Friday, June 29, 2007

The Diversity Zombie

Closing out its current term, the Supreme Court held in Parents Involved in Community Schools v. Seattle School District No. 1 et al. (pdf) that the diversity rationale for allocating social rewards by race survives, barely. In light of its history, this is a surprising and disappointing result.

Legally, the only reason “diversity” has the power it has to enable state racism, primarily in education, is because of one man, Justice Lewis Powell. In Regents of University of California v. Bakke, four justices held that a state medical school’s use of a racial quota, absent past discrimination, was unconstitutional. Four held that it was permissible. One, Justice Powell, said “sometimes.” In particular, taking account of race, without using quotas, was permissible to further “diversity” among the medical population, which in his view was a compelling state interest.

That solo concurring opinion is still, incredibly, the law of the land, affirmed as recently as 2003 in a case involving the University of Michigan law school, Grutter v. Bollinger. Ironically, in both Bakke and now the Seattle case the school doling out government spoils on racial grounds lost, but the diversity rationale lingers on.

Justice Kennedy is now the controlling opinion on such matters on the Court, and he refused to accept the reasoning of Justices Scalia, Thomas, Souter and Alito that the state simply cannot be racist in any way in allocating educational opportunities. Instead, he left the door for race to be used on diversity grounds, allowing Justice Powell’s reasoning to stagger on, zombie-like, for another term, rejecting in particular the Roberts opinion’s “all too unyielding insistence that race cannot be a factor in instances when, in my view, it may be taken into account." He agreed that the use of race as a mechanistic consideration was unlawful, but not that race could never be used. Diversity is still a compelling state interest, meaning it is possible to have racial considerations determine who gets into a good school and who doesn’t. (Ironically, the biggest victims of this policy are not whites but Asians, who are now subject to informal quotas in many elite private colleges and universities.)

This is a shame. The Court’s reasoning on diversity is a mess, inviting a never-ending stream of clever camouflage of racial quotas and litigation. Four Justices are chasing racial favoritism all over the halls of jurisprudence, and one Justice or another (Justice Powell, Sandra Day O’Connor, and now Justice Kennedy), refuses to let it be captured. We would be better off as a country if the plug were simply pulled on Justice Powell’s historical accident of a controlling opinion, so that at last we may be confident that no state is denying to any person within its jurisdiction the equal protection of the laws..


Thursday, June 28, 2007

Now What?

President Bush’s proposed immigration changes have been resoundingly defeated. It is apparently dead - not Monty Python dead, not Rasputin dead, but dead dead. This failure tells us that on this issue there is just no sustainable center – those who want to legalize don’t want to make it harder to come here, to bring family, etc., and those who want enforcement don’t want to legalize to get it. Where does that leave us? A few principles to remember will be helpful.

Some immigrants cost us. Low-skilled immigrants cost the rest of us far more in taxes than they pay in taxes. This is not in itself an indictment; lots of citizens could be so characterized. But that someone can come here from, say, Mexico and cause my taxes to be higher, therefore lowering my control over my own life, is ethically unacceptable.

Some, probably most, immigrants benefit us. One would have to be willfully obtuse to deny the way immigrants have revived many central cities, have played a huge role in our technological advance, and have provided badly needed services – medical service in rural areas, e.g. – for native-born Americans. Their creativity and their ambition make us greater, and our willingness to absorb them as full equals is our single greatest contemporary competitive strength relative to other nations.

Black markets can’t be policed. Immigrants will continue to come, no matter how high the fence is. They may take more dangerous routes and hence die in larger numbers, but they will continue to come because the disparity between what they make there and what they make here is so overwhelming. I don’t expect the policing of this market to be any more effective than the policing of any other.

Immigration is thus a very difficult problem. While still politically untenable, I think the only solution is likely to come from acknowledgment of the fourth principle worth remembering:

The welfare state first. No less an admirer of freedom than Milton Friedman often said that open borders plus an open-to-all welfare state is a recipe for disaster. It will draw people for the benefits (and the benefits will be paid whether that is what drew them or not), lowering the possibilities for the rest of us. People do have a moral right to contract with anyone they desire, but they don’t have a right, as noted above, to impose tax obligations on me by their immigration decision. There can be no ethical solution to the immigration problem that doesn’t recognize this fundamental truth, which is of course common to the welfare state in its entirety.

Wednesday, June 27, 2007


No, not that kind. The kind that comes from a government or social structure being rejected by some or all groups in society as not operating on their behalf. This, it turns out, may be the key to social peace.

Social scientists like to explain social outcomes by analyzing the importance of particular institutions. Slavery, for example, persisted because of features peculiar to the antebellum South, or the Brazilian plantation. But what if all of man’s grand theories, schemes and visions about how his societies do and should work came to naught? What if, in particular, how societies turn out can be reduced to a few essential considerations of resource endowments and the distribution of foresight and patience? Such, corrected for my oversimplification, is the claim of Joshua Epstein of Brookings as recounted in Technology Review (hat tip: Wretchard). By creating an artificial computer society where everyone wants a resource called “sugar,” and varying the aforementioned attributes of the population, rigorous and precise predictions about social violence, income distribution and other phenomena can be generated.

The paragraph of interest to me is below:

Variant two, "Inter-Group Violence," is more interesting. Now agents are divided into two ethnicities, blue and green. "Legitimacy becomes each group's appraisal of the other group's right to exist," Epstein explained. In this context, an agent's going activist means that it kills a member of the opposing ethnic group. The cops are peacekeepers, and if the model is run without them and L among all agents is reduced by as little as 20 percent, ethnic cleansing quickly begins. When cops are introduced, safe havens emerge. Nonetheless, interethnic hostility continues. Ultimately, as figure 2 shows and Epstein told me, "when you drop legitimacy in this variant, it always ends with one side wiping the other out." Cop density can be set at any level. "At low cop densities, you get rapid genocide. At high cop densities, you likewise can sometimes get rapid genocide, but also a highly variable outcome. On average, more cops makes it take longer." Enough longer to justify the expense of extra policing? It's all just highly uncertain, Epstein says; merely to have a surge of cops would not guarantee a good outcome.

Ethnoreligious conflict is a recurring theme of this blog. Epstein’s work suggests more than you might think about the importance of politics and culture in determining ethnic harmony. If there were, for example, a large social movement dedicated to the proposition that the prevailing social system and government were not “legitimate” because they favor a particular group, bad things could happen quickly. If the universities were staffed by devotees of “whiteness studies,” the proposition that all of society unfairly hands members of a particular group privileges they are unaware of, they might cultivate anger and resentment among whites and nonwhites alike. If there were a large movement devoted to the multicultural gospel that cultures should remain separate rather than mix, that their practices should be contextualized rather than measured against an objective ruler of right and wrong, well that might cause groups begin to question the “legitimacy” of prevailing distributions of wealth or, beyond that point, the right to equal, group-blind treatment under law, of various groups. People could start to care less about producing more sugar and instead about taking the other group’s. That could be a sorry mess indeed, particularly for a society already figuring out how to cope with rapid increases in ethnoreligious diversity.

But that would never happen.

Thursday, June 21, 2007

In Defense of the Automobile

The automobile has taken it on the chin lately. Enabler of suburban sprawl, global warmer, in need of gasoline whose purchase requires bankrolling the jihad, and all-around contributor to modern American obesity, the car is coming under scrutiny by Congress and the elite press for its consequences for humanity. Many people shudder at the thought of the Chinese and Indians taking to the car the way Americans, Europeans and Japanese have. Recognizing that the global-warming problems are almost certainly exaggerated (and even if they are not), this attitude is a mistake

I confess I was motivated to write this by overhearing a conversation in which someone criticized car ownership as causing more trouble - expense, parking hassles - than it was worth. Certainly, in a few select urban environments, that is probably true. But the prevailing anti-auto sentiment is profoundly mispalced, for the car is one of the most pro-liberty inventions in human history. For almost all of the history of civilization most people have been confined to a particular place because the costs of leaving were so high. A few adventurous soldiers or traders might wander far afield, but most people were born, lived and died within a ten-mile radius of where they were born.

More than any other form of transportation, even the airplane, the car changed all that. Commercial air travel allows you to go great distances, but only (typically) by arranging the travel well in advance, and at significant expense. Provided only that you can afford the gas, you can hit the road as the mood strikes you. And this is an astonishing breakthrough for human freedom. The Model T in particular was a spectacular human breakthrough, opening up to all possibilities once only available to the richest.

Previously, if the environment around you was hazardous or unpromising, all you could do was try, within (often severe) prevailing social constraints, to change it. Suddenly, you could leave. The ambitious young man stuck in an economically moribund region can pack up and leave for something better. The person who senses a profitable opportunity between two distant locations can use his vehicle to knit them together. Jack Kerouac can hit the road and write about whatever he was searching for. The car as vehicle, as it were, for self-expression gives us the hot rod, the low-rider, the carefully polished convertible – a manifestation of beauty every bit as valid as high fashion or other forms of expressive art. More profoundly, the Iraqi in danger because of confessional fratricide can get in a car and head for Jordan; the woman in danger from domestic violence can put the children in the car and head for someplace safe and far, rather than relying on her close neighbors (known, typically, to her abuser) for protection.

The automobile is on a par with the telegraph and central indoor climate control as an expander of what is possible. If Wikipedia is to be believed, there are about 590 million cars on the road, and there are going to be many more as global living standards rise. No matter what the urbanites isolated in their doorman buildings and the carbonphobes say, this will continue – the automobile liberates commerce, weakens the capacity to repress, and generally makes things possible that once were not. That is why we like them so.

Monday, June 18, 2007

Noted Without Comment

From the President of the Czech Republic, Vaclav Klaus:

As someone who lived under communism for most of his life, I feel obliged to say that I see the biggest threat to freedom, democracy, the market economy and prosperity now in ambitious environmentalism, not in communism. This ideology wants to replace the free and spontaneous evolution of mankind by a sort of central (now global) planning.

The environmentalists ask for immediate political action because they do not believe in the long-term positive impact of economic growth and ignore both the technological progress that future generations will undoubtedly enjoy, and the proven fact that the higher the wealth of society, the higher is the quality of the environment. They are Malthusian pessimists.

Saturday, June 16, 2007

Sir Salman

The Queen has knighted Salman Rushdie. The Indo-British author notoriously was sentenced to death for blasphemy by Ayatollah Khomeini in 1989 for his book The Satanic Verses.

Somewhere in the back reaches of my bookshelf I have a copy of that book. I read very little nonfiction, and remember buying it in graduate school more as a gesture of solidarity with the principle of free expression and to see what all the fuss was about. I enjoyed the book, though I thought that Mr. Rushdie had really behaved quite badly in taking a cheap shot at a religion. Yet I was chilled by how all too much of the world reacted to the anger the book demonstrated.

The reaction of much of British society in particular to the original fatwa does not do the nation proud. Angry Muslim demonstrators in the UK called for his death and for the book to be banned, and the usual multicultural suspects emphasized the offense he had undeniably given more than the principle that there is no right not to be offended, and that when an author is threatened with death the author is not at the moment the primary problem. The biggest exception to this cravenness was Margaret Thatcher, who pronounced the reaction unacceptable and immediately placed him under police protection. Mr. Rushdie himself later acknowledged the irony that a politician he despised stood by him more than many in the literary establishment of which he was a part.

The wages of the Rushdie affair have been heavy, not least for those most closely involved - translators of the novel were murdered, and the novelist was in hiding for years. But the rest of us too are still laboring under these burdens. In the recent controversy over the gross Danish cartoons lampooning Muhammad, the government itself was ultimately impelled to apologize after embassies (of it and Norway) were torched. The cult of non-offense has become enshrined in American universities and in much of European society generally. (A Swedish politician, Dahn Pettersson, was this week incredibly criminally convicted and fined for defaming and ethnic group for something that he said, in excessively general terms, about Albanians in that country.) There are some proposals in international circles to adopt conventions making defamation of religion different from other kinds of speech, in other words speech that is not free.

In this BBC interview Mr. Rushdie refers to the demonstrators as a “medieval lynch mob,” which is suggestive. “Medieval” suggests that we’ve progressed beyond all that, but in fact civilization is a force constantly under siege, something Margaret Thatcher always knew, and one suspects that he pretty much took it, and the progress it enables, for granted until then. The knighthood is a poor substitute for a more vigorous stand in favor of freedom taken in 1989, but better a day late and a dollar short than never.

Thursday, June 14, 2007

Noted Without (Much) Comment

From the property-is-freedom file, and the obituary of Baron Guy de Rothschild at The New York Times:
After the fall of France in 1940, the pro-Nazi Vichy regime seized the family bank, which had been moved from Paris to the small southern town of La Bourboule in the Auvergne region. The next year, the baron slipped away to New York and then to London, where he joined General Charles de Gaulle’s Free French forces.

History repeated itself some 40 years later, when, in 1981, the newly elected Socialist-Communist coalition of President François Mitterrand nationalized the bank that the baron had reclaimed and built up again after World War II.

History often repeats itself, the first time as tragedy, the second as socialist sanctimony.


Antioch College, RIP

Antioch College in Ohio has announced that it is suspending operations next summer. According to its press release, the college plans to reopen in several years, but people who know about such things say that its chances of reopening are small. There are things to mourn in its demise, and things to learn as well.

Antioch has always been a place for the radical’s radical. It has been known most recently for inviting convicted cop killer Mumia Abu-Jamal to speak at its commencement (by telecom linkup from his cell), and for a comical school policy requiring that all sex acts at the college by explicitly negotiated and consent obtained.

As a whole it is a good thing for American society to have this kind of variety in higher education. America needs an Antioch, committed to radical “social change,” just as much as it needs a consummate traditionalist school like Hillsdale College. It is part of the genius of the decentralized nature of American society that anyone can start a college on any principles he likes, and only students and other constituents decide whether it succeeds or not. And Antioch surely had its niche. Its founder, Horace Mann, famously exhorted people to make sure they didn’t die without having some victory for humanity, by which he meant social progress. It admitted blacks and women long before many schools (although not before Hillsdale, which derived from the ideals of the American Revolution, not criticism of the American project, the proposition that discrimination in admission was wrong).

But ultimately Antioch was cannibalized by its own victories and philosophy. Its radical critique of American society has long since entrenched itself in faculties across the land, making it largely unnecessary. Meanwhile, according to some alumni, the new generation of students had an unusually influential subset that was fundamentally different. Whereas progressives of yore believed in social improvement as the highest value, nowadays, influenced by broader cultural trends, self-expression and individual liberation from social constraint of all sorts is. Indeed, the Antioch's hometown paper, The Yellow Springs News, reports that the school's financial decline began when students wnet on strike in the ealry 1970s, as if the college was there to be bent to their demands. The dormitories and dining facilities in the campus were frequently marred with graffiti, all in the name of free student expression of course, and it was until recently common for students to call the local authorities to campus by launching false fire alarms. Anarchy, in other words, rather than progressivism.

Progressivism as an ideology requires a conception and acceptance of the society that is to undergo progress. Society is to be repaired, not torn asunder. Anarchy and radical individualism, however, are different. There are to be no restraints, particuarly informal social ones. Alas, once that happens, once the common core of both generally accepted values and the political institutions built on them are breached, individualism finds there is no structure to support individualism, merely anarchy.

It is said that when French students took over the Sorbonne in 1968 one of the things they immediately did was to destroy and vandalize ancient documents contained in the library. That is an act of mere mindless destruction, not of progress. It is breaking Lenin’s eggs as indiscriminately as possible, with no thought even of the omelet to emerge. In a sense the values of the modern left, taken to their logical conclusion, made Antioch unsustainable. The Antioch values ultimately ate their own.

There is a lesson in that.


Monday, June 11, 2007

Why Worry About That? Because We Can

Ethnoracial tensions were far worse in the America of the decades before World War I than now. The former was the time of lynching, of widespread acceptance of the theory of eugenics and its corresponding belief that immigration was causing national dysgenesis, of explicitly racial attacks on Chinese workers by American labor unions and of explicit discrimination against Asians of all kinds by the American immigration authorities.

And yet it is now, not then, when the clamor for multicultural respect, for equal representation in the canon, for respect for cultural differences, is most salient. The idea that respect for diversity should be a major national dividing point was nonsensical decades ago, when the tensions between groups were much worse. Similarly, despite environmental pollution being much worse decades ago than now, it is now that minor threats such as minuscule pesticide residues in food draw so much worry from people who earn their living worrying about such things. By any reasonable measure we are materially better off, and better off in terms of control over our own destiny. So why has the roster of things to worry about – global warming, how to zone cities properly, whether we’re too fat – and the language of crisis used to discuss it worsened so dramatically?

The Cato Institute has published a new book by Brink Lindsey that attempts to answer this question, called The Age Of Abundance: How Prosperity Transformed America's Politics and Culture. In it, bolstered by data from The World Values Survey, he notes that America, like other rich countries, has solved the primary problems that have always plagued humanity, especially of starvation and shelter. (He might have also added freedom from conquest.) Having done that, we have turned our attention to what the WVS calls “self-expression values” – emphasizing in our politics issues that are as important for what they announce about us to the world as they are for their own sake.

Whatever the consequences of CO2 emissions, or militant Islamism, or the millions of Americans without health insurance, or the poor performance of Americans in school, they pale next to man's big problems, which we have solved. We thus turn our attention to issues of much less consequence. In Mr. Lindsey's view, we worry about obscenity and cultural decay and the like because we can. Alas, symbolic politics, being statements about the self, are those least prone to compromise. Classic political thinking, in which the normal distribution of public tastes plus competitive politics leads to solutions in the center, is unsuited to self-expressive politics, where any give is taken as a sign of personal diminishment. Despite their lower stakes, the politics of mass prosperity are angry and irreconcilable.

But not to worry. It could be worse. And has been.

Friday, June 08, 2007

The Aid Scam

The rock singer Bono has been making the rounds at the G-8 summit, trying to scold national leaders into keeping their promises to increase aid funding to poor countries. As an economist it is sad to watch this, because the ineffectiveness of such aid in improving the lot of people in such countries is one of the few things (along with rent control making apartments harder to get and a handful of other propositions) that most economists agree on. An interview with a Kenyan economist in the English language version of Der Spiegel (hat tip: The Belmont Club) pungently begs Western countries to stop sending foreign aid. Here are some choice excerpts:
The Kenyan economics expert James Shikwati, 35, says that aid to Africa does more harm than good. The avid proponent of globalization spoke with SPIEGEL about the disastrous effects of Western development policy in Africa, corrupt rulers, and the tendency to overstate the AIDS problem.

Mr. Shikwati, the G8 summit at Gleneagles is about to beef up the development aid for Africa...

Shikwati: ... for God's sake, please just stop.

SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.

Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.

SPIEGEL: Do you have an explanation for this paradox?
Shikwati: Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa's problems. If the West were to cancel these payments, normal Africans wouldn't even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.

SPIEGEL: The Americans and Europeans have frozen funds previously pledged to Kenya. The country is too corrupt, they say.

Shikwati: I am afraid, though, that the money will still be transfered before long. After all, it has to go somewhere. Unfortunately, the Europeans' devastating urge to do good can no longer be countered with reason. It makes no sense whatsoever that directly after the new Kenyan government was elected -- a leadership change that ended the dictatorship of Daniel arap Mois -- the faucets were suddenly opened and streams of money poured into the country.

Shikwati: Why do we get these mountains of clothes? No one is freezing here. Instead, our tailors lose their livlihoods. They're in the same position as our farmers. No one in the low-wage world of Africa can be cost-efficient enough to keep pace with donated products. In 1997, 137,000 workers were employed in Nigeria's textile industry. By 2003, the figure had dropped to 57,000. The results are the same in all other areas where overwhelming helpfulness and fragile African markets collide.

The whole thing is worth a read, as is William Easterly’s The White Man’s Burden, which readably documents the catastrophe that is foreign aid.
Let us be clear: the state of current economic research, whose practitioners agree on little, is that foreign aid does not work. Rather, it sometimes makes things worse in recipient countries. How can this be? Intelligent foreign aid, closely monitored, can be used for specific, socially productive tasks such as buying malaria nets or drilling wells. What could be wrong with that?

A lot, it turns out; aid has several disastrous flaws. It generates vast corruption among recipients – not just recipient governments but the development aid groups that oversee the use of the money. And the fact that so many have a stake in its success means that once aid begins it can never be truly cut off, as the endless procession of officials from countries like Côte D’Ivoire (over 20 IMF structural-adjustment loans since the early 1980s) to IMF headquarters can attest. Both pushers and takers of these loans become addicted to them. (See my sketch of the Palestinian territories, more destroyed by aid than anywhere else on the planet, here.)

But Easterly’s most compelling criticism is the ultimate futility of trying to manage development – radical transformation of preindustrial societies into societies of modern prosperity where people can be in charge of their own fate – through the drawing up of aid and loans from desks in Washington or Paris. Foreign aid would fail even if it weren’t stolen, even if it didn’t prop up cruel dictators, because it is central planning. It is no more sensible for the World Bank to decide, with taxpayer money, that a dam needs to be built in country X than it is for a Soviet agricultural planner to decide what the price of beans in Kiev should be. Those dams and wells, for all the good they do at a particular location, affect incentives and create a problem economists call path dependence, where decisions today require us to adopt a particular future tomorrow. (The classic example is the QWERTY typewriter. Despite its alleged inferiority to other keyboard designs, it is said to persist because it would be too expensive to switch because typists are all QWERTY-trained, which gives manufacturers and incentive to make more QWERTY keyboards, which gives typists an incentive to be QWERTY-trained.) In the foreign-aid context, the construction of a dam means decision-makers in that country now take the dam as given, and re-orient economic decision-making on that basis. Since the dam was not constructed based on local entrepreneurial initiative, capitalizing on local information about that society, it is likely to be a white elephant.

Development is a complex, far from entirely understood problem. But one thing we know is that it doesn’t happen by imposition from the center. It happens from the bottom up, one entrepreneur at a time in an environment, such as China since the early 1980s or India since the mid-1990s, in which people have a sense that their efforts and ambition will pay off. It is almost a problem of epidemiology – the spread of the (beneficial) virus of the mentality of self-sustaining growth into more and more regions – as much as economics. And foreign aid has nothing to do with whether that virus spreads; if anything, it is an antiviral agent.

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Tuesday, June 05, 2007

Free China

Nicholas Kristof has a blog entry referencing a recent column of his in The New York Times. In it, he describes the ways in which Chinese nationals take great risks to save desperate refugees from North Korea:

I was enormously impressed with the Chinese who, at great personal risk, help the North Koreans in the border area. Almost all are ethnic Koreans, and most are Christians (South Korea has a large Christian population, and partly as a result the Koreans in China have disproportionately become Christian as well). I kept asking them why they would take these risks, and overwhelmingly they said it was because of sympathy for fellow Koreans, coupled with their faith.

After the communist takeover Washington was consumed with the question of “Who Lost China?” The most important question in the world today, more important than CO2, more important than the future of the jihad, is what kind of China it is going to be.

The late Milton Friedman once argued, in Capitalism and Freedom, that economic freedom was necessary but not sufficient for political freedom. In this lecture, he modified that view and argued that a third freedom, human freedom, which he defined as “freedom of people to make their own decisions so long as they do not prevent anybody else from doing the same thing” and which amounts to the ability to control one’s own life, was worthy of equal attention, and that while political freedom might or might not develop from economic freedom, economic freedom was essential for human freedom.

And China, for all its problems, has a much greater measure of economic and human freedom – the power of individual Chinese to direct their own destinies – than it has ever had. People miss this because they focus on the almost complete lack of political freedom, and suppose that “freedom” means the power to choose your governors. But the proper comparison for China in 2007 is not Switzerland in 2007 but China in 1967, or 1067, or 1067 B.C. In 1067 every Chinese person was nothing more than the personal property of the emperor, who sent monitors into every village to make certain that no one was stiffing the emperor by refusing to work. In 1967 one madman – Mao Zedong – could turn a nation of almost a billion people on a dime on a whim, could whip up mass hysteria, could destroy millions of lives.

But because of economic reform since 1979 the average Chinese has much more self-ownership now than he once did. Economic reform has given the freedom to buy and sell, to expand his opportunities, to form consensual networks with his fellow nationals. This is why those Chinese on the Korean border will take such risks for their North Korean brethren, something unthinkable during Mao’s day. They take great risks precisely because they have learned to define broader self-interests beyond what the government whips into them. There is no way to defy the government without first possessing some sense that the government can be wrong.

Don’t get me wrong; China is far from an Eden of human freedom. Increased self-ownership is largely a function of the cities; the abuses of the government in the countryside, e.g. by stealing land from peasants to be converted into residential or industrial use, is well-documented. And China may yet prove to be a geopolitically dangerous nation, as other rising powers (including the U.S.) have been. This depends on part on whether China becomes more politically free, if you believe in the theory of the democratic peace. But the transition from central, governmental organization to individual self-organization of economic decisions means that China (or, more accurately, the people who constitute it) is not turning back. The degree of their future nationalist anger is still a short-term question, but the liberalization of the last thirty years has opened far too many possibilities – for rescuers of refugees every bit as much as for toy manufacturers or farmers – to turn back.

Saturday, June 02, 2007

Why is Immigration Such a Hard Problem?

There are two recent pieces on immigration out that suggest what a mess immigration has become. One is a piece from Kerry Howley at the glass-is-ever-half-full folks at Reason, filled with their usual faith that free markets and free people mean that things always work out. The gap in real wages, the piece notes, between rich and poor countries are much larger now than during the last great wave of migration from 1850-1920. The ethical dimensions of more relaxed immigration for desperately poor people are huge. As the piece puts it, “[t]he greatest distortion for Chadian farmers is not American cotton subsidies, writes [Leonard] Pritchett, but that ‘farmers from Chad have to farm in Chad—and not farm in France, Poland, or Canada.’” Open immigration to rich countries is an ethical issue, in that many very poor people could be made much better off. The only argument against this is that the American government should make it harder for foreigners to try to earn a living so that Americans can do so more easily, which is not ethically obvious. (In what ethical reasoning system, other than nationalism, are the rights of a person born in India to try to earn a living less than those of an American?)

And even from an America-centric perspective, the world is full of ambitious, creative people desperate to work, who could do this country a lot of good. Not too many Chadian farmers are going to be coming to America, but a lot of Indian software writers and Chinese computer engineers (and Mexican farm workers) might. The U.S. is, other things equal, the best destination around for hard-charging achievers – due to relatively low taxes and a long history of relative comfort with immigrants, for starters. The more open the borders, the more vibrant a nation we are. (Someone should write a piece about all the immigrants who have been contributing technology, not to mention personnel, to the American military since Sept. 11.)

But wait. It’s not that simple. James D. Miller of TCS Daily offers us the following equation:

Unskilled Immigrants + Large Welfare State = Higher Taxes

Once upon a time, during the previous mass immigration, everyone in America was expected not to tap the taxes of his fellow citizens for his own sustenance. This was even more true for immigrants; one of the few tests imposed at Ellis Island was the question of whether an immigrant was likely to be a public charge. But now there is a massive government apparatus to transfer income. This apparatus is almost surely part of what attracts many lower-skilled immigrants to begin with, and even if not they end up consuming public services, even net of taxes paid, in huge proportions (pdf). The problem gets worse if, as Mr. Miller contends, low-skill immigrants who achieve citizenship will vote overwhelmingly in favor of expanding the welfare state and the taxes on other people needed to fund it.

And so our large public-school and welfare-state services make it nearly impossible to get the immigration incentives right. The U.S. is a primarily higher-skill country, and it makes little sense from an economic-welfare perspective to import lower-skilled workers in large numbers, thus lowering our potential degree of specialization. It is high-skill immigration we seek, because that is what we are good at. (A furniture store wouldn’t operate more efficiently by recruiting a lot of computer programmers, nor a software firm by hiring lots of craftsmen; the logic here is the same.) Of course, if not for the artificial draw of schooling and services fewer of the lower-skilled would come in any event, and so this would not be a big issue.

There is a basic ethical right to contract with others as you wish, even if they live elsewhere. This logic is largely recognized in trade, but not in migration. But there is also a basic ethical problem when others come to your country so that they can extract taxes from you. Both on incentive grounds and ethical grounds, the welfare state makes good immigration policy impossible.

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