Why open borders won’t work

by on June 8, 2006 at 3:54 am in Economics | Permalink

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.

Jeffrey Alan Miron June 8, 2006 at 5:14 am

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?

Sandy P. June 8, 2006 at 10:59 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.

Dan Hill June 8, 2006 at 12:29 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…

Oskar Shapley June 8, 2006 at 1:46 pm

Tyler,

after reading your Slate article I have to ask, why is your answer to NOLA “shantytown”? Why isn’t it “housing projects”?

Paul Gowder June 8, 2006 at 3:06 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?

Steve Sailer June 8, 2006 at 4:34 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

Steve Sailer June 8, 2006 at 6:49 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.

jim June 8, 2006 at 9:02 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.

Peter Schaeffer June 8, 2006 at 11:38 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?

Peter Schaeffer June 9, 2006 at 3:00 pm

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?

jim June 10, 2006 at 11:05 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.

Paul Gowder June 11, 2006 at 12:20 pm

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.

David Wright June 12, 2006 at 6:02 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?

jim June 12, 2006 at 8:01 pm

us, not “use”, sorry, too many martinis

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