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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