Bryan Caplan  

The Political Externalities of Immigration: Two Graphs to Ponder

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Lately I've been delving more deeply into the empirical evidence on the political externalities of immigration.  Two striking graphs from Alesina, Glaeser, and Sacerdote's "Why Doesn't the United States Have a European-Style Welfare State?" (BPEA 2001):

1. Internationally, racially diverse societies have much smaller welfare states, controlling for GDP per capita, regional dummies, and more.  The bivariate relationship:

welfare1.jpg
(Large version)

2. Within the U.S., states with higher black population shares have smaller welfare benefits, controlling for income:

welfare2.jpg

AGS's story is precisely the one I've been pushing: Diversity undermines solidarity.  People don't mind paying high taxes to support people "like them."  But free money for "the other" leads to resentment and political pushback.  If you're a social democrat, this implies a tragic trade-off between social justice for natives and social justice for potential immigrants.  But if you're a libertarian, the opposite is true.  The welfare state doesn't make open borders impossible.  It's open borders that makes the eventual abolition of the welfare state imaginable. 



COMMENTS (29 to date)
Henry writes:

Devil's advocate: If we allow open immigration, we may end up with a relatively racially homogenous society - majority Hispanic.

Todd writes:

Henry,

What is the population of Mexico + Central America + South America? 500 Million?

What is the population of India? China? Africa?

guthrie writes:

I had an intuitive sense of this a little while back... I figured one of the fastest ways to dismantle (or at least dislodge) the welfare state would be to allow more immigrants. This would likely increase the stress on the system and thus give rise to objections that wouldn't otherwise be raised. Glad to see some numbers suggesting my intuition might have some backing!

guthrie writes:

I had an intuitive sense of this a little while back... I figured one of the fastest ways to dismantle (or at least dislodge) the welfare state would be to allow more immigrants. This would likely increase the stress on the system and thus give rise to objections that wouldn't otherwise be raised. Glad to see some numbers suggesting my intuition might have some backing!

Mercer writes:

"open borders that makes the eventual abolition of the welfare state imaginable."

In the US it has been white protestants who support the party less friendly to the welfare state. Non Cuban Latinos like the welfare state much more than WASPs. Has CA become more or less friendly to the welfare state since the Latino population has soared?

MikeDC writes:

I don't see how the argument about racial diversity being made in the article can easily be grafted onto the immigration template.

1. The article takes pains to note that "ethnolinguistic fractionalization" was not statistically significant by itself.

2. So what's the "race" of all the hispanics coming here? Well, it's often unclear... lots are of Amerind stock, but you've also got a good sized sample of Bernie O'Higgins thrown in as well (this is noted in the high racial fractionalization components for several south american countries with high immigration to the US.

3. Suppose the next big wave of immigration is from, say, Greece?

David W writes:

Guthrie says:

This would likely increase the stress on the system and thus give rise to objections that wouldn't otherwise be raised

On the other hand - this is essentially the same argument as 'starve the beast'. Attacking the growth in government indirectly has a very poor record of success. I think the only way we're going to get results is if we push directly for those results.

JP59 writes:
The welfare state doesn't make open borders impossible. It's open borders that makes the eventual abolition of the welfare state imaginable.

I think the cure would be worse than the disease.

Ray writes:

I wonder if open immigration is also the best way to spready libertarian ideas. As more people come to the U.S., more will be exposed to the implicit liberal values in our culture, such as: independence, science, thinking for oneself.

The viability of libertarianism in the long run depends on spreading the ideas as far and wide as possible.

Brian Moore writes:

Some questions:

Why no India or China on the top chart?

And why 2 Brazils?

Frederick Davies writes:

Interesting, but only half the story: you are looking at the relationship between welfare and immigration by keeping time fixed and moving geographically. Why not look at it by keeping the geographic point fixed and moving in time:
-Has America got more welfare now than at the beginning of the XX century? Yes.
-Has America become less racially homogeneous during the XX century? Yes.

FD

Dave writes:

Your next book should be titled "Selfish reasons to support more immigration."

Chris writes:

Is government spending really the best measure of bad big government? Denmark has bigger spending per capita than Peru, but I'm sure Denmark has freer markets.

Isn't it more likely that:
free markets -> wealth -> society can afford bigger government.

It would be interesting to see this graph redone with the Index of Economic Freedom on the Y axis.

In the US, immigration causes socialism cross-sectionally (high-immigrant states are left-wing -- NY and CA -- the left wouldn't win these states without the ethnic votes), and in the time series (1930s new deal happened just when poor ellis island-era immigrants became eligible to vote.

NZ writes:

Is it just me or is Wisconsin absent from that second graph?

Steve Sailer, if you're reading this, do you find that interesting?

NZ writes:

Wait nevermind. I found Wisconsin.

Mr. Econotarian writes:

"we may end up with a relatively racially homogenous society - majority Hispanic."

"Hispanic" is not a nationality. Salvadorans, Mexicans, Guatemalans, Colombians, etc., view each other as fairly distinct.

As others have noted, there are plenty of people in Asia and Africa who would like to come to the US.

Every 50 years or so the US goes through the same anti-immigrant cycle. Previous immigrant groups are scared of the new immigrants. First it was the so-called "drunk, listless, Catholic Irish". Then the "evils flowing from the Germans". Then the "dull, lazy Eastern Europeans". Then the "criminal Italians".

And of course, it has always been the "dangerous, shifty-eyed hoards of Asians" who "threaten the very life of the Republic" starting with the Chinese Exclusion Act of 1882, to the Gentlemen's Agreement with Japan in 1907, and the Asian Exclusion Act of 1924.

During every wave of immigration, there has been great fear that the immigrants would change the political system of the US.

Even many of our Founding Fathers were immigration-phobes. Benjamin Franklin claimed that “those who come hither are generally of the most ignorant stupid sort of their own nation.”

Thomas Jefferson wrote: "Foreigners will bring with them the principles of the government they have imbibed in their youth, or if able to throw them off, it will be in exchange of an unbounded licentiousness, passing, as is usual, from one extreme to another. It would be a miracle were they to stop precisely at the point of temperate liberty."

Well, THEY WERE ALL WRONG. Not only has the US always been able to accommodate huge numbers of immigrants while remaining a very classically liberal country, for the most part, the countries the immigrants came from all became more classically liberal as well.

Yes, we had periods where more people spoke foreign languages in Brooklyn than English. We had Yiddish radio, Norwegian street signs in the mid-West, and now we have Spanish-language television. But all children brought up in the US during their language-learning years has generally learned English, and it will continue to be the language of economic and political freedom, as long as we are willing to extend an opening to those who want to take the risk to move to this shining city on a hill.

JPIrving writes:

This is interesting evidence Prof Caplan.

It would be interesting if you would next look at crime. To cherry pick the data, literally 100% of convicted rapists in Oslo over 2003-2010 were non Westerners.

You'll find similar (if less stark) patterns in other major European cities and indeed my native Vermont. Africans and Arabs come to naive, high trust societies and literally rape them. There needs to be some immigration restrictions to keep out people from highly dangerous groups no?

M.R Orlowski writes:

This is quite the finding, I'm glad that there is some empirical evidence that people of Bryan's persuasion towards immigration (such as myself) can quote. An important phenomenon such as this one should be popularized much more often; we need to get more libertarians on the open borders bandwagon. Also as Bryan mentioned, this is a great dilemma for social democrats/egalitarians. We should call it the Egalitarians' Dilemma. Anyone else agree, or should we not call it anything?

Cahal writes:

I support more open borders but I don't think getting rid of immigration limits is the solution to global poverty. Building up strong nation states seems like a far better solution than allowing people to concentrate in more affluent areas.

I have also been persuaded of this type of thinking by Rodrik's Globalisation Paradox, which is great.

Cosmotarian writes:

You should read these blog post from recent US Ph.D graduate, of Swedish and Kurdish decent. He writes on the blog Super-Economy and he completely refutes the arguments by Alesina and Glaeser in the post “Ethnic Diversity and the Size of Government”

He has also state what he calls the “Sanandji Principle”, you can pick have 2 out of 3 but not have all 3:

1. Limited Government
2. Open Borders
3. Democracy

In the post “Open borders and the Welfare State” he states the views of classical liberals and libertarians Hayek, Friedman and Nozick on the issue of open borders:

"Friedrich Hayek thus wrote ”a recognition of collective ownership of the resources of the country which is not compatible with the idea of an open society”. The minimum standard of living that Hayek believed the state should guarantee even its poorest citizens ”necessitates certain limitations on the free movement across frontiers”.

Milton Friedman also recognized this, and stated ”You cannot simultaneously have free immigration and a welfare state”.

Late in his life, Robert Nozick become skeptical about open borders, saying (in an interview with a libertarian Swedish journal no less!):”Why do we not have completely free immigration everywhere? One reason is the welfare state""

[broken link fixed--Econlib Ed.]

"Has America become less racially homogeneous during the XX century?"

In 1920, the ethnic groups of major cities included, Irish, Italians, Jews, Poles, Wasps, etc. By the mid 1960s, they had all become white. This was the same time period in which running against the welfare state gave Barry Goldwater a record-setting loss.

When immigration started to revive, we became able to elect Reagan and, by the 1990s, even Democrats had to reform welfare. (By 2008, we had become so over-confident that we elected a throwback, but that's another story.)

Thomas writes:

The second graph uses a narrow measure of welfare benefits. Throw in subsidies for housing, food, medical care, education, and the picture might look a lot different. Also, a correction for average (or median) income probably would push the line closer to level. How robust is the fit, anyway? It looks like there's a negative relationship mainly on the strength of 7 states (from NC to MS).

What the second graph really shows, as far as I can tell is that historically "white," non-Southern, and more-prosperous states are willing to hand out more in AFDC than historically "less white," Southern, and less-prosperous states. This says something about the states, but nothing about the likely effect of immigration on welfare spending.

kyle8 writes:

Mr. Econotarian, the people who pointed out the problems in the great waves of past immigration were NOT wrong.

They were quite correct in pointing out the crowding of the cities, the increase in crime, the increase in poverty, and yes immigrants did indeed change American politics. To gloss over those real concerns with a wave of your hand is not intellectually honest.

That is why each wave of immigration in the past was followed by a time of slower immigration so that those who came in the last wave would have time to assimilate, and for their skills and wages to improve.

The problem we have now is that the current wave of immigration has been going on for a long time and there has been no cooling off period.

James A Donald writes:

Then California should have the lowest welfare of all, right?

The flaw in your theory is when whites get outvoted.

California is turning into a third world hell hole because the Mexican underclass moved out of Mexico to California for better welfare.

Albert Ling writes:

Data doesn't seem right, Brazil appears twice in the first dataset, above and below the US level of welfare state.


I think there the optimal amount of immigration for the U.S. is much more than today but less than what you advocate Bryan.

You clearly gain by excluding people who have criminal histories or people who would not be hireable in the US even at the minimum wage (of course the best would be to end the minimum wage and let them in).

A great course of action for the US now is selling immigration permits. That would bring in rich people who would pay more taxes than they consume, and at the same time instantly boost the treasury with the lump sum payments. The coffers could definitely use it..

8 writes:

Bryan is right, it will lead to the dismantling of the welfare state...in Canada, Europe and Australia, as whites flee the country. Or there will still be welfare in the new majority white nations of New England and Greater Idaho, funded by selling arms to the various ethnic armies that make up the greater part of EthnicKlashistan.

Pandaemoni writes:
3. Suppose the next big wave of immigration is from, say, Greece?

I will be dead before I see my money going to support those filthy Greek animals!

(Hard to believe that the thing "that makes the eventual abolition of the welfare state imaginable" is the encouragement of that sort of sentiment among my fellow countrymen.)

Ali writes:

Mr. Econotarian, what race/ethnicity is ILLEGAL? And why on earth should Americans embrace people of any race/ethnicity who do not respect us or our laws? Yeah, you're libertarian, but government does provide services other than welfare and THAT depends on the cooperation of the members of society. If someone makes their first act here breaking the law, and they're rewarded for it, why on earth would they think they have to follow ANY laws? Moreover, as for "diversity" doing away with welfare, it may well do that--and with the nation itself. My grandparents, Arab Christians, left Lebanon because that country became so diverse it fell apart.

Old Whig writes:
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