Alexander T. Tabarrok
Presentation before the Santa Clara Student Debate Conference
Virtually all economists agree that immigration increases the wealth of the United States. For example a group of economists all of whom had been either president of the American Economic Association or a member of the Presidents Council of Economic Advisors, were asked On balance, what effect has twentieth century immigration had on the nations economic growth. 81% of these prominent economists answered very favorable, 19% said slightly favorable, not a single one said slightly or very unfavorable (See Appendix C, to Julian Simons The Economic Consequences of Immigration, 1989, Basil Blackwell).
This near unanimity of opinion among economists as to the economic effect of immigration is worth emphasizing. Even George Borjas, the most prominent economist advocating restrictions on immigration agrees that immigration increases the wealth of the United States. Borjas differs from the mainstream only in two respects. First, he thinks that current immigrants are less desirable to the United States than previous immigrantsa famous quip has it that Borjas thinks the last good boat of immigrants was the one he came in ona little cruel, perhaps, but with an element of truth. Borjas still thinks that the current generation of immigrants raises the wealth of the United States but he argues that the gain is not as large as it was before. Second, according to Borjas there is a distributional issuepoor natives are harmed by immigration even though total wealth is increased. The prominent economists surveyed earlier, however, do not agree with Borjass conclusions, when they were asked What level of immigration would have the most favorable impact on the US standard of living, 56% said more, 33% said the same number and none said fewer.
The usual complaint about immigrants is that they take jobs away from native workers. The complaint has little basis in fact, however. Even as the pilgrims were getting off the boats they were already complaining about newcomers and wondering how they could be supported in the new country. Since that time tens of millions of people have come to the United States and there are more jobs here than ever. Then as now the basic reason why immigrants dont reduce the number of jobs is that immigrants both produce and consume. Immigrants buy goods as well as sell goods, so the number of jobs expands as the number of workers expand. A simple test of the theory is presented in Table 1 of your handout which first compares unemployment rates in the 10 states with the highest immigrant presence to unemployment rates in the 10 states with the lowest immigrant presence and finds that unemployment is lower in the 10 states with the highest immigrant presence. As a second test it looks at the 10 states with the highest unemployment rate and the 10 states with the lowest unemployment rate and finds that there are more immigrants in the states which have the lower rate of unemployment. Thus there is no evidence to indicate that immigration is at all correlated with unemployment rates.
Nor does the evidence indicate that immigrants lower wages much if at all. When immigrants cluster in a particular city or state, as is often the case, wages may fall locally but the effect is usually temporary as the lower wages cause firms to expand in that region and as altogether new firms are created. Moreover, falling wages are not an entirely bad thing even for the workers as it results in more output and lower consumer prices. Finally, there are many ways in which immigrants can raise wages by bringing new ideas and new opportunities to America. As China opens its borders to trade, for example, it is Chinese-American immigrants who lead the way in selling in that new market. Americas extensive Chinese-American community is thus an important asset which competing nations like Germany and France do not share. Immigrants often bring substantial capital into the United States also to start new businesses and invest in American firms. Its amazing to learn that 1 fifth of the new companies in Silicon Valley were started by immigrants,. In the modern age, immigrants also bring to America what economists call human capital, 1/3 of the scientists and engineers in SV are immigrants. These highly-skilled immigrants are creating jobs and raising wages for the bulk of native workers.
Immigrants and Welfare
Do immigrants use more welfare than natives? Is the immigrant use of welfare increasing? The best evidence on both of these questions is no. To which I refer you to the Vedder and Gallaway and Moore article in The Independent Review. When you exclude refugeeswho are allowed into the United States for humanitarian reasons and who often come to the U.S. with absolutely nothingthen immigrants use about the same amount of welfare as do natives and their use of welfare has not been increasing. To be sure, some immigrants abuse the US welfare systemthey come here for a free ridebut some natives abuse the system as well. Indeed the number of natives who abuse welfare is far higher than the number of immigrants who abuse welfare. People who denounce immigrant abuse of welfare rarely denounce the abuse of welfare by natives even though the latter is a far more serious problem as far as the taxpayer is concerned.
The use of welfare by immigrants has always been something of a rhetorical trick even a slur used to rally people around kicking the immigrants out. The 1996 reforms of welfare, however, make the debate moot. The 1996 reforms restricted immigrants from using welfare and also limited the use of welfare by natives. Immigrant abuse of welfare was never a serious problem but is now even less so.
What about other government programs?
Immigrants and Social Security
As many of you may know, several demographic changes are pushing the social security system towards bankruptcy. First, the baby boom generation is larger than the generations before or after them. As the baby boomers age, the number of people of age 65 or over will increase from 34 million today to 69 million by 2030. As a percentage of the population the elderly will increase from being 13 percent of the population today to being 20 percent of the population in 2030 when the baby boomers will be in retirement.
Second, life expectancy after age 65 has been increasing relatively rapidly. The generation which is in retirement by 2030 will have a fifty percent longer life expectancy at age 65 than the generation that retired around 1940. Increased life expectancy is a wonderful benefit of modern technology but under the present system of social security financing it is the young workers who must be taxed to pay for the retirement of these long-lived retirees.
Third, after the baby boom generation was born, the birth rate began to decline. Thus, the large baby boom generation, increasing longevity, and the decline in the birth rate have all combined to cause the number of workers per social security recipient to fall dramatically. In 1960 there were 5.1 workers for every social security recipient, today there are only 3.4 workers for every retiree and when the baby boomers retire there will only be 2 workers for every recipient of social security.
More retirees, longer life expectancy, larger benefits, and fewer workers -these trends have meant substantial increases in the payroll tax. Since the social security program began, the payroll tax has increased more than 500 percent. Eighty percent of workers today pay more in payroll taxes than in income taxes. To maintain benefits the tax will have to be increased to at least 18 percent of payroll in the future and perhaps to 23 percent.
An increasingly elderly population is also putting strains on Medicare funding which will require an increase of 10 percentage points in the Hospital Insurance portion of the payroll tax. Taxes this high on labor income will have a very negative effect on the economy.
The payroll tax is in addition to local, state and federal income taxes and indirect taxes like sales taxes. Taking all these taxes into account shows that future Americans will have to pay unprecedently high taxes if the current system is not reformed. If the crisis in social security is not alleviated young workers like yourselves will have to pay more than 50% of their lifetime incomes to the government.
Now what does all of this have to do with immigration? The answer is that by importing more workers in their prime earning years we can alleviate the forthcoming crisis in social security. Everyone, in fact, should be in favor of immigration on these grounds. The logic is pretty easy to see, suppose you are retired and are living on a social security check paid for from the taxes of workersdo you prefer fewer or more workers? Of course your check is more secure the more workers there arethus retirees should certainly be in favor of immigration. What about the workers? They too should be in favor since the more workers the lower their share of the burden of paying for all the retirees.
On net, therefore, it is quite clear that immigrants do not reduce the number of jobs, they do not lower wages except perhaps temporarily and in local areas, they do bring capital, skills, and ideas to America which helps America compete in world markets and which raises the US standard of living.
The main effect of immigration on natives is therefore primarily positive.
But suppose that the effect were negative. Would this be a good argument for restricting immigration? Perhaps, but it would not be a moral argument. At this point, I am going to accept for the sake of argument that immigration hurts natives in some way, say by driving down wages of native workers. I dont happen to believe that immigration does hurt US workers, but if you are going to demolish an opponents argument, its always a good idea to demolish your opponents best argument. Thus, I am going to argue that even if immigration does harm US workers it would be wrong to prevent immigration.
I will also show, rather surprisingly, that restricting immigration is immoral from the point of view of almost all moral theories. We do not have to debate, moralitysince virtually every moral theory agrees the conclusion that restricting immigration is immoral.
Lets begin with a true example. During most of the 19th century there were very few controls on immigration. But beginning in the latter part of the 19th century and especially in the early twentieth century, xenophobia and racism led to the passing of a quota system that drastically restricted the number of people who could immigrate. After the 1924 immigration act, immigration fell by 90 percent.
The new immigrant quotas were especially harsh towards European Jews. Before the quotas had been put into place, about 100,000 Jews were migrating to the United States every year but after the quotas were put into effect the flow trickled to only about a few thousand a year, if that. The reason for the restrictions on immigration by Jews was not hard to understand, anti-Semitism was widespread throughout American
society. A series of surveys done between l938 and l946 showed that more than half of the people of the United States considered Jews greedy and dishonest, and that 35% to 40% would have supported legal discrimination against Jews such as separate restrooms, restricting them from voting and so forth, measures such as those in force against Blacks
What happened next of course is well known. Hitler came to power in Germany. Many Jews were desperate to leave but they had no place to go. A thousand refugees on the boat Saint Louis left Hamburg May l3, l939, but were refused admission to Cubathen under the control of the United States and then were refused entry into the United States. In the end, they had to return to Europe, where many of them were deported to the concentration camps and were murdered by the Nazis in the holocaust.
Anti-Semitism was so strong in the halls of government that even after the holocaust began one state department official could say that rescuing Jews wasnt worth it because this would end up ridding Hitler of an enormous burden.
Its clear that if US immigration policy had not been restricted in the mid 1920s that hundreds of thousands, perhaps millions of Jews who died in the gas chambers of WWII would instead have been alive in the United States.
Its clear in fact that the history of immigration law is the history of racism. The Chinese Exclusion Act of 1882 had the not surprising purpose of excluding Chinese. Japanese were prevented from immigrating in 1907 and all Asians were preventing from coming into the country in 1917. It is truly shocking to learn that before 1943 what Chinese immigrants there were not allowed to become citizens, own land, and in some states they could not marry non-Chinese.
In addition to racism came the slightly more socially acceptable cultural hypothesis that only people from certain cultures were compatible with American values and ideals. The Irish were said to be drunks and criminals, for example, and they professed a foreign religion Catholicism. One scholar (Burgess, 1934) of immigration writing in the 1930s said:
So long as this immigration was confined to comers of the Teutonic races everything went well. But now we are getting a very different sortSlav, Czechs, Hungarians They are inclined to anarchy and crime They are in everything which goes to make up folk character, the exact opposite of genuine Americans.
The motives of those preventing immigration were and sometimes today are distasteful and disgraceful. It is clear that if the motive for restricting immigration is racism then such restrictions are wrong. Not everyone who opposes immigration is a racist, however. I want to go further, therefore, and argue that even non-racist restrictions on immigration are immoral, indeed the motivation is irrelevant, it is wrong to prevent people from moving from one country to anothereither to stop them from getting out or to stop them from getting in.
To see the immorality its worthwhile noting that the issues of immigration are often thought to be international, but in fact the same issues arise nationally. After the end of the civil war and again in the post WWII era, blacks left the American South for Northern cities like Chicago and Detroit. They went in search of better jobs and better lives. Some in the north didnt want them, blacks would ruin the culture, blacks were unskilled, they would lower wages etc. All the arguments against immigration were used against blacks migrating from the South to the North, and of course racism played a part as well. In more recent years, as the rust belt has rusted and jobs have moved back down the south, immigration to the south has occurred and now it is the Southerners turn to decry carpetbaggers from the North who are destroying a way of life with their new ways.
The only important difference between the national and international situations is that because of the Constitution there are few laws to prevent people from moving from one state to another. In China the law does prohibit Chinese citizens from moving from one part of the country to another part (See Jacob Sullum. Moving Targets. Reason Magazine, March 15, 2000). If a Chinese resident wants to move from the country to Shanghai where the economy is booming he must apply for permission from the government. This strikes must of us as wrong but if it is wrong to prevent a resident of China from moving from the country to the city, if it is wrong to prevent a Texan from moving to New Hampshire, then it is also wrong to prevent a German from moving to Texas. The imaginary line separating Texas from New Hampshire is really no different from the line separating Texas from Germany.
It will be objected that Texas and Germany are different countries while Texas and New Hampshire are not. But what sort of moral theory with serious claims to our attention makes something as important as the right to move from one place to another rest on something as arbitrary and accidental as the name of the place in which you were born? Pity the poor residents of Liechtenstein who on this theory have hardly any rights to move at all.
Lets suppose in particular that immigrants lower native wages.
But why should this make a difference? Suppose that Bill wants a job which he knows Bob will also be applying for. It surely would be wrong of Bill to go to Bobs house and nail the doors and windows shut and plant land mines and barbed war around the yard so that Bob couldnt leave. Yet this is exactly what we do to prevent Mexicans from coming to the United States to look for jobs.
Moreover, the consider the larger principle behind restricting immigration to save jobs or wagesthe principle is that natives can and should be guaranteed jobs with guaranteed wagesthis principle cannot be taken seriously because international immigration is just one way in which wages change. If we were to take this principle seriously we would also have to prevent internal migrations. Plenty of people are coming to Northern California to look for jobs in the computer industry, for example, and this just as much as immigration from India lowers wages in the computer industry.
Not only would international and internal immigration have to be prevented, we would also need population controls. As far as wages are concerned the only difference between immigration and birth is that birth takes longer. When your neighbor has a child it as equivalent to a worker entry the country 18 years in the future. The wage argument against immigration thus also suggests that we should have prevented the parents of the baby-boomers from having children.
The guaranteed wage argument also implies that we must restrict technology. There is no doubt whatsoever that technology has been responsible for the disappearance of far, far more jobs than has immigration. Edison destroyed more jobs with his lightbulb than immigrants have every done, the same goes for Henry Ford who destroyed the horse and buggy industry, today the internet is destroying the travel agency business and the small bookstore. Its absurd to single out one source of job loss for special attack. Change destroys jobs but change comes from many sources not just immigration. And, of course, change creates jobs. America has the highest standard of living of any major country in the entire world. To maintain and enhance that standard of living America should continue to embrace those qualities which have made America great, openness and dynamism. Openness to new technologies, new ideas and new people is Americas greatest source of strength.
To return to the moral issues lets us change the analogy slightly and suppose that John wants to marry Jill and Jill wants to marry John, it would be wrong of Sam to try and prevent the marriage by force. Preventing the marriage by force would harm both John and Jill. In the same way when the government forbids an Indian computer programmer from coming to the United States it harms both the Indian programmer and his potential employer. Thus, restrictions on immigration Its about some people in the United States harming foreigners and other people in the United States.
I have argued so far that it is wrong to prevent competition by force whether the competition is from a fellow native, an immigrant, or new technology. There is no right to a job or a wage rate but there is a right to move from one country to another in search of a better life. This is the point of view of Thomas Jefferson, John Locke and other great supporters of the natural rights tradition in America.
Lets now look at the immorality of immigration restrictions from other moral perspectives. I will consider four sorts of moral theoryutilitarianism which says that what is moral is to increase total happiness, contemporary liberalism which says that redistribution of wealth from the rich to the poor is moral to increase equality, John Rawlss analytical liberalism which says that something is moral if it would be agreed to behind a veil of ignorance and finally I will briefly examine Christianitys perspective on immigration. Each of these moral theories strongly supports open immigration and opposes restrictions on immigration.
Lets begin with utilitarianism. Its easy to see that immigrants are benefited more from coming to America than natives are harmed. An immigrant from Nazi Germany or contemporary India, China, Ethiopia or Mexico is leaving a situation which may range anywhere from death in a prison camp, to death by starvation and back breaking labor to misery and death at an early age due to abject poverty. Even the poorest Americans live in better conditions than the typical Ethiopian or Chinese. On Utilitarian grounds, therefore, immigration is to be applauded because it increases total world happiness.
Contemporary liberalism or any ideology which asserts the importance of redistributing wealth from the rich to the poor would certainly favor open borders. Immigrants are, in general, much poorer than natives. Thus, even if natives are hurt by immigration they are hurt much less than by what the immigrants gain. Alternatively stated if you are in favor of any form of the welfare state then you should also favor open borders. If it is right to tax the rich to help the poor then it is certainly wrong to limit such redistribution to members of one nationthat is simply tribalism. Its possible to argue for tribalism, of course, by say arguing as Hitler did that there is something special about the German volk, or as racists do that a white nation must be preserved etc. but obviously these sorts of arguments will not win among most people today, however successful they were in the past.
What about contractarianism and Rawlss veil of ignorance? The basic contractarian argument is that something is just if everyone would agree to it if they did not know information about themselves which might bias their decisionsinformation say about their wealth, race, or sex. To see the relevance, imagine that you did not know which country you would be born into. Would you be in favor of open or closed borders? There is some possibility that you might be born an American in which case we are assuming that you will be harmed by immigration and therefore will be against open borders. On the other hand there is a much greater probability that you will leave in a poor and perhaps dictatorial country in which case you will favor open borders. Moreover, not only is the probability higher that you will be the sort of person who favors open borders but the gain from open borders when you find yourself living in desperately poor country is much greater than the loss should you find yourself living in a rich country. Thus, everyone behind a veil of ignorance would choose open borders and open borders are therefore just because this is what we would choose if our biases did not interfere with our moral conscience.
Catholic Social thought is clear on the issue of emigration and immigration. Pope John Paul II, for example, says in Laborem Exercens, that:
Man has the right to leave his native land in order to seek better conditions of life in another country. Pope John Paul II, Laborem Exercens
More generally, the ethic of kindness to strangers runs throughout Christianity especially in the New Testament.
In Luke, a lawyer challenges Jesus, I know that to inherit eternal life I must love they neighbor as myself, he says but who is my neighbor?. Jesus, then replies with the parable of the Good Samaritan, the foreigner who stops to help the injured native even when his countrymen pass him by. Neighbors are not just the people who live next door.
Perhaps most explicitly, Matthew 25:35 tells us that at the great judgment When the Son of Man comes in his glory, and all the angels with him the people of the world will be separated and those on the Lords right hand will be told Come you that are blessed by my father, inherit the Kingdom prepared for you from the foundation of the world; for I was hungry and you gave me food, I was thirsty and you gave me something to drink, [and] I was a stranger and you welcomed me
Today the immigrant is like the stranger in whom Jesus asks to be recognized. To welcome him and to show him solidarity is thus a duty of hospitality and a fidelity to Christian identity. (Paraphrase of Pope John Paul II).
Let me conclude with this thought. I understand the purpose of the talks over the next couple of days is to help you prepare for debates. In those debates, I understand, that regardless of your actual views some of you will take the pro-immigration side and others the anti-immigration side. That is fine and appropriate. Whichever side of the debate you speak on, however, I would ask you at the end to of the day to ask yourself where lies the Truth. And please remember that this debate involves the lives of real people, often desperately poor people who seek only to come to this country to make for themselves and their family a better life. I would ask you also to take morality seriously, and ask yourself by what right, by what moral theory is it justifiable to place heavily armed guards at the border to capture, imprison, and sometimes kill these people? If you do, I think you will find that no moral theory can justify such a monstrous social policy.