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Open Borders Work, Part 2

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Opponents of immigration marshal a battery of objections to opening up borders. They claim that it would cost jobs, pose a huge welfare burden, and threaten Americans’ way of life — even their security. Yet these fears are mostly nonsense.

Critics argue that low-skilled immigration is harmful because the newcomers are poorer and less-educated than Americans. But that is precisely why they are willing to do low-paid, low-skilled jobs that Americans shun. In 1960, more than half of American workers older than 25 were high-school dropouts; now, only one in ten is. Understandably, high-school graduates aspire to better things, while even those with no qualifications don’t want to do certain dirty, difficult, and dangerous jobs. Many low-skilled jobs cannot readily be mechanized or imported: old people cannot be cared for by a robot or from abroad.

And as people get richer, they increasingly pay others to perform arduous tasks, such as home improvements, that they once did themselves, freeing up time for more productive work or more enjoyable leisure. Thus, as advanced economies create high-skilled jobs, they inevitably create low-skilled ones too. The way to reconcile aspirations to opportunity for all with the reality of drudgery for some is through immigration.

Fears that immigrants threaten American workers are based on two fallacies: that there is a fixed number of jobs to go around, and that foreign workers are direct substitutes for American ones. But just as women did not deprive men of jobs when they entered the labor force too, foreigners don’t cost Americans their jobs. They don’t just take jobs; they create them too. When they spend their wages, they boost demand for people who produce the goods and services that they consume; and as they work, they stimulate demand for Americans in complementary lines of work. An influx of Mexican construction workers, for instance, creates new jobs for people selling building materials, as well as for interior designers. Thus while the number of immigrants has risen sharply over the past 20 years, America’s unemployment rate has fallen.

But do some American workers lose out? Hardly any; most actually gain. Why? Because, as critics of immigration are the first to admit, immigrants are different from Americans, so that they rarely compete directly with them in the labor market; often, they complement their efforts — a foreign child-minder may enable an American nurse to go back to work, where her productivity may be enhanced by hard-working foreign doctors and cleaners.

Study after study fails to find evidence that immigrants harm American workers. Harvard’s George Borjas claims otherwise, but his partial approach is flawed because it neglects the broader complementarities among immigrant labor, native labor, and capital. A recent National Bureau of Economic Research study by Gianmarco Ottaviano and Giovanni Peri finds that the influx of foreign workers between 1990 and 2004 raised the average wage of U.S.-born workers by 2 percent. Nine in ten American workers gained; only one in ten, high-school dropouts, lost slightly, by 1 percent. Moreover, the new arrivals boost the returns to capital and benefit consumers through cheaper goods and services. Overall, then, America clearly gains. Ethically, it is hard to object to a policy that makes poor immigrants and the vast majority of Americans better off at the expense of a small number of people whose lot could be improved through such things as better education and training.

But might things be different if America’s borders were open to all and sundry? Israel’s experience is instructive. When the Soviet Union collapsed, the mass exodus of Russian Jews swelled Israel’s working-age population by 8 percent in two years and by more than 15 percent between 1989 and 1997 — the equivalent of 15 million foreigners unexpectedly arriving in the United States over the next two years, and 29 million by 2016. Jews everywhere have an automatic right to settle in Israel, which leaves the country open to mass inflows of immigrants, irrespective of the country’s economic needs and circumstances.

The influx of Russian Jews in the 1990s posed a severe test of the economic viability of Israel’s “right of return” policy. After all, the newcomers didn’t speak Hebrew and didn’t have jobs to go to. Yet as I explain in detail in my book Immigrants: Your Country Needs Them, Israel was able to absorb this huge and unexpected inflow of immigrants without a rise in unemployment, and with only a temporary fall in wages. The upshot is clear: even when migration is motivated by political crisis rather than economic demand, flexible advanced economies can absorb large numbers of immigrants with scarcely any cost to native workers.

Innovation and dynamism

Yet narrow calculations of immigrants’ impact on native wages or their net contribution to public finances neglect the much broader benefits of creating a more open and dynamic society. The exceptional people who come up with brilliant new ideas and set up new enterprises often happen to be immigrants. Instead of following the conventional wisdom, they tend to see things differently, and as outsiders they are more determined to succeed. Around a third of the Americans who won Nobel prizes in physics in the past seven years were born abroad. Nearly half of America’s venture-capital-funded start-ups have immigrant cofounders.

Most innovation comes from groups of talented people sparking off each other — and foreigners with different ideas, perspectives, and experiences add something extra to the mix. If there are ten people sitting around a table trying to come up with a solution to a problem and they all think alike, then those ten heads are no better than one. But if they all think differently, then by bouncing ideas off each other they can solve problems better and faster, as a growing volume of research shows. Just look at Silicon Valley: Google, Yahoo!, and eBay were all cofounded by immigrants who arrived not as graduates, but as children. And an ever-increasing share of a society’s prosperity comes from solving problems — developing new medicines, computer games, and environmentally friendly technologies, designing innovative products and policies, providing original management advice. Since diversity boosts innovation and enterprise, which are the source of most economic growth, critics who claim that immigration has few or no economic benefits are profoundly mistaken.

Immigration and welfare

Milton Friedman once claimed that you can’t have free immigration and a welfare state. He was right on many things, but in this case he was mistaken. Admittedly, if people from poor countries are better off on welfare in rich countries than they are working in their country of origin, they could conceivably be motivated to move, and if enough poor people did that, welfare provision could become economically and politically unsustainable. But even in such cases, immigrants would still be even better off working than being on welfare. So immigrants would have to be both enterprising enough to move in the first place but then suddenly be sapped of enterprise once they arrive. This is highly improbable — and there is no evidence, as even immigration critic George Borjas concedes, that the United States actually does act as a “welfare magnet” for people in poor countries.

In countries where we observe high unemployment among immigrants, the reason is not that foreigners are lazy and don’t want to work. The blame generally lies with labor-market restrictions that privilege insiders at the expense of outsiders. Throwing immigrants out wouldn’t reduce unemployment; it would more likely raise unemployment among native-born people. In any case, if rich countries opened their borders, they could at the same time restrict the availability of welfare to foreigners initially, just as the 1996 welfare-reform act cut off immigrants’ access to federal public benefits.

It is perverse to use the welfare state as an excuse to keep immigrants out. If the price of gaining the right to work in a country was not being able to claim welfare benefits when they arrive, most immigrants would take it. But unfortunately, they are not offered that option.

The costs of intervention

Many people say that they have no objection to legal immigrants, but that illegal immigrants are a problem. Of course, if the U.S. borders were open, the distinction would disappear. But in any case, illegal immigrants are not the problem; they are a symptom of the real problem: nonsensical immigration restrictions.

That immigrants are in the United States illegally is a sign not of moral turpitude but of misguided government intervention in the labor market: since employers cannot obtain visas for low-skilled foreigners to come work legally, foreigners who want to take up jobs in the United States have no choice but to come illegally instead. These generally hard-working and enterprising people’s only crime is wanting to work hard to earn a better life for themselves and their children — the epitome of the American dream. Without them, America would grind to a halt.

In any case, governments cannot stop people from moving across borders. Despite efforts to build a Fortress America, half a million foreigners bypass U.S. border defenses each year. Some enter covertly; most overstay their visas and then work illicitly. Far from preventing immigration, increasing draconian policies mostly drives it underground.

That creates huge costs: a humanitarian crisis; the soaring expense of border controls and bureaucracy; a criminalized people-smuggling industry; an expanding shadow economy, where illegal migrants are vulnerable to exploitation, labor laws are broken, and taxes go unpaid; a loss of faith in politicians who cannot keep their promises about immigration; a corrosion of attitudes towards immigrants, who are perceived as lawbreakers rather than hard-working and enterprising people; and the mistreatment of refugees in an attempt to deter people who want to come work from applying for asylum, besmirching the American commitment to help those fleeing tyranny.

These problems are generally blamed on immigrants, but they are actually due to immigration controls. It should be obvious, even to those who view immigrants as a threat, that the U.S. border controls are not just costly and cruel, but ineffective and counterproductive. Far from protecting society, they undermine law and order, just as Prohibition did more damage to America than drinking ever has.

Those who claim that tougher measures could stop immigration are peddling a false prospectus. Even if, at huge cost, the United States built a wall along its long border with Mexico, deployed an armada to patrol its shores, searched every arriving vehicle and vessel, denied people from developing countries visas altogether, and enforced stringent internal checks on people’s right to be in the United States, migrants would get through: documents can be forged or stolen, people smuggled, officials bribed. Even with a shoot-to-kill policy, people got across the Berlin Wall. And by trying to protect the land of the free from the phantom menace of immigration, anti-immigrationists would end up turning the United States into a police state. Politicians should instead have the courage to stop fighting a costly, unjust, and unwinnable war against immigration.

Open borders and terrorism

Having open borders does not imply opening the United States up to terrorism. If terrorists are home-grown, such as the Oklahoma bombers, or are foreigners already in the United States, then even the most stringent immigration controls could not feasibly keep them out. If foreigners are suspected terrorists trying to get in, then the government should use the standard legal means to apprehend them and have them extradited.

Tighter border security is perfectly compatible with free immigration: if most people were allowed to cross borders legally, government officials could focus their efforts on apprehending the tiny minority of terrorists, rather than diverting their efforts trying to keep out Mexicans who want to come work. Conversely, even if the United States granted no immigrant visas at all, terrorists could still enter the country on tourist, student, or short-term business visas, or under the visa-waiver program. And whatever you think about the merits of building a wall along the border with Mexico, it certainly won’t keep out terrorists. When I visited the Border Patrol in El Paso, Texas, they said their top priority was catching would-be terrorists. I asked them precisely how many terror suspects they had apprehended. The answer was “zero.” Does that mean al-Qaeda operatives are flooding into the United States across the New Mexico desert unnoticed? Of course not: they would most likely enter the country through a normal entry point using a false passport, or a genuine ID, if they are not yet suspects. There are more effective means of combating terrorism. Building a border wall is a hugely costly diversion.

Many people fear that if the United States opened its borders, everyone in poor countries would move in and American societies would collapse. It is a deep-rooted fear, as if immigrants were the barbarians at the gates. But it is misplaced.

After all, America didn’t do too badly when millions of poor European immigrants arrived in the late 19th and early 20th century. Nor has Britain collapsed since it opened its borders to Poland and the seven other ex-Communist countries that joined the European Union in 2004. If you consider that Poland is almost as poor as Argentina, Europe’s partial experiment with open borders is not a million miles away from the United States’s opening its labor markets to Latin America.

When Britain opened its borders to the Poles and other East Europeans, all 75 million people in those much poorer countries could conceivably have moved, but in fact only a fraction have, and most have already left again. Many are, in effect, international commuters, splitting their time between Britain and Poland. Of course, some will end up settling, but most won’t. Most people don’t want to leave home at all, let alone leave it forever: they want to go work abroad for a while to learn English and earn enough to buy a house or set up a business back home.

Studies show that most Mexican migrants have similar aspirations. If they could come and go freely, most would move only temporarily. But perversely, U.S. border controls end up making many stay for good, because crossing the border is so risky and costly that once a person has got across he tends to stay. A Mexican who overstays his visa knows that if he returns home, he will never be able to reenter the United States legally.

The case for open borders is compelling. Yet persuading skeptics won’t be easy. That’s why the argument for setting people free has to be made at several levels. There is a principled case: it increases freedom and reduces injustice; a humanitarian case: it helps people in developing countries; an economic case: it makes Americans richer; and a pragmatic case: migration is inevitable, so it is in everyone’s interests to make the best of it.

Allowing people to move freely may seem unrealistic. But so too, once, did abolishing slavery or giving women the vote. Campaigning for open borders is a noble cause for our time.

Part 1 | Part 2

This article originally appeared in the April 2008 edition of Freedom Daily.

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    Philippe Legrain is an award-winning journalist and a visiting fellow at the London School of Economics. His latest book, "Immigrants: Your Country Needs Them" (Princeton, 2007), was shortlisted for the 2007 Financial Times Goldman Sachs Business Book of the Year award.