closer to open borders. We probably don’t get anywhere near pure open borders, but we do get a lot closer than if only one or two countries were trying it out.

PS: Open borders isn’t the only policy proposal for which we can ask this sort of question. I’m quite curious to hear the thoughts of proponents of drug legalization, free trade, organ trading, and other such cutting-edge proposals. The situation with some of these seems to be a bit better than for open borders, but not by a huge margin. For instance, consider the case of drug legalization. According to this Wikipedia page, there is only one country, Uruguay, where the possession, sale, transport, and cultivation of cannabis (marijuana) are all legal. But there are a number of nation-states (plus member states in nations) where the possession of marijuana is legal, or illegal but decriminalized, and there are others where marijuana use is de facto tolerated. So even though full-blown legalization is rarely embraced, we have enough variation in the direction of legalization to address the question of “if it’s such low-hanging fruit, why has nobody plucked it?” This is roughly similar to the situation with open borders.

PS2: I wrote up a condensed version of an early draft of this post in the form of an Open Borders Action Group post.

Make More Singapores!

I have advocated the DRITI policy– instead of coercively restricting migration, tax it and use the proceeds to compensate natives– for years, and Principles of a Free Society was written, if you like to think of it that way, as a political philosophy suited to undergird DRITI policies. By now, this has become a standard part of the case for open borders. Thus, in “Meant for Each Other: Open Borders and Western Civilization,” Bryan Caplan writes:

Still worried [about open borders undermining natives’ wages]?  There’s a cheaper and more humane remedy than keeping foreigners out: Charge them an admission fee or surtax, then use the proceeds to help displaced native workers.

Which is the same idea as DRITI. Not that I’m blaming Caplan for borrowing the idea from me without acknowledgment. Caplan knows I advocate migration taxes. He even wrote one of the blurbs for Principles of a Free Society. But Gary Becker proposed a migration tax to the IEA back in 2010. Actually, that was four years after I published the idea, but Becker had written about it before, in an op-ed in the 1980s. Recently, at the APEE conference in Las Vegas last April, Richard Vedder also proposed a migration tax. The idea is really too obvious to quibble over its paternity. It’s a simple cross-application of the standard free-trade advocacy truism– “yes, free trade has winners and losers, but tax the winners to compensate the losers”– to migration policy. I’m not sure whether Caplan got the idea from me. I’m pretty sure that if he hadn’t got it from someone, he’d easily have thought it up on his own. It’s a no-brainer for economists, but somehow policymakers are blind to it. Or so I thought.

What I didn’t realize is that Singapore already has something close to a DRITI policy in place, as Carl Shulman reports. From 1970 to 2010, the number of foreign workers in Singapore rose from just over 20,000 to more than a million, a third of the labor force, and still rising. Most of these are not the high-skilled workers that OECD democracies tend to privilege. Nearly a million are here on low-skilled “work permits,” including foreign domestic workers (214,500) or construction workers (319,100). How is the number of immigrants regulated? First, by Foreign Worker Levies, i.e., migration taxes, a policy variable. There are also Dependency Ceilings, maximum foreign shares of an employer’s workforce. Shulman doesn’t say how often these are binding, but they seem liberal, e.g., 87.5% of construction crews can be foreign. And how much do migration taxes raise?

Levies for unskilled workers range from $3,600-$9,000 per annum. With around a million workers subject to levies, the proceeds to Singapore should be in the billions of dollars (all figures are Singaporean dollars, about 0.8 $USD each).

Total levies collected amounted to $1.9 billion in 2010 and $2.5 billion in 2011. Total government operating revenues in 2010 were $45.5 billion and $50.5 billion for 2011, so worker levies alone accounted for 4-5% of operating government revenue. Since then the migrant population has grown substantially and levies have been hiked, by a third or more in many cases, with further increases scheduled, so the current percentage is likely significantly higher. Even so, the figure will be small compared to the economy, because low-skill workers contribute disproportionately little to economic output, but is high as a proportion of compensation costs. While Singaporean natives with such low incomes would pay no income tax, the top levy rates for unskilled workers (charged to employers) can be half or more of wages.

In short, while we can quibble about details, Singapore more or less understands and is applying and applies the citizenist case for open borders. Singaporeans benefit from cheap cleaners, bus drivers, and domestic workers. And they don’t just benefit themselves; foreign workers also gain opportunities. As Vipul Naik pointed out in conversation, if all developed countries adopted policies like this, migrant wages and wages in migrant source countries would be competed up. I might argue for slightly different moral side-constraints (e.g., I wouldn’t endorse deportation of pregnant women), but it would be a great thing for both economic development and freedom if other developed countries followed Singapore’s lead.

Lastly, a more general point. Singapore is amazing. Every time I read about policy in Singapore, I find myself involuntarily thinking Wow! This is the most enlightened regime on earth. Perhaps that’s a slight exaggeration, but few would deny that Singapore is a spectacular success. So why don’t we make more of them? Much of the key to Singapore’s success seems to be simply that it’s a sovereign city-state. In general, sovereign city-states make wildly disproportionate contributions to civilization. Think of the city-states of ancient Greece, Athens and Sparta and Corinth, birthplaces of philosophy, history, science, and democracy. Or the city-states of Renaissance Italy– Venice, Florence, Genoa– which were also gloriously accomplished in arts and letters and sciences. Today, Hong Kong has a kind of partial sovereignty. It, too, is a dazzling success, whose success has spilled over in a massive way. Hong Kong has been a major catalyst for China’s economic take-off. Yet, perversely, we have established a system of international sovereignty which makes it impossible to found new sovereign city-states. We need charter cities.

Singapore: 29% of the labor force is foreign

From Singapore’s Success: Engineering Economic Growth, by Henry Ghesquiere:

Like other countries, Singapore controls the income of foreign labor. Here, too, economic growth has benefited from openness. Augmenting the domestic labor supply is an integral part of the country’s overall development strategy.

Foreign manpower made a key contribution to Singapore’s economic growth. By 1970, full employment had been achieved and Singapore began to attract temporary foreign workers, then accounting for 3.2 percent of the labor force. Their number grew rapidly, reaching 7.4 percent of the workforce by 1980. By 2000, foreign workers made up an estimated 29 percent of Singapore’s labor force– 5 percent higher-skilled or professionals on an “employment pass” and 24 percent lower-skilled holders of a “work permit.” Expatriates filled half of the 600,000 new jobs that were created during the 1990s, with the other half filled by the domestic labor force. The upward trend has continued since.

Foreign workers now play a key role in Singapore’s economy. Low-income earners, mainly from the Philippines and Indonesia assist in households and with elderly care, while road and construction workers hail from all over South and East Asia. Professionals and highly skilled workers are being courted through an aggressive open-door policy to attract global talent. Foreigners on temporary work permits and employment passes are expected to leave at the expiry of their term, unless renewed. There are procedures to keep the lower skilled as a revolving pool on fixed employment terms to prevent them from establishing roots. Jail penalties await landlords and employers who house or employ illegal immigrants. Foreign labor and the Singaporean economy have become intertwined in mutual dependence.

In this area as well, Singapore relies on the price mechanism as a policy instrument to manage the total inflow and skill level of expatriate labor. Under the foreign work permit system, employers pay a levy to the government budget that differs according to the skill level of workers and sector of activity. Permits are renewable every two years. Levies are raised if demand from employers is strong. Levies are lower or nil for better-skilled workers. This differentiation has encouraged construction firms to invest in training their workers and to introduce labor-saving techniques. One consequence of improved skill levels is increased competition: during the downturn in 1998, some local employees were retrenched while stronger performing foreigners kept their jobs, unlike in 1985. Also, the inflow of one important category of less-skilled workers may have indirectly contributed to higher productivity. The increase in female labor force participation from 29 percent in 1970 to 53 percent in 1999 has provided more than 228,000 additional workers over the past three decades. This includes 130,000 maids, allowing many families to have a second income-earner. The government explains the beneficial impact of the foreign presence, even though such a policy has led to some concerns among Singaporeans about future job prospects and more intense competition for housing.

Of course, I don’t approve of all of this. In particular, to jail landlords and employers who house or employ illegal immigrants is a  violation of human rights. That said, it may be more tenable for a city to adopt such measures– jail is indefensible, but fines might be tolerable– than for a country to do so, since congestion and local externalities perhaps give people a more legitimate stake in their immediate physical neighbors than any citizen of a large territorial state has in anyone’s residence, or not, somewhere in the territory, including perhaps in wild and uninhabited parts of it.

Most impressive is the statistic: 29% of the labor force is foreign (as of, I think, 2007). This share is a little less than twice as high as the 16.6% in the US. To get to the Singaporean level, the US would need to let in about 30 million more immigrants. Singapore is wealth worth emulating, considering that Singapore is about 20% richer than the United States (per capita). Moreover, Singapore seems to be maintaining rapid rates of GDP growth even since they’ve overtaken the United States and supposedly should be bumping up against the “economic frontier.”

UPDATE: By the way, the idea that foreign nannies and maids could free high-skilled women from housework and childcare and facilitate their entry into the labor force is particularly interesting. The feminist case for open borders?

A DREAM Act for Singapore? Or, the arbitrariness of nationality-based residence laws

There is a 19-year-old Filipino citizen who has literally lived her entire life in Singapore who, as of this writing, risks being kicked out of the only country she has ever called home:

Nadirah was born out of wedlock in Singapore and given a Filipino citizenship, as her mother was a Filipino. Along with her five siblings, two other siblings are also non-citizens while the other three siblings were given citizenship as her parents got officially married in Philippine before they were born.

As Nadirah graduates from ITE, she will soon be asked to return to Philippine once her student visa expires in a month’s time. To be relying on relatives whom she never spoken to for years and a country where she has no memory of, the situation looks utmost depressing for this young lady with a uncertain future.

Nadirah’s situation reminds me all too much of the “DREAMers” of the US –young people who are present in the US without lawful immigration status who have spent most, if not all, of their lives as law-abiding members of US society. The immigration laws of Singapore ought to give people like her relief: there’s an argument to be made that even if she doesn’t deserve citizenship, she certainly ought to be able to reside in the only country she’s ever called home.

But we ought to look beyond the specific issue of young people whose paper nationality does not match the nationality written on their hearts. There are plenty of older people who, whether or not they feel a sense of national belonging to another country, are productive and harmonious members of that country’s society.

My mother may provide a useful illustration: she is a Filipino citizen who resided in Malaysia with our family for several years on a renewable 1-year “social visit pass”: the Malaysian immigration authorities maintained this legal fiction that she was making a “social visit” to my father for an extended period of time. While this is certainly more favourable than how other immigration legal regimes treat families, it also meant my mother had no legal standing to work in the country (despite possessing a post-graduate degree in a STEM field) and risked deportation or being barred entry for fairly arbitrary reasons.

A real risk my family faced was that if my father died, there would be no legal fiction for her to remain on a “social visit” and force her to return to the Philippines (where she has not lived for decades). Moreover, the restrictions of the pass forced my parents to spend multiple working days every year processing the necessary red tape to renew my mother’s visa (a luxury which many less-educated, working-class families probably can’t afford), and deterred my mother from leaving the country (on one occasion, a bureaucratic error in her visa meant that she risked being unable to re-enter the country if she left, even for a brief visit — so she simply did not visit any friends or family in neighbouring Southeast Asian countries until the next year, when her visa was renewed and the error corrected).

In principle, my family could have obtained permanent residency for my mother. In practice, the immigration bureaucracy seemed content not to bother itself with her application. It’s going on 15 years since her application was first filed, and every single time we’ve checked on its status, we’ve been told: “Wait for a letter from us.” The last time my father visited a Malaysian immigration office to discuss this, he saw a white woman berating a civil servant. She had apparently married a Malaysian who had since died, which is probably why she was there at the office that day. She was shouting at the government clerk in fluent, well-accented Malay: “I have been living in this country for longer than you have been alive!”

(Of course, there’s always a story that can top any story you think of. If we are speaking of immigrants’ pulling rank based on seniority, I can only imagine what a Mr. Padilla, who had lived in the US for over 4 decades and fought for it in the Vietnam War, had to say when he received his deportation order.)

The way we think about immigration law assumes citizens must, more or less, live in the country of their nationality. If they live or develop ties elsewhere, they need to prioritise their loyalties and naturalise as necessary. The permanent residency systems of most countries assume that those holding permanent residency will eventually naturalise: I have heard of one Malaysian holding permanent residency in the UK who calls both the UK and Malaysia home being frustrated at the UK border when its immigration officers demand to know why she wants to come in (“because it’s my home!”).

Yet there is no reason to bind citizenship and residency together: even in the status quo we can simply define citizenship as membership in a polity, and residency as the right to reside there and submit to that polity’s laws. Perhaps Nadirah wouldn’t be satisfied without citizenship — she might have grounds for this, since it sounds like she has always thought of herself as a Singaporean. But she and her Singaporean friends and family would still find this arrangement a whole lot more palatable than the alternative, which is to expel her as a non-resident to a country that is just as foreign to her as it is to Lee Kuan Yew.

The very fact that some of Nadirah’s siblings are Singaporean citizens and some are not speaks volumes about the arbitrariness and ridiculousness of how immigration law treats human beings: the entire lives of people, and the communities they are embedded in, hinge on some pieces of paper. Whether it’s a birth certificate (God bless those lucky people whose foreign parents were rich enough to give birth to them in the US and entitle them to American citizenship) or a marriage certificate (which gave some of Nadirah’s siblings the legal imprimatur that she lacks), it serves as an entirely arbitrary division between people who, for all other intents and purposes, are identical.

If immigration policy prevents people who call a place their home — a home that their community recognises as theirs — from actually living in that home, then as a moral matter, immigration policy is wrong. Plain and simple. We recognise the moral truth of platitudes like “Home is where the heart is.” We may sing paeans to the importance of community and how that defines the space we call home. But when home is on the line for members of our communities who, by an accident of birth, don’t have the legal right to live in their own home, do we have the moral courage to change the laws which make a mockery of the concepts of home, family, and community?