Bryan Caplan  

Sitting on an Ocean of Hypotheticals

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Could we have another Arthur S... Robert Frank's Confusions...

David senses a weakness in my "Sitting on an Ocean of Talent":

But I don't think people's opposition to more immigration is that different from how they would react to those who would prevent them from getting at precious resources. Exhibit A is oil in the Arctic National Wildlife Region (ANWR.) For years, the federal government has locked up that resource, not allowing it to be drilled. Assuming that it is locked up forever, the foregone gains are about 30% of Bryan's hypothetical trillion dollars.

[...]

But the point is: that's not what people are doing. People are treating that locked-up pool of oil much the same way they're treating that locked-out ocean of talent. They're passively accepting the government's limits and, in both cases, many people favor them.

My reply: I deliberately didn't use oil as an example because many smart people think there is a powerful reason to leave untapped oil reserves untouched: negative externalities, especially from air pollution and climate change.  I focused on a purely hypothetical substance - Leonium - to fix ideas and bypass pre-existing ideological commitments.  Otherwise I'd be basing one controversial position (pro-immigration) on an unrelated controversial position (pro-drilling) - rarely a good pedogogical or rhetorical idea.



COMMENTS (15 to date)
Jody writes:

That's a curious differentiation as negative externalities (beyond the typically asserted job) are the essence of the anti-immigration argument.

Jake writes:

Economically speaking, the externalities from drilling oil are obviously different from the externalities caused by immigration of low-skilled labour. Specifically, the former can, at least in theory, cause a net loss in economic efficiency while the latter is, at the very (and implausibly) worst, a transfer from native workers to immigrant workers. However, morally speaking, I think many people might not see much of a difference between the externalities caused by immigration and oil drilling. After all, immigration does cause a welfare loss for some people whom voters actually care about: their poor native-born friends, families, and neighbors.

Jody writes:

Jake: beyond the job substitution or lump of labor arguments (the South Park, They Took Errr Jobz extrrnality) let me list some other externalities that I believe are more commonly made, all of which boil down to differences between the native and immigrant populations.

The Friedman externality - immigration + liberal welfare benefits will attract those who want to consume those benefits. See SF and the homeless.

Bowling alone - a different immigration population decreases social cohesion, thereby decreasing social capital and eventually economic output. See bowling alone.

Sailer AFF - whether or not the immigrants are different, they increase the demand for land, which leads to increased housing costs. See the ruin of Thomas Jefferson for the effect in reverse.

What I used to call the California externality, but now call the Obamacare immigration externality - assume a democracy and that the immigrants have noticeably different voting prefrrences. See the aforementioned outcomes or Katl Rove arguing that Hispanics are natural Republicans.

The tax base externality - assume the govt is no longer primarily in the business of providing public goods and assume the immigrants are on average net tax consumers. See Canada.

There's also the disease externality that used to be made more frequently, but I only now see the analog made in the context of blood donation.

WT writes:

A more fundamental weakness, of course, is that there is absolutely no evidence that moving over half of the world's population to the United States would result in any GDP gain at all, let alone doubling world GDP.

No one knows what would occur with such a massive disruption of living patterns, institutions, and economic arrangements.

David R. Henderson writes:

@WT,
A more fundamental weakness, of course, is that there is absolutely no evidence that moving over half of the world's population to the United States would result in any GDP gain at all, let alone doubling world GDP.
False. There’s huge evidence. Check the Clemens article. Huge differences in prices, when due to barriers to trade, are strong prima facie evidence of huge gains from trade. Maybe it’s not enough to convince you in light of other problems; that’s a case you might make. But your statement that there is no absolutely no evidence is absolutely false.

David R. Henderson writes:

@Bryan Caplan,
I didn’t find this persuasive. In fact, I’m not even sure what your point is.

WT writes:

You think there is "huge evidence" that moving 3.5 billion people to the United States would double world GDP? This is absolutely amazing:

1) you don't stop to wonder about even such basic matters as where people would live if you increased the US population by literally an order of magnitude,

2) you don't wonder whether existing businesses and economic institutions would at all be able to absorb such a 10x influx of people who don't speak the same language and don't have the same education,

3) you don't wonder whether these extra 3.5 billion people would just recreate the economic and political conditions of their homelands if even that much (perhaps they'd be on average worse off as they would no longer have access to the same resources that they are used to),

4) you don't wonder whether there might be a U-shaped curve lurking here (i.e., if a few people come here, they get absorbed into the current US economic system, but if too many people came here at once, the former US economic system would be utterly swamped by whatever institutions and economic patterns the new residents brought with them).

Instead, you're confident that you can extrapolate what would happen if 3.5 billion people moved to the US.

Really?

WT writes:

Perhaps there is just a philosophical difference here.

Some people see nothing wrong with taking a tiny bit of evidence that is hugely affected by selection bias, and then confidently predicting a linear relationship that can be extrapolated up to 1000 times.

Other people are more epistemologically modest.

David R. Henderson writes:

@WT,
You think there is "huge evidence" that moving 3.5 billion people to the United States would double world GDP?
No. I didn’t say that. I was addressing your original claim. You said, "there is absolutely no evidence that moving over half of the world's population to the United States would result in any GDP gain at all, let alone doubling world GDP.” I was taking on the “absolutely no evidence” and the “any GDP gain at all.” But by the way, I should not have let the other part of your sentence go unremarked. I strongly doubt that 3.5 billion people would move here. There’s VERY LITTLE evidence for that.

NZ writes:

@Jody:

In fact, at least one negative externality is shared by both anti-immigration and anti-drilling arguments: environmental destruction.

Sailer cites this one a lot too.

DaveL writes:

While "half the world's population" might be an overstatement, I see comments on blogs all the time that "half the population of wants to emigrate to the US." The most common value of I see is "Russia."

Culture Externality: My belief is that American culture is worth something, and there is a certain capacity for assimilating new immigrants from different cultures (which varies depending on which specific culture is immigrating and in what numbers). If you overload that capacity you get ethnic separation, cultural conflict, and too much convergence with undesirable imported cultural features (attitudes toward women, gays, government, law, etc.).

andrew' writes:

[Comment removed for supplying false email address. Email the webmaster@econlib.org to request restoring your comment privileges. This is your final notice. A valid email address is required to post comments on EconLog and EconTalk.--Econlib Ed.]

WT writes:

In the original post, Caplan claimed as follows: "Standard cost-benefit analysis predicts that global GDP would roughly double."

The paper to which he links claims that "we might plausibly imagine overall gains of 20–60 percent of global GDP" if 3 billion people migrated to richer countries.

Thus, David, your response to me misses the point. I said, "there is absolutely no evidence that moving over half of the world's population to the United States would result in any GDP gain at all, let alone doubling world GDP." It is not responsive for you to point out that there is indeed some evidence that if a few people immigrate there are economic benefits. Even so, there's still no evidence on what would happen if 3 billion people migrated, which would be so disruptive as to be different in kind, not degree.

In any event, since you say that 3+ billion people are not going to immigrate anywhere, Caplan is left without any basis for his claim about doubling world GDP (which depends on extrapolating to that many people even though it's 1000x what the evidence actually shows).

Mark Bahner writes:
1) you don't stop to wonder about even such basic matters as where people would live if you increased the US population by literally an order of magnitude,

The population density of the lower 48 is about 36 people per square kilometer:

Its population density was 94.484 inhabitants/sq mi (36.480/km²), compared to 79.555/sq mi (30.716/km²) for the nation as a whole.[5]

So we'd need to look for any countries/areas of the world with population densities greater than 360 people per square kilometer. Some interesting values for 2011:

Bahrain = 1791 (yes, 1791 per square kilometer!)

Bermuda = 1291

Bangladesh = 1174

India = 411 (that's for the country as a whole...there are parts of northeast India that are far more densely populated)

Japan = 351

...so, I'd say they'd fit. :-)

Especially if we put half of the 3 billion in Canada, which is dangerously under-populated. (Sorry, Canada, it's a simple fact. ;-))

Canada = 4 people per square kilometer.

NZ writes:

@Mark Bahner:

An increase in population density tends to make land more expensive, right? What does that do to the ability of average people to buy property vs. live their whole lives as renters? Renters behave pretty much the same as owners, right?

Also, do you plan on paving over Yellowstone and Yosemite so people can build highrises there, or will those places just be the new suburbs?

One thing I've learned over my lifetime of moving from one continent, country, and state to another every 6 years or fewer is that I care less about climate (in terms of average rainfall/temperature) than I do about certain other things:

1. Days of sunshine/year
2. Inclusion of mountains somewhere on the visible horizon
3. Number of times I have to interact with or be around strangers between the time I leave my home and the time I arrive at my destination

The first two are not impacted by population density. The third definitely is, and it may be the most important. It's even more important now that I'm a parent.

Are there any children in Libertaria?

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