argued that libertarians exaggerate the political externalities of
immigration.One of my arguments is that
immigration increases diversity, which undermines solidarity, which mutes
public support for the welfare state.A
well-known 2001 paper by Alesina, Glaeser, and Sacerdote (henceforth AGS) presents
evidence that, on net, racial fragmentation makes the welfare state
smaller.AGS is heavily cited, but the
best of my knowledge, no one has ever published a critique in an academic
journal or book.The most thoughtful
response to AGS remains a
blog post by Tino Sanandaji, Ph.D. student in Public Policy at the
University of Chicago.Consider this a belated
Sanandaji begins with a correct explanation of the AGS
[E]conomists believe that solidarity is diminished in
ethnically heterogeneous societies. According to this theory voters care more
about people with the same race and ethnicity as themselves, and are less
willing to help the unfortunate if they have a different skin color...
Some libertarians want to rely on this mechanism to tear down the welfare state
through open borders and the ethnic tensions they believe that migration will
Sanandaji's first reaction:
[I]f that is the price of limiting the welfare state... I
would oppose it... I understand that some free-marketers have turned against
the very notion of "solidarity", because the left has exploited the
term so much. However this should not let us lose sight of the fact that
solidarity and national cohesiveness are social goods, not something that we
should want to destroy through an immigration shock doctrine.
This is a straw man.The
claim isn't that open borders will "destroy" solidarity or the welfare state,
but merely that open borders will undermine
both.And while free-marketers may well
agree that some degree of solidarity
is good, it's also hard for free-marketers to deny that current levels of
solidarity are excessive.Solidarity stands in the way of free-market
reforms in pensions, education, health care, taxation, agricultural policy, and
Sanandaji then turns to the heart of his critique:
Ethnic diversity overall tends to expand the welfare state,
not reduce it. While the research only focuses on one effect of unskilled
immigration (reduced fellowship), there are at least three effects that go the
other way. Here are the main effects of increasing the share of low income
1. Solidarity is diminished and social ties are weakened, so that the
majority population becomes less willing to pay taxes to help "the
other". This limits the size of government. The
ethnic-diversity-and-redistribution-literature has almost entirely focused on
this sole effect.
This is a strange way to describe the state of the
argument.It would be more accurate to
say that (a) Almost everyone assumes that immigration increases the size of the
welfare state; (b) AGS identified a mechanism going in the opposite direction;
and (c) AGS showed that on international data, the net effect of diversity on the welfare state is indeed
negative.There is a -.66 bivariate correlation
between social spending as a percent of GDP and racial fragmentation, and this
relationship persists controlling for per-capita income, region, and age
Now let's turn to Sanandaji's "three effects that go the
2. Increasing the share of low income individuals
increases the welfare state through a mechanic effect. This means even if you
don't vote for any changes to the welfare state, the use of preexisting welfare
programs such as unemployment insurance and public health care increases.
True enough, but this "mechanic effect" is precisely the
kind of thing that economics rightly teaches us to second-guess.You could just as easily say that the
"mechanic effect" of raising the price of iPhones is to increase profits.In both cases, you need to consider how the
mechanic effect interacts with behavior.
Sanandaji's next mechanism tries to do just that:
3. More disadvantaged citizens increases the need for
a welfare state. To the extent that the welfare state reflects a desire to
reduce social problems, having more deprived individuals increases the demand
for more government to solve problems.
This sounds good, but it's theoretically confused.The standard microeconomic story is: (a) the
more poor people there are, the higher the cost of reducing the poverty rate;
(b) voters will respond to this higher cost by spending less per person; (c)
the net effect on total welfare
spending (number of recipients times spending per recipient) is therefore ambiguous.
The welfare state exists largely because the middle classes
and the rich feel sorry for the poor. The left is not stupid or irrational,
they rarely demand government intervention where there are few problems.
Once again, this sounds good - until you remember that
"poverty" is relative.By global
standards, almost everyone in the First World is rich.But First World countries still have Social
Security, Medicare, free public education, etc.And few of these benefits are means-tested!Contrary to Sanandaji, the welfare state
exists largely because (a) people receive money whether they need it or not, and
(b) the middle classes and the rich constantly redefine poverty to ensure its continued existence.Not just the left, but the entire
political spectrum is indeed irrational, and habitually demands government
intervention for no good reason.
Sanandaji's fourth point:
4. Though ignored by proponents of the
ethnic-diversity-and-redistribution, minorities also get to vote, and they vote
overwhelmingly for the left.
I'm puzzled by this claim.AGS's Table 10 econometrically confirms that blacks are much more in
favor of redistribution than the general population.Their whole story is precisely that the indirect
effect more than offsets the direct effect.AGS's case would be even stronger if they had a measure of total spending on the y-axis rather than a measure of per-person spending. But contrary to Sanandaji, they're not "ignoring" this point.
Sanandaji also neglects the possibility that immigrants vote
"overwhelmingly for the left" primarily because right-wing parties treat them with
such hostility.Bush's share of the
Hispanic vote in 2004 was probably
overstated (39%, not 44%, is a reasonable estimate), but he still made
impressive gains simply by treating Hispanics with respect and taking a
relatively pro-immigration stance.
Sanandaji continues with what is arguably his best point:
This effect is dominant when we are discussing free
migration, because with open borders in a world where 700 million people have
they would like to migrate right now, sooner or later the immigrants will
become the majority of voters and make the political preferences of the natives
AGS show that in the United States, higher black population
shares predict lower welfare benefits
(but not total welfare spending), even controlling for median income.But if you study their Figure 5 closely,
you'll notice that blacks are a minority in every U.S. state.What would happen if blacks actually formed a
majority?Maybe, as Sanandaji suggests,
there would be a U-shaped effect - beyond 50%, AFDC benefits would start to
rise.Indeed, I bet that is precisely
what would happen.
However, there is a crucial difference between African
Americans and immigrants.African
Americans have a shared group identity.Immigrants do not.They identify
at most with other people from the same country.And even there, internal divisions between
"early" and "late" arrivals are common - see Jews or Cubans.By the time that "immigrants" form a majority
in any First World country, most of them will probably no longer consider
themselves to be "immigrants."See the
United States, where the grandchildren of immigrants often have trouble
pronouncing the word "immigrant" without reproach.
In the conclusion of his post, Sanandaji provides two graphs
in support of his skepticism.For a blog
post, they're impressive graphs; if you read Sanandaji's comments, he
diligently responds to criticism with additional legwork.Nevertheless, AGS's graphs and regressions
are better, especially their Figure 4 and Table 9, which show social spending
as a function of diversity controlling for the leading confounding
variables.Until I see contrary evidence
of comparable quality, AGS's story remains the one to beat.
Ethnically fragmented societies tend to be poorer and less
well organized, which makes a large welfare state hard to finance. But we are
discussing immigration to the west, not to Guatemala.
A fair point, but instead of throwing away most
of the data and variation, it's better to keep the data and add control
variables.That's precisely what AGS
did, and found that their result held controlling for per-capita income.