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Profile of Lant Pritchett
In The New York Times magazine, this Harvard economist is a strong advocate of open borders, or barring that, guest workers:
About 7 percent of the rich world’s jobs are held by people from developing countries. For starters, he would like to see the poor get another 3 percent, or 16 million guest-worker jobs — 3 million in the U.S. They would stay three to five years, with no path to citizenship, and work in fields with certified labor shortages. He assumes that most receiving countries would not allow them to bring families. Taxpayers would be spared from educating the migrants’ kids. Domestic workers would gain some protection through the certification process.
In effect, Pritchett is proposing a Saudi Arabian plan in which an affluent society creates a labor subcaste that is permanently excluded from its ranks...he estimates his plan would produce annual gains of about $300 billion — three times the benefit of removing the remaining barriers to trade.
He considers nationalism an "atavistic prejudice," but I think it is, at least for the time being, a necessary atavistic prejudice. People will identify with some political unit or other and the current alternatives to nationalism usually are worse (my unverified theory is that Pritchett's Mormon background plays a role in his views). The key question is how many more people we can take in before this constraint starts to bite.
Not unrelated is this NYT article on the evolution of Larry Summers.
Posted by Tyler Cowen on June 10, 2007 at 08:45 AM in Economics | Permalink
Comments
Why don't we see more economists and politicians speaking out about needing fewer restrictions, more legal immigration, less government red tape in deciding what industries are really in need of labor?
Let's make it super easy for immigrants to enter legally and stay as long as they want, and do whatever work they find. If being legal were so easy, there would be almost zero illegals. The only people who would do so are the dangerous criminals, knowing they wouldn't pass security checks. Border enforcement can concentrate on these much rarer cases and do so more effectively.
If people cry about how much they cost our schools and hospitals, let's cut the mandatory provision of education and health care. Or if compromise is needed, allow new immigrants to enter under condition of foregoing them. Then who can complain about immigrants?
Posted by: Tim V at Jun 10, 2007 10:30:51 AM
Why not just charge the employers of guest workers an extra tax to cover social cost they impose on communities. This would solve most of the problems people complain about that is, that they are lowering wages of US workers and burdening tax payers. It is also market based solution to the problem of how many guest workers the economy needs. I really can't see how importing people to mow lawns will help the economy of either country. Saudi Arabia is not the model of an economy the we should copy.
Posted by: joan at Jun 10, 2007 11:05:09 AM
"I really can't see how importing people to mow lawns will help the economy of either country."
Really? I suspect that's the crux of the problem here. Hiring said people (gardeners, nannies, etc) frees one's time enormously and allows one to more productively spend one's time (shouldn't females be especially pro-immigration at least on this regard, i.e. making it easier to have a family and a career?)
Posted by: Oh at Jun 10, 2007 12:00:27 PM
Part of the problem with this is a game-theory related problem.
If we open our borders, we will see a very large influx of people. However, nobody from America will be allowed to enter other countries freely, so there is no way to relieve the pressure of additional people.
I would very much like open borders though. With jet travel being what it is, restricting citizenship is an outdated almost tribal practice
Posted by: mark at Jun 10, 2007 12:07:52 PM
This guy is a psychopath, how do these f**ks get to have any influence over policy?
In fact, this guy should write in the media more, it would show the American people what greedy, flagless morons a good proportion of economists are. While others skirt around the issue this guy comes right out and says it - lets import serfs!
Come on Prichett! PLEEEEEEEASE write some more! Let the American people see the twisted malice at the heart of the open borders lobby. Nationalism is prejudice? Right, if a war ever comes and the nation needs to be moboilized, make sure this guy gets no protection.
A spell in the army would do economists the world of good.
Posted by: adrian at Jun 10, 2007 12:45:32 PM
The status quo, with illegal immigration and authorities generally looking the other way sounds like a better plan.
Posted by: shecky at Jun 10, 2007 12:48:18 PM
I am baffled by the pro-immigration side. Isn't "nationalism" just a form of local control, and isn't controlling your boarders just about the weakest from of "nationalism" there is? How does one guarantee that the guest workers wouldn't have a path to citizenship in today political and legal climate, let alone cut off their education and health care?
Tyler, perhaps you could help shed your open boarders rep, by explaining what metrics you would want to use measure the "immigration bite". Currently you discounts the public anger as either nativist or xenophobic, and considers the 8% decrease in low income wages to be small?
Posted by: ben at Jun 10, 2007 1:14:51 PM
Oh wrote:
Hiring said people (gardeners, nannies, etc) frees one's time enormously and allows one to more productively spend one's time
But if a person's time is so valuable aren't they free to hire those services in the absence of immigration? If they can't afford it without the importation of cheap labor, then don't immigrants have to lower wages? and if the immigrants are net tax drains, isn't the government just subsidizing that labor?
Yes the government subsidizes native low skill labor too, but why import more of it?
Posted by: ben at Jun 10, 2007 1:29:30 PM
Ben, think about it: if no one's doing the work (that is, if I'm mowing the lawn or taking care of the kids by myself), then there are no wages to be lowered. No one is getting paid to do that work. Instead, I'm doing it myself instead of doing something else (something that, for the vast majority of Americans, would pay better and be a more productive use of time). Bringing in people who will do this work for the wages that Americans are willing to pay thus ends up creating jobs, making Americans themselves more productive, and doesn't lower wages -- since no wages were being paid in the first place.
As for that 8% reduction in low-income wages, even according to Borjas that's only in the short term -- in the long run, the reduction is about half of that. And it's not even clear that that's the real effect -- Giovanni Peri's work convincingly suggests that immigration boosts the wages of most Americans and has only a very small negative effect on Americans who don't have a high-school education (who constitute less than 10 per cent of the workforce).
Posted by: K. Williams at Jun 10, 2007 2:04:18 PM
"He considers nationalism an "atavistic prejudice," but I think it is, at least for the time being, a necessary atavistic prejudice. People will identify with some political unit or other and the current alternatives to nationalism usually are worse (my unverified theory is that Pritchett's Mormon background plays a role in his views). The key question is how many more people we can take in before this constraint starts to bite."
What do you see as being the major alternative to nationalism in terms of human prejudices? And is the effect of the Mormon background the idea that it's okay for a fairly culturally different group of people to form their own community that is essentially separate from the rest of a country?
One more tiny thing: I find your posts on this topic very helpful in my thinking. Would you do more of them if the comments were less... um... atavistically prejudiced? Just curious.
Posted by: jared at Jun 10, 2007 2:15:05 PM
No one is getting paid to do that work. Instead, I'm doing it myself instead of doing something else (something that, for the vast majority of Americans, would pay better and be a more productive use of time).
If you're not hiring the marginal gardener at current wages, then your alternative use of time must be less productive. While some particular employment of low-wage workers may be very productive, their marginal productivity is quite low. Importing more of them further lowers the margin of production and yields little benefit to the economy.
Posted by: guest at Jun 10, 2007 3:19:29 PM
Allowing free trade of labor brings the same benefits as the free trade of everything else. Each person does what s/he has the comparative advantage in doing and it becomes a win-win game. We don't need to decide what we need as a country; we each need to decide what we want and need as individuals, free to make such choices.
Immigrants lower nominal wages, but by reducing prices, they increase real wages. The average may go down, but only because of the misleading of selection bias (counting different people in different measurements).
Posted by: Tim V at Jun 10, 2007 3:21:41 PM
Adrian: "Come on Prichett! PLEEEEEEEASE write some more! Let the American people see prejudice? Right, if a war ever comes and the nation needs to be moboilized, make sure this guy gets no protection."
Adrian, your own language suggests an substantially high level of fanaticism. Is that the impression you intend to make?
Posted by: Michael Giesbrecht at Jun 10, 2007 3:31:35 PM
Allowing free trade of labor brings the same benefits as the free trade of everything else.
It does bring the same benefits, but it also has some peculiar drawbacks. In practice, we can only import a limited number of immigrants. The best system is probably an immigration tariff, and the proposed point-based system is a fairly good approximation of this.
Posted by: guest at Jun 10, 2007 3:54:49 PM
RE: Tim V,
Is it really free trade if the immigrants are net tax drains and making the decision to exchange their labor not only for their direct wages but also the third party benefits they receive from various levels of government?
Re: K Williams,
I think guest answered better than I could, but you seem to ignore the option that instead of doing it yourself (even if you currently do), you could hire an American. If thats too expensive, why should the government subsidize your labor costs. Also subsidized labor distorts the market, I could see a maid/nanny freeing an American to participate in the workforce, but I could also see someone using a yard service for more leisure time.
Tyler, likes the idea of the cost of living in the US to be a check on immigration, thus allowing "open" boarders, but this is in direct conflict with the US social welfare safety net that is geared toward making sure everyone can live in the US.
Posted by: ben at Jun 10, 2007 4:06:40 PM
Tim V.,
Immigrants not only lower nominal wages, but they put an increased strain on "the system." Pretending that the immigration issue is purely a free trade issue is naive.
It's interesting that in this blog, we're also discussing the nationalization of health care. Assuming we do reform our health care system such that all citizens are covered - perhaps an unrealistic assumption, but let's pretend for a moment, shall we? - wouldn't you see a doubling or tripling of our annual immigration #s as having other impacts? It could very well be that the real wage increase you postulate we'd see would be erased by increases in taxes to cover health care, added infrastructure, education, etc. for these immigrants.
The point is, open borders/free trade advocates seem unwilling to acknowledge that there are ancillary effects.
Posted by: fustercluck at Jun 10, 2007 4:25:09 PM
Tyler, likes the idea of the cost of living in the US to be a check on immigration, thus allowing "open" boarders, but this is in direct conflict with the US social welfare safety net that is geared toward making sure everyone can live in the US.
The worstpart of this is that the resulting increases in cost of living would be either a deadweight loss (e.g. more crime, lowered quality of life), or disappear into parasitic rent.
Posted by: guest at Jun 10, 2007 4:30:41 PM
Without open borders, over 20% of all Mexicans now live in the U.S. With open borders, about 35% of all Puerto Ricans now live in the 50 states, and the influx was finally stemmed only through enormous tax breaks and transfer payments from the 50 states to Puerto Rico estimated at $22,000 annually per family of four!
Five billion people live in countries with lower per capita average GDPs than Mexico, so the expected influx into the wealthy world as the result of open borders would be in the billions. Of course, it would never actually happen -- either the standard of living of advanced countries would decline so sharply that the incentive to immigrate would vanish or the political reaction to this folly in the West would be dramatic.
Posted by: Steve Sailer at Jun 10, 2007 5:34:41 PM
Would open borders do poor countries all that much good? What we see is that countries with high rates of emigration tend to be corrupt and inefficient underperformers, such as Mexico and the Philippines.
In contrast, the vast and welcome decline in the percentage of poor people in the world over the last generation has largely been driven by internal reforms in countries with low percentages of emigration: China and India, most notably.
Posted by: Steve Sailer at Jun 10, 2007 5:38:01 PM
I think Lant Pritchett is right (though he's too much a moralist for my taste) in that a Saudi Arabian style system is much more sensible. So do I lose my racist, bigot, nativist anti-foreign-bias badge now and get accepted into the Open Borders Club? Or do I also have to proclaim that we're a nation of immigrants, we shouldn't split up families, the immigrant populations are assimilating just fine not that it's any of our business because their culture is good as ours if not moreso?
Posted by: TGGP at Jun 10, 2007 7:01:49 PM
Immigrants not only lower nominal wages, but they put an increased strain on "the system." Pretending that the immigration issue is purely a free trade issue is naive.
I don't see any particularly strong strain on "the system" in Los Angeles, a place with high amounts of new immigrants.
Assuming we do reform our health care system such that all citizens are covered - perhaps an unrealistic assumption, but let's pretend for a moment, shall we? - wouldn't you see a doubling or tripling of our annual immigration #s as having other impacts? It could very well be that the real wage increase you postulate we'd see would be erased by increases in taxes to cover health care, added infrastructure, education, etc. for these immigrants.
Yes. However, there are a few points to be made. One, health care reform has little to do with immigration reform. Two, nationalized health care could lead to the exact same effects even if all immigration were magically stopped and reversed back, say 10 years.
The point is, open borders/free trade advocates seem unwilling to acknowledge that there are ancillary effects.
Anti immigration/free trade advocates seem unwilling to acknowledge that there are positive effects of higher rates of immigration.
Without open borders, over 20% of all Mexicans now live in the U.S. With open borders, about 35% of all Puerto Ricans now live in the 50 states, and the influx was finally stemmed only through enormous tax breaks and transfer payments from the 50 states to Puerto Rico estimated at $22,000 annually per family of four!
Yet somehow, the economy is strong and unemployment low. How can this be?
Would open borders do poor countries all that much good? What we see is that countries with high rates of emigration tend to be corrupt and inefficient underperformers, such as Mexico and the Philippines.
And this is bad because....?
Posted by: shecky at Jun 10, 2007 7:02:47 PM
Immigrants not only lower nominal wages, but they put an increased strain on "the system." Pretending that the immigration issue is purely a free trade issue is naive.
I don't see any particularly strong strain on "the system" in Los Angeles, a place with high amounts of new immigrants.
Yes, with 12 million immigrants, absorption is possible. What happens when that number balloons to 120 million? 1.2 billion? You think there's a gang problem now?
Assuming we do reform our health care system such that all citizens are covered - perhaps an unrealistic assumption, but let's pretend for a moment, shall we? - wouldn't you see a doubling or tripling of our annual immigration #s as having other impacts? It could very well be that the real wage increase you postulate we'd see would be erased by increases in taxes to cover health care, added infrastructure, education, etc. for these immigrants.
Yes. However, there are a few points to be made. One, health care reform has little to do with immigration reform. Two, nationalized health care could lead to the exact same effects even if all immigration were magically stopped and reversed back, say 10 years.
So your contention is that should we nationalize healthcare, new immigrants won't be eligible for that coverage? Or wait, they will, but financially this would have a zero net effect? Please explain.
The point is, open borders/free trade advocates seem unwilling to acknowledge that there are ancillary effects.
Anti immigration/free trade advocates seem unwilling to acknowledge that there are positive effects of higher rates of immigration.
I'm not anti-immigration and have no problem with a reasonable increase in immigration numbers, but a policy of completely open borders makes absolutely no sense to me. I see nothing but negatives with such a policy.
Posted by: fustercluck at Jun 10, 2007 7:31:48 PM
Like jared, I was wondering what Tyler saw as the alternatives "worse" than nationalism.
In the US context, what are the drawbacks of sapping nationalism?
Posted by: Dan Klein at Jun 10, 2007 9:58:52 PM
Did Tyler mean the alternatives worse than nationalism from an ECONOMICS perspective, or from an overall perspective?
Empires, anarchy, microclans, monarchical bloodrights, class/caste systems are all worse than nationalism.
Apparently many people think the nation state has outlived its usefulness. But people need to belong to something in order to build a civil society. Undermining the only system that has created property rights for nearly everyone regardless of their caste, class, blood, or sex seems like a poor idea to me.
Posted by: anonymous at Jun 10, 2007 10:11:23 PM
Shecky wrote:
I don't see any particularly strong strain on "the system" in Los Angeles
Are you sure you're looking? LA County is facing a budget deficit of more than 1 billion dollars.
Link
Now thats not entirely due to illegal immigration, but where do you think a lot of 2.9 million uninsured in LA county are coming from. The system in LA is definitely under strain, saying otherwise is crazy talk. Moody's Investor Service, is placing their long term credit rating under review. Wouldn't that be a market signal?
Posted by: ben at Jun 10, 2007 11:43:41 PM
