Saturday, April 01, 2006

Welfare and Immigration: The Flip Side of the Argument

Voluntary agreements between people now in Mexico and people now in the U.S.—my renting an apartment in California to someone currently living in Mexico, or hiring him to mow my lawn—benefit both parties. Standard economic arguments suggest that although there may be negative effects on third parties, such as someone else who wants the apartment or someone else who wants to cut my lawn, the net effect is positive. The standard arguments for freedom of association, contract, and trade apply to immigration as well.

Opponents of open immigration have an obvious counterargument: not all interactions are voluntary. A Mexican who comes here in order to mow lawns benefits us as well as himself. One who comes to collect welfare benefits himself, but at our cost. A common conclusion is that free immigration may be desirable in a completely laissez-faire system, even in the relatively laissez-faire America of a hundred years ago, but not in a modern mixed economy.

The strength of this argument is in part an empirical question. Immigrants may get things they do not pay for, but they may also pay for things they do not get. On past evidence immigrants tend to be predominantly young adults, a long way from collecting Social Security or Medicare. The question is a complicated one and I am far from sure that a correct answer would support the argument against immigration, but that is not the point I want to explore in this post.

What I want to explore instead is the flip side of the argument. The existence of a welfare state may indeed make open immigration less attractive. But the existence of open immigration also makes a welfare state less attractive—which, for those who disapprove of a welfare state, is an additional argument in favor of open immigration.

Consider the analogous argument applied intrastate. Supporters of higher levels of welfare generally want them to be provided at the federal level—for a good reason. If welfare is provided and paid for by the states, high levels of income redistribution tend to pull poor people into, and drive taxpayers out of, states that provide them. That provides a potent political incentive to hold down redistribution. This is one example of a more general principle: The more mobile taxpayers are, the more governments, like businesses in a competitive market, have to provide them value for their money, and thus the less able they are to tax A in order to buy the votes of B.

The same argument applies across national borders.

26 Comments:

At 9:26 PM, April 01, 2006, Anonymous Anonymous said...

"But the existence of open immigration also makes a welfare state less attractive—which, for those who disapprove of a welfare state, is an additional argument in favor of open immigration."

Less attractive to whom? Maybe you mean less practical?

Obviously there's some upper limit to social spending. Equally obvious, we're far from that limit. So this seems to be a "worse is better" argument.

On a tangent, I saw George W. Bush explaining his preferred immigration policy as letting people in who are willing to "do jobs that Americans don't want to do". Never mind the bad economics. Bush's ideal immigrant has no skills, no education, no ambition, and a low IQ. What a way to build a country.

 
At 9:46 PM, April 01, 2006, Anonymous Anonymous said...

Open borders enlarge the constituency for the welfare state. The longer it persists the lower the probability that the welfare state will be rolled back, especially when we have courts that ruled California's proposition 184 (which denied benefits to illegals) unconstitional and did the same for laws that would deny benefits to newcomers from other states for a year in Saenz v. Roe. The children of immigrants are not assimilating into the classical-liberal mold that characterized America (at least relative to most other places) for most of its history, they are taking on the values of the most dysfunctional section of society: the ghettoe. The illegitimacy rate of second & third generation immigrants is higher than the first generation. Family values may be important to them, but that apparently isn't enough to remove dependency on the government. That's why their votes go predominately to Democrats no matter how much Bush attempts to pander to them.

In summary: the likelihood of voters pushing to reduce immigration is much higher than their likelihood to shrink the welfare state and the longer mass immigration persists the more dependents (and supporters) on the welfare state there will be. When/if the welfare state collapses, I see descent into the dysfunctional political systems of Latin America as more likely than a revival of the the spirit of (17)76.

 
At 6:58 AM, April 02, 2006, Anonymous albatross said...

It becomes harder to sustain a welfare state in the presence of lots of poor immigrants, but there's also much more visible povery, since those immigrants arrive poor and stay poorer than the population (though their kids will probably do better). It's not clear to me which direction that tips things.

Also, it's pretty likely that we'll get distorting laws intended to push poor immigrants out of peoples' neighborhoods and towns. For example, strict laws on how many unrelated people can live in a house, higher minimum standards on housing, urban renewal to bulldoze poor neighborhoods and replace them with more expensive ones, all allow a specific community to rid itself of some of the spillover costs of having poor immigrants here, without spending a lot of money they didn't already want to spend.

 
At 7:02 AM, April 02, 2006, Anonymous albatross said...

A lot of the argument for restricting immigration comes from people who basically want to engineer the country to look a certain way--with higher value, more educated, higher IQ people, with specific values and such. The irony is that most of that argument also comes from people who almost always disagree with the desire to use the power of government to reengineer society in other areas. Once we've decided to manage immigration on the basis of engineering a society in the direction we want, how do we argue not to do the same thing in other areas--say, tax policy, trade barriers, welfare, etc.?

 
At 7:53 AM, April 02, 2006, Blogger SheetWise said...

What a way to spread the American dream -- the entitlement mentality we've adopted guarantees that there will never be a 51st state.

 
At 3:18 PM, April 02, 2006, Anonymous Anonymous said...

YOU'VE BEEN HIT BY THE

|^^^^^^^^^^^^^|
|Truck full of Mexicans| '|""";.., ___.
|_..._...______====|= _|__|..., ] |
"(@ )'(@ )""""*|(@ )(@ )*****(@

Sorry they have no insurance )-=

 
At 5:02 PM, April 02, 2006, Blogger montestruc said...

Anonymous said...
---quote--
"But the existence of open immigration also makes a welfare state less attractive—which, for those who disapprove of a welfare state, is an additional argument in favor of open immigration."

Less attractive to whom? Maybe you mean less practical?
---end quote---

It seems obvious to me that he meant that it is less attractive to the people paying the bills -- the taxpayers.

-------resume quote--

Obviously there's some upper limit to social spending. Equally obvious, we're far from that limit. So this seems to be a "worse is better" argument.
-------end quote

Only for your definition of "worse". Also for your definition of "limit".

Why anyone should think that poor people who are willing to work and want to work on one side of a border are less deserving that poor people who for the most part are much less willing to work and do not want to work on the other, is beyond me.

 
At 5:32 PM, April 02, 2006, Blogger FuturePundit said...

Immigration of populations who do poorly even in 2nd and 3rd generations (and Hispanics are one such group) leads to more welfare because they vote for it.

 
At 7:03 PM, April 02, 2006, Blogger SheetWise said...

futurepundit -

I don't believe the 3rd generation Hispanic/American population is distinguishable from "white" America.

I don't have it at hand -- but a well documented analysis was written by Thomas Sowell in the 80's (Civil Rights - Rhetoric or Reality). Hispanics blended in the 3rd generation.

 
At 6:03 PM, April 03, 2006, Blogger FuturePundit said...

sheetwise,

In fact Hispanics do not blend. Samuel Huntington reports that even into the fourth generation Hispanics have far worse educational attainments than whites.

 
At 8:53 PM, April 03, 2006, Blogger SheetWise said...

futurepundit -

Good article.
I was responding to your comment "populations who do poorly". While education correlates with opportunity (and sometimes even earnings) -- my recollection is that Sowell was looking at earnings (searching for indications of discrimination).

Economically, Hispanics do quite well -- once Spanish becomes their second language. ;)

 
At 12:07 PM, April 04, 2006, Blogger Leonard said...

I've made this same argument myself, at least to try to get libertarians to think about it. But I think there is a pretty obvious refutation.

Consider our current situation, with a welfare state and a relatively small voting block of immigrants, a large majority of whom vote Democratic (that is, they correctly recognize which party will direct to them the most redistributed wealth).

If we open the borders as libertarian moral theory suggests is the right thing to do, then some vast proportion of the world population is likely to want to come here. Absent restriction, I see little reason why 500 million up to a billion people would not come. After all, as an old prof of mine put it, "we got the money". Capital. We have it, they don't, but they can benefit from it just by moving here.

So what happens when 500 million third-worlders come here and become citizens? Does this strengthen the welfare state or not? Depends on when you look. In the short run, clearly the welfare state is strengthened. 3rd worlders bring with them third world memes. The GOP becomes the minority white party. The Democrats are wildly successful, and step up the redistribution from the rich (i.e., white) minority to the new citizens.

But when have we ever seen, in all of world history, a welfare state voluntarily and freely choose to radically reduce itself? We have not. Scalebacks in socialism have happened for only a few reasons I know of. One is that the state in question was militarily vanquished, which is how national socialism died. The second endpoint is because the wealth ran out, and the state went bankrupt. Even then, it seems to require that a full human lifetime of muddling before there is any real change, so that the old guard literally die off. This is the Soviet pattern, also applicable in less drastic cases, i.e. New Zealand.

In the long run, socialism is unstable and unworkable, so the new free-immigration America would get back to less socialism, because the USA would go bankrupt after destroying the economy. (And as America goes, so would go the world economy too, most likely.) Then we'd languish for a generation in socialist doldrums like the Soviets did. Finally, economic freedom would happen as the central state collapsed.

Is this worth it? I think the destruction of our economy and collapse of the US government is a pretty big price to pay to get back to a moral immigration policy.

 
At 2:51 AM, April 05, 2006, Anonymous Anonymous said...

"The GOP becomes the minority white party. The Democrats are wildly successful, and step up the redistribution from the rich (i.e., white) minority to the new citizens."

It occurs to me that South Africa is a test case along these lines. How have things changed since the transition to majority (black) rule? In particular, is welfare spending up or down? The logic of David's argument suggests it should go down.

 
At 5:55 AM, April 05, 2006, Blogger Marco said...

"Bush's ideal immigrant has no skills, no education, no ambition, and a low IQ. What a way to build a country."

Most immigrants to the US, including the ones from Europe in the 18th, 19th and early 20th century, used to fit in the above description. Yet they seem to have done rather well.

 
At 9:47 AM, April 05, 2006, Anonymous Peter Bessman said...

There's cultural issues as well. A lot of the illegals don't want to come to America --- rather, they want America to come to Mexico. This strikes me as an eminently horrible proposition, but take a look at the rallies sometime. Not pretty.

Historically, there have been Anarchist nations --- but very few, and they are all dead now (save for Somalia --- we'll see where that goes). Inductive/deductive rigor breaks down at the borders (heh), but I wager there's something about national defense that grants a statist society better survival characterists.

America is far from perfect, but if there was a better alternative, we'd be there. And it's a damn sight better than Mexico. Tactical realities mandate taking the border seriously.

Something we would do well to consider is that liberty is an economically advantageous proposition, and one we would expect to generally win in the long run. But whether a situation is an economic one or not is an empirical observation. The world is not generally libertarian yet, even though that is the current best economic model available. This could mean that we simply are not far enough into the long run yet to reach the libertarian end game. Or it could mean that, in fact, the situation is not an economic one --- or at least not completely so. I personally cannot think of a way to tell which proposition is correct --- therefore, I tread carefully when it comes to eliminating state mechanisms at every and any opportunity.

 
At 6:57 PM, April 05, 2006, Anonymous Anonymous said...

And what of the negative externalities of the criminal justice system costs to deal with underemployed young black men that are displaced by the Mexican migrants?

 
At 4:44 AM, April 06, 2006, Blogger Marco said...

I am not really sure what is meant by libertarianism and anarcho capitalism, since each supporter seems to have a different definition of both, and even self declared anarcho capitalists seem to envisage some kind of government, although they don't call it that.
Personally I am in favour of small governments, i.e. moving as much power as possible from national to local governments (towns, counties, boroughs, etc). The best thing would be for residents to have as much decision power (number of votes) as they "invest" in the government itself, by paying taxes to it. Those who pay no taxes would have no votes. This, incidentally, is similar to the system which existed in most developed countries before the introduction of democracy. People would be free to move into the territories controlled by other governments which would accept them; this would create a sort of "social arbitrage".
Opening the gates to immigrants on the national level would be a disaster. Millions of people from the world's poorest countries would swarm into North America and Europe, simply because it's much better to be dirt poor on the streets of Milan, Paris, London or New York than it is in Monrovia, Freetown or Kinshasa. The flow would presumably continue until this was no longer true. On the other hand if immigration was controlled by the local governments, each town or region could decide how and when to admit immigrants. Incidentally, I believe immigration into the US used to be regulated at state level until some time late in the 19th century.

anonymous: I don't believe there are many black people working in the fields... I don't think there are many (or indeed any) black Americans who would be willing to work there, but a great number of Mexican workers would probably refuse to work with them.

 
At 12:43 PM, April 06, 2006, Blogger markm said...

'"Bush's ideal immigrant has no skills, no education, no ambition, and a low IQ. What a way to build a country."

Most immigrants to the US, including the ones from Europe in the 18th, 19th and early 20th century, used to fit in the above description. Yet they seem to have done rather well.'

Marco: they fit part of the description. "No ambition" fit none of them, and a good many of them also had skills or brains that their home country didn't give them a chance to use. Those without ambition stayed in Europe.

OTOH, I doubt that "no ambition" fits many Mexican immigrants, either - those I've seen at work were hard workers, although their highest ambition might be to see their kids running their own lawn service business rather than being doctors. OTOH, if they get here, things don't work out right away, but welfare picks up the slant, they might well learn from this that ambition, skills, and hard work are unneeded. LBJ's "Great Society" has passed this message to three generations of nativeborn losers, why should Mexicans be exempt?

 
At 9:42 PM, April 06, 2006, Blogger montestruc said...

"FuturePundit" said...
Immigration of populations who do poorly even in 2nd and 3rd generations (and Hispanics are one such group) leads to more welfare because they vote for it.
------end quote

Well I don't. Please pardon me but I think your statistics are bunk.

My great-grandmother fled Mexico during the early part of the Mexican Revolution, her husband -- an American mining engineer -- had disappeared. Many years later we think we know that he was killed in the revolution, and dumped in a mass grave based on knowing who he worked for and where he was working, and some written histories of the Revolution. My great-grandmother lived in the USA for most of the years of her life after that and either supported herself and child, or was supported by family when old, she never learned to speak English by the way, and always called it “barking” even as she encouraged her grandchildren and great-grandchildren to learn to speak English.

My grandmother had four children in the USA in the 1930's and 1940's. All four hold (or held, my father has passed away) degrees, two in engineering, one in criminal justice, and one in education. Two later got master’s degrees if I recall correctly. Of her 9 grandchildren we between us hold at least three degrees in engineering, at least one law degree, at least one MBA, and I think several other degrees one of which is a criminal justice degree, and I am not keeping very close track of some of my cousins. None of us are on any form of public assistance as far as I know, unless you are going to count disabled veteran’s benefits for a decorated disabled veteran, and that would be deeply offensive IMHO. That is just my family.

The company I work for employs around 150 engineers in the building I work in. By my observation more than a third of the engineers that work there who are not immigrants (most of the immigrants are South or East Asians, immigrants are well over half the crew) are Hispanic. Now you might not think that all of the Hispanic people I know there are Hispanic, as they many of them do not look “Mexican”, but they are Hispanic, and I think that is a large part of the problem.


I think that your statistics are based on people who “look” Hispanic, and/or cannot speak English well, or who are Hispanic and have legal problems, or who work in areas or businesses you associate with Hispanic people, and so your statistics are I think biased against well-assimilated Americans of Mexican or other Hispanic ancestry.

 
At 12:33 AM, April 07, 2006, Blogger David Friedman said...

Marco writes:

"Incidentally, I believe immigration into the US used to be regulated at state level until some time late in the 19th century."

I believe the only significant restriction on immigration, prior to the 1920's, was on the immigration of asians. So far as I know that was entirely at the national level, although California had various legal restrictions on what Chinese could do in the state, possibly intended to discourage immigration.

Aside from that, anyone who could get here was allowed in, unless he had obvious symptoms of a contagious disease or the like.

One of the things I find odd about the current discussion is the idea that letting people in is somehow a new idea contrary to America's traditions. The reason there were essentially no illegal immigrants in the 19th century was that there were no restrictions (aside from those on asians) to keep them from being legal immigrants.

 
At 3:41 AM, April 07, 2006, Blogger Marco said...

markm wrote:

"Marco: they fit part of the description. "No ambition" fit none of them, and a good many of them also had skills or brains that their home country didn't give them a chance to use. Those without ambition stayed in Europe."

From this point of view most immigrants are highly ambitious (even though their ambition is only one to have a decent life) otherwise they would have stayed at home. Most Irish, Italian, etc immigrants also used to fit into this description. I don't think they were stupid, but I suspect they would have done very badly on IQ tests, whatever it is that they measure.
Of course the old immigrants moved into a country in which integration was more difficult and public welfare nonexistent, so their children had to work hard as well. Nowadays the children of immigrants are already 100% American.

 
At 9:50 AM, April 07, 2006, Blogger Anton said...

Seems to me I read somewhere that high-Welfare states like Hawaii had less population growth in some recent period (probably 1990-2000) than low-Welfare states like Nevada.

Why is it obvious to the first commenter that "we're far from that limit"? Obviously we're far from redistributing everything, but is that the only limit?

 
At 11:13 AM, April 07, 2006, Anonymous Peter Bessman said...

One of the things I find odd about the current discussion is the idea that letting people in is somehow a new idea contrary to America's traditions. The reason there were essentially no illegal immigrants in the 19th century was that there were no restrictions (aside from those on asians) to keep them from being legal immigrants.

I think it's important to make a distinction between those who oppose lax immigration policies and those who oppose illegal immigration. The latter simply disapproves of large-scale lawbreaking, which is arguably a bad thing, but also generally an indicator of law that isn't worth having. I think we can all agree that a law which isn't enforced is pointless at best, so I vote against amnesty for illegals, but I also vote for a great relaxation of immigration controls.

The more confusing terrain is occupied by those who oppose relaxation of immigration restrictions. The motives for this are quite variegated. My own assessment is that a tiny sliver is simply racist, and what's left is split between those who see lax immigration as a security threat and those who cling to misguided economics.

Those who oppose open immigration because it is a security threat forget, as you pointed out, that there are alternative ways to get people into this country beyond immigration. And the people who are afraid that immigrants will make us economically worse off simply don't understand economics.

Things get even more complex because some people (such as myself) advocate taking our borders seriously to prevent the infiltration of non-people resources --- since enhanced border security is required to clamp down on any sort of resource migration, a lot of issues get lumped together which ought not to. I personally support open immigration, but I oppose open nuclear weapon migration --- making my opinion known and comprehensible has proven surprisingly difficult.

So, having said all that... in the context of people opposing open immigration, I also find it quite puzzling that the obvious historical precedent is ignored. Stranger still, I can think of at least one very good reason to oppose granting citizenship to everyone who comes, and that is because we have a welfare state --- as expenses rise, so does my tax rate, and that [cartman]pisses me off[/cartman] --- but that discussion only seems to arise in libertarian circles, oddly enough (or perhaps not).

If it seems like I'm maundering, it's because I am --- this post is a bit of an attempt on my part to get my thoughts on the matter to congeal.

Now, to address your original point:

What I want to explore instead is the flip side of the argument. The existence of a welfare state may indeed make open immigration less attractive. But the existence of open immigration also makes a welfare state less attractive—which, for those who disapprove of a welfare state, is an additional argument in favor of open immigration.

Posit that open immigration means citizenship for anybody who can get here. Given the greater prosperity of our nation relative to much of the world, in addition to government welfare programs, we can expect our ranks to swell with immigrants. Since people will only come to this country if it can make them richer, we can assume that they will be poor by our standards upon entry. Because of this, we can expect the tax burden of the welfare payers to increase in order to support the influx of welfare payees.

At some point, the amount of money lost in taxes will be more than the sense of righteousness that supporting a welfare program provides. The ultimate question, then, is what we can expect that level of taxation to be.

I cannot think of a way to answer that question deductively, but I propose looking at other nations to see what level of taxation is tolerated by the citizenry. Using this approach, a cursory inspection of Europe reveals that the answer is, "quite high, and getting higher." Assuming American people aren't substantially different from European people, it stands to reason that we will allow our taxation levels to reach that of the Europeans.

Personally speaking, I find that proposition to be not at all enticing. I would rather end our welfare programs and restrict our methods of taxation, then open up the borders and hope that the flow of immigrants (and other factors) provide enough inertia against the reinstatement of a New Deal.

 
At 11:12 AM, April 29, 2006, Blogger Inheriting Syria said...

I think that the poor immigrants that come to America give more power to the poor Americans, so for that reason I support the immigrants that are NOT convicted felons. I say jail the immigrants that are felons and those that hire those felons.

Most of all I say, “Power to the poor.”

Google Me if you like:
Carl G. Mueller, Nam 68
Big Bear Lake, CA 92315

Poor
o
Will
e
Rule

 
At 6:50 AM, January 21, 2009, Blogger wow power leveling said...

This comment has been removed by a blog administrator.

 
At 10:55 AM, August 05, 2009, Anonymous BobW said...

I know this is three years late.

I would like to point out that in previous periods of massive immigration we did not have payroll tax withholding and associated and other compliance costs. These costs raise the cost of labor in the formal economy, and thereby enlarge the informal economy.

A citizen cannot easily live in the informal economy; we are too taxed and tracked and checked. This gives the illegal immigrant an unfair price advantage over the citizen.

 

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