On Immigration

by Don Boudreaux on May 22, 2007

in Immigration

His eyes and mind ever-sharp, here’s my co-blogger at Market Correction Andy Morriss on immigration; this is a letter that he sent recently to the Wall Street Journal:

Sirs,

Your editorial on the proposed immigration bill does an excellent job of summarizing the policy issues at stake (“Immigration Opening,” May 19) but leaves out a crucial important dimension to the debate. The proper way to think about all immigration restrictions is as barriers to trade in what economists term “human capital,” the skills and education each brings to his new country. The proposed bill makes this explicit with its $5,000 “fine” for illegal immigrants wishing to regularize their status, which is more properly thought of as a tariff.

Tariffs on goods are bad because they reduce trade. Restrictions on importing capital are foolish because they reduce investment. So too are tariffs on human capital, for even unskilled immigrants bring an important human capital contribution to the United States: Immigrants are risk takers by definition. They leave homes and families and for a new land, where they are unfamiliar with the culture and often cannot speak the language. These are precisely the people who create economic growth because they are willing to take such a risk to gain a better life for themselves and their children. In short, every immigrant is a potential entrepreneur and every entrepreneur is a benefit for the rest of us.

Of course, just as every country has the right to inspect goods coming into its territory, every country has the right to regulate immigration to a limited extent. For example, nations are entitled to ensure that criminals do not immigrate just as they are entitled to inspect agricultural goods for hidden pests. But the fundamental principle underlying immigration should be the same as it is in all areas of trade: the presumption is free trade and the burden is on those proposing restrictions to show both that their restrictions are justified and that they are the minimum needed to accomplish their purpose. The proposed immigration bill flunks both these tests.

Andrew P. Morris
H. Ross and Helen Workman Professor of Law
University of Illinois, College of Law

 

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{ 11 comments }

Bruce G Charlton May 22, 2007 at 4:30 pm

I'm from the UK – so this is an outside perspective.

Isn't _illegal_ immigration more equivalent to smuggling than to free trade?

I would favour easier, cheaper and quicker regulation of immigration, which would need to be coupled with general reforms to cut back on welfare and making it easy to work legally, repealing the minimum wage etc.

But I find it hard to see how mass scale law-breaking can be ignored without serious knock-on problems.

K May 22, 2007 at 5:22 pm

I fail to see that immigration is trade.

English allows almost any interpretation of words. But why pretend this is a commercial activity like importing Volvos?

Many immigrants are people who contribute. It does not follow that unlimited, at will, immigration is the best policy.

International free trade is limited by what one nation will pay for anothers product. International free immigration allows the seller (as it were) to act unilaterally.

CRC May 22, 2007 at 5:40 pm

K,

"International free trade is limited by what one nation will pay for anothers product. International free immigration allows the seller (as it were) to act unilaterally."

This isn't quite right.

First it isn't "nations" that pay for products but rather people or groups of people (possibly in the form of companies) who happen to reside in a particular nation, that is on one side of a (rather arbitrary) border.

Second, that a person ("human capital") can act unilaterally in terms of crossing a (rather arbitrary) border is true, but so what? They cannot act unilaterally in selling their services or labor. They must come to a voluntary, mutal agreement with another party to engage in trade. It is a minor fact that they need to re-locate (geographically) for this trade to occur.

Personally, I am starting to settle on the opinion that national borders are somewhat arbitrary and that both trade and immigration "policies" (i.e., controls or restrictions) are merely fabrications to enforce these otherwise arbitrary dilineations (borders).

CRC May 22, 2007 at 5:45 pm

Bruce,

"Isn't _illegal_ immigration more equivalent to smuggling than to free trade?"

That would probably be correct. Of course, in a true free-trade setting there would be far less "smuggling" and a much greater flow of "goods", "services" and "human capital" across the borders. To call something "smuggling" or "illegal" immigration requires a deeper inspection into why? Why is it illegal to move X product across this border? Why is it illegal for X person to cross this border?

I suspect that, if you dig down and strip away the rhetoric you'll find that in many cases the answer is "just because" and "just because" is a bit of an unsatisfying answer.

Chris May 23, 2007 at 12:22 am

To be fair, there are significant negative externalities to liberalizing immigration. By providing an incentive to cross the border, the employer of a poor immigrant imposes costs on the rest of us — the cost to educate that immigrant's children; the cost of welfare benefits; and the costs to the health care system as the immigrant uses emergency medicine, but stiffs the hospital on the bill. There are other costs as well — immigrants often do not have all their vaccination, increase the spread of disease; immigrants often bring their own value systems which can clash with ours, to our detriment — Mexico, for example, has a much more lenient view towards drunk driving.

In the end, having that person come may still be good deal. But, it's a lot closer call than I think Don makes it out to be by painting it only as a free-labor issue.

K May 23, 2007 at 12:46 am

CRC: your points are well said. I meant of course that the trade is limited by what the buyers in the first country as a group will pay for what sellers in the other country offer.

Consider Volvos. Volvo cannot sell many cars Brazil unless Brazilians consider a good buy. Since Volvo cannot sell at a loss (for long) they cannot sharply reduce prices. So the sales level depends upon the buyer and the seller.

Your second point is correctly stated but does not address the actual problem.

A new resident of many nations – such as in the EU – immediately acquires a bundle of rights which often include medical care, housing, living allowances, and other social services.

Now some given immigrant may be a great asset to his new country. Seeking work, the employer-employee situation would apply. Or the person may become an entrepreneur.

But what of others? Why should not impoverished people leave nations with almost no social safety net, and perhaps no meaningful civil rights, and migrate into a place offering a better life simply for showing up?

And why would some governments not be delighted to see the poor, the ill, disgruntled minorities, and the elderly depart.

So when there is unrestrained immigration an imigrant can unilaterally acquire services that must be paid for. They can be imposed upon the host country.

Obviously not all who could improve their condition by immigration will do so. And immigration often has benefits. I just don't see the generalization that therefore no restriction must be best.

Morriss conveniently says those who disagree must bear the burden of proof. But he would, he is a lawyer.

I agree with your last paragraph. Such things are arbitrary and fabricated. That does not mean they serve no purpose now. It means that in the past another decision could have been made.

The caliber of a rifle or the length of a meter or a minute can be called fabricated, artifical, and arbitrary.
But once accepted they serve a purpose.

Perhaps borders and nationality will mean nothing. I can't possible know and don't quite care.

But avoid the conclusion that what may be a good event in the future must be a good event now. That logic would lead to forbidding the sale of gasoline after next week and ordering everyone to use hydrogen.

Arkady May 23, 2007 at 12:57 am

Chris,
It's inappropriate to say that immigrants impose negative externalities on other Americans by consuming social services. The real negative externality occurs when the government robs Peter to give Paul those socialized services. Put it this way: if immigrants agreed to educate their kids privately and go without welfare transfers (and, for that matter, to pay taxes like other Americans), would you change your tune?

Your other comments strike me as canards. Is there any reason to think that immigrants are more diseased than natives? Or are you just rehashing the old trope that "those [Mexicans, Italians, Irish, Chinese, Pollacks] are all grimy carriers of plague"? And do you have any data to suggest that Latin American immigrants cause a disproportionate number of drunk driving accidents, or are you just going down a list of stereotypes? (Those Mexicans! So sleepy all the time! And so drunk on tequila!)

When anyone resides in this country for any reason, they certainly ought to be subject to our laws (our real laws anyway — see Don's next post) — so let them be vaccinated like the rest of us, and be pulled over for reckless driving like the rest of us. And let them be taxed like the rest of us to pay for it. I suspect that, if you told the illegal immigrants now present in this country that all they had to do to obtain legal status was get their shots and pay their income taxes, the USA would almost instantly be richer to the tune of 12 million official citizens.

Chris May 24, 2007 at 1:29 am

Arkady –

I'm rather disappointed in your second paragraph. Pulling out the old saw of racism in an economic discussion is low.

It is reasonable to believe that when the immigrants are poor and come from a country that does not have nearly as wide-spread of a public vaccination program as the US. In 2003, for example, foreigners accounted for over half of the TB cases, and 1/4 of those cases were from Mexico.

In any case, my point was that merely focusing on immigrants as "inexpensive labor" ignores the fact that immigrants impose other costs which have to be factored into the equation. And, unless there's the political will to do things like drop the requirement that emergency rooms accept all comers and bar immigrants from welfare, those costs will eclipse that person's salary. I might get my lawn mowed by an great immigrant gardener, but your taxes will go toward educating his kids and your insurance premiums will go up when he can't pay the bill at the emergency room.

Like I said, even with all those costs, it may still be a good deal in a Coasian way. But, you have to consider a lot more than just the cost of labor to figure it out.

DS May 25, 2007 at 7:21 am

The whole illegal immigration debate dances around an inconvenient question: It is predicated on the idea that 12 million illegal aliens could be rounded up and deported, without significant cost to the tax payer if the US government just decided to do it. How on earth are you going to find and deport 12 million people, spread out across the country? The government can't stop illegal drugs from crossing our borders how is it going to stop 500,000 people each year from crossing 1500 miles of border? With a wall?

This debate is purely academic.

DS May 25, 2007 at 7:22 am

The whole illegal immigration debate dances around an inconvenient question: It is predicated on the idea that 12 million illegal aliens could be rounded up and deported, without significant cost to the tax payer if the US government just decided to do it. How on earth are you going to find and deport 12 million people, spread out across the country? The government can't stop illegal drugs from crossing our borders how is it going to stop 500,000 people each year from crossing 1500 miles of border? With a wall?

This debate is purely academic.

Arkady May 25, 2007 at 11:53 pm

Chris,
I apologize for misinterpreting your comments. However, even if the point you were trying to make was entirely economic, you can't deny that racism is a common element in many anti-immigrant arguments. I see now the economic point you making, but I hope you see how your comments could at least be interpreted as racist. (For what it's worth, it was always the way at Ellis Island that people with infectious diseases were turned away from our shores. I'll repeat my question from before: if aspiring immigrants or resident illegals agreed to get vaccinations at their own expense before entering the country or obtaining legal status, would you retract your objection on that point?)

With all that said, in response to your actual point: I think that Don and other immigration-friendly posters here would eschew your cost-benefit analysis of immigration. The issue is not one of cheap labor versus welfare payments, it's an issue of natural rights — the right of the immigrants to go where they please (so long as they don't trespass on private property), the rights of employers to hire whomever they like, and the rights of property owners to sell or lease dwellings to whomever they like. Yes, if poor people immigrate to the US they might increase our welfare burden (although they'll more likely become wealth-creating entrepreneurs, since as immigrants they're obviously self-starting risk takers who are willing to sacrifice), but this is a reason to eliminate welfare, not to curtail immigration. Welfare handouts and immigration limitations are both bad policies, and doing away with either by itself will help do away with the other.

To put your objection to immigration [even though I may get cheap lawn care I'll have to pay more taxes or insurance, so the costs and benefits may wash out] in a different light, consider this: there are certainly natural-born US citizens who, because of their low skills and need for social welfare are a net "negative" to our economy. Even though they can be hired at low wages, they require handouts that increase our tax burden. Should these people, once identified, be deported?

Natural rights are not subject to cost-benefit analysis.

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