David R. Henderson  

Cowen on Immigration

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Tyler Cowen's latest New York Times column, "A Profession with an Egalitarian Core," is one of the best short pieces he's written in the last year or so. HIs overall point is that economists have been on the forefront in caring about everyone's rights and that we shouldn't abandon that noble tradition today. Here's something I hadn't known:

At least since the 19th century, the interest of economists in personal liberty can be easily documented. In 1829, all 15 economists who held seats in the British Parliament voted to allow Roman Catholics as members. In 1858, the 13 economists in Parliament voted unanimously to extend full civil rights to Jews. (While both measures were approved, they were controversial among many non-economist members.) For many years leading up to the various abolitions of slavery, economists were generally critics of slavery and advocates of people's natural equality, as documented by David M. Levy, professor of economics at George Mason University, and Sandra J. Peart, dean of the Jepson School of Leadership Studies at the University of Richmond, in "The 'Vanity of the Philosopher': From Equality to Hierarchy in Post-Classical Economics."

Also, of course, Levy and Peart are the ones who uncovered why Thomas Carlyle called economics "the dismal science." It's because the free-market economists, who dominated economics at the time, strong opposed slavery. What a party animal Carlyle must have been.

Next, Tyler turns to immigration and lets out his inner Bryan Caplan:

One enormous issue is international migration. A distressingly large portion of the debate in many countries analyzes the effects of higher immigration on domestic citizens alone and seeks to restrict immigration to protect a national culture or existing economic interests. The obvious but too-often-underemphasized reality is that immigration is a significant gain for most people who move to a new country.

Michael Clemens, a senior fellow at the Center for Global Development in Washington, quantified these gains in a 2011 paper, "Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?" He found that unrestricted immigration could create tens of trillions of dollars in economic value, as captured by the migrants themselves in the form of higher wages in their new countries and by those who hire the migrants or consume the products of their labor. For a profession concerned with precision, it is remarkable how infrequently we economists talk about those rather large numbers.


Amen, brother Cowen.

Tyler then admits the problem of the welfare state, but points out that then we should figure out a work-around:

Truly open borders might prove unworkable, especially in countries with welfare states, and kill the goose laying the proverbial golden eggs; in this regard Mr. Clemens's analysis may require some modification. Still, we should be obsessing over how many of those trillions can actually be realized.

Then this zinger:
In any case, there is an overriding moral issue. Imagine that it is your professional duty to report a cost-benefit analysis of liberalizing immigration policy. You wouldn't dream of producing a study that counted "men only" or "whites only," at least not without specific, clearly stated reasons for dividing the data.

So why report cost-benefit results only for United States citizens or residents, as is sometimes done in analyses of both international trade and migration? The nation-state is a good practical institution, but it does not provide the final moral delineation of which people count and which do not. So commentators on trade and immigration should stress the cosmopolitan perspective, knowing that the practical imperatives of the nation-state will not be underrepresented in the ensuing debate.


Or, as I put it in challenging the nationalism of one of Cowen's fellow NY Times columnists:
There is one slide, though, that displays Krugman's nationalism. On the third-last slide, he lays out the argument that there can be an optimal tariff if the country imposing it has the power to affect world prices. Krugman then gives the standard economist's criticism of naively imposing this tariff. He writes, "This is optimal only if the foreigners don't react. Unilateral optimal tariffs can lead to "optimal tariff warfare", which makes both countries worse off."
Notice what criticism Krugman didn't make: he didn't say that the optimal tariff is not optimal at all when you consider world welfare. It's optimal only from the viewpoint of residents, considered as a whole, of the country whose government imposes it. Thus my statement that Krugman displays his nationalism.


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COMMENTS (29 to date)
ajb writes:

Why stop at immigration and trade? Why not evaluate treason and invasion and surrender in war in purely utilitarian terms that ignores the special utility of the home nation? At some point, the idea of nations is that they provide public goods that the citizenry is supposed to uphold in preference to all others, even to the point of dismissing external costs. In many cases, to do otherwise is not simply to countenance an involuntary transfer, it is the worst form of disloyalty. And as Tyler concedes in his allusion to killing the goose, who will undo immigration's effects if it turns out to destroy some of the social features that we take for granted? Already we see Democrats gloating that Hispanic immigration will make it hard for traditional Republicans to win. What if it does more than that and makes support for a market oriented economy hard to sustain? Why aren't Americans allowed to take those consequences into account? And why shouldn't we be risk averse in this regard?

BC writes:

I understand the sentiment here. However, there are many people that believe that the job of the US government is to act in the best interests of Americans. One may not agree with that view, but it would be a shame to lose the support of those people on issues like immigration (and trade) simply because those people are under the mistaken impression that immigration is not a net benefit for Americans, even without taking into account the benefit to immigrants. It's like persuading your firm to enter a potential business deal with another firm. Your best chance of success is to convince your firm that the deal makes business sense from its own perspective. The merits of the deal from the other firm's perspective will be evaluated by the other firm. Such is the nature of mutually beneficial voluntary exchange.

Also, there are many that mistakenly view immigration and trade issues as zero-sum: they are pre-disposed to believe that immigration benefits immigrants at the expense of Americans. The emphasis on the benefits of immigration to Americans is an attempt to disabuse them of that notion.

Kendall Ponder writes:

I think ajb raises a good point. If we found a group of people in this country who killed people just because they were of a different religion I assume most of us would demand our law enforcement to put a stop to it, yet there would be little or no support in this country for sending troops or law-enforcement people to Somalia where it happens all the time. Or how do we defend federalism? If it is wrong to restrict/not restrict abortion why should a state boarder determine where it is or is not allowed?

James A. Donald writes:

Our leading libertarians endlessly hope to renew the nineteenth century libertarian/leftist alliance, although the alliance never made logical or emotional sense.

It is a one way alliance, characteristic of leftism. No friends to the right, no enemies to the left, implies that all your friends are enemies, and all your enemies are friends, that you support those who intend your destruction, and hate and seek to harm all those that seek to prevent your destruction. If your faction supports faction X, faction X intends your destruction.

Hence the numerous popular fronts which generally ended in all non communist elements of the popular front being purged.

Ted Levy writes:

ajb asks, perhaps ironically, "Why stop at immigration and trade? Why not evaluate treason and invasion and surrender in war in purely utilitarian terms..."?

If we ever get a chance to surrender to Hong Kong, I urge we take it.

S writes:
He found that unrestricted immigration could create tens of trillions of dollars in economic value...For a profession concerned with precision, it is remarkable how infrequently we economists talk about those rather large numbers.

What are the error bars on that? Its funny how casually people throw around big fuzzy numbers.To be fair, Tyler does say this:

Truly open borders might prove unworkable, especially in countries with welfare states, and kill the goose laying the proverbial golden eggs; in this regard Mr. Clemens’s analysis may require some modification

So the confidence interval is something like 10 to -10 trillion.

Maybe the reason economists don't throw around that unobserved 10^13 number more often is that deep down most of them just dont believe it.

Steve Sailer writes:

"Why not evaluate treason and invasion and surrender in war in purely utilitarian terms that ignores the special utility of the home nation?"

Vidkun Quisling says, "Hear, Hear!"

Steve Sailer writes:

Tyler's column brings Kim Philby and Harry Dexter White to mind, too.

Ghost of Christmas Past writes:

Am I--a mere commenter, not one of the expert economist bloggers whose forum this is-- the only person who has actually read Clemens' really-very-accessible survey paper, previously linked from this very weblog? Remarks in this weblog generally seem to cite Clemens (and some of his peers) only for large, very optimistic, headline best-case numbers, without critically examining Clemens' calculations (even though he is perfectly candid about them).

To justify magniloquent claims of financial benefit from mass migration, Clemens (and similar thinkers, as his footnotes show) has to postulate gigantic numbers of people moving (up to 3/7 of world population!), has to discount the loss of amenity value to rich-country citizens, has to assume away any effects the migrants might have on their new homes, has to presume the miraculous appearance of vast new industrial capital and housing stock in destination countries, then finally and most absurdly has to skate past the problem of declining marginal returns!

Seriously, are there any other claims of trillion-dollar bills lying on the sidewalk that the bloggers here would accept without more critical examination? Or at least some back of the envelope analysis?

I am not "joining Paul Ehrlich's bet against Julian Simon" here. I don't believe in "Limits to Growth." But I don't believe in the Tooth Fairy either. Nor that the only reason we don't have electric cars with 300-mile ranges that recharge in fifteen minutes is that CARB and EPA regulations are too slack because those agencies have been captured by Detroit.

I won't belabor the declining marginal returns problem any more. I honestly think it should be transparent to people here who consider it.

Clemens writes about billions (really!) of people moving from LDC's to rich countries, to the point where migrants will outnumber natives in rich countries three to one. Clemens-type calculations of the gains the migrants can expect assume they will just merge into existing rich-country cities and industries. That is unrealistic. To accomodate so many people, new homes and businesses and so-forth will have to be constructed. That is certainly imaginable, but cannot occur in zero time at no cost. It also cannot occur without changing more than border policy. All rich countries have complex oppressive NIMBY zoning and regulatory regimes-- how would merely opening the borders abolish those? Are we justified to assume away any interrelatedness of the wealth-promoting "institutions" of rich countries and their political arrangements?

Whenever skeptics object that large numbers of poor, mostly ignorant migrants might kill the goose that lays the golden eggs (as by supporting leftist politicians), migration enthusiasts reply that rich countries can simply keep migrants in subjection. I know that's not the phrase they choose; they speak delicately of giving migrants non-voting resident status. But it is unfair to cite Clemens for his optimistic economic-gain numbers without taking his population numbers too-- he proposes to quadruple the populations of rich countries by admitting three migrants for every old citizen. If so many people arrive just to be told they must obey a government chosen by only one-fourth of the population, the migrants and the leftists who will agitate them will say that the old citizens constitute an unjustly-privileged class. Either political concessions or (economic gain destroying) revolutionary violence seem likely to follow. If old citizens wish to apply enough force to keep so many new residents in subjection they will have to convert themselves from a productive body to aparasitical and militarized class. That does not seem attractive to me.

John B. writes:

I agree with your article for two main reasons: nation state is obsolete and personal liberty is sacrosanct, as put in the quote: "People are not illegal". When we ask: Is Immigration Favourable for Canada?, what are we really trying to say?

Dealing with all issues from the American (Canadian, European, etc.) point of view does not allow us to see many important changes in less developed countries. If we let them have their share, they can grow and save themselves from famine. This is way more important than buying a new overpriced condo in Miami. I think it was Canadian philosopher Joseph Heath who underlined for me this problem in his book Economics Without Illusions.

Joe Cushing writes:

I think economists would have more influence if they gave up their government supported paychecks and made money in the free market like Tom Woods. They talk about ending the welfare state while collecting a paycheck from it.

Paul writes:

If a government does not benefit its citizens, and instead harms them, would it be wrong for those citizens to revolt and form their own government?

That's not to say that immigration harms people, but why shouldn't one revolt against a government that one finds injurious?

panderson writes:

We can rewrite the above, from a socialist perspective:

"A distressingly large portion of the debate in economics analyzes the effects of property laws on individual citizens alone and seeks to restrict property to protect individual rights or existing economic interests. The obvious but too-often-underemphasized reality is that property laws are a significant harm to the majority who don't have property.

This is an overriding moral issue. Imagine that it is your professional duty to report a cost-benefit analysis of liberalizing property policy. You wouldn't dream of producing a study that counted "men only" or "whites only," at least not without specific, clearly stated reasons for dividing the data.

So why report cost-benefit results only for property owners, as is sometimes done? Property is a good practical institution, but it does not provide the final moral delineation of which people count and which do not. So commentators on economics should stress the socialist perspective."

Tom West writes:

I think many people think of their nation in much the same way as a firm in which they are a shareholder.

In which case, should a firm's policies be dictated by interests beyond their shareholders?

Of course, I do approve of economists' efforts to change shareholders' opinions so that policies benefiting the rest of the world *are* in the shareholders' interest (interest being defined as more than financial return).

David R. Henderson writes:

@ajb,
And as Tyler concedes in his allusion to killing the goose, who will undo immigration's effects if it turns out to destroy some of the social features that we take for granted? Already we see Democrats gloating that Hispanic immigration will make it hard for traditional Republicans to win. What if it does more than that and makes support for a market oriented economy hard to sustain? Why aren't Americans allowed to take those consequences into account? And why shouldn't we be risk averse in this regard?
Those are all good questions. You yourself concede that Tyler concedes this. So he's saying--and I'm saying--that given this potential trillion dollar or more per year gain, let's figure out a way to get it while minimizing the chance of killing the goose. So, for example, a path to residency but not citizenship. So, for example, a guest worker program. Tyler's point, I think, and certainly mine is that economists have played small ball here and should be looking at the big picture: how do we get a lot of those gains while not taking big risks?

Ken B writes:

I'm in favor of immigration, but I always seem to be against the arguments made for it on this blog. When I see a homeless man seeking shelter, before I invite him home I think of the effect on me and my family. So I suspect do Tyler or David think first of their families, and rightly so.

Now I think the welfare of foreigners matters a lot. That is precisely why I supported many interventions abroad over the years. David I know objects even to Lend-lease. I think my cost benefit ratio for that beats David's for immigration. I think he can only overcome this conundrum by denying the nation per se any standing or value (for then the objection flows from it being a state action). I think that's a tough sell.

Ken B writes:

My position on states is pretty simple, and close to Roger Scruton's. the nation state may not be logically necessary for free and civil societies on a large scale, but the historical evidence suggests it's the best bet. Free societies require dissent. This must not drift into a desire to destroy the society, or be portrayed as such. The notion of a "loyal opposition" is what makes that possible. Loyal to what though? Family, race, religion, language have all been tried. Anyone think they worked well? You need a notion broader notion, less exclusive, one that allows joining, and one that is divorced from the high irrationality of some of those listed. On a large scale only the nation state seems to work.

So I'm a tough sell for arguments that claim to promote freedom by denying any value to nations, or heritages of freedom.

S writes:
So he's saying--and I'm saying--that given this potential trillion dollar or more per year gain, let's figure out a way to get it while minimizing the chance of killing the goose.

David

This is a basically a macro projection based on aggregation across many random variables. You would be rightly skeptical if someone told you all the government has to do is spend a trillion dollars and we will realize a 53% return.

Why are you so willing to take this number as a given, yet so skeptical (rightly) of multiplier style garbage? At least debt can be paid down, or defaulted on, immigration on this scale is irreversible.

best

Brian writes:

Cowen's "zinger" doesn't amount to much. We should only count the advantages to U.S. citizens because that's what rational players do--they make decisions based only on what's good for them. Arguing for open immigration based on some supposedly "moral" position, such as the opportunity costs for the immigrants themselves, is a non-starter.

Effective arguments for nearly open borders, which I support, have to proceed on the basis of OUR opportunity costs. What can we gain by letting them in, and what do we lose by not? If potential immigrants don't bring a net gain to the table, let them stay where they are.

Tom West writes:

We should only count the advantages to U.S. citizens because that's what rational players do--they make decisions based only on what's good for them.

But if you let them immigrate, then they'll become Americans, and their welfare will have increased substantially by your decision.

Problem solved!

Bedarz Iliaci writes:

But if you let them immigrate, then they'll become Americans,
This quote captures the unreality that the libertarians labor under.
Who is an American?. He is the one that has been molded by the American culture. He thinks like an American. He feels with follow Americans.

An immigrant may not be willing to relinquish his identity and culture. And when he comes in large number, he may not need to. Then he forms enclaves within American cities.
And one thing he would not be-a libertarian.

Tom West writes:

And one thing he would not be-a libertarian.

Given the original poster, the irony of this statement is, um, high :-).

David R. Henderson writes:

@Tom West,
Your irony meter is working well. :-)
Signed,
Your fellow (former) Canuck
@S
This is a basically a macro projection based on aggregation across many random variables.
I don't think they're random. I admit that I have not looked carefully lately at how Clemens got his estimate, but when I did look at it some months ago, I don't think he had any random variables there. Which specific variables are you referring to?
You would be rightly skeptical if someone told you all the government has to do is spend a trillion dollars and we will realize a 53% return.
True. And it's true because most of what government spends, it wastes. We have good evidence on that. I'm not seeing the connection with the issue at hand, though. Please elaborate.
Why are you so willing to take this number as a given, yet so skeptical (rightly) of multiplier style garbage?
Because it's an application of one of the things we economists are surest of: gains from exchange. When an economist sees an asset, in this case, human labor services, trading at $5,000 a year in one location and able to fetch $30,000 a year in another location, we know that there are huge gains from exchange.
At least debt can be paid down, or defaulted on, immigration on this scale is irreversible.
No one disputes that. That's why Cowen wants to be careful about it. S, why keep arguing about things that Cowen and I have already conceded?

Brian writes:

Tom West, you said

"But if you let them immigrate, then they'll become Americans, and their welfare will have increased substantially by your decision."

I don't disagree with this, but you can't look at the improvement in welfare of the immigrants alone. You have to look at the marginal improvement in the welfare of Americans due to the immigration decision. That is, look at the welfare of Americans before the decision (current Americans only) and the welfare after (original plus new). If the (long-term) after welfare is higher, then the decision should made to allow it.
In other words, the marginal improvement of the immigrants themselves doesn't matter at all (because they aren't Americans at the start), but their welfare does enter into the after calculation.

And you thought you were being so clever....:)

Steve Sailer writes:

"You wouldn't dream of producing a study that counted "men only" or "whites only," at least not without specific, clearly stated reasons for dividing the data."

I read about studies every day in the New York Times that count, say, "blacks only" or "women only" or "gays only" as the proper focus of moral concern.

As Lenin said, the Revolution is all about Who? Whom?

Bedarz Iliaci writes:

Tom West,
Compared with a random Third Worlder, a Canadian is as close to an American as to make no difference.

There is a difference between a Candian or a German immigrant and a Hindu or a Rwandan.

Tom West writes:

I read about studies every day in the New York Times that count, say, "blacks only" or "women only" or "gays only" as the proper focus of moral concern.

Statistically speaking, as straight white males, the world is our oyster. (See John Scalzi's Straight White Male: The Lowest Difficulty Setting There Is). Note, he makes it explicitly clear that doesn't mean every straight white male has it easy.

Given a society that is not thrilled about massive inequality, especially between identifiable groups, we can either exclude those not doing as well (your solution) or do at least something to aid them (the rest of the world's solution).

S writes:

David,

Thanks for the response. Since this thread is probably dead, a short reply is in order...

No one disputes that. That's why Cowen wants to be careful about it. S, why keep arguing about things that Cowen and I have already conceded?

Fair enough.

Best

David R. Henderson writes:

@S,
Thanks.

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