Sunday, February 28, 2016

Can a contemporary Western country have a moral immigration policy with a reasonable risk level?

The intense, and highly moralised, debate over migration in the West is clearly based on a widespread presumption that it is obviously possible for contemporary Western societies to have a moral migration policy. That proposition, when examined, is much more dubious than it might appear.

It is obvious that people moving to the West from the Rest are likely to improve their economic (and other) prospects, as noted in economist Michael Clemens's 2011 journal article (pdf). Hence a Gallup World Poll suggesting that about 700m people worldwide would like to move permanently to another country.

This motivation is quite obvious and the fundamental driving factor--if it was not true, there would not be such demand to move to the West and the issue would largely be moot. What is much more difficult is why prospects are so much better in the West than in most of the Rest and how robust that success is to population inflows. Though the moral issues extend beyond that.

Bleeding initiative 
Consider the epitome of a successful immigration policy--Australia. There is effective border control, so the migration debate in Australia has not gone feral, as it has in other Western democracies. Even more impressively, a high level of migration is managed with remarkably little social disruption or political angst. So, a successful policy.

But one with distinct moral downsides. First is that effective border control involves a certain amount of cruelty: this cruelty, by deterring efforts to arrive by boat, does stop people drowning at sea in black market transportation. Still, it is cruelty.

Second, a key element is that Australia cherry-picks its migrants quite successfully. This means that there is much less downward pressure on labour income within Australia, as the migrants bring a significant amount of capital (including human capital) with them. It is often pointed out that migrants increase local demand: but if they bring labour (but not much capital), then there is relatively more pressure on average labour incomes--particularly "pure" labour incomes (i.e. unskilled labour)--as the pool of those competing for labour income from the increased demand expands much more than the capital doing so.

Note, the claim is not that migrants reduce wages; wages are "sticky" downwards. (At least not cause an overall reduction in wages, though there may be significant specific effects to segments of the labour market [pdf].) The issue is the distribution of the returns to economic growth--importing large numbers of people reliant on labour income is likely to distribute more of the returns to growth to the holders of capital, and the newcomers, and less to resident providers of labour.

Hence, that Australia successfully cherry-picks is is good for Australia's internal social cohesion, but it means that Australia (a rich country) is bleeding off people with initiative (plus persistence--measured by willingness to go through the application process) and skills from less wealthy countries. In global terms, this is a perverse redistribution of scarce resources.

As Clemens points out, an ameliorating counter-effect is to raise the return to human capital in the countries left. Nevertheless, as he also points out, this reduces the externality to the countries providing migrants, it is not likely to eliminate it.

Not that there are no domestic problems from Australia's successful migration policy. That so many of Australia's housing market entrants are non-voters makes it much easier to regulate to restrict housing land supply, driving up the cost of housing (and so shelter) and undermining the incentive to provide infrastructure.

The infrastructure effect occurs as restrictive regulation of land use raises the opportunity cost of land for infrastructure--both from the increase in land price plus the knock-on effects of increasing resident resistance. (Expectations of rising property values increase the NIMBY effect.) It also lowers the revenue benefit of providing infrastructure, as governments can, much more easily, tax the artificial land scarcity they create without the bother and expense of building infrastructure and then taxing increased land values therefrom. In other words, land use rationing plus taxing of the created artificial scarcity creates very similar dynamics as those which lead relying on private provision to under-provide infrastructure.

In Australia, the infrastructure and land regulation debates are also a classic example of using migration policy for other purposes--specifically, Virtue signalling. Hence the Virtuous position of no new dams, no new motorways, no new power stations, stopping urban sprawl, opposing in-fill (i.e. BANANA --NIMBY on steroids) while supporting high levels of migration: an utterly self-contradictory set of positions but whose very self-contradiction makes it an excellent pattern for Virtue signalling--embracing the contradiction makes one very Virtuous. While pointing out the contradiction is very unVirtuous (but questioning the signalling marks of Virtue is generally unVirtuous: which has an invidious effect on open debate).

As per the explanatory mechanism in political scientist Xavier Marquez's theory of cults of personality, when moralism is compulsory, how does one signal superior morality? By accepting the costs of contradiction--it operates as an excellent sorting mechanism and is a splendid application of postmodern authenticity trumping reason.

Regarding the general regulatory effect of migration, having higher numbers of non-voters being market entrants makes it easier to regulate to benefit market incumbents (typically voters) over market entrants, increasing dysfunction across a range of markets. This is particularly notable in Europe, with labour market regulation.

A positive take on the moral difficulties, but policy success, of Australia's migration policy is that it conforms to a point economist Thomas Sowell makes--there are no morally perfect solutions, only trade-offs.

Disrupting order
To avoid the specific moral problems of Australia's immigration policy, simply give up on effective border control (no cruelty) and stop cherry-picking (no bleeding off).

Failure to have effective border control more or less guarantees your domestic immigration debate will "go feral", from voters resenting having no say. If there is any sea route involved, lack of effective border control increases deaths at sea. It also increases perverse market-exclusion effects, as "illegals" are then stripped of normal legal protections, creating pernicious black markets in labour.

Not cherry-picking migrants greatly increases the costs, and reduces the benefits, of migration to the host countries. As voters are likely to notice, this also increases the chance of one's migration debate going feral.

A migration policy which degrades one's own political and social cohesion does not look particularly moral. Nor a sensible policy choice. As Chancellor Merkel and the EU are currently discovering.

Open to catastrophe
The next alternative is simply to go for completely open borders. There would be no "illegals", so no black markets in labour.

Given the relative ease of modern transport, there would not be much selection for persistence, or for commitment. (This is very different from the C19th.) There would be some selection for initiative and some for capital. But the greatest relative increase in income would be for labour, so overwhelmingly the selection would be for importing (massively) more labour.

Note, this is the only option that would make any serious dent in the level of global poverty (as distinct from specifically benefiting migrants). No remotely plausible level of migration to the West would otherwise have significant (positive) effect.

At which point, we confront what econblogger Nick Rowe labels, accurately, the Autism of economics. As economist Paul Krugman nicely points out, economists think in models. And models are abstractions: ceteris paribus (other things being equal) is a necessary element in making models useful by being simple enough to be tractable. Thinking of people as participants in markets abstracts away from all sorts of other aspects of being human and being part of a society. (Barry Weingast provides a nice analysis of problems with that in development economics and aid policy.) Indeed, economists abstract so completely that there managed to be a long period of not paying much attention to property rights, as they were so just assumed.

That economists are still struggling to come up with models of long-term cross-country economic growth which satisfactorily explain the patterns we actually see demonstrates that there is a great deal which matters about how societies as a whole function, even in just narrowly economic terms, that economics is still grappling with.

Which makes glib application of open market models to migration policy highly Autistic. So long as economics cannot produce a robust cross-country theory of long term economic growth compatible with the historical evidence, it cannot claim to provide any sort of reliable guide to the implications of open borders.

There is no reason to think that the factors which make Western countries stable and prosperous--and so attractive targets for migration--would be able to withstand a truly open borders policy. The current population of the West (EU, US, Canada, Australia, New Zealand) is about 890m. Adding 700m people to that population, or even a significant proportion thereof, would be an enormous social, economic and cultural shock.

The strain on existing physical infrastructure would be potentially huge. Then there are the social infrastructure issues. Why would existing structures of formal regulation be able to magically scale up without any significant degradation? Why would existing informal structures of social order be able to magically scale up without any significant degradation? What would be the effects of having voters being a minority of adults? If the existing institutions (formal and informal) are not robustly elastic on the scale required, would the policy not simply be one of importing social dysfunction--potentially, massive social dysfunction?

Open borders have almost infinite capacity to go catastrophically wrong in ways which would be non-reversible. Taking such risks with the lives, freedoms and prospects of citizens and their children is not a moral policy.

Nor is it a rational one for existing voters, given that the possibility of multi-generational and irreversible social catastrophe so outweighs any likely benefits to them. And it is the existing electorate which, directly or indirectly, would be making the decision.

Marriages and visitors only
A policy which would have none of the above costs would be to have effectively a no-migration policy. This is the other way of minimising black markets. There would be little cost in local social cohesion. Rich countries would not significantly bleed off initiative and human capital from poorer countries. In the circumstances of the modern world, the most moral migration policy for Western countries may well be to simply have a policy of not being a society open to further settlement.  At the very least, it is much more morally and socially defensible than many folk seem to be willing to credit.

Moral certainty on migration is very easy if you have a simplistic enough perspective, or otherwise block out awkward facts and problems. (Such as simply assuming that the necessary structures for social order scale up indefinitely and robustly; giving no significant positive weighting to the good functioning of Western societies; and/or using the debate for other purposes.) Taking a broader moral view may not lead where one expects at all.

ADDENDA: An issue I did not include is nicely captured here:
People also clearly, and understandably, value a certain amount of homogeneity-- social/economic/political interactions are all much easier with shared values/expectations/signals/interests.
While the moral bankruptcy of "refugees welcome if you can make it" is captured nicely here:
Right now, a series of do-gooder decisions have turned the journey from Syria and Africa to northern Europe into the Hunger Games. Is that really what moral policy looks like?

[Cross-posted at Skepticlawyer.]


  1. Good post Lorenzo. I think you are getting at the real conflicts/trade-offs. I tweeted it.

  2. Paypal, Google, Intel, SpaceX, general relativity, the Federalist Party and Tesla all had foreign-born founders, so I find human capital components too sweet to pass up

    I think with prudent discrimination and denials of problematic rights, we could enjoy large win/win tradeoffs. David Cameron's attempt to disconnect EU migrants from the welfare state without disconnecting them from labor markets seems promising. Do you know good literature on Kafala?

    1. As I was completely unaware of the Kafala system (thanks for the pointer) no.
      And yes, there are quite a range of potential beneficial trade offs, if policy is considered pragmatically.

  3. Very well argued post, Lorenzo. Very little to add here.

    Ghenghis, Weinstein's migration system is fairer than Kafala, but a bit more difficult to implement.

  4. Second, a key element is that Australia cherry-picks its migrants quite successfully.

    Which means the Australian Gov. lets in only those who least need to migrate.

    1. With the thoughts you'd be thinkinMarch 4, 2016 at 1:50 PM

      Or in other words attempts to ensure the people let in are the least burdensome to its citzenry.

      Did you even read the post?

    2. if larger economies like continental Europe, US and Japan converge toward Aussie policy, those societies who presently enjoy comparative advantages in making humans may also enjoy substantial remittances from adding value to those humans and exporting them to the places where they can b most productive. there should b some cool educational spillovers even for those that don't get to emigrate, as well as from the remittances themselves

      an unstable 1st world with reactionary populist governments might not b much good for the 3rd world. if an Indian is more likely to invent something important in Sydney than in Kerala, then it's likely better for India that she go to Sydney

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