If I could change just one policy that would make the worlds poor much better off, I would eliminate immigration restrictions in wealthy countries. Heres the kicker: it wouldnt just improve the lives of the poor. It would make the natives of already-wealthy countries even wealthier. US Citizenship and Immigration Services begin accepting petitions for H-1B Visas for fiscal year 2012 on April 1. Its a good time to reflect on exactly how government immigration policy is shooting us all in the foot.
According to the USCIS website, potential immigrants can compete for 65,000 slots with the provision that there are exceptions for [t]he first 20,000 petitions filed on behalf of individuals with U.S. masters degrees or higher and exemptions for people who will work at higher education institutions, nonprofit research organizations, or governmental research organizations.
This is tragic for a couple of reasons. First, it means that some of the worlds greatest minds (and those who would employ them) have to turn their time and attention away from innovation and toward jumping through legal hoops in an attempt to get one of a small number of admissions to the United States. Theyre worse off. Second, Americans are denied the benefit of having the worlds best and brightest working for our businesses and living in our neighborhoods. Were worse off. Finally, artificial restrictions on immigration reduce competitive pressure on some of the worlds worst governments. Were all worse off.
I propose something even more radical. Yes, at the very least, the H-1B Visa program should be eliminated altogether and anyone who is well-educated should be allowed to move to the US. I think we should go one further and eliminate educational requirements. I would like to see us accepting immigrants of all colors, creeds, and credentials.
Why? First, there is an ethical argument for it. Restricting immigration restricts the right of people to cooperate on terms they find agreeable. Second, theres a narrow economic argument for it. Immigrants tend to have skills that are complements to rather than substitutes for natives skills. They create new opportunities for trade and innovation. In short, they provide us with more opportunities to cooperate with others to mutual advantage, and we get richer in the process.
As Bryan Caplan argues in an EconTalk podcast and in a lecture as part of the Future of Freedom Foundations Economic Liberty Lecture Series, the standard arguments against immigration dont hold up to scrutiny. According to these data, the long-run effect on all native workers wages is about 0%. It is negative (to the tune of about 4.8%) for high school dropouts, slightly positive for HS graduates and people with some college, and negative by about half a percent for college graduates. I take this not as a signal that we need more restrictions on immigrants. Rather, people need to stay in school.
Immigrants also lead to lower prices for the things we buy and more success for the businesses we run. You might think of a business as a gigantic corporation, but businesses also include small-scale lawn-care companies, construction companies, and other small businesses. Some of these are businesses that would not exist at all in the absence of immigrant labor. Further, if you have a retirement account, you are an owner of the means of production and, at least indirectly, an employer. As the economist Alex Tabarrok, Research Director at the Independent Institute, has pointed out, immigrants arent taking our jobs. They are doing jobs that would not exist in the absence of immigrant labor.
Others argue that immigrants are a burden on taxpayers. There is a degree to which this is true, but in most cases immigrants provide net tax benefits. Ill repeat what I wrote about this last year:
Other immigration critics say that immigration burdens the welfare state, invoking Milton Friedmans claim that a country cannot simultaneously have both a welfare state and open immigration. But Friedmans indictment was criticism of the welfare state, not a criticism of immigration. Illegal immigrants are a burden on the welfare state? OK. But so are tax cuts. Are we to oppose tax cuts on these grounds, too? (Im indebted to philosopher Mark LeBar for this last point.)
Even if immigrants are a net drain on the American economyand Im pretty sure they arentthe relevant comparison is not between open borders and perfectly enforced closed borders or perfectly enforced selective immigration. The relevant comparison is between open borders and heavily politicized immigration policies in which the benefitsif there are anyof restrictions are soaked up by lobbyists and wasted by the political process.
If youre an immigrant and youre already here, once again, Im glad youre here and I hope you like it as much as I do. If youre applying for an H-1B Visa, good luck. If you dont get it, I hope we realize what were missing soon and open the border so we can receive you with open arms.
Update, 4/2/2011: at the request of the Independent Institute, this article has been modified to reflect Alex Tabarroks affiliation with the Institute.
Art Carden is a Research Fellow at the Independent Institute in Oakland, California and an Associate Professor of Economics at Samford Universitys Brock School of Business.