Monday, July 9, 2018

Migration complexities and the campaigns against social bargaining

This is based on a comment I made here.

Coming from a country (Australia) with a much higher proportional immigration flow than the US, I find US debates over migration odd.

First, the level of illegal immigration in the US is clearly a huge problem. It distorts the debate, creates a black market in labour and gives lots of voters the feeling of having no effective say (because they don’t). Without effective border control, and with significant inflows of illegal migrants, the effective value of the lever of the ballot is greatly reduced, and and ordinary voters have no other lever other than the vote to influence a policy area fundamental to the future evolution of any polity.

Second, treating immigrants as an undifferentiated mass is just silly. I know economics lends itself to that, with people as interchangeable utility-maximising machines, but what is missed is that culture affects framing, expectations and preferences so that the same situation can create quite different incentives to people of different cultural heritages. (See, for example, the ethnic complexities in who voted leave in the Brexit 2016 vote.)

It is an observable fact that, for example, (1) different groups of migrants have different crime rates and (2) mainstream Sunni Muslims, given that mainstream Sunni Islam is a religion of domination, create problems no other group of migrants do, and the more so the proportionately larger group they are. (As adherents of "permanent minority" forms of Islam IbadisAlevisIsmailis and Ahmmadis are not an issue: they have gone down the same path that rabbinical Judaism did, abandoning the tendency to become homicidally enraged over God's law being trumped by pagan/goy/infidel law.)

Denmark, for example, seems determined to be not-Sweden and to minimise the welfare/crime/cultural difference costs of migration. Cultural difference costs are particularly significant when operating a welfare model which effectively requires high degree of cultural homogeneity to work in order to minimise free riding and maximise information flows between officials and recipients.

Third, treating migrants as having no (negative) effect on incentives within the country of receipt is just silly. For example, the combination of lots of non-voting housing market entrants with positional goods is more or less guaranteed to create regulatory restrictions on the supply of housing land, with consequent upward effects on rents and house-prices. An effect likely to be particularly strong in coast cities with nice hills: economist Paul Krugman's Zoned Zoned versus Flatland effect. [Which means more of GDP goes to land rent.]

Fourth, I am deeply sceptical about “(all) migrants are (always) an economic positive” arguments. See the point about migrants not being an undifferentiated mass, the effect on housing markets, variable social welfare costs and differentiated effects on residents depending on access to capital and place of residence.

Obviously significant migration is a positive to capital holders if it thereby increase the relative scarcity premium from such capital. The effect on labour income is rather more complicated.  For high levels of migration on labour income to not lead to lower-that-it-would-otherwise-be income from labour for the resident providers of labour requires that demand for their labour increase, even though the overall supply of labour is increasing due to the inflow of other providers of labour. Robert Fogel, in his Without Consent or Contract (which I reviewed here) provided strong evidence that mass C19th migration to the US was not good for native-born workers.

Australian migration policy is essentially set up to not disturb the capital/labour balance. (We are the only country in the Western world, that is not a micro-state, whose migrants are a net gain to average human capital.)

Fifth, even in Australia, where popular opinion is generally strongly pro-migrant (but not illegal migrant: conflating the two issues poisons migration debates [and polling results are tending towards having less migration [pdf]), the congestion costs are beginning to wear away at support for current levels of migration. Making sure your physical, social and political infrastructure is up to a significant migrant influx is actually quite difficult. Especially as aforementioned housing market effect actually militates against having adequate physical infrastructure (by raising its costs and lowering its tax revenue benefit). The US political system does not strike me as currently functional enough to well manage such. The EU political system(s) in some ways, even less so.

Sixth, when reviewing "migration is a net positive" papers, relevant questions to ask are:

(1) Does it differentiate between effects on labour income and capital income for the existing residents? If the answer is no, the paper is useless to the point of effective dishonesty, as who gets what benefit (and what costs) is crucial to understanding the effects of migration. Even if it does look at resident labour and capital income effects separately, does it incorporate wage stickiness effects? In particular, does it incorporate that the most likely negative effect on labour income from migration is not to lower wages, but to block their rise? Merely observing that there is little evidence that wages are being actually lowered is not, in itself, proof that wages are not being "flattened".  See here for a relatively simple model which works from precisely that effect.

(2) Does it measure the fiscal/welfare effects? Including any crowding or congestion effects on access to government services and support? Different migrants groups and profiles have very different effects on demand and use of welfare services. It is not helpful, or even analytically sensible, to treat immigrants, in the felicitous words of one study (pdf), “as a homogeneous huddled mass”.

(3) Does it measure crime/distrust effects? Raising the level of ethnic diversity tends to decrease levels of social trust which tends to increase the level of crime even if the newcomers commit less crimes on average than the existing residents. If an incoming group has a higher tendency to commit crimes than the residents, the effect is magnified. (And popular views of relative level of criminality among different migrants groups can be relatively accurate [pdf], though in the US general stereotypes about migrants seems to be dominated by [pdf] perceived patterns among Hispanic migrants.) These effects are, however, likely to be highly localised, with little or no impact on national crime trends, which again points to distributional effects mattering. Though enough localised effects can start adding up, as in Britain's rape gang scandals.  [CORRECTION: It appears that economist Bryan Caplan's criticism of Putnam's original paper on diversity was spot on, that it is not diversity per se which lowers trust, but other features associated with high migrant neighbourhoods: which adjusts, rather than refutes, the point.]

(4) Does it incorporate infrastructure effects? If the paper effectively assumes that physical, social and political infrastructure is infinitely flexible, then it is pushing nonsense on stilts. Simply considering physical infrastructure effects alone, as noted above, the effect of raising the proportion of housing entrants who are non-voters in a situation of positional goods (normal in coastal cities, for example, particularly if there are also scenic-hill effects) greatly increases the likelihood of regulatory limitation of use of land for housing which raises the (opportunity) cost of building infrastructure (as the value of land-for-housing is increased) and reduces the net revenue value of building infrastructure (as regulatory restriction of land use drives up value of taxes on such land in itself).

In my own city of Melbourne, for example, anyone outside the inner city "bubble" is well aware that (1) traffic congestion has got noticeably worse in recent years and (2) the main reason is the failure of transport infrastructure to keep up with the migrant inflow. So people are experiencing, from more and more time spent in heavy traffic, a significant daily cost to them from high levels of migration.

As for political infrastructure, there was much pointing and laughing/sneering that anti-migrant sentiment was an element in the Brexit vote, yet support for leaving was highest in areas with the least number of migrants. There is no contradiction here; if people observe that issues connection to migration take up a great deal of public debate and attention, but there are very few migrants in their area, then that means all that debate and attention is directed away from where they live. An example of the point about political infrastructure not being infinitely flexible.

Status sacralising
What makes all this worse is that members of what economic historian Thomas Piketty calls The Brahmin Left (pdf), but I prefer to think of as Brahmin Progressivism (since key ideas are neither Enlightenment-based nor class-framed, so not "Left" in the sense that applied from 1789 to 1991), have become addicted to using migration as a sacred idea (especially the sacred value of "diversity") for Brahmin Progressivism's moralised, taboo-generating status claims. (Taking the notion and use of 'sacred' from social psychologist Jonathan Haidt, see here [pdf].)

Migration is moved out of the realm of social bargaining, operating according to various perceptions and calculations of costs and benefits, and moved into the realm of sacred status-markers where disagreement with any key status-marker position is direct evidence of sin, and one does not, of course, bargaining with sinners! because that is to negotiate with evil. This secular sacralisation (in this case of diversity) creates, for example, sinful books.

Suggesting that diversity has costs, that different migrants groups tend to provide different costs and benefits, even that there should be effective border enforcement, all become attacks on the sacredness of diversity (which, being sacred, cannot be discussed in terms of trade-offs without being tainted). Diversity should also, of course, being sacred, reach everywhere. But not, "obviously", cognitive diversity, because that means sin and evil. This despite cognitive diversity being the form of diversity which studies regularly find does have positive benefits while the forms of diversity which are sacralised have no identifiable connection with, for example, better decision-making or group performance. But such benefits-and-costs analysis are not to be permitted to taint the sacred value of diversity.

Economic papers that essentially "leave out" the hard bits of the effects of significant levels of migration become one-sided chips to be played in in these sacralised status games. They become, rather than contributions to public debate, weapons in a drive to undermine the operation, even the concept, of effective social bargaining over migration conceived as manifesting the sacred value of diversity.

There is a religion-size hole in many WEIRD psyches and, to a significant degree, in Western societies in general. Using politics to feed that hole is disastrous, as politics is about the arrangement and direction of society via public policy, so politics-as-substitute-religion turns policy and politics, not into a system of bargaining and trade-offs, but an exercise in personal salvation centred around barred-from-trade-offs sacred objects and involving a (naturally escalating) war against sin and sinners.

It would be helpful if economists played a little less into such games and rather more into grappling with the genuine complexities of migration.  After all, the Western world has previously gone through a period where politics became about salvation and wars against sin, and it was not a happy experience.

[Cross-posted at Skepticlawyer.]