Thursday, November 15, 2012

Immigrants and Welfare

Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore,
Send these, the homeless, tempest- tossed to me;
I lift my lamp beside the golden door.

One possible response to the observation that the U.S. had effectively open immigration for most of its history and it turned out pretty well, one made by a commenter to my previous post, is that the U.S. was not then, and is now, a welfare state. As long as immigrants came to work and produce, they were a net benefit. The problem comes from the risk that poor immigrants today will come in order to live off our welfare system at a level considerably better than they could manage, even with hard work, in the countries they came from.

That is an old argument, one I discussed in my first book some forty years ago. There are a number of possible responses.

The first is the empirical question—is there evidence that immigrants in fact impose net costs on the U.S. tax and spending system? I think the answer is no, although it is not a question I have looked into in any detail. Immigrants tend to be young and healthy, hence impose lower costs than the average of those already here. And some of our governmental costs, most notably national defense and interest on the national debt, are independent of population, so easier to pay the more people are helping to pay them.

A possible response is that current legal immigrants are better educated and richer than those who would come if restrictions on immigration were relaxed or eliminated, so not a relevant sample. That does not apply to illegal immigrants, however. A possible argument there is that the very fact they are illegal makes them less able to take advantage of government services. Most obviously, an illegal immigrant who provides his employer with a bogus social security number is paying money into the Social Security fund and is never going to be able to collect. Grant them all amnesty, and who knows what will happen?

One might see that as an argument for what a cynic would view as current policy—let them come and keep them illegal. A more attractive alternative, in my view, would be to let them come, make them legal, but have restrictions on what benefits immigrants who are not yet citizens are entitled to. Immigrants pay taxes, direct and indirect, so it should not require a very sharp reduction in access to government services to keep them from being a net drain. It might not require any at all—that is an empirical question.

A more extreme version, which I proposed a long time ago, would be to provide new immigrants with none of the services that go to recognizable individuals, as opposed to services such as the existence of roads or national defense—no welfare, no public schooling, no unemployment compensation. Of course, to be fair, the immigrants should also be exempt from whatever part of taxes pays for those services—raising the possibility that some well off citizens might conclude that their current benefits were not worth what they cost, and alter their status accordingly.

Unless we want to maintain a permanent class of non-citizen residents corresponding to the metics of classical Athens, non-citizen immigrants will eventually receive citizenship, entitling them to all the benefits (and burdens) thereof. But by that time they will have been supporting themselves, and adjusting to their new environment, for long enough so that they should be no more likely to be a burden than anyone else. Perhaps less, given the personal qualities required to choose to make a new life in a new place. Living on welfare might look like a good deal for someone whose only experience is trying to survive in an impoverished third world country, but less so after a decade or so living and working in a first world country at first world wages.

There is one more argument I have offered in the past, one that ought to appeal to libertarians, perhaps to conservatives, but not to some other people. The existence of a welfare state may be an argument against freer immigration. But freer immigration is also an argument against the welfare state. Increases in the level of welfare will have some tendency to pull in poor immigrants, increasing the cost of those increases to those already here, which should make increases less politically popular. That is an argument for freer immigration from the point of view of those opposed to the welfare state.

It is also an argument against freer immigration for those in favor of a welfare state, which suggests that perhaps it ought to be the Democrats, not the Republicans, opposing any reduction in current immigration restrictions. 

Having let myself slide back into a very old argument, I will show my true colors by quoting the end of the chapter on immigration from my first book:
It is a shame that the argument must be put in terms of the economic or psychological 'interest' of the present generation of Americans. It is simpler than that. There are people, probably many millions, who would like to come here, live here, work here, raise their children here, die here. There are people who would like to become Americans, as our parents and grandparents did.
If we want to be honest, we can ship the Statue of Liberty back to France or replace the outdated verse with new lines, 'America the closed preserve/That dirty foreigners don't deserve.' Or we can open the gates again.
     Welcome, Welcome, Emigrante
     To my country welcome home.
     (The Machinery of Freedom, Chapter 14)


Max said...

I can't resist pointing out again that the statue of liberty's *pedestal* (the part with the words) was made in America. France had nothing to do with it!

David Friedman said...


Point taken.

But the words on the pedestal were supposed to describe what the statue symbolized. "I lift my lamp beside the golden door."

Now mostly shut.

Anonymous said...

The words on the SOL are a nice greeting for a hospital or Holiday Inn. It's worth noting that immigrants a century ago were from various countries and ethnic groups, rather than from primarily the 13th richest and second fattest country on Earth. If the presence of a Mexican is good for a country, why should the U.S. continue to take them from those less well off?

Anonymous said...

If you don't talk about the economic or psychological 'interest', then the only other place for the discussion to go is to try to figure out why Republicans don't like Mexicans and why Democrats don't like non-union labor, neither of which is a pleasant topic for those respective parties.

Chris H said...

All the things you suggest are excellent ways to deal with any problem that might arise from open immigration with a welfare state (I particularly like the "no benefits, but not taxes that support benefits" idea). Though I will note that deciding that one will only look at this problem from the level of the national border seems arbitrary.

After all, if we worry about people from poor countries immigrating to take advantage of generous welfare, why not worry about, say, people from Mississippi moving to Connecticut to bilk them? Mississippi is significantly poorer even accounting for cost of living difference. The populace is less educated and thus likely lower skill in Mississippi than Connecticut. This should be especially worrisome for those who are concerned about the solvency of welfare given Connecticut's relatively generous benefits.

Now to be fair, the difference in wealth and skills between Mississippi and Connecticut is less than the difference between, say, Haiti and the United States. But even ignoring all the potential keyhole solutions like limiting benefits to immigrants, if welfare solvency is the decisive concern for a person, then they should be in favor of completely opening the border with every country that is close to as rich to the United States. Say every country with a per capita GDP 70% of that of the US (the gap between the poorest US state and the richest) which would mean at least open borders with between 25-28 other countries around the world. Consistency would demand either that or making a border wall around Connecticut to make sure Mississippi people don't get in.

Simon said...

Resistance to immigration is puzzling to the economic rationalist, since migration is (or would be, in the absence of the welfare state) economically rational with people moving to where they are more productive.

But consider that people value not just wealth but also relative status of which there is arguably a fixed amount in a society. If we look at the combination of wealth + relative status for the existing, adult, voting population of a country (we don't consider their children nor the immigrants), could resistance to immigration actually be rational? An immigrant who fails may cost you money, one who succeeds will make you jealous.

Then again, I remember from The Machinery of Freedom that David Friedman makes the contrary argument: immigrants starting at the bottom could create a situation where natives get more status as basic acculturation becomes a more valuable skill.

lelnet said...

"There are people, probably many millions, who would like to come here, live here, work here, raise their children here, die here. There are people who would like to become Americans, as our parents and grandparents did."

A big part of the problem is that this is not, as you appear to be asserting, merely two different ways of describing a single group. It is a pair of descriptions for two _different_ groups, although obviously the latter is a subset of the former.

For a great many opponents of mass immigration, the issue is (while arguably economic in fundamental nature, as it concerns human behavior in response to incentives and constraints) not readily reducible to financial measurement.

The concern, rather, is not over immigrants who wish to be Americans, but over those who merely wish to reside here (and eventually vote here), but do so while retaining the cultural attributes that led to their countries of origin being the kind of place they thought worth running away from.

In simpler terms, "if the place you were born was so bad it made you spend all that effort and risk to leave, why are you trying so hard to make America more like it?".

It is worth noting, of course, that this phenomenon is not limited to merely international immigration. Poll Arizona about building an impenetrable wall to keep out the Mexicans, and it's a toss-up which way any given respondent will argue. Poll Arizona about building an impenetrable wall to keep out the _Californians_, and the answer will be so near to unanimous as to make no difference. :)

It's just that building a wall in Arizona to keep out Mexicans is (whether you like the policy or not) permissible by the Constitution, while building one to keep out Californians is indisputably not so.

It can be argued, and I think persuasively, that the law is far too blunt an instrument to rely on for choosing between immigrants who wish to become Americans and immigrants who wish merely to reside within the borders of the United States. I happen to think that the problem is insoluble by means of the statute books, and thus must be either solved by tweaking incentives or else given up as a lost cause. But the incentive problem is an extremely complex one, and not given to simple solutions.

David Friedman said...

lelnet wants to distinguish between immigrants who want to become Americans and those who want to bring the environment they are leaving with them. I'm not sure how he would apply those categories to past immigrants. Is spaghetti part of our culture or theirs? Stir fry? Tacos?

I grew up in Chicago, a city much of which is a patchwork of ethnic districts, convenient for those who prefer their ethnic restaurants to be real and inexpensive. Despite which, the immigration that produced that patchwork seems to have worked pretty well.

lelnet said...

Trouble is, we're not talking about spaghetti, stir-fry, and tacos. We're talking about things more like socialism, rigid caste structures, and Sharia.

Your taste for Tom Kha Goong needn't _ever_ impair my access to roast beef sandwiches. They can coexist in peace indefinitely, and the more adventurous scions of the traditions they came from can (if they choose) acquire experience with and desire for one another's respective contributions, and everyone end up wealthier for it. America is _spectacularly_ good at making that happen.

But there remain elements of other cultures that must necessarily, by simple logic, struggle existentially against the culture we already have. They _cannot_ merely be added to it, as previously-exotic foodstuffs can, but rather, once imported, must eventually either destroy what preceded them or else themselves be destroyed.

This is not, of course, to say that _people_ coming from cultures possessing such elements cannot be integrated into American society. Every previous generation has managed it, after all, despite _all_ having had at least one such impediment. But to do so, they must _actually integrate_, rather than merely relocating and setting up a branch office of the Old Country.

Chinatown may be populated with people of Chinese descent selling food with Chinese ingredients and goods of Chinese origin, but it is not actually very much like China, and never has been.

Again, this is a problem for which any direct solution is almost certainly too complex to be attempted by law. But it may aid your understanding of the fight over legal decisions, to recognize that the political combatants' expressed statutory preferences (blunt as statutes by nature must be) are often merely proxies for more subtle and hence complex issues pertaining to the differential compatibility of cultures.

David Friedman said...


I don't see why the desire of Muslim immigrants to have contracts with each other judged under Sharia is any more of a problem than Jewish immigrants having disputes settled under Talmudic law or Amish settling their disputes under their institutions--both of which have long happened. On the whole, I would expect immigrants from socialist countries to be rather less friendly to socialism than immigrants from, say, France.

I haven't noticed the Volokh brothers, for instance, arguing for more socialism.

So I don't see why you think immigrants are going to impose the institutions of where they come from on the rest of us.

Simon said...

I think the progressivity of the U.S. federal income tax might be a problem.

Take annual federal spending and divide it by the number of U.S. tax payers. The tax payer that pays exactly this amount will in some sense put in as much as he gets out of the system. The tax payer that pays less could be said to be a negative contributor. Under the current system, a vast majority are negative contributors, and almost every immigrant will be, too. This means that in some sense it will be rational for people already in the U.S. to resist immigration. The solution to this would be a flat income tax.

lelnet said...

Well, therein lies the problem. How do you tell which members of the immigrant population are here to escape the evils of their native cultures (like the Volokhs) and which are merely here to escape the _consequences_ of those evils, while recreating the evils themselves (like the apparent majority of the Muslim population of Dearborn, or of Mexican-dominated communities near the border)?

You appear to think that I concur with the views of hardcore close-the-border types. I do not. America is most definitely improved by the addition of people who have seen _and recognized_ the consequences of errors contemplated by our present population and long-since implemented by the populations they came from. And as making the distinction between the two types is almost certainly impossible for a government bureaucracy, I say our bureaucracies should not attempt to do so, for they'll only make the situation worse.

We need to attack the _incentives_. A good first step, in the case of immigration from Mexico, would be to greatly _ease_ the process of immigrating to the United States _legally_, as we've seen that when the hard-working and otherwise law-abiding folks (the ones we _want_) are made into de jure criminals by the immigration statutes, they (naturally) become less willing to cooperate with American law enforcement in its efforts to root out and punish those among the immigrant population who are not merely here without government permission, but are engaged in ongoing patterns of crimes against persons and property.

Fix the incentives, and that problem will greatly lessen. (It's a lot harder to get from Havana to Miami than it is to get from Juarez to El Paso. Why do the Miami Cubans have so much less of a crime problem than the El Paso Mexicans? Mightn't it have something to do with the fact that the ones among them who aren't committing crimes can, if they see one of their neighbors going bad, report him to the authorities without having to fear for their own status?)

But how to get from here to there without creating tremendous moral hazard problems? I don't know. I'm not sure anybody does. It's easy to pontificate about how to craft a better policy than we had in the 19th century, or the 1920s or 1930s, based on the conditions that prevailed then. Crafting a policy that improves on the conditions today, without creating too many negative side effects? Much harder.

We live under an immigration regime that seems almost purpose-built to produce negative outcomes for society. There is evidence that some of the more cynical elements of our society have manipulated that policy for their own private gain (whether electoral advantage for Democrat politicians who benefit from vote fraud, or commercial advantage from Republican businessmen who benefit from cheap and exploitable laborers who can't complain without fear of deportation) at the expense of society at large.

I do not think that the restrictionists are right about the correct course for the future. But I can see their point, and while I think they are wrong, I recognize that they are neither crazy nor ill-motivated.

TheVidra said...

But what is wrong with the status quo? A sort of "don't ask don't tell" policy, where illegal immigration is liberally tolerated? Yes, there are sometimes arbitrary deportations (sometimes for electoral gain, but mostly to instill obedience and respect for authority among the illegal communities) but from what I've seen, illegal immigration is out in the open. It seems to work ok, the police in the DC suburbs of Virginia for example has informed the illegals (everyone knows who they are) that they can freely come to the precinct to report any crime, without having to show documentation. They have cars, driver's licenses, jobs, many are entrepreneurs (from selling tacos to full-fledged contracting companies) and generally contribute to the well-being of the community. The only downside I see to the status quo is that an illegal act is openly condoned by society - chipping away at the rule of law.