David R. Henderson  

John Lee on Krugman and Cowen on Immigration Restrictions

Sympathy for the top quintile... Simon Wren-Lewis on expansiona...

John Lee has written an excellent piece in which he gently chides Paul Krugman and Tyler Cowen (mainly the former) for their unwillingness to advocate "open borders." I put that term in quotation marks because Robert P. Murphy has persuaded me that the term does not accurately express what either John Lee, Bryan Caplan or I want.

But on to the meat of the article. John Lee nicely handles the issue about people coming here mainly for welfare. He writes:

We know Krugman's assumption of unworkability is unjustified because many welfare systems, including that of the US, already exclude immigrants from most benefits. Don't take it from me; take it from the federal government. If you need a one-sentence summary, here it is:

With some exceptions, "Qualified Aliens" entering the country after August 22, 1996, are denied "Federal means-tested public benefits" for their first five years in the U.S. as qualified aliens.

"Qualified Aliens" basically refers to what we colloquially might call "legal immigrants". Unauthorised immigrants never qualify for federal benefits unless and until they become legal immigrants and pass the five-year waiting period.

What of universal, non-means-tested benefits, like Social Security, which is often seen the crowning [sic] jewel of the New Deal? Or of Medicare, the crowning jewel of Lyndon Johnson's "Great Society" follow-up to the New Deal? Well, anyone half-familiar with the economics of these laws knows the answer: citizen or not, virtually nobody can qualify to receive benefits from either of these programmes without working for at least 10 years (see this report from the conservative Heritage Foundation for more). You would never see a flood of immigrants bringing their aged and infirm to cash in on American universal social benefits, because unless these aged and infirm worked for a decade, they would never qualify.

I think this is a little overstated. Remember that to qualify for benefits, you need to work for 40 quarters. The work need not be full-time. One could earn a small amount every quarter and then qualify.

But the spirit of his analysis is correct. Welfare in the United States is unlikely to be a huge magnet for immigrants and what is likely to be a much stronger magnet is the chance for a much higher-paying job.

I recommend reading the whole long article. I recommend it for not only the content but also the respectful tone. Were I teaching a class in rhetoric, I would use this as a reading. Indeed, two economist friends were the ones who recommended the piece and both of them highlighted the tone.

John Lee's personal statement is here. Bryan Caplan's post in which he took on Paul Krugman on similar grounds is here.

Personal note that's only slightly relevant: My friend and co-author Charley Hooper and I had a wonderful visit with Bryan Caplan at his parents' home in Los Angeles yesterday.

Comments and Sharing

COMMENTS (21 to date)
l4k writes:

UNLESS they have a child here then they can collect all the government goodies.

Andrew_FL writes:

I'll make the confident prediction that once the US becomes a de facto one party state, a major political issue will be lower that limit from 40 quarters down, however gradually, to zero.

And these people are going to vote in favor of that, every time, and the people opposed, are literally never going to win an election again.

But glory in the great liberty of human movement! Hah! Wunderbar.

In addition to privatizing border properties, as described by Bob Murphy, I have pointed out that in an ideal free nation there would be no government-owned "public" spaces at all. Highways, as well as docks and airports, would all be private property. Private owners would decide for themselves whom to admit.

An immigrant, after being admitted to a border property, could not travel farther inland without obtaining entry-permission from the owner of an adjacent property, probably a highway. And the owner of the highway may ask for certification from an entrant, certification that the entrant is expected or welcome at some private neighbor's exit from the highway.

Admission policy becomes a problem of how best to live with neighbors. This normally settles into peaceful cooperation because violence is so much more costly.

The difficult problem of deciding immigration policy, as with all "public policy" problems, can be subdivided and handled locally. When thus subdivided the problem would fall entirely out of view of nation-state (mainstream) media.

If you want more of my libertarian theorizing on this subject, you may look here or here.

Scott Sumner writes:

David, Once legal immigrants get a green card they qualify for food stamps, medical benefits and other forms of aid.

johnleemk writes:

Scott, that's a common misconception. Read the federal government page I linked to in the portion David quotes. Legal permanent residents (i.e., green card-holders) are banned from receiving federal food stamp, supplemental income, and Medicaid benefits unless they have lived in the US for 5 years or worked 40 qualifying quarters. The principal exceptions to this rule are refugees, veterans, and in the case of food stamps, children.

That said, many state governments choose to provide these federal benefits to federally-ineligible immigrants using their own money. Because programmes like Medicaid are actually implemented via state governments, the state government can choose to use the money they're allotted on immigrants. But the point it's a local decision to give these benefits; the federal government won't do it.

Alexandre Padilla writes:

Scott and David,

Eligibility for government programs doesn't depend of whether you have a Green Card. It depends of your immigration status and whether you have been in the country for X number of years. David (Henderson) mentioned that working paper in a past post but if EconLog readers want to know details on eligibility and how much immigrants cost to the taxpayers (compared to native), see Marianne Bitler and Hilary W. Hoynes, "Immigrants, Welfare Reform, and the U.S. Safety Net" (2011) [http://www.nber.org/papers/w17667]

The working paper has since been published here: “Immigrants, Welfare Reform, and the U.S. Safety Net,” with Hilary
Hoynes. In Immigration, Poverty, and Socioeconomic Inequality, D. Card and S. Raphael, eds. New York: Russell Sage, 2013.

MikeP writes:

I put that term in quotation marks because Robert P. Murphy has persuaded me that the term does not accurately express what either John Lee, Bryan Caplan or I want.

I have to disagree with Murphy's logic here. And I have to wonder whether you are missing something in aligning Lee's, Caplan's, or even your notions of ideal "border" "control" with Murphy's.

In point of fact, if one of Murphy's 2,870 border landowners was Al Qaeda and they allowed a funnel of terrorists into the territory, the overwhelming majority of the territory's residents would come down hard on that landowner -- even in an anarchy.

It seems clear that even in an anarchy specialized security enterprises would emerge that would verify the harmlessness of newcomers into the territory and issue visas at border control checkpoints. Critically, these visas would be unlimited in number, duration, and residence and employment rights, not least because that openness is necessary to serve the needs of the residents of the territory. But there would be border control.

That border control could exactly be emulated by a government that was interested solely in keeping provably harmful or dangerous people out of the country based on individually applied specific cause. Everyone else would be issued visas and let in without limit. That is, to my mind and to virtually all who use the term, open borders, whether the territory is the dominion of a state or a collection of properties and commons in an anarchy.

Unless they span the entire globe, even anarchies have borders.

William Occam writes:

The view that "welfare in the United States is unlikely to be a huge magnet for immigrants" reflects a developed world mentality. Poverty in the US, even with no direct government assistance, is frequently far superior to poverty in a developing country.

Denizens of third world garbage dumps look upon food banks, warm and dry shelters, emergency rooms/clinics, free legal advice, and so on as unbelievable luxuries....

Milo Minderbinder writes:

The issue isn't whether they come here for "welfare", it's whether the gov't spends money on them once they come.

For example in my township per pupil school spending is $11,500. The illegal immigrant isn't paying enough in sales, property and alcohol excise taxes to cover the burden for just one child.

And then when his wife racks up a $40,000 delivery bill which either goes to MediCaid, or the hospital eats, they get even further in the hole.

johnleemk writes:
For example in my township per pupil school spending is $11,500. The illegal immigrant isn't paying enough in sales, property and alcohol excise taxes to cover the burden for just one child.
Neither do a lot of Americans, though. The median annual household income is about $40-$50K -- if they have two kids, then there's no conceivable way their local taxes will cover their children's education at the cost of ~$12k per kid every year.

The principal channel for pecuniary benefit from public education consists of the future earnings and taxes of the children whose education is subsidised. Unless you believe the children of immigrants are unusually likely to leave the country in droves, there's no obvious public finance reason to treat their education as different from the education of other children who will grow up to live and work in the same country.

Milo Minderbinder writes:
Neither do a lot of Americans, though. The median annual household income is about $40-$50K -- if they have two kids, then there's no conceivable way their local taxes will cover their children's education at the cost of ~$12k per kid every year.

Right, we've already got plenty of "takers", no need to import any more.

Conscience of a Citizen writes:

Prof. Henderson, you write "Were I teaching a class in rhetoric, I would use this as a reading."

Do you endorse merely the "tone" or also the calculated mendacity of Lee's essay? Certainly the latter helps to persuade a naïve reader.

(Two years ago Lee admitted here in Econlog that immigrants do get welfare and suggested that doesn't bother him much.)

According to the US Department of Health and Human Services, many US States (like California, which has a huge caseload) legally provide welfare to immigrants during their five-year Federal disqualification.

Worse, the children of immigrants, including illegal aliens, are eligible for Federal welfare schemes such as TANF cash subsidies and CHIP health insurance (lawful immigrant and citizen (all those born in US regardless of parents' status) children) and SNAP/food-stamps (all children) without any five-year disqualification period. The money is paid to the immigrant/illegal-alien parents. How they spend it is up to them-- it's likely that everyone in the family eats from the same pot.

Note that TANF (formerly named AFDC) eligibility has always been based on "supporting children." It is the prototypical "welfare queen" generator-- the program that ill-educated teenage girls would get pregnant to qualify for. Many children of illegal aliens follow that path now.

All immigrants/illegal-aliens are eligible for WIC assistance to pregnant women and infants (no five year wait; helps illegal-alien women whelp a qualification for TANF) and all immigrants/illegal alien women get free perinatal care under Medicaid without any disqualification period because it's considered "emergency" care.

Enrolling in any welfare program qualifies illegal aliens for free cell phones ("Obamaphones").

Children of immigrants/illegal-aliens are eligible for free or reduced-price school breakfasts and lunches, and other subsidies to low-income students (this in addition to "free" public education-- itself a significant incentive for illegal immigration).

The IRS permits immigrants, including illegal aliens, to collect the Child Tax Credit and Additional Child Tax Credit, which are "refundable credits" that "refund" the applicant more than his actual tax payments (if any). CTC and ACTC are direct transfer payments from the middle class (to whom they are denied) to the poor, about a quarter of whom are immigrants or their children.

Obama's just-announced "amnesty" specifically includes making many illegal aliens eligible for the Earned Income Tax Credit, another refundable tax credit, as well.

Finally, the majority of government welfare- administering agencies close their eyes to immigration status. They have their own "don't ask, don't tell" policies which make legal eligibility rules nugatory. (This is predicted by public-choice theory; bureaucrats want to increase, not decrease, their caseloads.)

A few years back the President of Iran said there were no homosexuals in his country. The claim that immigrants to America don't get welfare is no more accurate.

America's elites wish to subsidize poor immigrants at the expense of middle-class taxpayers and they do. Even when "populist pressure" drives nominal cutbacks, those are illusory. For example, voters drove Congress to cut off Food Stamps/SNAP to immigrants in 1996, but by 2004 the restrictions had been repealed. Lee's essay contributes to the elite deception campaign, telling readers falsely that a "welfare keyhole solution" is already in effect.

Massimo writes:

This crowd, myself included, prefer technical, scientific, objective numerical analysis, and prefers to avoid discussing things like race and culture that are taboo and loaded with unhappy emotions that impede objective analysis. I sympathize, but those messy, non-numeric taboos are the heart of the immigration issue, and evading them to suit your analysis leads to irrelevant reasoning. Arnold Kling made this point when he said the immigration issue is not something that can be addressed by economic analysis and skill sets.

Basic street level Jewish safety in Europe is threatened by immigration. In Germany, the police advise the Jews to conceal anything that could publicly identify them as Jewish, because of the danger from Muslims -- recent immigrants -- that the police don't have a way to safeguard against. Police can arrest criminals after the fact, but they have limited power of preventing crime. This is a huge, horrible cost to society, that this crowd is in denial of because it doesn't fit the preferred, emotionally safe, non-taboo, objective analysis framework.

Blake writes:

Mr. Henderson,

I just want to add something to investigate regarding the impact of immigrants upon the domestic population. Specifically, David Frum's latest post states that economic models miss a lot of the harm that Americans suffer from immigration because they don't show a person who winds up dropping out of the workforce due to immigration's impact as being affected.

Here is the post http://www.theatlantic.com/business/archive/2015/01/does-immigration-harm-working-americans/384060/

Bob Murphy writes:

MikeP, I think you're stuck thinking in terms of the modern nation-State, where if somebody gets over the line between the US and Mexico, he's home free.

Check out this follow-up post to see what I mean.

Nathan W writes:

I have never met an immigrant who came to Canada for welfare. But I have met lots who strongly consider universal health care as a relevant benefit in becoming a citizen. But you cannot become a citizen without working or contributing significantly through participation in academics, for example.

People come for the economic opportunity and safer streets, not to be lazy bums. I would bet an awful lot of money that it was not their design, but only arrived at that perspective after getting kicked to the ground quite a lot of times.

I knew an Iranian guy whose wife divorced him and left with the kids not long after getting the country. He blamed TV and the queen of England for all his problems. OK, it's an exception. I've worked with hundreds of immigrants in many different kinds of jobs who work like dogs. Yes, they appreciate universal health care. But to work towards citizenship just so you can be a lazy bum? Not by design, perhaps by accident.

Nathan W writes:

It is not difficult to invent scenarios where in some specific case where the immigration gamble didn't pay off - someone got sick, lost their jobs and couldn't get one, had 12 kids who cost a million to educate then all died in a school bus accident.

These are anecdotes! And moreover, they are fictitious anecdotes.

Here's one, and it is much more representative of reality.

An immigrant comes. They get a job. They need it, so they can't negotiate, and earn probably twice the salary they actually get paid. Their kids go to school, work like dogs, get better marks than their peers, go to better universities than their peers, and do very well for themselves in the second generation despite both formal and informal barriers to their success.

My anecdote is a much better representation of the status quo, but there are also lots of stories of completely marginalized communities whose kids went to underfunded and substandard schools, never made it to uni, and become disaffected with the American dream in the same years as finding that drugs (which have been classified as illicit) are a way to earn some income to pay those bills, which as a fact of life, have to get paid regardless of where the money comes from.

But yes, we can also invent fictitious anecdotes of theoretical immigrants that cost more to society than they are "worth" to it. These situations also occur, but I think are not half as common.

It is the exclusion and marginalization that causes the problem, not the fact of immigration.

David R. Henderson writes:

@Alexandre Padilla,
Thanks. I had posted about this study on January 25, 1993. Here’s my post.

MikeP writes:

MikeP, I think you're stuck thinking in terms of the modern nation-State, where if somebody gets over the line between the US and Mexico, he's home free.

Actually, I'm stuck thinking in terms of centuries of emergent common law rights of way, where a property is not of much use if someone else can prevent passage to its boundaries for no cause whatsoever. Under such a system, your border properties are attached to the rest of the territory by rights of way.

If all property and all transport mechanisms within the territory were entirely private, the inefficiencies imposed on individual travel would be beyond our modern comprehension. Individual property owners who did not want to hassle with travel control would allow easy passage in hopes that problem people would cross and go bother someone else. Other property owners who wanted to hassle anyone and everyone would do so both to newcomers and longtime residents. There would be passport checks at most every property border, and "papers please" would be the currency of motion.

In contrast, if two or three immigration insurance companies rented border checkpoints from a good number of the property owners, they could be trusted to ensure that those who were admitted were not threats to the population of the territory and could be allowed free passage on uncontrolled rights of way. Then Mark, Bo, and Ed could focus on their own comparative advantages and not have to hassle themselves with whether to worry about Pam's border control.

Of course, it is likely that under a no-rights-of-way regime every property owner would contract with a border control company to take care of their boundaries. So maybe the territory would settle out into a checkerboard of visa -- and longtime resident passport -- acceptance or rejection. That should be more efficient, but still less so than common rights of way.

Maybe I am wrong about the overwhelming efficiencies of rights of way. Maybe the tradition of rights of way is but a legal abstraction drawn inappropriately from the King's Highway and not actually an emergent phenomenon. But I doubt it.

Ray Lopez writes:

I'm a Greek-American living in the Philippines. I'm dating and will marry a girl from here. I am in favor of open borders and trillion dollar bills on sidewalks. But essentially, what open borders amounts to, is not trading in goods but services, and it boils down to one simple question: would you like it if you or your kids dated and married inter-racially? Really that's the main question. Answer that question honestly and you'll understand where you stand on open borders. Read Dawkin's The Selfish Gene for background. This is one reason I'm pessimistic on open borders. Most people ascribe to the 'same race, same face' and "Noah's Ark" theories of relationships. Fear of the other.

Scott Freeman writes:

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