More responses to Caplan’s critics

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NOTE: All commenters are referred to as “he” in the text below. I did this because the only commenters whose pen names were gendered were male, and in my experience, most commenters on libertarian blogs seem to be male. I suppose I could have used the singular “they” but it seems ungrammatical when one is referring to a specific person. Apologies to any female commenters who might have been misidentified by my choice of pronoun.

Open borders is the most one-sided issue of our times. It wins the argument and to spare. That’s my position, and if there’s a certain bravado about it, that’s my way of daring those who disagree with me to justify themselves. I want to flush out the arguments against open borders, so I can refute them. Yet to argue with run-of-the-mill immigration critics is a tedious business, because their intellectual level is so low (see my dissection of Victor Davis Hanson) that the response could only consist in cutting through crude prejudices and elementary fallacies. Bryan Caplan’s Open Borders Persuasion Bleg a few days ago was useful because he evokes a more intelligent kind of critic. Indeed, as I noted in my previous response to Caplan’s critics, Caplan has managed to muster, in his comments section, the most clear-thinking group of critics of open borders on the web, because they’ve seen him make the case for open borders in its glittering clarity. They are informed dissenters. Though still mistaken.

Caplan started the thread with this invitation:

Immigration restrictions probably have bigger effects on the world’s economy than all other regulations combined.  As far as I can tell, virtually every moral theory – utilitarian, libertarian, egalitarian, Rawlsian, Kantian, Christian, and Marxist for starters –  implies that these effects are very bad.  As a blogger, I’ve tried (though perhaps not hard enough) to make open borders my pet issue – to convince as many people as possible that the cause of free immigration is of overriding value.

My question for you: How persuasive have I been?  In particular, how persuasive have I been for you personally?  Yes, polling your own blog readers obviously courts a strong selective bias, but I still want to hear your answers.

There were probably more positive than negative responses to this introduction, including some who were completely converted to the open borders cause from indifference or hostility. I’ll focus on the negative responses though because they show what we still need to work on. I’ll cover most of them, but skip the long comments from Ghost of Christmas Past because they would need their own post.  Continue reading More responses to Caplan’s critics →

Why are academia and Silicon Valley pro-immigration?

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Restrictionists often argue that immigration suppresses native wages. How, then, do they explain the significant economist consensus in support of more expanded immigration? They rely on a mix of arguments such as the economist blind spot, elite conscience salve, and other attacks on advocates. The subtext of these, particularly the elite conscience salve, is that most open borders advocates don’t have to live the adverse effects of immigration. In this telling, open borders advocates, safe in their ivory towers from the unwashed masses, can declare open borders and shrug their indifference to the annihilation of their less fortunate fellow nationals.

As a factual matter, George Borjas (the man most quoted by restrictionists on economic matters) found that in the short run in the US, college graduates lose more from immigration compared to ordinary Americans, and lose less only compared to high school dropouts. I’m personally unconvinced by Borjas’s pessimistic estimates, and find the more optimistic estimates of the impact of immigration more convincing. However, that’s not a topic I want to get into in this blog post. Rather, in this blog post, I want to consider two stereotypically high-skilled profession types where people within the profession (including many who aren’t open borders advocates) actively advocate for more immigration of people who would specifically compete with them for jobs. I’m talking about academia and Silicon Valley, both in the United States context.

The case of academia

In the United States, academia is one realm where the current immigration regime is closest to free migration. Student visas are not always granted, but it’s easier to get a student visa than a H1B visa, and it’s definitely way way easier than getting an unskilled work visa (the H2A visa category). For post-doctoral and tenure track positions, academia has successfully been able to exploit a loophole in the H1B regime. The H1B regime states that a H1B work visa can be granted only if it’s convincingly demonstrated that no qualified American could be found for the job. In academia, it is usually pretty easy to set forth a collection of job requirements (such as papers on a specific subset of topics) that are satisfied by only one person on earth. It’s much harder to use this trick to hire people in other high-skilled jobs, and nearly impossible to use the trick for “low-skilled” jobs like restaurant worker or farm worker. The point is not just that the law has a practical loophole, it’s that immigration officials generally let people get away with it. Bryan Caplan explains this between 22:30 and 25:00 of his immigration restrictions video. And Caplan also notes in this blog post that academia already has de facto free immigration. Continue reading Why are academia and Silicon Valley pro-immigration? →

What do open borders advocates really want?

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How do we translate the cause of open borders into specific policy recommendations? The range of policies entailed by “looser border controls” is wide — and the range of policies which might be mistakenly attached to the “open borders” idea is even wider. It is important to be clear on definitions when we discuss the idea of open borders, lest we waste time on proposals which few actually support.

Before I continue, note that I speak only for myself; not for Vipul, not for Nathan, and not for any other advocate of open borders, even though we all support greater immigration. In fact, immigration supporter Tyler Cowen declares himself opposed to open borders, even though I suspect under my definition of “open borders”, he may be one of our greatest advocates.

It is crucial to be clear about what “open borders” really means in terms of end goals. Being vague about the meaning of “open borders” makes it easy for restrictionists to attack straw men, while ignoring the strongest arguments for open borders. So when I seek open borders, here is what I want: people to be able to cross international borders at will, insofar as this is administratively practical.

Continue reading What do open borders advocates really want? →

Benefits and harms to migrants: a meta-response

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I just published a blog post titled gains from migration: GDP versus surplus where I make arguments similar to those in the blog post by Michael Clemens titled Do the Gains from International Migration “Go to the Immigrants”? But in true Caplanian fashion, I think it may be better to step back a bit and offer a meta-counterargument to people who use “all the gains from migration are captured by the migrants” as sufficient grounds to dismiss the huge benefits from open borders. And while I’m at it, I want to consider its mirror image argument, which is also offered by many restrictionists (though I haven’t yet seen a restrictionist offer both arguments simultaneously).

  • Benefits go “only” to the migrants: The claim here is that the benefits of open borders are huge, but they go “only” or “largely” to the migrants. Once we subtract off the benefits to the migrants, the benefits to the rest of humanity are miniscule, zero, or negative. So, open borders aren’t all they’re cracked up to be.
  • Open borders hurt the very people they’re intended to help: This argument has a few respectable versions, such as the killing the goose that lays the golden eggs formulation and the cheap labor leading to a technological slowdown argument. But, there are a lot of other versions of the argument, and the version I want to address here builds upon the analogy between immigration restrictions and apartheid in South Africa. The claim is that the end of apartheid spelled disaster for South African whites and blacks. If immigration restrictions are like apartheid, then open borders might lead to the very same problems globally that we currently see in South Africa. Typical for this line of reasoning is this comment by egd on Bryan Caplan’s blog post:

    Do you seriously believe that open borders would lead to such an outcome for you?

    No, but that’s not the right question, is it?

    Even in South Africa, treatment of whites after apartheid is far better than treatment of blacks under apartheid.

    Has ending apartheid made whites better off?

    Has ending apartheid made blacks better off?

    The answer to both of these questions is pretty clearly “no”: more poverty, more income inequality (to the extent it’s bad), reduced life expectancy, and other problems have developed in South Africa.

    The root cause isn’t desegregation, the root cause is political externalities associated with desegregation. Political externalities matter.

    James A. Donald, in a further comment on the same blog post, writes:

    It is glaringly obvious that not only are whites far worse off with the end of Apartheid in South Africa, blacks also are worse off.

    The flood of illegals from neighboring black countries has ended with the end of apartheid, and in many cases reversed. Blacks are voting with their feet that black South Africa is no good, after previously voting with their feet that white South Africa was good.

    Electricity has become intermittent, water is dangerous, and the higher stories of tall buildings have become uninhabitable

    Black incomes have fallen dramatically following the end of apartheid

    http://www.nber.org/digest/jan06/w11384.html

    http://www.globalresearch.ca/economic-and-social-crisis-in-post-apartheid-south-africa/

    When the superior rule the inferior, it is not only better for the superior, it also better for the inferior.

    Even if blacks had the same income, that would be no substitute for the lack of clean water, lack of reliable electricity, and lack of law and order.

    And that is what America will become in due course with current levels of immigration of inferior people.

Continue reading Benefits and harms to migrants: a meta-response →

Gains from migration: GDP versus surplus

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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.

"The Efficient, Egalitarian, Libertarian, Utilitarian Way to Double World GDP" — Bryan Caplan