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Why open borders won't work
The first issue is to pin down what we mean by open borders.
Land use restrictions are often a more important ""immigration policy" than border control per se. It is not just how many people get in at what cost, but who can afford to live here. This includes zoning laws, restrictions on the number of people allowed to live in an apartment, policies toward "squatters," and rules for the homesteading of public property. So by "open borders" I mean also liberal land use policies; nominally open borders would matter far less if unskilled laborers couldn't also afford to live in the U.S. (Note to anti-immigration types: you are focusing too much on the ease of crossing the border and not enough on the costs of living here. How much the best immigration restrictions involve land use policy or border policy is a curiously underexplored question.)
If both the border and land use were free, markets would be very powerful in organizing mass migration. Consider Hyderabad. Many of the very poor live either at or right next to garbage dumps. They live in tents or ramshackle lean-tos. Their jobs often involve scavenging the garbage dump for potentially useful scraps. Why do they live there? Do they like the short commute? Is it because they love the Indian culture one finds right next to the garbage dump? No, no, and no. They live there because they will put up with almost anything to have a chance of survival.
How many of these people would book passage on a slow ship to Baltimore, with the hope of living in a richer garbage dump? The ship would serve cheap rice and lentils, make them sew garments while sailing, and collect further payment five years after arrival, tagging them with GPS if need be or "monitoring" relatives back home. Or perhaps the Indian government would pay their way.
How about the nine or so million Haitians -- almost all living in extreme poverty -- who face a much shorter and cheaper boat trip?
I can imagine the U.S. staying a high-quality capitalist democracy with some percentage of the population living in garbage dumps and shantytowns. While I think we are underinvesting in shantytowns, the permissible percentage is not very high and almost certainly falls short of fifteen percent. (Btw, there is much complaining about the Mexicans, but in fact we share a long land border with a relatively wealthy third world country; this is rarely appreciated.)
That is why I do not favor unlimited immigration. To the extent that nominally "open borders" would be tolerable, it is because we already impose implicit immigration restrictions through land use policies.
That all said, I will reiterate my view that we could take in many more immigrants than we are doing now, both skilled and unskilled.
Posted by Tyler Cowen on June 8, 2006 at 03:54 AM in Economics | Permalink
Comments
Tyler: Your "definition" of open borders seems confusing. When I advocate open borders, I mean elimination of restrictions on immigration, with all other policies held constant. So that means all private property is still private, squatting on public land is still illegal, existing restrictions on apartment size still exist, etc.
And it is precisely because increased immigration would bid up land prices, rents and wages that open borders would not unleash a "flood." Instead, open borders would be self-equilibrating.
Why isn't what I have described the natural definition of open borders? And given this definition, do you still oppose them?
Posted by: Jeffrey Alan Miron at Jun 8, 2006 5:14:38 AM
So what would go wrong if more than 15% of folks near us lived in shanty towns?
Posted by: Robin Hanson at Jun 8, 2006 9:50:21 AM
Costs of living here?
Get food and clothing either nominally or free from
food pantries and thrift stores, etc., and still
manage to send $20 billion a year back to Mexico,
and approx. another $20 billion overseas.
Posted by: Sandy P. at Jun 8, 2006 10:59:35 AM
I agree with Mr. Miron. "Open Borders" means open borders, and nothing more.
Posted by: Noah Yetter at Jun 8, 2006 12:25:45 PM
If that's you reasoning, the US should at least have open borders with all middle and upper income countries...how many people from Australia and France do you think would come if they couldn't make a decent living? And yet we waste as much time, effort and money processing an immigration application from an Aussie as we do for a Bangladeshi...
Posted by: Dan Hill at Jun 8, 2006 12:29:37 PM
I'm not sure what the argument is. Obviously mass migration all at once would be a problem, but you could temper that by slowly dismantling immigration restrictions, so that by the time borders are truly open there is no mad rush. I think what you need to defend is the idea that mass migration would make the world as a whole worse off. Maybe it would, but that is not immediately obvious. The effects of such a migration depend on how many people would actually come to the US as well as how they would influence society, the economy, and the US role in the world. It would also depend on the effects on the countries of orgin.
Posted by: catquas at Jun 8, 2006 1:25:26 PM
Tyler,
after reading your Slate article I have to ask, why is your answer to NOLA "shantytown"? Why isn't it "housing projects"?
Posted by: Oskar Shapley at Jun 8, 2006 1:46:42 PM
"While I think we are underinvesting in shantytowns, the permissible percentage is not very high and almost certainly falls short of fifteen percent."
What do you mean by "the permissible percentage?" Permissible by whom? If there's an argument against open borders here, it must be hidden inside those words "permissible percentage." But I'm not sure exactly what it is. Given the vast importance of the question for millions of people who are denied a chance to earn a better life by US government coercion, it would be worth spelling out what the argument against open borders really is.
Posted by: Nathan Smith at Jun 8, 2006 2:20:48 PM
Tyler,
Perhaps you can tell me how "free trade" can be expected to work without "free immigration." It seems to me that there's a massive distortion in the global market when business owners can move to find the cheapest sources of labor, but labor owners can't move to find the most lucrative sources of employment. Am I missing something here?
Posted by: Paul Gowder at Jun 8, 2006 3:06:45 PM
Don't even suggest that Baltimore's friendly. Encourage them to set up on the b anks of port GMU.
Posted by: Baltimore at Jun 8, 2006 3:19:59 PM
What libertarians don't get is that lax enforcement of national laws against illegal immigration encourages voters to impose all sorts of land use restrictions at the local level. We've had an experiment with this in California, where Southern California was always more laissez-faire and Northern California was more restrictive and elitist. Northern California pioneered environmentalism in part to keep out low skilled illegal immigrants.
Well, today, most Southern California voters within 50 miles of the ocean agree that those snooty Northern Californians had it right -- extreme NIMBYism is the only viable local political strategy to keep from being overrun by illegal immigrants. So, California has moved to the left politically -- it voted for GOP Presidential candidates 9 times out of 10 from 1952 through 1988, but has gone solidly Democratic in the last four elections.
For more on the political limits of libertarianism, see
http://www.vdare.com/sailer/ca_history.htm
Posted by: Steve Sailer at Jun 8, 2006 4:34:24 PM
One problem with shantytowns is the negative health externalities.
Do you really want lots of TB and plague and other fun things that
are more likely to breed in such places near your cities?
Posted by: Barkley Rosser at Jun 8, 2006 4:46:34 PM
In Sao Paulo, which is blessed with many a shanytown, the rich commute by helicopter because they are so fearful of being kidnapped out of their cars by the denizens of the favelas.
Posted by: Steve Sailer at Jun 8, 2006 6:49:52 PM
Tyler is more brave than your average economist, now isn't he? But don't we need to be more specific than "we could take in many more immigrants than we are doing now," if we intend to shift the debate from the Tancredo-fear mongering arena to a more graceful and growth-oriented territory? If we can afford to double or triple our current admissions, (will Tyler go that far?), shouldn't we say that explicitly and argue for it?
Would tripling produce ANY shanty-towning?...or more of what we see now? ...immigrants crowding into apartments and homes that are in affordable areas?
Can't we (actually they) build lots and lots of those? Even at $4/hr (after taxes and $sent back to the family) the immigrants I work with can easily do better than shantytowns.
Who among us is really most hurt by lack of freedoms, surely few on your street, or in your state. Okay, AlexT and his friends at FDAreview.org will offer some trenchent exceptions. But if you travel you know, we are indeed a very blessed people.
Still, conservative types go melodramatic about freedoms we've lost here, whilst they are usually reluctant to apply the principles of the Declaration of Independence to anyone south of the border at all. The "rights of man" are not much in evidence anymore at the Republican meetings I go to. Instead I hear the fear of Mexicans in every speaker; many of them actually expecting we'll soon be out of drinking water and highways because of immigration!
John Mackey, founder of Whole Foods Markets has an article at: http://www.wholefoods.com/blogs/jm/archives/2006/02/winning_the_bat.html in which he argues that if the forces of classical liberalism don't take back the words "love", "caring", and "compassion" we'll not win the hearts of enough young people to sustain the freedoms we all enjoy.
No issue is more available for this purpose than immigration and the plight of migrant families who formerly could not properly feed their children or supply them with even rudimentary medicines.
Posted by: Dave Meleney at Jun 8, 2006 8:22:23 PM
Not only will a better dump attract those from countries with lesser dumps, but also the better welfare hand-outs here are attractive to many. Our emergency rooms, for example, are treating many gratis. But there is no free lunch, and there are no free emergency room visits or ambulance rides. At a price of several thousand dollars per ear ache or sore throat seen, this quickly mounts up into a lot of money; not to mention the fact that seriously ill people, say someone with an acute MI, may be delayed because of the congestion.
Lets get real about this. The welfare hand outs are not something to be left out of the discussion by thinking people. This is a failure of government, not of markets.
Posted by: jim at Jun 8, 2006 9:02:35 PM
It occurs to me that Beverly Hills has an open borders policy. Anyone, even I, can relocate there. However, plenty of folks have the same idea, and as a result, finding something in my budget is less than likely.
Posted by: shecky at Jun 8, 2006 10:08:11 PM
Cowen/Tabarrok go to pains to claim that low-skill immigration is NOT reducing the wages of our own working people. If this is really true, then the marginal output of unskilled labor is both low and near flat. In other words, the labor demand curve has only a trivially negative slope.
Presuming this to be true, why are we tolerating unskilled immigration at all? Unskilled immigrants impose a long list of negative externalities including crime (checkout MS-13), crowding, freeway gridlock, housing inflation, public health care costs, dying public schools, enviornmental burdens, taxes, etc.
Of course, I could also add the immense long-term costs of importing a population with high illegitimacy (48%), welfare dependency, high crime rates, near 50% high school dropout rates, affirmative action requirements, Medicaid dependency, foreign language issues, etc. In economic terms, a transaction whose costs exceeds its benefits is known as a "unprofitable". Why would America do anything thing? Why would so-called liberarians advocate importing people who will mostly vote for big government?
Enquiring minds want to know.
Has anyone else noticed that this is the first Open Borders post in a while that allows comments? Why exactly is this?
Posted by: Peter Schaeffer at Jun 8, 2006 11:38:13 PM
Has anyone else noticed that this is the first Open Borders post in a while that allows comments? Why exactly is this?
Look in the mirror for your answer.
Posted by: Matthew Cromer at Jun 9, 2006 12:19:39 AM
Mr. Cromer,
Are you suggesting that Cowen/Tabarrok have a problem with logical arguments demonstrating that unskilled immigration might be unprofitable? Do you believe they would prefer no discussion of the subject?
Posted by: Peter Schaeffer at Jun 9, 2006 3:00:59 PM
Paul Gowder: I know this is a common refrain among non-economist progressives, but yes, you are missing something. The reason economists tend to favor the free movement of capital and labor is that it allows both to find their most productive use. But letting one factor find its most productive use is still better than letting no factors find their most productive use.
To use the kind of simple example that economists like: Consider two neighboring factories, one producing wine and the other cheese. But the machines for producing wine efficiently are at the cheese factory, and the vice-versa. And the people who are better at making cheese are at the wine factory, and vice-versa. Of course, the largest gain in efficiency comes from letting both the machines and the people move freely. But even if you only let one of them move freely, you are still better off that if you let neither of them move freely.
Posted by: David Wright at Jun 10, 2006 5:30:48 AM
David,
Your example takes no account of institutional differences between nations and assumes that the wine and cheese factories are run by for-profit concerns. But suppose that the Wine and Cheese factories are in different sides of a border between two countries: Cheese in Country A and Wine in Coutry B. What if the Cheese factory in coutry A is run by Country A as a non-profit enterprise that expands operations as long as the average product of the worker is greater than or equal to worker opportunity cost expressed in units of cheese? Additionally suppose that all workers at the Cheese factory are treated equally; that is, paid the same wage in units of cheese. The result here is that too many people will be induced to work in the Cheese factory in Country A (efficiency is achieved when workers are hired as long as marginal product is greater than or equal to the opportunity cost of labor expressed in output units. Now if workers in Country B have lower opportunity costs in B than in A (due to say lower levels of private property rights protections there), then we will see migration from B to A and even more Cheese being produced in A.
Operationalising free trade theory will often require attention to institions, data, history, and other real-world concerns. Ronald Coase debunked the myth in economics that lighthouse services could not be produce privately by looking at the history of navigation and lighthouse operations (NOT by allusion to overly simplistic, as it turned out, theory). Similarly, Steven Cheung debuke the Fable of the Bees by looking at the actual operations of farmers of orchards and of bee keepers.
Posted by: jim at Jun 10, 2006 11:05:11 AM
Mathew Cromer writes:
[Look in the mirror for your answer.]
Got any logical rebuttals to what Peter Schaeffer wrote? Anything else is a throw-away statement.
Posted by: PJGoober at Jun 11, 2006 9:14:40 AM
David: that assumes that letting one factor reach its most productive use without letting the other do the same doesn't create negative externalities. Taking your wine and cheese example, it's not obvious that the world would be made a better place if the wine workers were permitted to move to the cheese factory, but the cheese workers weren't permitted to leave the cheese-making town. It might be that overpopulation in the cheese town creates enough disutility that it would have been better off just to leave the cheese workers in the wine factory.
I suggest that this is almost exactly analagous to the question regarding the movement of capital and labor.
Posted by: Paul Gowder at Jun 11, 2006 12:20:50 PM
Paul: The argument you make here looks different to me than the one you made above, but that's fine. Externalities (in the absence of well-defined property rights) can certainly prevent a free market from reaching an optimum allocation. But a better solution than regulation (e.g. no one can move, because the disutility of the overcrowding caused might outweigh the utility of their movement) is to internalize the externality (e.g. employers must pay a per-employee tax to cover the costs of the marginal increase in population caused by the job).
Jim: I don't entirely comprehend the boundary conditions of your altered example. If property rights really are really so bad in country B, then it really isn't optimal to produce there, and the market is producing the right outcome, no? Anyway, I'm impressed by your chutzpa in taking the arguments of the Coase crowd, who typically try to show how the market can allocate optimally even in the absense of a regulatory framework, and trying to use them to argue that we need a stronger regulatory framework limiting the free movement of labor.
Posted by: David Wright at Jun 12, 2006 5:38:20 PM
I have to agree with PJ that Paul Schaeffer's comments contain some of the more insightful anti-immigration arguments I've seen. Pro-immigration people like me would be well-advised to consider his arguments carefully.
I'm particularly intrigued by his question "Why would so-called liberarians advocate importing people who will mostly vote for big government?" I really don't know how to model the complexity of a situation that allows for a political back-reaction on the regulatory framework in which it plays out. Usually in economic models we imagine the regulatory framework as fixed and then try to model how that plays out. Does anyone have any examples of modeling that tries to encompass such back-reactions on the rules of the game?
Posted by: David Wright at Jun 12, 2006 6:02:44 PM
