immigration

So pretty much out of nowhere immigration has become the hot topic in Washington.  Before Arizona passed its own version of immigration control, no one in Washington was really talking about the issue.  My own cynical opinion is that the Democrats saw immigration as a way to steer the debate away from their unpopular policy debacles (stimulus, auto bailouts, health care, and what is slowly becoming a handout for big banks - financial reform).  With the so-called "jobless economic recovery" and voters pissed as hell at government in general, the Democrats looked poised to suffer monumental losses in November.  In this environment I'd probably want to change the subject as well.  Whether changing the issue to immigration is a smart political move is yet to be seen.

Very few issues are as divisive as immigration.  This has almost always been the case throughout the history of American politics.  Historically, many Americans born here have always felt an aversion to allowing more people to enter "their" country.  This was true in the nineteenth century - Irish, Italian, Asian and Eastern European immigrants were treated extremely harshly by traditional Protestant white majorities that dominated the country at the time.  Not much has changed today other than the fact that many of the people's whose ancestors once belonged to these oppressed groups now wish to limit immigration, themselves, while the majority of the anti-immigration sentiment is now focused on Mexicans.  This idea that we shouldn't allow anymore immigrants into the country when we have so many other problems of our own is what I like to refer to as the "Labor Union View of Population." 

I don't mean to say that labor unions around the U.S. espouse a policy view that we should close our borders.  In fact the opposite is true.  Many influential unions see a large amnesty as a tremendous opportunity to expand their ranks.  Currently many illegal immigrants compete directly with union labor in a variety of industries such as farming, construction and other day-laborer jobs.  Part of the reason some of these workers do not join unions themselves is because of their undocumented status.  Amnesty could change all of that.  But I regress.  The reason I term the anti-immigration view the "Labor Union View" is because in my opinion most Americans who hold anti-immigrant views do so for the same basic reason why a worker joins a labor union: to restrict the size and diversity of the labor pool.  Labor unions operate by restricting the supply of workers an employer has to choose from.  By imposing rules that only union members can be eligible for a job, the price of such labor rises.  Many anti-immigration components feel the same way.  By limiting the amount of immigrants into the country, the total supply of labor will decrease, thereby increasing the price of labor.  Remember the old South Park adage, "THEY TIRK ERRR JEEERBBBSSS?!?" (see clip below)



Now first of all I do not want to make you think that this is the only reason why some anti-immigration view holders do not support a comprehensive immigration reform bill.  I think there is a lot of merit to the argument that the control of our own borders is an urgent national security issue.  Unfortunately we live in an age where thousands of people around the world wish to do innocent, American civilians harm simply because of the way we live our lives.  We have an obligation as a people to stand up to these people that challenge our free and open society.  This means that we must do everything in our power to prevent attacks within our border against our fellow citizens.  However, in my opinion this national security issue is often used by as a smokescreen by politicians whose ultimate goal is to simply close the border. I also believe the argument that we should not reward those people who break our laws by granting them amnesty is deserving of merit.

There is also no doubt that some prejudice is involved as well.  These prejudicial views combined with the idea the immigrants will come in here and take away good well-paying, all-american jobs leads to a political culture that simply demonizes any type of comprehensive immigration reform.  This view point is simply wrong on the policy and wrong on the facts.  Immigration can be a tremendous source of growth in our economy, but only if it is coupled with other pro-growth initiatives along the way.  We must move away from the idea of "Zero-Sum" economics that dominates the immigration debate.  Just because an immigrant comes here and takes a low paying manual labor job does NOT mean that there is one less job for an native born American.  When an employer hires an immigrant for less money than he would have to pay native american to do the same work, the companies overall efficiency has increased.  These savings are eventually reinvested either in the business itself, or passed on to shareholders who can use the money to fund other productive ventures elsewhere in the economy.  This creates real job growth, not the artificial spikes in demand that are the dominant effect of short-term government "stimulus."

 So what would effective reform look like?  First, the emphasis of any policy must incentivize well-educated, hard-working immigrants to come to America.  These are keystone innovators of any society, and technology driven economy like the United States needs these types of thinkers in greater numbers in order to prosper.  The most important proposal I could make in this category would be to be institute a rule that any foreign graduate from a U.S. university with a science or engineering background should be offered a permanent green card and the opportunity to work towards citizenship.  By increasing the number of innovators we can harness the economic growth associated with these individuals over the course of their lives.  I don't think many people could make a strong argument why such a policy is against U.S. interests.

Secondly, I believe that some type of amnesty is necessary.  As I have written many times before, inherent economic realities often provide very strong incentives to break laws that limit the individual's ability to economically prosper.  Take for instance the market for illegal drugs.  The penalties associated with the traffic of these substances is very harsh, in fact much harsher than any anti-immigration laws, but every year millions of Americans take risks anyway to sell and purchase the drugs.  Regardless of the basis for such demand, the economic incentives provided by its mere existence almost forces many poor Americans into entering drug trade.  When the rewards of success are so high, even the chance of criminal punishment does not substantially decrease the average expected value of engaging in such an enterprise.  This is also the case regarding illegal immigration.  The incentives provided by the good working conditions and economic opportunities available in the U.S. make it economically rational to break U.S. immigration laws even taking into account the chance of apprehension.  Therefore illegal immigration will continue regardless of any attempt to truly secure the border because the incentive to break the law is too high.

In this situation, I believe that the prudent and cost-effective strategy would be for the government to attempt to facilitate the actions of economically rational actors in a way that still protects vital national interests such as preventing terrorists from coming into the country.  It makes no sense for government to attempt to completely eliminate a segment of a natural market (in this case outlawing a section of the natural labor market), as it is impossible.  As long as the underlying economic rational remains (which in this case will remain as long as the U.S. economy is prosperous) , people are going to pursue their economic best interests regardless of the penalties that are put into place.  Even the strict criminal penalties instituted in Arizona do not provide enough incentive to overcome the rational economic decision making that immigrants have made in my opinion.  As long as the worse the U.S. government can do is to send them back home, there is little incentive not to try to enter the country.

Therefore I believe the best immigration policy the U.S. can establish would be one that liberalizes the rules for permanent residency.  However, in a country with as many government "social safety net" programs as the U.S., allowing this sort of unfettered immigration could easily lead to abuses.  Obviously I am for the reduction, if not the complete elimination, of many of these wasteful programs that incentivize people to be unproductive.  However, I am in the minority so many of these programs are unfortunately here to stay.  Therefore I would propose that in exchange from dramatically liberalizing and increasing the immigration quotas, the new immigrants would be required to waive any right to participate in a list of certain government programs.  This would include medicaid, the new health care entitlement, and other types of welfare subsidies.  In exchange for giving up access to these handouts, we should end the cap on the number of new immigrants we allow into the country.  If someone does not have a criminal history and wishes to enter the U.S. to work, then we should allow it provided that he or she agrees to give up his ability to simply live off the state.  It is a fair compromise, but I doubt anyone in Congress, especially the Democrats who are simply trying to liberalize immigration so that there will be more wards of the state, would even consider this proposal. 

In conclusion, my basic premise is that illegal immigration is mainly caused by rational economic decision making of these immigrants.  When something is a rational economic decision even in circumstance where the government is attempting to completely ban it (undocumented immigration, drugs, prohibition) then it is nothing more than a tremendous waste of government resources to enforce such a policy.  If there is one thing I firmly believe it is that if a market for some good or service naturally exists (in the case of immigration it is a strong market for labor in the U.S.), then government prohibition of such a market does nothing but push it underground where the rule of law no longer applies.  This gives economic power to those who openly disobey the law and should not be the policy of our government.  Instead we should recognize that we cannot unilaterally eliminate a natural market in our free society, so instead we should attempt to structure the market in such a way that maximizes the benefits to everyone involved.  In the case of immigration I would argue that the best way to do this would be to encourage people who want to work hard to come here and do just that, while still instituting important checks regarding their background.  Are some people that have broke the law in the past or potential terrorists going to slip through the cracks in this type of liberalized system?  Most definitely yes.  However, I believe that is part of the price you must pay in a free and open society.  The economic benefits of liberalization outweigh these risks by an order of magnitude, and I believe that terrorists will get around even the most stringent rules if they really wanted to.  Remember that we have thousands of miles of open border with Canada.  Instead, by eliminating the possibility that immigrants are coming here for a handout, these immigrants could be a tremendous source of growth for years to come.  That would be good for all Americans.