Immigration Makes Us More Prosperous

This is a really important fact that people don’t talk about enough:

That is a huge gap. Immigrants’ economic output is almost three times their weight as a proportion of the population, a difference that adds up to $3 trillion annually.

Why would this be the case? Well, immigrants are typically pretty motivated people. Packing everything up and moving out of the country and into a completely new environment is a very motivated and committed thing to do. It is a signal that says “I want to do something really worthwhile with my life.”

Migration also takes lots of different skills such as the ability to navigate bureaucracy and different legal and cultural frameworks, the ability to learn a foreign language, and the ability to do in-demand work in the destination country.

And while there may be bad apples who go abroad to commit crimes, or leech off welfare, or engage in terrorism—just as there are some native individuals who engage in crime, and terrorism, and welfare fraud—the bigger picture detailed in the McKinsey/IMF study is one of migrants making the world much richer.

Indeed, immigrants commit a disproportionately low amount of crime per person. Skilled and highly-motivated migrants probably have less time or reason to engage in criminal activities.

And, as the FT notes: “The study also cites widespread academic work indicating that migration does not harm domestic employment or wages despite short-term negative effects in limited areas. Instead it emphasises a wage gap of 20-30 per cent between immigrant and native workers, adding that bringing immigrants’ pay closer to national averages would also boost output.”

Of course, these facts do not take away the cultural distress of people who voted for Brexit and Trump, people who may feel left behind by globalization.

But immigration restrictionism to appease these people is throwing the golden goose out with the bathwater. Immigration makes us as a whole much richer. A much more sensible answer than immigration restrictionism is to use public funds derived from the benefits of immigration to address some of these concerns. Such programs should include job retraining programs for factory workers displaced by job migration, providing language and assimilation classes for new immigrants, and screening measures to prevent the movement of people who might intend to commit acts of terrorism.

According to some theories, completely open borders would be even more beneficial, doubling global GDP.

In practice, that may not work, but a sensible migration policy would be to seek to move closer to the paradigm of open borders, to see if the theory holds up. Unfortunately, in the post-Brexit, post-Trump, post-fact world, we see no such policy. And we probably won’t for a long while yet.

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On the Dehumanization of Immigrants

Britain is in the grip of a worrying trend.

Our own Prime Minister compared migrants in Calais to insects when he called them a “swarm”.

Meanwhile, internet comment sections relating to the refugees are filled with hatred and venom. Asylum seekers are referred to as “invaders”, and the trolls encourage the British authorities to shoot them, to machine gun them, and hang them on meat hooks.

This dehumanization of immigrants frightens me. Not simply because dehumanization of large groups of people often foreshadows violence. It frightens me because this is just the tip of the iceberg. There is a lot more of this hateful stuff bubbling beneath the surface of our society. Anti-immigrant sentiment has been swelling in Britain for the last two decades, gently encouraged by tabloid journalists and other intellectually lazy people looking for an easy scapegoat for the economic and social problems of the age. As Richard Seymour noted last year in The Guardian, “77% of people in the UK want immigration reduced, and 56% want it ‘reduced a lot‘”.

Britain has been subject to soaring inflows of immigration in the past twenty years. This has meant large-scale changes to the fabric of society, some of which people may like, but many of which they may not. And there is an additional burden on public services. IPSOS-Mori, for instance, found that there is a strong correlation across Europe between anti-immigrant sentiment and people’s perception of strain on public services. In that sense, anti-immigration sentiment in itself may not be entirely irrational.

Still, it does ignore the fact that there may be cleaner solutions to Britain’s problems than simplistically blaming immigration, and trying to clamp down on human movement. None of the strains on public services, health care and infrastructure would exist if only the government would properly scale investment in infrastructure and public services to demand. Immigrants pay more taxes than they draw out in services, so immigration has hardly made such investment unaffordable. Not to mention the billions of pounds in cheap lending that the private market made available to the government at negative real rates during the last parliament — money that could have been invested in infrastructure and public services — but which the government passed on.

As America — with its millions of undocumented migrants — is discovering, trying to stem flows of humans is very hard. People are slippy, and they go where they wish. Walls and fences are impediments, but they are not absolutes. People can be incredibly singleminded. The stories of the migrants in Calais who have escaped warzones, famines and despots in Africa and the middle east to slip into Europe, and across the Channel are a testament to the resilience of the human will. That resilience is why the anti-immigration internet trolls are setting their sights upon machine guns and meathooks and other such savagery. Walls and barbed wire and officers with searchlights and sniffer dogs isn’t working.

In the bigger picture, as anti-immigrant sentiment has swelled, there may be an overflow into the demonization and ostracization of ethnic minorities, even those who are here legally. Even those who were born here. Even those such as myself who were born here and are the children of white, English mothers. Even, perhaps, to white Britons who favour multiculturalism and immigration. The data shows that Britain is getting more racist, with 1 in 3 admitting to racial prejudice, up from 25 percent in 2001.

In the long run, I have no doubt that the economic benefits of migration — it’s estimated that completely open borders would roughly double global GDP via more efficient matching of workers and firms — will win out and that humanity will become increasingly transnational, and postnational, and ultimately interplanetary.

But for now, with this tidal wave of anti-immigrant and increasingly racist sentiment, I feel frightened at what my own country — a country that I have lived in my entire life — might be becoming.

The Importance of Free Immigration

Judge Andrew Napolitano has incensed critics of immigration with his defence of the idea of immigration as a natural right:

Since the freedom of speech, the development of personality, the right to worship or not to worship, the right to use technologically contemporary means for self-defense, the right to be left alone, and the right to own and use property all stem from our humanity, the government simply is without authority to regulate human behavior in these areas, no matter what powers it purports to give to itself and no matter what crises may occur. Among the rights in this category is the freedom of movement, which today is called the right to travel.

The right to travel is an individual personal human right, long recognized under the natural law as immune from governmental interference. Of course, governments have been interfering with this right for millennia. The Romans restricted the travel of Jews; Parliament restricted the travel of serfs; Congress restricted the travel of slaves; and starting in the late 19th century, the federal government has restricted the travel of non-Americans who want to come here and even the travel of those already here. All of these abominable restrictions of the right to travel are based not on any culpability of individuals, but rather on membership in the groups to which persons have belonged from birth.

Americans are not possessed of more natural rights than non-Americans; rather, we enjoy more opportunities to exercise those rights because the government is theoretically restrained by the Constitution, which explicitly recognizes the natural law. That recognition is articulated in the Ninth Amendment, which declares that the enumeration of certain rights in the Constitution shall not be used by the government as an excuse to deny or disparage other unnamed and unnamable rights retained by the people.

So, if I want to invite my cousins from Florence, Italy, to come here and live in my house and work on my farm in New Jersey, or if a multinational corporation wants the best engineers from India to work in its labs in Texas, or if my neighbor wants a friend of a friend from Mexico City to come here to work in his shop, we have the natural right to ask, they have the natural right to come here, and the government has no moral right to interfere with any of these freely made decisions.

I agree with Napolitano. Giving the state the power to restrict freedom of movement is a dangerous precedent, and a dangerous concentration of power. Powerful and well-connected groups and industries can use the largesse of the state to protect their own uncompetitive ventures by restricting immigration.

And why should the state have the power to determine who can and who cannot live where? Surely market forces are a better determinant of the need for workers and migration than a central planner setting migration targets based on their own dislocated criteria?

These are by no means the most significant arguments for the freedom of movement. Ludwig von Mises theorised:

vonMisesimmigration

This is a critical dynamic. If a government enacts laws that are undesirable, workers (if they can) will move to another jurisdiction with more desirable laws. Freedom of movement is the status quo today for capital — under the current global regulatory framework, the free flow of capital means that governments have to compete to attract capital from around the globe. Governments do not have to do the same thing for labour, as the flow of immigration is very restricted compared to the flow of capital. This disparity may well have contributed to the extant reality that around the world — but particularly in the United States — capital’s share of output is increasing, while labour’s share is shrinking. Freer immigration could change all that.

There are various misconceptions of immigration. Perhaps most prominent is the idea that immigrants cost natives jobs. But the evidence suggests that this is not true. Eduardo Porter notes:

For years, economists have been poring through job market statistics looking for evidence that immigrants undercut less-educated Americans in the labor market. The most recent empirical studies conclude that the impact is slight: they confirm earlier findings that immigration on the whole has not led to fewer jobs for American workers. More significantly, they suggest that immigrants have had, at most, a small negative impact on the wages of Americans who compete with them most directly, those with a high school degree or less.

Meanwhile, the research has found that immigrants – including the poor, uneducated ones coming from south of the border — have a big positive impact on the economy over the long run, bolstering the profitability of American firms, reducing the prices of some products and services by providing employers with a new labor source and creating more opportunities for investment and jobs. Giovanni Peri, an economist at the University of California at Davis, estimated that the wave of immigrants that entered the United States from 1990 to 2007 increased national income per worker by about $5,400 a year on average, in 2007 dollars. He also concluded that the wave had a small positive impact on the average wage of American workers, by lifting the overall economy. If immigrants hurt anyone, it was the previous cohort of immigrants, with whom they most directly compete in the labor market.

Recent estimates have concluded that a liberalisation of global immigration policies could lift global GDP significantly. More importantly, empirical studies have confirmed the reality that immigration eases the fiscal balance — helpful for developed countries with ageing populations and a shrinking tax base. A 2011 report by Madeleine Zavodny of the American Enterprise Institute found that immigrants on average pay much more tax than they consume in government services:

fiscalimpact

This means that one frequent objection to immigration — that immigrants overstretch government programs and infrastructure — is irrelevant. Working immigrants pay more than enough in taxes to fund their own costs — often many times over.

The study also found that rather than taking up jobs, each immigrant worker generated jobs for the native population. The supply of work is not fixed. Each additional 100 H1-B workers were found to have generated 183 new jobs for the native population, and each 100 additional H2-B workers generated 464 new jobs for the native population.

But what about the countries that immigrants leave behind? Surely the countries left behind by thousands or millions of workers will fall into recession? Well, perhaps to some extent — although not so much in countries with higher birth rates or slack employment — but that’s the point. Countries that suffer a labour drain may have to reform their legal and political structure to attract workers. This alone would significantly boost competitiveness in the long run. And emigrants frequently send money back to their country of origin, and acquire new skills while working abroad that they can bring back home, in turn enriching their home country.

On the other hand, it might be unwise for countries to immediately switch from a restrictive policy to an open-door immigration policy. While freedom of movement is an essential economic freedom, a radical change in policy could prove destabilising, and cause significant cultural and social dislocation, friction or ghettoisation. Such a large change in policy should be undertaken slowly and cautiously — it would be unwise for governments to rush forward with policies that are unwanted and unpopular with the wider population.

But in the long run, though, the benefits of freedom of movement are clear, and will likely become clearer in the coming decades as more countries and blocs experiment with freer migration policies.

Mitt Romney & American Imperial Decline

Mitt Romney’s cure for America’s ills?

More military spending:

Romney set himself apart on Friday, arguing that a weaker military and a smaller global footprint will compromise America’s leadership in the world.

“The United States should always retain military supremacy to deter would-be aggressors, and to defend our allies and ourselves,” he said.

Romney said he wants to increase the military budget, mentioning specific projects from naval shipbuilding to a missile defense system. It’s a traditional Republican view of defense that was music to this crowd’s ears.

Romney claims that he wants to cut the debt and cut the deficits and then advocates even greater spending? Gee, that’s just what George W. Bush did:

That huge red spike of debt during George W. Bush’s term? That’s war-spending; Iraq, Afghanistan, and the 865 foreign bases maintained under Bush. That is the spending — not welfare, not medicare, and not infrastructure — that is out of control.

The reality of the American fiscal picture, as I showed in detail here, is that it is a permanent war economy. America’s greatest exports are war and weapons. When it comes to war and weapons, there is no austerity, and that is a sacred cow even to elements of the Tea Party. Look at the world’s top 10 nations in terms of military spending:

Is that a portrait of fiscal restraint? Or is that a portrait of ever-expanding military spending, flying in the face of the fact that the United States won the Cold war, and has no serious global rivals? And has this huge fiscal spending on war and weapons created a resilient and prosperous economy? No — there has been no real growth in the United States since 2007unemployment is persistently highfood stamps participation is rising,reliance on Arab oil and Chinese manufacturing is ever-present, road infrastructure is worsening, and so forth. That’s because spending hasn’t been targeted to what people need, but instead to the destructive and perverse racket that is permanent warfare, that serves the interests only of the military-industrial complex.

Humanity has been here before.

From Niall Ferguson:

Rome fell through a combination of external overreach, internal corruption, religious transformation, and barbarian invasion. That the United States—and, perhaps even more, the European Union—might have something to learn from his account is too seldom acknowledged, perhaps because Americans and Europeans like to pretend that their polities today are something more exalted than empires. But suppose for a moment (as the Georgetown University historian Charles Kupchan has suggested in The End of the American Era ) that Washington really is the Rome of our time, while Brussels, the headquarters of the European Union, is Byzantium, the city transformed in the fourth century into the second imperial capital, Constantinople. Like the later Roman Empire, the West today has its Western and Eastern halves, though they are separated by the Atlantic rather than the Adriatic. And that is not the only thing we have in common with our Roman predecessors of a millennium and a half ago.

There is a well-established American tradition, perhaps best expressed by Gore Vidal in The Decline and Fall of the American Empire, of worrying that the United States might go the way of Rome. But the perennial liberal fear is of the early Roman predicament more than the late one. It is the fear that the republican institutions of the United States—above all, its hallowed Constitution, based on the careful separation of powers—could be corrupted by the ambitions of an imperial presidency. Every time a commander in chief attempts to increase the power of the executive branch, pleading wartime exigency, there is a predictable chorus of “The Republic is in danger.” We have heard that chorus most recently with respect to the status of prisoners detained without trial at Guantánamo Bay and the use of torture in the interrogation of suspected insurgents in Iraq.

Gibbon could scarcely ignore the question of the Roman republic’s decay. Indeed, there is an important passage in The Decline and Fall that specifically deals with the revival of torture as a tool of tyranny. Few generations of Englishmen were more sensitive than Gibbon’s to the charge that their own ideals of liberty were being subverted by the temptations of empire. The year when his first volume appeared was also the year the American colonies used precisely that charge to justify their own bid for independence.

Yet Gibbon’s real interest lay elsewhere, with the period of Roman decline long after republican virtue had yielded to imperial vice. The Decline and Fall is not concerned with the fall of the republic. It is a story that properly begins with the first signs of imperial overstretch. Until the time of the Emperor Julian (A.D. 331–63), Rome could still confidently send its legions as far as the river Tigris. Yet Julian’s invasion of Mesopotamia (present-day Iraq, but then under Persian rule) proved to be his undoing. According to Gibbon, he had resolved, “by the final conquest of Persia, to chastise the haughty nation which had so long resisted and insulted the majesty of Rome.” Although initially victorious at Ctesiphon (approximately 20 miles southeast of modern Baghdad), Julian was forced by his enemy’s scorched-earth policy to retreat back to Roman territory. “As soon as the flames had subsided which interrupted [his] march,” Gibbon relates, “he beheld the melancholy face of a smoking and naked desert.” The Persians harried his famished legions as they withdrew. In one skirmish, Julian himself was fatally wounded.

What had gone wrong? The answer sheds revealing light on some of the problems the United States currently faces in the same troubled region. A recurrent theme of Gibbon’s work is that the Romans gradually lost “the animating health and vigour” which had made them militarily invincible in the glory days of Julian’s predecessor Trajan. They had lost their discipline. They started complaining about the weight of their armor. In a word, they had gone soft. At the same time, like most armies, their fighting effectiveness diminished the farther they were from home.

Most of us take it for granted that the United States Army is the best in the world. It might be more accurate to say that it is the best equipped and the best fed. More doubtful is how well it is configured to win a protracted low-intensity conflict in a country such as Iraq. One sign of the times that might have amused Gibbon has been the recent relaxation of conditions for recruits undergoing basic training. (A friend of mine who was in the army snorted with derision on hearing that trainees are now allowed eight and a half hours of sleep a night.) Another symptom of military malaise has been the heavy reliance of the Defense Department on National Guard and reserve troops, who have at times accounted for about half of the U.S. contingent deployed in Iraq.

The real problem, however, is a simple matter of numbers. To put it bluntly, the United States has a chronic manpower deficit, which means it cannot put enough boots on the ground to maintain law and order in conquered territory. This is not because it lacks young men; it has at least seven times as many as Iraq. It is that it chooses, for a variety of reasons, to employ only a tiny proportion of its population (half of 1 percent) in its armed forces, and to deploy only a fraction of these in overseas conflict zones.

Rome, like America was a distinctly divided empire in terms of social class, in terms of its economy, in terms of ideology, and in terms of geography. Once, the threat of Soviet dominance kept America strong. But no longer. The culture wars are tearing America apart, and America’s imperial grasp for resources is bankrupting the nation’s treasury. Globalisation has ripped the heart out of American supply chains, manufacturing and its labour force. Financialisation has created classes of greedy parasites, and a hungry and furious class of have-nots. Without global goods and oil, a service economy is fundamentally unsustainable.

And that is what this is about — trying to tighten America’s grip on the things on which the American empire is dependent — oil, and foreign goods. Romney’s play is about trying to sustain the free-lunch economics of Nixon and Kissinger instead of undertaking painful and reforms (i.e. energy independence, reindustrialisation, welfare reform, and demilitarisation) necessary to make America competitive in a multi-polar world.

What Romney misunderstands is just how fragile the American Empire is to a global trade war, or an oil shock, or any number of externalities.

As I wrote last month:

In my view, America’s economic health is totally dependent upon two things: the flow of dollars to the middle east in exchange for oil, and the flow of dollars to China for consumer goods. Any disruption to either or both of these flows would result in sustained and significant disruption to America’s economy

More military spending, and subsequent debt acquisition will heavily devalue the already-devalued dollar, which in turn will merely hasten the decline and fall of the American Empire for ultimately the same reasons as Rome: external overreach, internal corruption, religious transformation, and barbarian invasion.