Tuesday, September 08, 2015

Immigration, Welfare and the EU

The strongest argument against free immigration, from the standpoint of supporters of the free market, is that immigrants from poor countries may come not in order to work but in order to take advantage of a rich country's welfare system. Seen from one side it is an argument against free migration, seen from the other an argument against a welfare system. The easier it is for poor people to come to take advantage of welfare, the less attractive redistribution looks to the taxpayers paying for it, hence the less generous the system is likely to be. That may explain why levels of redistribution are generally lower in the U.S., where welfare was traditionally handled at the state level and intrastate migration was free, than in Europe, where welfare was handled at the national level and interstate migration was restricted.

Was. Within the E.U., there is now free migration. That puts pressure on national welfare systems either to reduce the level of transfers or raise redistribution to the supranational level. That pressure was limited as long as all E.U. members were relatively wealthy countries, became greater with the admission of poorer members from eastern Europe.

It is now greater still as the willingness of some European states to accept refugees and treat them generously, combined with conflicts that produce large numbers of actual refugees while making it difficult to distinguish them from voluntary migrants, is creating a flood tide of would-be residents on Europe's southern and eastern borders

One way in which the E.U. might respond is by restricting immigration. That will be difficult when many of the would-be immigrants are fleeing  real dangers, hence natural objects of sympathy. How do you distinguish real refugees from migrants seeking to take advantage of generous transfers (330 € monthly, accommodation, language courses and so on during the six months that it takes Germany to decide whether or not someone qualifies for asylum, according to a comment on a recent post here)? And immigration restriction is made more difficult by the fact that border control is done at the national level. A country with low levels of redistribution can leave its border open in the expectation that most new arrivals will promptly depart for richer fields.

An alternative is to offer asylum on terms sufficiently unattractive so that only those fleeing real dangers will be inclined to take them—no welfare payments for five years, the current Czech policy for non-asylum migrants. That is the immigration policy that I recommended for the U.S., along with open borders, more than forty years ago in the first edition of The Machinery of Freedom.

Either policy might solve the immediate problem but  still leave a situation where rich E.U. nations with generous welfare policies can expect to attract poor people from poorer parts of the E.U.—who, under current law, have the same rights as existing residents. It will be interesting to see whether the result is to shrink the European welfare states or to shift redistribution one level up, converting the E.U. into something a little closer to a United Statues of Europe.

For those in favor of free immigration and opposed to redistribution, the optimum solution, within the E.U. and in the world more generally, is easy. Arguably, the same solution should be optimal for those who support redistribution for egalitarian motives. Open borders plus the abolition of transfer payments might increase inequality in the U.S. or Germany but would surely reduce inequality on a global scale, the poor of India and Egypt, who would benefit, being much poorer than the poor of the U.S. or Germany.


At 5:53 PM, September 08, 2015, Anonymous Douglas Knight said...

I believe that the Czech policy is typical of EU states.

At 9:56 PM, September 08, 2015, Blogger Xerographica said...

"United Statues of Europe"... a union for statues? Those darn Europeans exploiting their statues. heh. Sorry... for some reason I enjoyed the idea of a union for statues. Their number one grievance? Bird poop?

I'm pretty sure that the result wouldn't be to shrink European welfare states. I think that in nearly every situation people on the left will simply argue that welfare is being undersupplied. The liberals put out a sign that says "free lunch"... and when the line for free lunches grows longer... the liberals point at the length of the line in order to justify providing more free lunches. "Look! The supply of private welfare is failing to meet all this demand!"

Exhibit A: The Voluntarism Fantasy by Mike Konczal

My reply... The Reality of Compulsory Taxation. The best economic argument for taxation is the free-rider problem...which is also the best economic argument against democracy. Here's a more recent version... Ryan Cooper vs Economics.

Of course, as I explained in that entry, this line of attack isn't available to people who don't believe that the free-rider problem justifies taxation. Which is super unfortunate because I'm sure that you could do a lot more damage wielding this powerful weapon than I could!

At 10:57 PM, September 08, 2015, Blogger Jonathan said...

It will be interesting to see what happens. I think the idea of a United States of Europe is unattractive to most ordinary Europeans, many of whom are more interested in splitting up than merging with other countries. People don't like being governed by faraway foreigners -- and Europeans still regard most other Europeans as foreigners (often speaking foreign languages).

At 12:24 AM, September 09, 2015, Blogger Jonathan said...

Try to imagine whether the United States of America could have come together or stayed together if they all spoke different languages...

At 10:22 AM, September 09, 2015, Blogger jimbino said...

At least the new immigrants come potty trained, literate and with some education and skills. The greatest beneficiaries of the USSA welfare state are the breeders and their brood, on whom we spend a fortune for public-school mis-education, food and health care just to bring them to the point where they might be capable of contributing to society.

As a childfree taxpayer, I give a green card to an immigrant before I'd give a license to an american breeder to pop out yet another burdensome kid.

At 12:10 PM, September 09, 2015, Blogger Tibor said...

Douglas Knight: I am not sure about this. For example, Germany does not even have a immigration law and its creation is one of the hot topics in Germany these days. Pretty much everyone agrees that the country should have one, nobody can agree on what it should look like.

I do not know much about how this works in countries other than these two, however. I know Denmark has an immigration law that is similar to the Czech one but I would be surprised if Sweden a law like that.

Also, the 5 years are not the only requirement, one also has to have a stable income and a flat in the country. Then one can get a permanent residency which entitles the holder to welfare at the scope of a citizen and voting rights in the municipal elections.

As for the US of E, there are people such as the current EU commission president Juncker or the French president Hollande who would very much like to see something like that. Pretty much all of them are on the left or centre-left. However, even though they may be overrepresented in the European parliament and especially the European commission (which is an unelected body assigned by the governments of the member states, even though it has much more power than the directly elected european parliament), I think to say that they are 10% of the European population is a very generous upper bound, so this superstate is about as likely to come to existence as Switzerland is to join the EU :)

USA is very different form EU in that the country is both culturally, economically and linguistically homogeneous (more or less). EU is none of those things and as Jonathan mentions, there are various groups of people who would even want (to a greater or a lesser degree) to separate from their current countries rather than join something even bigger. In Spain there are the Basque and Catalonians, in Britain there's Scotland and Northern Ireland, Belgium has been on a verge of splitting into two countries for a while. To go to an even more unlikely territory - Bavarians sometimes say "we are Bavarians, not Germans" and the same holds for Moravians in the Czech republic (although I would be very surprised to see either of them form a separate state in the next 50 years). The north of Italy also is not very keen on being together in one country with (and subsidizing) the south (which is economically close to Poland whereas the North is about at the level of Austria).

At 12:33 PM, September 09, 2015, Blogger Tibor said...

Also, I am not sure intra-EU welfare emigration is that big an issue. I also think it is not exactly accurate to say that the welfare rights are exactly the same in the EU. Here is an article from a year ago about this:


It seems the response was to limit welfare to immigrants from the other EU countries rather than to limit welfare in general. Generally speaking, as Europe is a collection of various ethnicities living mostly in nation-states, I think it is (unfortunately) more likely that any problems that mix foreigners and welfare are going to be addressed by limiting immigration rather than limiting welfare. Even in the all-welcoming Germany, the asylum seekers are not allowed to work (as long as I remember it right) while they are waiting for their applications to be processed. This suggests to me that this is also due to some level of fear of immigration, because otherwise it makes little sense - it would help the people to assimilate to the society as well as decrease the burden of the state on the welfare payments. On the other hand, with the newly (this year) introduced minimum wage of almost 10 USD an hour, a lot of the people who come, a sizeable minority of which are even illiterate, would have a hard time to find a job anyway.

At 9:54 PM, September 09, 2015, Blogger Roger said...

No, the strongest argument against free immigration is that the character of a nation will be destroyed when it is flooded by immigrants of a different culture.

At 10:47 PM, September 09, 2015, Blogger Jonathan said...

Is any nation in danger of being "flooded" by immigrants?

I suppose the original inhabitants of the Americas could reasonably complain that they've been flooded by immigrants of a different culture. But that happened at least partly because most of them were wiped out by disease.

At 3:24 AM, September 10, 2015, Blogger Tibor said...

Roger: It is certainly probably the most common argument against free immigration but also one of the weakest in my opinion. Even if 8 million people from the middle east and Africa came to Germany, they would still represent slightly less than 10% of the population. That is not going to "change the character of a nation". Now, this does not mean the problems are only monetary, if the majority of the newcomers are long-term unemployed and form ghettos and parallel societies, this can cause problems - increase crime, turn some city districts into no-go zones and so on. This seems to have happened in the UK and France, to a lesser extent in Germany. I think the problem is the worst in France which is also the country with probably the least flexible work laws among first world countries (possibly with the exception of Greece). Unfortunately, Germany seems to have introduced a minimum wage law at the worst possible time.

I don't know that much about the US but I think that these problems should be of little concern there. The Mexicans who come to the US do not really come from a very different culture (the difference is about the same as that between Spain and Germany, I would say) and unlike in all of Europe,belonging to the nation is not implicitly associated with a particular ethnicity. Also, given that a lot of latinos live in the US illegally and come to work in the country not to live off social welfare (which, although this probably depends on the state, is also likely not as generous as for example in Germany) making it legal for them (while only granting welfare rights after a period time with a stable income) would only mitigate the dangers of ghettos and parallel societies emerging.

It also does not seem to be the case in the US that the 3rd generation of immigrants still identify themselves more with the country of origin of their grandparents or even cannot speak English. However, this does happen in Europe and I blame above all the inflexible job market and extensive welfare. It is not a perfect metric, but if you look at http://www.heritage.org/index/heatmap and choose labour freedom, it seems at least at a first glance to highly correlate with the ability to assimilate immigrants to the country. Britain seems to be an exception though. That can be caused either by a possible history of low labour freedom in the past decades or by something else still which I missed. Or perhaps the correlation is false, but I would be surprised about that.

At 10:34 AM, September 10, 2015, Blogger Roger said...

Jonathan: If you are arguing that immigration did not work out well for the Aztecs and Incas, then I agree with you.

Tibor: Germany is already 20% non-German, and it has changed the character of Germany. I live in California where white non-hispanics are only about 30% of births, and immigration has changed the character dramatically. And of course Israel is terrified about what Arab immigration would do to it.

At 11:14 AM, September 10, 2015, Blogger Jonathan said...

The Aztecs and Incas didn't experience immigration, they experienced a hostile takeover facilitated by an epidemic of alien diseases.

If you want each country to stay exactly as it is, you're on to a loser: they will change anyway, with or without immigration. As Heraclitus observed, you can't step twice into the same river. Change happens, although some people regret it.

The USA is a nation of immigrants, so receiving more immigrants is just carrying on the national tradition.

The UK is also a nation of immigrants, over a much longer timescale. There can't be much left of the genes of the Ancient Britons by now.

Yes, Israel is a rare example of a country that could disappear entirely if it allowed unrestricted immigration. It's a rather special case.

At 11:52 AM, September 10, 2015, Blogger Roger said...

Sure, countries will change. Some are changing for the better, and some for the worse. Some countries want to have some control over the matter, and that is a strong argument against free immigration.

The USA is not a nation of immigrants, and it has never been. The percentage of foreign-born is much higher than it was a few decades ago, and the highest since about 1890. So the immigration is not just carrying on as before.

The UK and Sweden are being destroyed by immigration, and it would be accelerated if they dropped restrictions.

At 12:25 PM, September 10, 2015, Blogger Jonathan said...

The USA is a nation of immigrants in that the overwhelming majority of its people are descended from foreigners who immigrated since the 17th century. This is not unusual in the Americas, but it's fairly unusual compared with countries on other continents.

I don't know the details, but I guess that Sweden not only permits immigration but encourages it by helping immigrants. If it gave the permission without the assistance, I think fewer people would be willing to move to a country with such long, cold, dark winters.

I was born in the UK and have visited it fairly recently; I saw no signs of imminent destruction.

At 1:32 PM, September 10, 2015, Blogger Roger said...

Jonathan: The USA did not exist until 1789, when it was founded by non-immigrants. It is true that all people on Earth are descended from people who lived somewhere else, if you go back far enuf in time.

Yes, Sweden encourages immigration. No one would go there otherwise. And the UK destruction is not imminent, but taking place over several decades.

At 2:31 PM, September 10, 2015, Blogger Jonathan said...

The original post here seems to be arguing for "open borders plus the abolition of transfer payments", which would probably reduce whatever problem Sweden (and indeed other countries) may have with immigration.

In fact, "No one would go there otherwise" is an exaggeration. I have myself spent more than four years living and working in Sweden. I received no government assistance because I didn't need any: I had a job already arranged before I went there. Such immigrants are not a burden on the host country, although they may disturb local culture a little.

It seems to me that a country may reasonably decide to offer assistance to a limited number of incoming refugees; aside from that, I don't know why it should subsidize voluntary migrants. If they're not capable of looking after themselves, they shouldn't make the trip.

Roger: Whether the USA may or may not be called a "nation of immigrants" depends on your precise interpretation of the phrase. As I interpret it, the description is appropriate; you interpret it more narrowly. So be it. More to the point is that the USA has been receiving significant waves of immigration throughout its history, with some ups and downs. There's nothing new about it. And I see that some people were already seriously worried about it back in the 1850s; there's nothing new about that, either. But the country has survived quite well so far.

At 6:36 AM, September 11, 2015, Anonymous Anonymous said...

I think the argument against immigration is often made on flimsy economic grounds, but only because the real reason - that people don't like people from a different culture coming in and changing things - is not one that can be made anymore without the speaker branding themselves an ignorant racist who nobody ought listen to.

A better way of looking at the borders question in my view is not open-borders versus closed-borders but nationalized borders versus private borders. If the amount of control the government has over who can interact with who in what way is small, then it doesn't matter anywhere near as much who else lives in the nation, because the nation itself isn't too meaningful. One aspect of this is of course welfare, but another - particularly relevant to the culture argument - is anti-discrimination laws. If people are permitted to decline interaction with others for whatever reason they want, even terrible and impermissible reasons like "because they're foreigners", I think there is much less of a reason to care about who else lives in the nation, because you have much more control over whether them living there impacts you or not.

And the great thing is that when you do this, the borders become much more suited to what everyone actually wants. People who don't want to interact with certain cultures don't have to. People who want to live in a great cosmopolitan city with people of all kinds from all over can do so.

So my attempt to sell open borders to a conservative would be "Like many other things, borders are too complicated and too important to leave to government."

At 3:12 PM, September 11, 2015, Blogger Tibor said...

Roger: I am currently doing my PhD in Germany, I've been living in the country for about 2 years now and if the country is changing somehow then I don't think it is caused by the 20% of residents of non-strictly german background (by the way this includes people like me who are in the country only temporarily as well as citizens of mixed german-foreign ancestry). If anything, it seems to me that Europe is more or less following suit with the PC stuff that started in the US a bit earlier. But this has more to do with development within particular political movements on the left than with an increased population of immigrants.

By the way, could you elaborate on how the (recent) immigration changed the character of California? I am honestly interested in particular examples. Typically, it is the conservatives who oppose immigration on cultural grounds, but (and correct me if I am wrong, I might as well be) I would guess a typical catholic hispanic immigrant to California is going to be more conservative (in more or less the same sense that most Republicans are conservative) than a typical non-hispanic white resident of San Francisco.

By the way - slightly unrelated - are there any statistics for whether the Catholics or the protestants are more right wing or left wing in the US? In Germany, which, like the US, has a large number of both Catholics and Protestants, the further you go to the south the more Catholic and less Protestant you get and also more conservative (in both economic and social terms) and less social democratic (or liberal in the US terminology). But my impression is that Catholics are probably not the majority of conservative Republicans in the US, right? Then again, they do not seem to be prevalent on the left either, so I wonder whether one can observe some correlation between denomination and political views in the US like in Germany.

At 10:52 PM, September 12, 2015, Blogger Roger said...

Tibor, Catholics are fairly evenly split between Democrats and Republican, and so are Protestants. The Republican usually get the votes of the evangelical Christians and the Mormons, but these are small compared to the Catholics and Protestants. Non-Christians (Jews, Moslems, atheists, etc) vote overwhelmingly Democrat.

Catholics are certainly not a majority of the Republicans. We have never had a Catholic Republican President, or even a nominee in a long time. Most of the current candidates are not Catholic.

The hispanic Californians are not particularly conservative, and usually vote Democrat.

At 5:27 AM, September 13, 2015, Blogger Tibor said...

Interesting. Then maybe "being more socially conservative" is not an intrinsic Catholic trait, albeit it seems to work (more or less) that way in Europe.

It is true that it is probably more complicated with economic attitudes even in Europe. While the south of Germany also seems to have a more capitalist attitude, already the neighbouring Austria (where the vast majority of religious people are Catholics) is probably more socialist than Germany as a whole and the south of Europe, which is dominated by Catholicism (with the exception of Greece), also seems to be more socialist.

All in all, I like the attitude of the last Anonymous and it seems to me that this probably addresses the concerns of people who are against immigration for cultural reasons.

At 12:52 PM, September 13, 2015, Blogger Tibor said...

So today Germany temporarily (which can be done in case of necessity even under the Schengen rules) reintroduced border control with Austria and is limiting train traffic between the two countries to cope with the massive immigration of asylum seekers. It will be interesting to see how this develops.


Post a Comment

<< Home