The Economics of Immigration
2022-02-28 · Guest: Benjamin Powell (Executive Director of the Free Market Institute) · 52:19
Economic and social impacts of immigration
Host Bob Zadek and Professor Benjamin Powell discuss the economic and social impacts of immigration, debunking common myths about wage depression and political instability. Powell presents research from his book Wretched Refuse, arguing that immigrants complement native labor and that market-based legal pathways are superior to current restrictive policies.
Topics: Immigration, Economics, Labor Markets, Assimilation, Public Policy, Property Rights, Comparative Advantage, Political Institutions
Speakers:
- Bob Zadek — Host
- Benjamin Powell — Executive Director of the Free Market Institute at Texas Tech University
Introduction to the Third Rail [00:00]
Bob Zadek: Good morning, everyone. Welcome to The Bob Zadek Show, the longest-running live libertarian talk radio show in all of radio. We are always live. Thank you so much for listening this Sunday morning.
This morning’s topic presents an almost, in my opinion, intractable public policy problem. The problem is complex. It affects every American, indeed every citizen of the world—that may be a bit of hyperbole, but you will decide for yourself as we get into this morning’s show. It affects all of us one way or another. It affects us socially, politically, and economically. And it is the kind of topic that everyone has an opinion on. And everyone, most people, are convinced their opinion is the correct one. And almost, or most opinions that those in the general public seem to carry, is an opinion formed with a minimum of data backing it up and a maximum of emotion and myth and assumptions and biases.
In short, it is mega-complex. The subject, you probably have already guessed, is immigration. A problem which we cannot seem to solve in this country. We do not even seem to know where to start. We have a legal system governing immigration that has been observed as being as complex, some would say more complex, than the system dictating the calculation of federal income tax. The legal immigration system is perhaps more complex. It is so complex that no one in the lawmaking, executive, or judicial branch seems to want to go near it very much. It is, I think, the true third rail of American politics. Social Security used to be—uh-uh. I think it has been booted out of first place by immigration.
To help us, to help you, get your arms around the issue, at least understand the issue with a lot of data to support the explanation, I’m happy to welcome back to the show Professor Benjamin Powell. Ben is the Executive Director of the Free Market Institute and a professor of economics at Texas Tech University. He’s a senior fellow with the Independent Institute. They are located in Oakland. He has his PhD in economics from George Mason University. Ben has written and edited a great number of books on economics and related topics. You may recall, indeed you may still be reminiscing about Ben’s last visit to our show this morning when he had just written Socialism Sucks: Two Economists Drink Their Way Through the Unfree World. This morning we are going to discuss Ben’s latest book, which he has edited, entitled Wretched Refuse: Cambridge Studies in Economics, Choice, and Society.
In the book Wretched Refuse, Ben presents many of the issues, the arguments pro and con on immigration, open borders, work visas. He discusses the economics of immigration, the effect upon the welfare system—can we afford more immigrants? Indeed, can we afford not to have more immigrants? In short, complex stuff. Ben does us all the great favor of sorting it all out. Ben, welcome to the show this morning.
Benjamin Powell: Hey, Bob. Good to be with you. Thanks for having me back.
The “New Economic Case” for Restriction [02:16]
Bob Zadek: Now, Ben, in your book which you co-authored with Alex Nowrasteh, Wretched Refuse, were you trying to learn something? Were you trying to prove something? Or were you on a course of discovery in writing the book?
Benjamin Powell: Well, there is no Q.E.D. at the end of the book, so I don’t think there’s a proof of anything in there. What I do think it is, is people, as you kind of mentioned in your intro, have all sorts of conflicting ideas about immigration, often that are at odds with the social science. And we review some of that in the beginning of the book about wages and jobs and economic impact and such.
But really, what this book sets out to do is look at what I think is the most serious objection to greater immigration or free or open immigration that’s out there. And basically, this objection, they call it the “new economic case for immigration restrictions,” which is made by Harvard economist George Borjas, Paul Collier, and some others. But it’s really not that new in a sense. It goes back to our founding fathers in the United States who worried about immigrants from other countries coming in here and destroying our liberties.
And what the new case basically is: will immigrants come here and bring with them their beliefs, informal or formal institutions from their origin countries that are responsible for those origin countries being poor in the first place? And if they bring those beliefs with them, could it change the formal and informal rules that govern a destination country like the United States in a way that would make us less productive? Because if they do, not only would the normal gains that economists forecast that we could get from immigration not occur, but it actually might make the destination country poorer.
So I said that kind of in a long-winded academic way, but let’s make this intuitive. Imagine Cuban immigrants fled socialist Cuba and came to Florida and brought with them pro-socialist ideas that turned Florida socialist. The Cubans then would not see the big increase in income from leaving Cuba and going to Florida, and Floridians would all become poorer as a result. That in essence is the fear in the new case for immigration restriction. And what this book does is we take it seriously and we try to systematically investigate a whole bunch of different ways of stocks and flows of immigrants across countries, case studies, and different things like corruption and freedoms that they could impact, and to empirically investigate it and say, is there very much evidence for this? And to preview the results, I’m going to say no, and in fact, quite often the opposite.
The Fragility Myth and Internal Migration [03:50]
Bob Zadek: How could it possibly be—I’m asking a clearly rhetorical question—that our system—freedom, free markets, relatively free markets, I should qualify, relatively free markets and all of the freedoms guaranteed to us in the Bill of Rights and case law—how could that system be so fragile so as to be able to be destroyed, if that’s not too strong a word, or even weakened by immigrants who pretty much gamble everything in giving up whatever they leave behind to come here? Sort of, why bother with this? Is it the assumption of those who believe that, that a wave, a substantial number—because you have to have large numbers for this fear to become actualized—is it sensible to assume that large numbers of people will leave poverty, absence of freedom or less freedom, to come here only to see to it that our country becomes like the country they just left? I don’t even understand the psychology of how one could assume people would think that way.
Benjamin Powell: Well, let’s dial it back a little bit, Bob, and think about internal migration here in the United States. Because I’m speaking to you this morning from Texas, and this type of objection or fear is something that people talk about in Texas a lot too over these last few years.
Bob Zadek: Californians. Californians.
Benjamin Powell: You crazy Californians all moving to Texas. And you know, they’ll talk—I don’t like left-right politics, blue-red crap—but people talk like that here. “Is Texas going to turn purple because of all of the Californians coming?” And the answer’s no, actually. When you look at—and again, I don’t like the politics as the way to do this—but if you look at, like, voting rates, non-native-born Texans vote for Republican candidates at higher rates than native-born Texans do. They self-identify as conservative more, which is not the same thing as libertarian that you and I like to talk about, but it’s getting at this idea though of: are Californians coming to recreate liberal California in Texas? And it’s no. Actually, the Californians who move here are more likely to be the ones who want to go buy a gun when they get here.
There’s a selection bias of who chooses to come here. Texas is kind of a thing. If someone just wants to escape the high cost of living in Texas, they can lower their cost of living by moving north to Oregon or east to Colorado and still be crunchy. The ones who come here to Texas are ones who like the idea of Texas. And I say this as a guy who moved from Boston, Massachusetts, to Texas to run a free market institute.
And while we see this in an internal market in the United States where people are free to move between the 50 states, I think there’s an element of this to international migration too. There’s kind of a pre-assimilation on some margins that America is still a thing, imperfect as it may be, and when immigrants choose to move here, it’s not certainly with the intent to undermine American institutions that make us wealthy and productive, but instead to become part of that. I think if I was going to give the strongest case for the alternative, it would be that, well, they just unknowingly bring with them cultural traits and beliefs because they don’t understand what makes America prosperous and they don’t understand these freedoms. So that it’s not that they willingly come and want to vote a particular way, but it’s the norms and beliefs that could undermine our productivity. And as I said, in the book we’re going to explore it a bunch of different ways. We don’t really find evidence for it, but I think a big part of that is kind of a sorting mechanism of who it is who chooses to risk everything and move to America, and for that matter, other destination countries, and why they wouldn’t undermine our institutions or destroy our freedoms. And in fact, I would argue in the United States case, actually, and we do in the book, that greater immigration in bigger numbers was associated with smaller government growth and limiting the socialist movement in the United States back when we had Ellis Island-style immigration policies.
Defining “Open Borders” vs. Ellis Island [06:11]
Bob Zadek: Ellis Island-style immigration policies. For those who may not be old enough, which includes everybody except me, to actually know the reference of Ellis Island—by the way, it’s a wonderful museum. You cannot remain dry-eyed if you visit the Ellis Island Museum, which is of course an island in New York Harbor, which was the first stop of immigrants. They arrived by boat, they were processed in Ellis Island. The immigration officials were looking for disease and criminality. It was a pretty low bar to get in. You passed through Ellis Island and off you went into the experience of the United States. So that was Ellis Island. And references to Ellis Island are basically a placeholder or a marker for open borders. So I guess any reference to Ellis Island is pretty much a reference to open borders. Is that a fair summary?
Benjamin Powell: You know, Bob, I actually like to—because I know you have a big libertarian audience following too—I find “open borders” is a loaded term that packages a lot of things together for people, including the chaos that’s going on on the southern border of the United States along Texas-Mexico right now, which incidentally is not an open border when people pay $5,000 to $10,000 to coyotes to smuggle them across. That’s a pretty good indication that you’re not free to cross openly, otherwise you wouldn’t be paying those fees.
But I think we can distinguish, you know, “open border” for some people means no checks, willy-nilly jumping across the Rio Grande or whatever else, whereas I think, you know, Ellis Island migration policy or free migration like free trade just implies no blanket quantitative restrictions on immigrants coming from any particular origin country. So as you mentioned, you could have basic qualitative—come through legal checkpoints, have basic qualitative checks of contagious disease, if so quarantine, known criminal or terrorist, you don’t get in. But otherwise, much like during the Ellis Island time, any number from any origin are welcome. In fact, the “wretched refuse,” as the book title is, are welcome to our shores. So I like to contrast that. The “open borders” thing I think alienates people unnecessarily and meanwhile attracts people cheering for it who don’t get exactly what we’re talking about.
Bob Zadek: You’re quite right about that. “Open borders” gets everybody all of a sudden fists get clenched as soon as you talk about open borders. And that gets in the brains, in the minds of many people who hear it, they see absolute doomsday. It’s Dr. Strangelove time. And they see it’s the end of everything. So you’re quite right, “open borders” is a phrase that is poisoned, even though it may have some—it may be an explanation which is somewhat practical, although it’s not open as you said, there are limitations, but it just gets too many people too angry. So to advocate open borders does not engender support for those who favor a far more liberal immigration policy. So I will take an oath never to say “open borders,” at least until 9:00 AM Pacific this morning, then I’m free to do whatever I want. So thank you for the correction.
Benjamin Powell: The other benefit to speaking about Ellis Island immigration policies is, you know, a number of people I talk to about immigration, they’ll say, “It’s just illegal immigration that I object to, not legal immigration. You know, my great-grandparents, my grandparents, they came here legally.” And I said, “Well, I want to return to the type of migration policy that your great-grandparents faced.” Ellis Island immigration policy allowed most people in the world to legally come to the United States. Right now, almost everybody in the world is legally prohibited from migrating to the United States. So we’re going to return to law and order immigration, we’re just not going to restrict the numbers. And I think this is a better way to build bridges with people, at least as you say for the next 36 minutes.
The Semantic Trap of “Illegal” Immigration [08:16]
Bob Zadek: Thank you for making that point. And on the two-word subject of “illegal immigration,” it’s really strange to me when I have these conversations with people about immigration and they all say, “I am opposed to illegal immigration.” And I say, “Well, gee, that’s a headline. I’m opposed to illegal everything.” But the way to fix it is either to change the behavior or change the law. You have a choice. And therefore, when you oppose illegal immigration, is it the illegal part you don’t like or the immigration part you don’t like? Putting it another way, if you made all immigration legal, are you then totally content and docile and not talking about this anymore if you simply change the law? Or is it really the immigration that you’re opposed to and you dress up your opposition in the illegality of it all?
Benjamin Powell: Yeah, I think you’re exactly right there, Bob. There’s very few things that have a magic wand solution, and if the sole objection to the illegal immigration is the fact that it’s illegal, that’s one of the few things where there’s a magic wand solution of: okay, make immigration legal. But I think you’re exactly right that many people who say that are actually having other reservations about what would be legal immigration in greater numbers.
Bob Zadek: Now the opposition, the opposition of more liberal immigration policies breaks down, I think this is helpful. There are arguments made on the economics of it all, “taking away our jobs”—a phrase that I hate, nobody owns a job—but “taking away our jobs,” putting it more directly, it has negative—it has pressure to push wages of the lower wage earners in our economic system, those wages down even lower as they can’t compete with immigrants. The same argument that was made during the Great Migration when blacks from the rural South were migrating to the Midwest and the Northeast to take the construction and other low-skill jobs, and they were willing to work for less because they valued the job more and they knew they were unskilled. Well, the cure was minimum wage laws—let’s keep them out of the competition. So it’s been a legal tradition in this country to discourage wage competition to the detriment of the consumers but the benefit of those who have the jobs.
So there is an economic argument against immigration. There is a social argument against immigration: “We’re going to lose our”—I hate to even use the phrase, but I will—“way of life.” Ugh. But there is a fear we will lose our way of life, ignoring the fact, in my opinion, that the mixture of cultures is our way of life. That’s what it means. It’s not losing it, it’s encouraging it. But there are many people who object to that.
There is, as you had mentioned, Ben, a fear of a deterioration in our political system, that with waves of immigrants, they will collectively through the ballot box alter our system of government because they bring with them different beliefs. And then there is, of course, another—the welfare component, which is a concern that immigrants coming here with less will be more of a tax on the welfare system, and we simply cannot afford to start doling out welfare, so the argument goes, to all of these immigrants, we can’t afford it.
And lastly, Ben, and an argument that I think we should try to touch on, is the statistics of how many people, if they could, how many people in the world would happily and almost immediately move to the modern Western civilizations—the US, Australia, Canada, England, etc. How many people would move to the first-world countries, and what would happen to the first-world countries if all of the people who would probably want to move if they could, if they did actually move? Could any of the countries survive?
So first, and your book discusses many of them, so help us sort out the myths from the reality on each of the segments which you discuss so well in your book. And we can start with—you did it briefly a few seconds ago—is the fear of the loss of cultural norms, our way of life, a very broad term, and a change in our political system as a result of immigrants. After all, if the immigrants are as wretched as some people think and as the title of your book, are they going to make our country wretched as a result of coming here?
Debunking the “Taking Our Jobs” Myth [11:16]
Benjamin Powell: Yeah, a whole lot in all of that to unpack, Bob. We’ve got a lot of time, so let’s go through them. If we can, can we actually start with the jobs/wage a little bit because we can roll into how that relates to the institutions?
So this is something that’s popular for people to debate on radio and other public forums, but it’s just not the type of debate serious economists have. And that’s economists who are both pro-greater migration and anti-greater migration. There’s no serious economist who believes they steal, quote, “our jobs.” So we have a virtually limitless desire for goods and services. When we add more people, we add more jobs. So think about what’s happened over the last 70-plus years, the post-World War II years. You’ve had massive entry of women into the labor force, baby boomers into and now starting to exit the labor force, and post-1965 greater immigration. We roughly tripled the size of the labor force. We also roughly tripled the number of jobs. The number of laborers is the key determinant to the number of jobs.
Immigrants as Complements, Not Substitutes [12:41]
Benjamin Powell: What immigration does is it changes the mix of jobs that the native-born population does to better correspond to what we are good at, and they take up the slack of what they are better at. This is, by the way, the exact same thing economists find when they study international trade in goods and services too.
Bob Zadek: Comparative advantage.
Benjamin Powell: Yeah, I didn’t want to use that ugly economics term on your show, but if you’ll use it, I will. It shifts the jobs to those things that we have a comparative advantage in. So disproportionately, immigrants to the United States tend to be either very low-skilled, like lack a high school diploma, or also very high-skilled. If we used education as a proxy for it, a disproportionate number of PhDs in the United States are foreign-born compared to domestic-born. Whereas meanwhile, the US labor market, most of us are coming kind of somewhere in the middle—graduated high school, maybe did some college, maybe have a bachelor’s degree. If you were going to like draw shapes to these things, immigrants tend to kind of look like an unbalanced hourglass where you’ve got lots of ones that are low-skill, kind of few in the middle, and more up at the top. Whereas like the US labor market would look more like a diamond where most of the people are kind of in the middle.
But that tells us that immigrants for most of us aren’t a direct substitute. They’re—if we’re going to use economics terms again—they’re a complement. They free us up to do what we’re better skilled to do and take away the tasks that we’re not as well-suited to do. So this is why when it comes to wages, then, economists don’t find any overall depression of US wages from more low-skill immigrants coming, or for that matter, high-skill ones. And it’s because for most of us, they’re complements rather than substitutes.
So when economists do this—now here’s where economists do debate it—is on the wage impact of, like, high school dropouts in the United States. And man, some of these economists get all riled up about this and call each other frauds over how they use their data and all this other stuff. But what they’re debating is whether people without a high school diploma in the United States might see as much as a negative 8% impact on their wages or as little as nothing or even slightly positive, and if it lasts for like under two years or all the way to two years. To me, this is kind of a sideshow. If we’re talking about massive global gains from migration and an increasingly small proportion of the native-born population that directly competes with them seeing a temporary, kind of small wage decrease, to me it just doesn’t seem like a big deal in terms of how that would inform what you think the right number of immigrants is.
And even for those people without—just using an education as a proxy for skill—so like why wouldn’t high school dropouts necessarily have a wage decrease? How do some economists find a positive effect? Well, their skill set is still different. Most importantly, language. So this is the person who, you know, was the roofer, and when you have more immigrants come in who take over the roofing jobs, this person becomes the foreman of the roofer who talks to the English-speaking customer. So it’s about changing what you’re doing in your job in response to how your skills differ from the immigrants.
Bob Zadek: Can I just, Ben, I just want to comment just very briefly on that part of your presentation. The focus is, your focus was, that yes, there might be in the margins some small decrease in average wages of unskilled workers, as if, well, that’s a minor detriment which is more than offset by other economic benefits. I think that’s sort of a one-sentence summary.
Benjamin Powell: Yes, and it’s also true for virtually anything that could make the country richer, at least in the short run. There’s going to be some small number of people who lose in the transition. The horseshoe manufacturers lost when Henry Ford created the assembly line. So there’s always going to be something like that. But the point is it’s relatively modest here and relatively small segment of the population.
Bob Zadek: But here’s the point I want to remind our listeners, because I think what I’m about to say doesn’t get discussed as much. Maybe because it’s a bad point, and you’ll correct me, but I don’t think it is. And the point is, let us take that 8% reduction in average wages, if that’s the right economic concept, of low-income workers. What that means is that consumers are paying 8% less for a service or for a product collectively. So it’s a question of whether what you just said is a bug or a feature. I say it’s a feature. What’s wrong with a governmental policy that means that consumers get to buy the same good or service for less money? That’s a positive. And to describe it only as a negative misses the corresponding benefit. I just wanted to make that point.
Benjamin Powell: Yeah, I think that’s a good point. And it’s not exactly 8%, but let me give an example that drives this home a little bit. And it’s about how immigrants can complement us, and in particular, low-skill immigrants. Some people will say, “Well, I’m for high-skill immigrants, but those low-skill ones don’t add anything.” Well, we have a very high-skilled, at least as the globe goes, labor force here that includes lots of women college graduates. In fact, there’s more women in college today than men. And many of them face high childcare costs when they get to their late 20s or early 30s and choose to exit the labor market in order to take care of their kid. And one part of that choice is the very high childcare costs. Well, we have a shortage of childcare providers and nannies compared to people in other parts of the world. If you allowed more low-skilled people in who provided childcare, that would free up more high-skill trained US labor who otherwise might take time out of the labor force to use their high skills. So this is the ways that it kind of complements rather than substitutes. So that’s making that one particular service, as you said, for lower cost for the consumer in the United States, but it also frees them up to be a producer of other things that will be at lower cost for us.
Global Gains and the Ultimate Resource [16:13]
Bob Zadek: So therefore, the economic argument—is it a fair summary that the economic argument about immigration is profoundly pro—would favor, the economics would favor a more liberal, far more liberal immigration policy than we now have? Or are there some sound economic arguments that would argue the other way?
Benjamin Powell: Yeah, well, so what it isn’t is it’s not about jobs or the wages of the native-born, the things that are popular to talk about in the rest of society. The big thing is that economists estimate massive overall gains from immigration. I mean, a Haitian leaving Haiti moving to the United States, their income goes up by 1000% on average. Same for a Nigerian. For a Mexican, it’s about 150%. So the gains from moving from a low-productivity area to a high-productivity area—and this is really because humans, as Julian Simon said, are the ultimate resource. But their creativity, the value they can create for others, is limited when they’re in countries that don’t have a rule of law, a tolerable degree of economic freedom, strong private property rights. And when you free them up and let them move to a place that has better institutions on those margins, they become much more productive.
So the consensus of economists is that the global gains are massive. If the whole world went to open migration, we’re talking like a doubling of global output. But that the gains for the native-born population are relatively modest as a percent of our economy anyway. And that there are other problems with immigration, and we can get into—you mentioned fiscal ones about tax stuff. We can get into some of those. But if the gains of massive doubling global GDP are anywhere near right, well, you have to be thoroughly uncreative to not be able to think about how you could use public policy to plug some of the other issues that come along with the greater migration, which is why we did the book Wretched Refuse, because the new case for immigration restrictions argues that the immigrants might undermine that rule of law, the property rights, the economic freedom that make us productive. And if they did that, then we don’t get the big increase in output, which means it’s a lot harder to deal with any other problems.
Political Impact and the Marx Paradox [17:44]
Bob Zadek: Now, you segued perfectly into the next topic I wanted to discuss, because your arguments are so data-driven. That’s why Wretched Refuse and your other books, frankly, are so important, because they are data-driven with lots of tables and lots of support for the positions. And you mentioned, which is precisely what I want to discuss now because you do it so well in your book, is what is the data to the extent that it can be measured on the effect on our political system, our legal system if you will, but political system is broader, the effect on our political system on waves of immigrants from political systems that are very different from ours? Is it that they become early and passionate adopters of our system, or is their collective effect on our system is to weaken it?
Benjamin Powell: Yeah, I think for the most part they just don’t have that much of an effect, and that sometimes it’s a positive effect. So we look at this across about 110 countries looking at stocks and flows of immigrants over a 20-year period. Nowhere do we find that they’re on average decreasing economic freedoms. Sometimes we find slight increases in economic freedom. When we look at the history of the United States—you know, Bob, I might be unique on this one, I’m going to favorably cite Karl Marx on your show now, I don’t know how often you have guests doing that.
Bob Zadek: It will not be good radio for anybody.
Benjamin Powell: But Karl Marx and Friedrich Engels were exchanging letters in the 19th century bemoaning how the immigration to the United States was limiting the socialist labor movement in the United States because it was undermining the worker solidarity. There was always a new immigrant wave to undercut the power of the labor unions, which were the ones pushing for the social welfare state type thing that Germany was doing at that time. So in this sense, Marx was more insightful than some of our founding fathers on what the effect of immigration on the growth of government in the United States would be.
We also look at some case studies around the world today, because the United States, of course, the Ellis Island immigration policy, the open immigration policy, stopped in 1921 before we had a developed welfare state. So I think, by the way, for the most part, it’s immigrants assimilate into the culture that they’re moving to, the political culture. I think there’s a problem with the political culture in the United States today. It’s not immigrant-driven, it’s driven by our own evolution in terms of ideologies of native-born Americans.
But we also look at other case studies. We looked at Israel and Jordan in the 1990s, both of which had big surges in their population not related to their own immigration policies but to external events. And you know, all of these are case studies or sample equals one. But when we want to look for these bigger waves, you only have a few examples to look to in modern times. The Israel one was the Soviet Union ended their emigration restrictions, the wall keeping people in. And because Israel had the Law of Return, which allows every Jewish person, every child or grandchild and non-Jewish spouses of Jewish people to migrate to Israel and have instant citizenship, voting rights, access to the welfare state as soon as they arrive, they had about a 20% surge in their population during that decade of mass flow of Soviet immigrants who weren’t particularly religious—most of them were atheists and agnostics. They most of them didn’t speak a Jewish language, they all spoke Russian. They were just immigrants who qualified to move there and wanted to get the hell out of the Soviet Union, and Israel was a better place. And you know, we do a bunch of fancy statistical techniques to look at how it impacted economic freedom there, and we see that, you know, economic freedom in Israel shot from about 90th in the world to 45th. They made a big increase during a decade when most countries were improving economic freedom, they outpaced everyone else. But sometimes it’s—well, we could do the fancy statistical stuff, there’s just obvious things to look at. I mean, the left Labor Party in Israel stopped using the color red in their political propaganda because they didn’t want to alienate the Soviet vote. The Soviet immigrants there wanted greater freedom, and in fact, they wanted greater freedom than the existing Israeli population wanted.
Assimilation and the Labor Market Blender [21:01]
Bob Zadek: Now the related issue, it’s a social issue I think, but it’s also political, which you also discussed in your book, is this word “assimilation.” There are—everyone has an opinion on the need for assimilation. I find the discussion on assimilation to be overheated, much ado about nothing, but it’s discussed in your book. So comment on the threat of non-assimilation or the benefits of assimilation and how assimilation or not affects the big picture of political and social life in the United States.
Benjamin Powell: Right. So I think assimilation is important to make things go more smoothly, and I think it relates to the other types of policy and institutions we have in place. So compare the United States and Europe and how both of us have dealt differently with more recent migration waves. I think there’s definitely more difficulties culturally in assimilation in Europe than the United States. And some of those things might be unique to historical past, but a lot of it actually comes from our labor market institutions. You had mentioned, Bob, that, you know, the minimum wages in response to the African American migration in the United States a hundred years ago. That’s something similar in Europe today. They have relatively high minimum wages relative to productivity, and they have laws that make it difficult to impossible to fire employees once you hire them, depending which country you’re in. In fact, the way I say it to my students is: imagine you had to promise to marry somebody with no possibility of divorce before you’re allowed to go on your first date with them. And now you know what it’s like to be a French employer. Those type of laws there make it very difficult to economically integrate the immigrants because their productivity’s low relative to that minimum wage, and immigrants are a risky bet when you’re hiring them, so they’re more likely to hire a known person to the employer. And this also cuts against why youth unemployment is so high in Europe.
But once you’re not integrating them economically through the labor market, well, what do they do? They turn to each other and they enclave, and they resent the society that’s hosting them, and then that society in turn resents them back, and you get some of this ugly dynamic that you see in Europe. Contrast that with how, you know, to keep the immigrant group similar here, the Somali immigrants integrate better into the United States than in Europe. And I think that’s because we have a more flexible labor market. Once you get people in and working, commerce is a great equalizer and a great blender. It destroys prejudices and allows for greater harmony when we all benefit each other through exchange. So I think it’s important to keep our economic freedoms and our labor markets to better integrate immigrants.
Bob Zadek: I think you make a really important point, Ben, that I want to be sure is not lost on our listeners. In comparing Western Europe’s handling of assimilation and big wave, relatively large waves of immigrants versus the United States, I think the difference is in the United States, while for sure there are areas of non-assimilation—the large Hasidic Jewish community in Brooklyn and elsewhere in New York State, the of course the Amish in Pennsylvania and like groups that just plain are more comfortable together—there is a difference between the United States where non-assimilation is by choice, simply by preference, versus in Western Europe where I think I’m correct that the absence of assimilation is by government action. Governments discourage assimilation. In the United States, we either encourage it—that’s what I think—or at least are as a system of laws neutral, and we have less laws interfering with assimilation. I think that’s the big difference, just an observation, and you made the point in comparing the United States with Western Europe.
Property Rights and the Freedom of Association [22:49]
Bob Zadek: Now there’s another issue, of course we are libertarians and many of my listeners are. There is another issue that also is non-economic, it’s philosophical. I just want to mention it for a minute or two, Ben, if I may, which is putting aside for the minute—this is going to seem like heresy—putting aside for the minute whether a more liberal immigration policy benefits or harms the United States in the big picture. Putting that aside and focusing upon the immigrant, the prototypical immigrant for this point is somebody, a family simply wants to live with less fear and with more freedom. And they want to exercise their natural right, if you will, of travel. They simply want to live without fear and with more freedom. Do they not have that right? Or not? And is it not cruel, inhuman, unfair, whatever label you want to put, to even if, even if the net effect on our country may be somewhat negative, is there a collective moral obligation? Now this is not the kind of a show where we’re going to dig deeply, nor do we have the time, into the morality of it all, but I wanted to just mention and have your thoughts in a sentence or two about that issue, because it so often never gets into the conversation.
Benjamin Powell: Yeah, and you know, this is actually a point that I do want to bring up a little bit for your readers about thinking about immigration rights, because I do not actually think about the right to immigrate, and I certainly don’t think of it as an absolute. You don’t have a right to immigrate across my property or somebody’s ranch in Texas without their permission. I think that’s different than legal checkpoints to come into the country. And when I think about rights and freedom of association as it’s tied to immigrants, it’s about by what right does a government put a filter on all of the property owners who live within the United States of who they may freely associate with? If I want to rent my property or sell my property as a residence to someone who happens to be born on the other side of lines politicians drew on maps, by what right does my government prohibit me from transacting with them in that way? Similarly, if I am an employer, by what right does the government put a filter at the border and say who I may employ on site and who I may not? So when it comes to immigration and rights from a libertarian perspective, I actually think for the most part the rights reside with the existing property owners within the United States, and it’s their freedom of association that’s being violated by our anti-immigration laws, rather than an inherent right to immigrate. I just don’t think the border filter is a just one imposed by our government on our existing Americans who have a right and a freedom of association.
Market-Based Solutions and Conclusion [24:13]
Bob Zadek: Your book makes a wonderful contribution to the conversation in helping people organize their thinking as to what modest and perhaps not-so-modest changes could be made and should be made in our utterly chaotic, if not a total void in any semblance of policy. What modest changes, what first steps could be made with your encouragement to add some sense of order and—well, I’ll just stop with order and benefit to our country in our immigration policy?
Benjamin Powell: Well, I think we need to solve our illegal immigration problem by drastically opening up paths to legal migration. That’s the key. And now the question is within a political system, how much can we push on that margin and how much will we get? My answer is that we should be opening it all the way back up to Ellis Island style, and that means anybody can have a legal path here who’s not a criminal or has a contagious disease at the time. Now, I don’t think that’s what the political system’s going to give us. If it just increased its quantities higher, that would be a start. If you’re going to have quantitative limitations, it seems to me we should be using a market to allocate those visas instead of the cumbersome immigration process that you kind of alluded to in your intro to the show. By a market, I mean if the answer is that there’s going to be 3 million, 5 million, 10 million, 1 million, whatever the number is of visas per year, auction for them. Allow employers to bid on them to bring people here and allow people here to bid on them to give them to a relative to reunite with, allow people in other countries to bid on them to get the right to come here. Hell, allow immigration restrictionists to bid on them so that they could burn the permits. But conditional on limiting quantity, the only way to get the most efficient mix is to use a market to reconcile the competing demands for those visas. But if we had a truly open Ellis Island system, the market price would be zero because anybody could get one by showing up.
Bob Zadek: So doesn’t there have to be some upper limit into above which we have too many, whatever that means—economic, social, political—we have too many immigrants and we just can’t handle it and we will be collectively worse off? Or is that so theoretical that we’ll know it when we get there, but it’s not in the foreseeable future? Is there a danger from erring on the side of overly liberal immigration? We have about 45 seconds left.
Benjamin Powell: Yes, there is a limit. No human being knows it. We cannot centrally plan an international labor market any better than the Soviet commissars could centrally plan the market for shoes, televisions, or anything else in the Soviet Union. So how do we handle it between US states? We allow employers to bid for our labor, we bid on apartments and houses, consider cost of living differences and then move or don’t move. Nowhere where people are free to move between jurisdictions do you see wage differentials of more than 30%, but yet we see them by orders of magnitude between countries. We are so far from optimal immigration that we could let this process play out for a long time before we’d be going towards that limit, and then the market process itself would slow it down and stop it. We don’t need the government planners to do it.
Bob Zadek: Let ‘em all in. I couldn’t agree more, at least for the minute. This is Bob Zadek. We’ve been speaking with Ben Powell. Ben has written and edited Wretched Refuse: Cambridge Studies in Economics, Choice, and Society. If you want to get people’s attention when you discuss immigration and organize your own thinking, this book is a must. Ben, thank you so much for your time. Thank you for your scholarship.
Benjamin Powell: All right, very good. Always a pleasure to be on with you, Bob.
Bob Zadek: And have a wonderful rest of the Sunday and the same to my audience. I’ll be back again next Sunday. Enjoy the rest of the weekend.