Bryan Caplan  

Compensation for Immigration

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I've previously argued that if you're worried about the effect of immigration on the wages of low-skilled Americans, reducing immigration is overkill.  It is more efficient and humane to simply impose a surtax on immigrants, and use the revenue to compensate low-skilled Americans.

Giovanni Peri, today's Public Choice seminar speaker, just suggested an even simpler way to deal with the distributional effects of immigration: Raise the quota on high-skilled work permits to maintain a constant ratio of high- and low-skilled labor.  Since we have a massive queue of high-skilled workers who want to enter the U.S. labor force, it would be easy to stabilize the national balance of skills without cutting back on low-skilled immigrants - or kicking out the ones who are already here.

Since economics are clear, let's talk about the politics.  Is Peri's proposal any more politically viable than an immigrant surtax?  Or are both equally hopeless in the face of the public's anti-foreign bias?

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COMMENTS (13 to date)
Ruy Diaz writes:

But you are still not addressing the effect large immigration has in the culture of a country. The people wants to remain the people, not to become a new people.

Part of the reason for an "anti-foreign bias" is the shared experience of the human species. Foreigners do nasty things like wage war against you, raid you for your women, begin civil wars when they become part of the population, etc. Complaining about anti-foreign bias instead of trying to work around it is like complaining about the hot sun at midday on summer.

scott clark writes:

I would bet that the surtax on immigrant labor would actually be more politically palatable than letting more immigrants in. The surtax would discourage the marginal immigrants from coming here, but many would still be better off, some would decry that the immigrant tax is really way unfair and un-American, but I bet it would be realitively more popular.

8 writes:

Ruy is right. You, and most other economists, have a tin ear on cultural issues.

There are those who oppose immigration for economic reasons, but very few of them care about high skilled immigration. The politically palatable deal is to restrict overall immigration and tilt the balance in favor of skilled immigrants. You're not going to get more immigrants no matter what.

And if there is amnesty, I would not be suprised if the U.S. elected politicians who completely shut down immigration for a generation. Especially if the economy weakens, it is a certainty, IMHO.

Grant writes:

Ruy & 8,

I agree, but don't think these anti-foreign laws are inevitable. Most governments have made personal discrimination (i.e. racism or culturism) illegal, but people still have a desire to discriminate against people unlike themselves. As a result, they do so by anti-immigration laws.

Many people don't want to hire, live near or associate with "dirty foreigners". If voluntary discrimination were legal, they wouldn't have to. I the solution is simple property rights; if the government trampled them less, we wouldn't even be having this conversation. Instead its created a commons where none need exist, and Americans want to keep foreigners from trampling that commons with immigration laws.

I'd bet that discrimination on the personal level is less harmful than on the national level. Of course, the former is not politically correct, while the later is.

ryan yin writes:

Ruy & 8, I think you might be misinterpreting Caplan's description. He is not disagreeing with your facts so much as your evaluation of those facts. Denotatively, you all say the same thing. It's just as if after reciting the facts you say "and that's a good thing" and Caplan recites the facts and says "and that's a bad thing."

Regarding compensating low skill workers, wouldn't that largely amount to a tax on human capital? Don't optimal tax models say that even if you're specifically trying to redistribute, taxing capital is a bad idea?

Oil Shock writes:

Bryan seems to be not happy with the size of the current government; he wants even bigger one. With the additional revenues, more parasites can live on the labor of ordinary working people.

Mason writes:

Increasing the quota for highly skilled workers would be much more palatable because it could be done behind the senses. It wouldn't directly affect any citizens so nothing public has to be said, quietly increase the quota 5% a year for the next 10 years and you have sizeable increase in immigration.

Additionally no one likes the idea of second class citizens (except the potential second class citizens). If you're American you're American, not American*.

Steve Sailer writes:

The difference between Arnold and Bryan is that events in the real world have an impact on Arnold's thinking.

That the mortgage meltdown, for example, was overwhelmingly concentrated in dollar terms in just four high immigration states, California, Nevada, Arizona, and Florida, will never, ever affect the emotions Bryan developed reading Julian Simon many years ago.

Jacob Oost writes:

Bryan, where you see anti-foreign bias, I see a respect for the rule of law that is necessary in a market economy (Hayek). I also see a lot of anger at people who broke into this country illegally getting tax-payer benefits.

I'm all for liberalized immigration, but by the book. Perhaps a system whereby employers of low-skilled labor in different states put in generic sponsorships for worker visas for whoever is next on some list. This way we know that the influx of labor is in proportion to demand, rather than having a glut.

John Fast writes:

I'm curious how much anti-immigration bias is just filthy, racist bigotry against "dirty foreigners," and how much is due to a mistaken belief that immigrants want to come here in order to beg, steal, and/or get on welfare.

Presumably the latter bias could be dealt with if they were confident that immigrants would have to pay taxes *and* could not receive welfare or other social services (and that any who committed real crimes would be caught, punished and deported).

Ruy Diaz writes:

ryan yin writes:

"Ruy & 8, I think you might be misinterpreting Caplan's description. He is not disagreeing with your facts so much as your evaluation of those facts. Denotatively, you all say the same thing. It's just as if after reciting the facts you say "and that's a good thing" and Caplan recites the facts and says "and that's a bad thing.""

You are assuming too much. I don't see the facts and say "that's a good thing." I see the facts and I'm ambivalent about them.

Let me use an example from two centuries ago, a comparison between New Englanders and Rednecks at the beginning of the 19th century. (From the book Cracker Culture: Celtic Ways in the Old South, by Professor Grady McWhiney.)

New Englanders, most of them, were thrifty, patient, hard-working, 'money-grubbers', and valued both education and hard work.

Rednecks were impulsive, prone to violence and sexual promiscuity, prone to drinking and hated both education and hard work.

I am for the immigration of New Englanders, or rather their equivalent on the modern world. A transplant of people with those values--I hope--may actually improve our shared culture.

I am definitely against immigration of rednecks, or rather their equivalent in the modern world.

It is not simply about being pro- or anti- immigration.

ryan yin writes:

Ruy Diaz,
When I referred to "facts," I was simply referring to the claim that opposition to immigration is about cultural issues (as opposed to economic ones). It's just remarkable to me when Caplan refers to "anti-foreign bias" or "tribalism" and someone complains that he just doesn't understand that the immigration debate is about cultural rather than economic issues. After all, what exactly has Caplan been doing besides jump up and down, wave his arms, and yell, "hey, economists, wake up, preferences on immigration have almost nothing to do with material self-interest!"?

Jaison writes:

Hey Bryan!

I have noticed that there are millions of people are coming on H1B Visas (In All Field),
this has to be stop ASAP, we americans are loosing our jobs left and right.

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