Sunday, August 3, 2008

Why Bother to Have Borders?

Why do countries have borders?

To put it another way, why do countries allow immigration at all?

In an ideal world, there are no borders. If you visit somewhere on vacation or business, decide you like the climate and culture, bang - you get a job and find a place to live. No visas, no applications, no quotas on people from your country. Absolute freedom of movement between all the developed, civilized nations of the world.

I don't know when we'll live in such a world. In a very few cases, there are enough adjoining nations at rough economic parity that parts of this vision can be achieved (let's call this hypothetical place the "E.U.", and it's worked pretty well for them so far). But the unfortunate reality is that bordering countries are usually not economically matched in this way, and the exchange is one-way. The most relevant example to us, to introduce the elephant in the room, is the U.S. and Mexico.

All the hot air about immigration has at least crystallized into a recent legislative attempt. The McCain-Kennedy bill wasn't perfect, but it was a starting attempt to fix a bad situation and get to a position where we can more legitimately control illegal immigration (currently 4% of our population). This is the second or third most important economic issue facing the next president. Coming from a border state, and jointly sponsoring the bill, John McCain knows something about this problem. Obama wasn't in a position to introduce such a bill because he started his first term in Congress less than four months before McCain and Kennedy introduced it.

There aren't many Americans who would stop immigration altogether. In fact, most non-immigrant Americans think that immigration should be kept at the same rate or increased, and also that legal immigration has been good for the economy. On the other end, it seems that the "if you're against opening the border to everyone you're a racist" argument seems not to have convinced many people either. Most of us seem to understand that it's not bigotry, but real hard-and-fast material considerations that militate against unrestricted immigration; and most of us also get that legal immigration, if done right, is a good thing.

Before I list the biggest reasons why rationally controlled immigration is a good thing, we need a framework to understand why countries allow immigration at all. These underlying assumptions have gotten lost in the debate, and surfacing them reveals the fault line between clear and muddy political thinking. Clear-thinking voters in any country realize that individuals support laws and policies that benefit him or her as individuals. Our elected officials stay away from concise declarations of reality like this because they horrify misguided voters who think the root of our policies should instead be compassion. Unfortunately, in the real world, compassion loses to individual and national material self-interest - and it should.

The most compelling reason to allow immigration is simple: to maintain our current population. Americans reproduce at the rate of 2 children for every 2 people; for statistical demographic reasons, replacement rate is not 2.0, but 2.1. If immigration ceases tomorrow, by 2100 we'd lose almost 50 million in population (one-sixth). There are other countries with worse problems than ours in this respect - a lot of European countries are hovering in the 1.2's. Japan in particular is in real trouble and doesn't seem to get it that without increasing their immigration rate, they're going to disappear. This is the price to pay for undergoing demographic transition; at least the French incentivize families.

Another reason to allow controlled immigration is to take the best and brightest from around the world. I'll come right out and say it - I'd rather let in someone who's rich and/or smart than someone who's not. Working in a technical field, I've been privileged to work with brilliant people from China, Germany, France, Russia, Japan - you name it. I'd rather have them working here in the U.S. contributing to economic growth than back home. Every spot we give to an unskilled, poor immigrant is a spot we don't give to an excellent PhD from China - and Chinese PhD's have more and more reasons - and opportunities - to stay home and contribute to the economy there). Fortunately, U.S. policy already has provisions to allow immigration for in-demand skill sets. Other countries do so selectively - for example, as most countries do, Australia's entry papers ask if you intend to immigrate there - and if you're over 45, in so many words, don't bother, because they don't want the burden of healthcare burden of becoming a global retirement community. They have every right to do so. Back in the U.S., most illegal immigrants in the U.S. are from Latin America, and specifically Mexico. Some of it's geography; you don't have to be rich to walk across the Rio Grande, but you have to have some resources to fly across the Pacific. To be clear: we should be much more explicit about restricting immigration based on bank account and earning power. Welcome to the twenty-first century - when we put up the Statue of Liberty, we didn't know exactly how large and mobile the poor and huddled masses would become.

A third reason that controlled immigration benefits us is the trade and cultural links it provides to the rest of the world. This Economist article summarizes it excellently from Europe's viewpoint. The EU will be hobbled by an aging population with few growing cultural ties to the world beyond its shores, where the US will stay young and increase its links to a surging Asia and a developing Latin America.

Fair enough - but can we afford illegal immigration? Of course, if you understand the reasons to encourage legal immigration, the answer is a clear no. Using the least negative figures in one study, illegal immigrants in the U.S. consume at least $2,000 more than they produce each year. Can we really tolerate net drains on our economy? In my more irritable moments I wonder if we can't develop a system where native-born citizen sitting at home watching reality shows and collecting unemployment for the third time couldn't be kicked out to make space for a successful businessperson from overseas. As you can well imagine, I therefore don't have much sympathy for arguments that illegal immigrants should be allowed to stay based on how long they've managed to trick the authorities, and I'm not so concerned with whether they've started a family. If you didn't bother to read the terms of your mortgage, you shouldn't expect me to bail you out, and if you decided to start a family while you were living under the radar, that's no one's problem but yours either. Yes, it's a hard thing to say, but if civilization functions, then legal responsibility has to land somewhere sensible.

The economic impact of uncontrolled immigration is mediated by several problems, and the one that bears mentioning in closing is language. I used to take the Libertarian position of "let the market solve it". I still don't care when I tune in a Spanish radio station, and not just because I speak Spanish - that's a legitimate need served by the market. But there are functions legitimately fulfilled by government, and I depart from hardcore libertarianism in my belief (shared by most Americans) that education is one of those functions. That's why I was so disturbed to learn that in California, you can take the GED test in Spanish. Who does that help? Certainly not the test-taker, and certainly not me as a participant in California's increasingly fragmented economy. Even in Canada, where there are two official languages, bilingualism is strongly asymmetric. French-speakers are in reality almost all bilingual in both French and English. The same can't be said for the Anglophone provinces, especially in the west, and it certainly can't be said for the larger immigrant communities in the United States.

Of course, I have a personal angle on the immigration debate. My wife isn't a citizen and I'm sponsoring her to immigrate. We're early in the process, and right now we're waiting for her temporary green card to come through. It's not an easy process, and it shouldn't be. But at times we wonder why we should bother jumping through the hoops. She's a financial professional, in a position to make a real contribution to our economy, so she has no option of trying to work under the table, and she has to wait months for her paperwork to come through. In the three months since we've applied, two hundred thousand illegals have entered the country to harvest crops and clean houses. Isn't there something strange about that?


Aaron said...

If I'm reading that study you linked to correctly, the author confused productivity with income. The author looked only at the amount of money collected in taxes, which isn't a measure of productivity. The "dirty secret" he mentioned at the end of the article is just standard economics; you don't voluntarily raise your variable costs. With any other instance, this writer would be decrying the effect regulation had in increasing costs. Being that this is a pet case of his, he's willing to waive the rules (same as everybody else does - see health care, gasoline/energy, etc.). I am sure that there is an enlightening economic analysis on the impact of illegal immigrant workers waiting to be written, but this wasn't it.

c.o. jones said...

"In fact, most non-immigrant Americans think that immigration should be kept at the same rate or increased..."

Until they find out that we're already admitting somewhere between 800,000 and 1,000,000 legal immigrants a year, and that those newly minted "green card" holders can bring in their parents, adult children, siblings, and whatnot via chain migration.

The blogger does make some good points about letting the market provide the solutions, but did miss an important aspect. One of the reasons Americans are having fewer children is because of government policies that punish affordable family formation. Reverse those policies, and we would not "need" so many immigrants.

Ah well, the toothpaste is out of the tube already and can't be put back. Because the great majority of our immigrants are low skill, poorly educated individuals from Latin America with higher fertility rates (not to mention a much shorter interval between generations), we can expect to be a majority Hispanic country within the lifetime of at least some reading this blog.

Aaron said...

The statement that the vast majority of the legal immigrants are from Latin America is incorrect. Asia has just as many immigrants coming into the US:

There are a number of mitigating factors against one particular ethnicity rising to dominance in the US. There are long term benefits to assimilation that will be motivation to integrate into the system.

c.o. jones said...

Aaron -

Re-read my post. I did not differentiate between legal and illegal immigrants; once that's taken into account, I am quite sure the scale tips toward Latin America. Also, I would not necessarily take the government's figures at face value. These are the people who have been using the "12 million" number for illegal immigrants for at least 3 years.

I don't remember if it was Barron's or Investor's Business Daily, but one of those business-oriented publications pegged the number closer to 20 million. I doubt that either publication would go out on a limb and publish something that would expose their benefactors as being part of the problem rather than part of the solution.

Aaron said...


I apologize for the misreading. I would tend to agree with the higher estimates when factoring in illegal immigration. I try to be pragmatic about the issue, as, like you said, we aren't going to radically reverse it. I don't think we necessarily need to give up on improving quality of living standards, output, etc. The market solution to immigration I have some faith in is foreign investment. Mexico has been doing better in attracting investors, and in turn the country is improving the overall living standard. We should want to hasten that. But of course, outsourcing is fought against with comparable passion to immigration. I don't know this for a fact, but my guess is most illegal immigrants are making moves out of desperation. If the economy in Mexico was robust enough, they wouldn't need to be seeking out working by violating our immigration laws.