A while back I wrote out my thoughts on immigration in a more thorough manner than I have before or since. However, this was at Scott Sumner’s blog and I often have trouble finding that old post (though I have linked to it before). I decided I should put it here so I can find it more easily.
My first comment:
Guest-workers are an example of importing labor but not receiving immigrants. I would endorse a large guest-worker program like Dubai’s rather than simply letting the workers immigrate. I say this because I am not a liberal or perhaps even a libertarian.
Sumner responded:
I have an open mind on guest workers. I see pros and cons to those programs. I suppose I tend to favor immigration over guest workers, although if I had my way I’d change our immigration program to something closer to what Australia and Canada have. If I am not mistaken our immigrants are skewed toward the low-skilled. It might be better to have a more balanced approach. I’m not an expert here so someone please tell me if I am wrong in my comparison of the U.S. to those other two countries.
I post a long comment in response:
I agree that our immigration regime skews low-skilled, due to both the heavy role family reunification plays and the tacit acceptance of large amounts of illegal immigration from certain regions. I was surprised when I found that African immigrants hold white-collar desk-jobs at a rate higher than the native-born white population (though maybe I shouldn’t have been). To me that screams “marginal returns have a ways to diminish before they turn negative!”. My ideal immigration system would be two-tiered: high-skilled workers would be encouraged to come here permanently and could bring family (though we may want to put them through an initial period of lots of soul-draining profitable work & anomie). I think smarter voters will tend to do a better job, and so they can be enfranchised. Like a company considering hiring a long-term employee or a condo association considering a new occupant, our perspective will be: “Is this the best deal for us [the current “shareholders” of the company] we can find”? Because there are so many people willing to immigrate, we can levy higher taxes on them and provide fewer services and still expect many to accept.
It would be extremely difficult to try and stop immigration from our southern border, so instead we will institute a guest-worker program to control it. They would truly be guests and would be encouraged to send remittances home. They would have a pre-established relationship with an employer who is in effect “vouching” for them. The vouching company will be held responsible for any complaints the citizens may lodge against the immigrants (in addition performing a bail-bondsman like duty of keeping track of their whereabouts). Bryan Caplan acknowledged[*] the resistance many Americans have to immigration and proposed that we simply tax the immigrants (or their employers, it is equivalent) and bribe the natives into putting up with them. There are large enough gains from trade for this to be quite feasible. With their status being perfectly legal, immigrants will not be punished for returning home by being unable to go back again to the U.S. While there are some costs involved in employee turnover, we don’t want a lucky few immigrants to hog all the available slots indefinitely and so visas will have a limited time and will be awarded semi-randomly to the pool of acceptable candidates. This way those who do not win initially will be more willing to accept it on the possibility that there’s always next time in the not-too-distant future, and returning immigrants will accept going back to their lower wages at home on the expectation that they may get to go north again.
I could probably put a lot more thought on how to maximize our gains, but it seems obvious right now that we have far from an efficient system.
*I didn’t link to this at Sumner’s, but should have. It was a lot easier to find this while searching before that, and I suppose it’s relevant enough to link as well.
UPDATE: This exchange between Bryan Caplan and Richard Hoste is quite relevant.
Entitled to an Opinion 
April 26, 2010 at 10:31 pm
There’s no doubt that with the proper immigration profits current American citizens could profit greatly. In fact, if tax dollars were dispersed as a national dividend, rather than as defined benefits (medicare, EITC) and patronage (civil servant jobs), and enough immigrants were allowed in at special high tax rates, I think a system could be designed in which current American citizens would no longer have to work (or would work dramatically less).
But the downside of this is that America would basically be importing a caste system. (Really, it is importing a caste system now, opening up immigration further will make the problem worse). Latin America has always had a soft caste system, and I see no evidence that blacks, hispanics, and whites in America are amalgamating together. Do you want America to turn into a Brazil – even if it was a safer, 1950’s version of Brazil? One of the worst aspects of a caste system is what it does to the elites. The elites end up living off the backs of the lower castes, rather than by engaging in engineering, entrepreneurship, and trade. I think this is one of the reasons Mexico fell so far behind America.
April 27, 2010 at 11:22 am
I think smarter voters will tend to do a better job, and so they can be enfranchised. Like a company considering hiring a long-term employee or a condo association considering a new occupant, our perspective will be: “Is this the best deal for us [the current “shareholders” of the company] we can find”?
That makes sense, if you think that America is a corporation and that the people in it are “employees”. And I get the impression that you really do think that.
But as I’ve said before, I think that way of looking at things is both flawed and dangerous. Of perhaps more interest to you, it’s not conducive in the long run to the creation of wealth.
April 27, 2010 at 11:25 am
In fact, if tax dollars were dispersed as a national dividend, rather than as defined benefits (medicare, EITC) and patronage (civil servant jobs), and enough immigrants were allowed in at special high tax rates, I think a system could be designed in which current American citizens would no longer have to work (or would work dramatically less).
If you check your history books you’ll see tha America experimented with this concept early in its history. It did not work out well.
April 27, 2010 at 11:33 am
Bryan Caplan acknowledged[*] the resistance many Americans have to immigration and proposed that we simply tax the immigrants (or their employers, it is equivalent) and bribe the natives into putting up with them. There are large enough gains from trade for this to be quite feasible.
You’e talking here about the illegal immigrants who are largely from Latin America. There are no “gains from trade” associated with their presence in the US, regardless of their status. At least, no gains for the US.
As far as Caplan is concened – have you ever noticed the quite amazing number of prominent libertarans who are tenured professors? So much for that “free movement of labor” stuff they push on everyone else.
Libertarianism – it’s the new communism.
April 27, 2010 at 1:18 pm
You are still going to need to enforce immigration law, with or without the guest worker program. So that problem still needs to be solved – and I don’t see why it can’t be.
I admit, quantitatively your design will obviate much of the desire to flout the law. But it certainly won’t obviate all of it. So the problem remains just about the same qualitatively.
I would definitely rather not have your guest workers. A closed labor market will drive up employment (and wages) of our citizens. This will take a bite out of employers who would do better for themselves (and for their customers) by employing Mexican guests. Too bad. It should have a variety of social effects that are very desirable. For one, it will take a bite out of social welfare spending. It would also engender bourgious virtues (possibly including somewhat less baggy pants), and pride, among the marginal citizens who get hired. They are too dumb of course to realize that they got hired because seasoned brainiac-patriarchs like ourselves decide to jettison doctrinaire libertarianism and exclude foreign labor.
I think there is a need for the tribe, the nation, even if only in a very modest degree. Fuller employment serves this. It would make us into more of an organon, and enervate the counterculture of the robustly disaffected. My proposal is not good for Mexico. Too bad. The intuitive background for what I’m saying here is of course a very mild nationalist impulse; I am permitting that impulse a minor inroad upon my background libertarianism.
April 27, 2010 at 6:25 pm
Flesner-
If you check your history books you’ll see tha America experimented with this concept early in its history.
What specifically are you referring too?
April 27, 2010 at 9:38 pm
I’m referring to the the time when Americans devised a system under which other people were brought here to work on their behalf, under which “current American citizens would no longer have to work (or would work dramatically less).”
To be honest, I think that people who dream up such schemes get what they deserve. Or their descendants do. There’s not much left of the “American work ethic” in you.
April 27, 2010 at 8:58 pm
I am also worried about developing a caste system and wrote about my fears here. Here’s what I think could distinguish my plan from what we see in the third world: the guest-workers would truly be guests, they would all go home after a specified period of time to be replaced by others. They would not have family here and children who were born into (rather than voluntarily choosing) non-citizen status. I believe that is how the Gulf States currently operate.
flenser, I think there is a lot of wealth tied up in the United States. A lot of it is intangible capital, perhaps due to institutions or norms. I think the most sensible people to be considered owners of this capital are the current citizenry. That does not make them employees (the guest-workers will be) but stockholders. And I think the joint-stock company is quite good at producing wealth.
“There are no “gains from trade” associated with their presence in the US, regardless of their status. At least, no gains for the US.”
Yes there are, immigrants are hired because it is profitable to do so. Not their presence specifically, but labor which happens to require their presence. If labor could be completely abstracted away as a good to be shipped across borders with the trading partners stay on their own side, it would make this a lot simpler. The guest-worker proposal is my attempt to separate labor from the benefits of citizenship, and the fines on “sponsors” will serve to internalize other externalities associated with residence.
Caplan is opposed to tenure and was actually working on a book titled “The Case Against Education” before he (unfortunately, in my view) got side-tracked with “The Selfish Reason to Have More Kids”. I’m not aware of any libertarians who favor tenure, and a great many who oppose it.
Tyrosine, by requiring sponsors who we are confident will remain in the country and have vulnerable assets we can more easily enforce immigration laws. If any sponsored worker causes problems, we hold the sponsor responsible. The sponsor can make sure to select only reliable guest-workers, make arrangements to ensure rules are followed, or whatever. We give the sponsor the desired incentives and leave it up to them to enforce rules. There are a number of analogies one may make between current immigration and drug laws (though the latter are a lot easier to smuggle and manufacture), and one of them is the problem created by the massive & obvious flouting of rules and vested interests blocking enforcement. By reducing the population of outlaws, we shift into a lower crime equilibrium which makes it easier to enforce laws. This approach has worked with drug markets in High Point, N.C and Newburgh N.Y. Mark Kleiman has written a lot about those incidents.
Tyrosine, why should a closed labor market drive up employment & (real) wages any more than closing off any sort of foreign good? And once you’ve embraced protectionism why not apply it at the level of the state, county, town, or household? Autarchy makes us poorer, trade makes us richer.
April 27, 2010 at 9:28 pm
Autarchy makes us poorer, trade makes us richer.
Is “autarchy” really the word you were looking for there? I’m not getting that contrast to trade.
Trade is trade in goods, not people. In fact, as a certain Mr Friedman said, trade in goods is a substitute for the movement of people. Instead of importing Swiss cuckoo clock makers to America, we simply import the cuckoo clocks, in exchange for Jack Daniels or whatever. That is trade. What you are proposing requires some completely different word.
I believe that (guest workers) is how the Gulf States currently operate.
I’m read some stuff about “guest workers” in the Gulf States that would turn your stomach. The Arabs don’t suddenly become civilized in this one area. Which has nothing to do with your guest workers plan, I admit.
immigrants are hired because it is profitable to do so
It is profitable for their employers, not for America. It’s a fine example of employers privatizing their profits while socializing their costs. Poor people of any sort do not pay their own way in our society. Increasing the number of poor people does not alter that basic fact.
I think the joint-stock company is quite good at producing wealth.
I’ll have to come up with a succinct description of why attempting to transform a country into a company is a bad idea. I know I’m not there yet. But one key difference is the while ‘producing wealth’ is the entire reason for a company to exist, it is not the reason why countries exist. Not even tangentially.
Have you ever read “Our Enemy, The State”?
April 27, 2010 at 9:52 pm
why should a closed labor market drive up employment & (real) wages any more than closing off any sort of foreign good?
If we closed off the importation of foreign oil, do you think it would result in an increase of the cost of domestic oil?
And once you’ve embraced protectionism why not apply it at the level of the state, county, town, or household
A closed labor market at the national level is not “protectionism” no matter had badly libertarians want to redefine the word.
If you had suggested to Adam Smith, David Ricardo or F.A. Hayek that it was “protectionism” not to import 300 million Chinese to the West, they’d have had you committed to a lunatic asylum.
Smith proposed the wealth of nations. You propose their abolition.
April 27, 2010 at 10:13 pm
TGGP,
I’m not strongly opposed to your program, assuming it works out well. I might slightly prefer mine, but not by a huge amount, and not without any uncertainty.
I take your point on excluding foreign labor not necessarily driving up employment of citizens. In assuming that it would, I was just being absent minded. I’m aware, but did not have it in mind, that that is a bone of contention at the very least.
What I think I have heard, in my scant attention to this whole issue, is that foreign labor might impact citizen wage levels (at the low end of the wage scale) more than citizen employment. Do you have a view on that? I would imagine that higher citizen wages at the low end of the scale can also have the same sort of socially salutary effects that I would expect for higher citizen employment.
How do they keep guests from having *any* offspring in Dubai? Chastity belts?
I see that you are offering to steeply fine the Tyrosine Broccoli Co if its guest workers do not return to Mexico. But the government is still going to have to check people for visas – probably even right on the street. That’s because some of the guests I hire might be tempted to persist here against the law and perhaps look for some sort of off-the-books work.
However, one problem with your program looms largest, assuming you are just immigration czar and not overall philosopher-king. And that is that all kinds of bleeding hearts and agitators are going to obstruct you from checking peoples’ visas and deporting those present illicitly. That’s not really a “problem with your program” though, I guess: it applies equally to my total-restrictionist program. So I guess we just need to become absolute monarchs over the USA, first off.
April 27, 2010 at 10:15 pm
> all kinds of bleeding hearts and agitators are going to obstruct
Including judges and officials, I mean.
April 27, 2010 at 10:36 pm
flenser-
The proper analogy is indentured servitude, not slavery, as the immigrants would be coming to the United States under their own volition. Indentured servitude actually seemed to have worked out pretty ok.
Anyways, I’m not actually advocating the proposal in my first paragraph. As I say in the second paragraph, I think it would result in a caste system in which the born citizens grow lazy from living off the toil of the immigrants.
TGGP-
Even if the workers are only guest workers, you still have the caste system effect. There is even more of a social and political gap between the natives and the immigrants, which can create all the problems known to caste system. It still allows for the problem of the natives becoming lazy. I don’t caste systems have ever been healthy for a society – whether the system was in India, Mexico, the American South, or modern Dubai.
Furthermore, in all likelihood the guest workers would be given extensions, then the ability to raise a family here, and then they would be permanent residents with second class rights. There would be a hard class system in law, not just in custom.
April 28, 2010 at 7:05 am
Can you run a guest worker system simultaneous with an anchor baby policy hole?
April 28, 2010 at 10:22 am
I think it would result in a caste system in which the born citizens grow lazy from living off the toil of the immigrants
Yes, thats another problem with a guest worker program. It rots the natives when they think that certain work is beneath them.
TGGP, I think you engage in a logical fallacy when you liken human beings to goods such as bushels of wheat of boxes of shoes.
Humans are sometimes the creators of goods and the providers of services. Other times they are the consumers of goods and services. Still other times they do neither of these things. But in no case are humans thenselves “goods and services”. (The exception being slavery, of course)
One of the more pernicious ideas libertarians have spread is that humans are nothing more than “factors of production”, a notion they seem to have picked up from their cousins the communists.
April 28, 2010 at 9:44 pm
The word I was thinking of was “autarky”, not “autarchy”. Whoops.
You are correct that goods are not people. I myself have often insisted on the distinction to open-borders libertarians. I am trying to as much as possible replace our current system with one based on trade in labor rather than residency + citizenship. Much of the labor immigrants do cannot be exported (how do you export a mowed lawn, cleaned office, or nanny?). The jobs often require that they be fairly close to the end-user.
“It is profitable for their employers, not for America. It’s a fine example of employers privatizing their profits while socializing their costs.”
That is why I propose taxing/fining the sponsors in order to “internalize externalities”.
“Poor people of any sort do not pay their own way in our society.”
That is because they receive lots of benefits while paying less taxes. I propose to tax immigrants extra and not give them benefits.
Producing wealth may not be the reason the country exists, but I think the current residents would prefer being wealthier. They are already purchasing a lot of goods & services which rely on immigrant labor, I propose a more rational scheme to deal with that.
I have not read “Our Enemy, the State”, but I have read Franz Oppenheimer’s “The State”, which is the major inspiration for Nock’s book. I actually host Oppenheimer’s book online at my personal tripod site. The closest thing to a review of it on my part is here.
“If we closed off the importation of foreign oil, do you think it would result in an increase of the cost of domestic oil?”
Raising the cost of oil reduces real wages. Lowering costs increases real wages.
“A closed labor market at the national level is not “protectionism” no matter had badly libertarians want to redefine the word.”
So if labor could literally by shipped across borders in a package, abstracted from the actual person producing it, you would still not consider it protectionism to restrict the shipment of such packages?
“Smith proposed the wealth of nations. ”
To be pedantic, he examined its causes.
Tyrosine, I think George Borjas is the go-to guy regarding the effect of immigration on the employment/wages of the low-skilled.
“some of the guests I hire might be tempted to persist here against the law and perhaps look for some sort of off-the-books work.”
Every guest-worker who comes in will be recorded and the sponsor will be held responsible if that guest-worker don’t show up when the time comes for them to go home. In another nod to Mark Kleiman, that’s something like the basis for the highly effective Hawaii H.O.P.E drug program. Maybe we could even fit them with ankle-bracelets.
“And that is that all kinds of bleeding hearts and agitators are going to obstruct you from checking peoples’ visas and deporting those present illicitly.”
Enforcement will be directed against sponsors, who will be big faceless & heartless corporations who receive little sympathy. It will be the job of the sponsor to ensure guest-workers adhere to the rules.
I’m not worried about natives becoming lazy. The same argument could serve against buying products from abroad rather than making them ourselves or even using technology to substitute for labor.
Malak, I would of course like to get rid of the anchor-baby policy. I would also of course get rid of “family unification”. I think in Dubai they primarily have male guest-workers who can’t have children. I’m not sure what the consequences for having children would be, I suppose if any G.Ws are pregnant they will be sent home. Sponsors will be heavily fined if any of their G.Ws give birth in this country.
I’m not aware of any libertarians who say people are nothing more than “factors of production”. But among the things people are, factors of production is certainly one. Because of that there is a large demand for immigrant labor which is currently met through illegals with the law being flouted. I propose to get control of the situation, allow for the labor demands to be met, and correct for other externalities involved in having the guests (briefly) resident here.
April 29, 2010 at 12:54 pm
among the things people are, factors of production is certainly one.
That’s true. An overrated and overstated truth, but true as far as it goes.
Because of that there is a large demand for immigrant labor which is currently met through illegals with the law being flouted.
No, not because of that. Because illegal labor is cheaper and comes with less strings attached. This would remain true even if a guest worker program was implemented.
Perhaps implicit in your guest worker idea is the notion that we’d finally crack down on the employers of illegals, thus driving the cost (in every sense) of it above that of legal labor.
But we could do that now, without a guest worker program.
Raising the cost of oil reduces real wages.
If you have to resort to evasion it’s sign you are on shaky ground. I asked you what effect banning foreign oil would have on the price of domestic oil. You chose to answer some other question I never asked, all to avoid admitting that immigration into America reduces real wages.
I am trying to as much as possible replace our current system with one based on trade in labor
I can see that. Here’s a crazy idea – how about we replace “trade in labor”(?) with actual trade? You know, where people in country A make product X and trade it with people in country B for product Y?
if labor could literally by shipped across borders in a package, abstracted from the actual person producing it, you would still not consider it protectionism to restrict the shipment of such packages?
Why don’t you ask me if a dog with a trunk on its nose is an elephant? Or if water, “abstracted” from being H2O to merely H, burns? The question is nonsensical. Once you “abstract” away the oxygen it’s not water any more. You’re not displaying your sharpest thinking on this topic.
April 29, 2010 at 1:13 pm
Because of that there is a large demand for immigrant labor which is currently met through illegals with the law being flouted. I propose to get control of the situation, allow for the labor demands to be met
What makes you think that every “demand” is supposed to be met in the manner which the demanders want? What in classical free market economics says that? There was a “demand” for slave labor in parts of America once. Once that demand was thwarted, they finaly got with the program and introduced mechanization.
If these “demands” really existed I would expect to see the cost of the things being demanded (labor costs in this case) increasing. But labor costs in the fields with immigrant labor have actually fallen.
So we are not talking about “demand” in the strict economic sense. What we have is a “demand” from business leaders that politicians provide them with labor at the price the business leaders chose. This is a travesty of free market economics.
April 29, 2010 at 8:52 pm
I’m not worried about natives becoming lazy. The same argument could serve against buying products from abroad rather than making them ourselves or even using technology to substitute for labor.
Trade is fine because you have to produce products in order to trade them ( but trade deficits are not good at all – the danger is Spanish disease in which a countries productive base atrophies as it gets imports by exporting its currency). Technology is fine too, I don’t mind people using ingenuity to save on work.
The problem with a caste system based on low skilled labor is that the upper class, instead of using ingenuity to invent new things, or using entrepreneurism to get rich and live a comfortable life, will instead just rely on the labors of the lower caste to enjoy a comfortable life. The progress of civilization will come to a stand still, as it did in India and Latin America.
April 30, 2010 at 8:30 pm
“No, not because of that”
Yes, yes because of that. If they were not factors of production there would be no point in hiring them.
“Perhaps implicit in your guest worker idea is the notion that we’d finally crack down on the employers of illegals, thus driving the cost (in every sense) of it above that of legal labor.”
The guest-workers would be working legally, and would prefer to come here in that manner rather than sneaking across with a coyote and being vulnerable to immigration raids or exploitation by criminals. They would also be able to go back home (assuming their employer grants it, which I don’t think is too outlandish since militaries also give leave) with the knowledge that they can come back to work easily. The employers may also prefer having the situation organized and not having to be uncertain about their labor force (possessing scarce guest-worker permits rationed by the government is also advantageous, though they would of course have to cough up to obtain them in the first place).
“But we could do that now, without a guest worker program.”
There are entrenched interests which would interfere with such a plan.
“If you have to resort to evasion it’s sign you are on shaky ground.”
I am not evading, I am trying to keep discussion in terms of real wages. We are all consumers and Baumol’s cost disease makes labor approach 100% of costs. Trade expands the production possibilities frontier, and that increase in productivity increases real wages. Imagine a pure-service economy of only two people. Each derives all his income from labor and spends it all on labor, each can do the same activities as the other though not equally well. Through comparative advantage (and perhaps economies of scale) they are both better off trading with one another even though each “undercuts” a service the other could provide. In real life, as in your oil example, there could be a small group of producers who are made worse off but whose loss is greatly outweighed by the gain to domestic consumers. Who are analogous to those domestic oil producers in the case of illegal immigrant labor? Primarily previous low-skilled immigrants who are already here!
“I can see that. Here’s a crazy idea – how about we replace “trade in labor”(?) with actual trade? You know, where people in country A make product X and trade it with people in country B for product Y?”
I would like to do that, but a lawnmowing or floormopping is difficult to move.
“You’re not displaying your sharpest thinking on this topic.”
I asked a hypothetical in order for you to state what your real objection is. If labor could be shipped across borders, it would be analogous to your oil example. I don’t know if you want to restrict imports of oil, maybe you do. Alternatively, you could object to “employers privatizing their profits while socializing their costs”. That’s my objection to the current situation, and through taxes/fines I intend to impose those costs on the employers.
“What makes you think that every “demand” is supposed to be met in the manner which the demanders want?”
Nothing “supposed” about it, just recognizing the fact that the demanders will try to get what they want and will likely subvert rules which prevent it. My plan aims to let them have what they want, while we who complain about the social costs of immigration get what we want.
“Once that demand was thwarted, they finaly got with the program and introduced mechanization.”
No, as Wolfgang Schivelbusch discusses in “The Culture of Defeat” the south failed to industrialize after the Civil War, even as the “New South” propagandists raved about the glorious industrial future.
“If these “demands” really existed I would expect to see the cost of the things being demanded (labor costs in this case) increasing.”
If demand didn’t exist I wouldn’t expect there to be a cost at all. The relatively low cost of immigrant labor is why it is demanded.
Devin Finbarr:
Wouldn’t it be possible for the upper class to rely on the “labors” of machinery, letting civilization come to a stand still instead of using their ingenuity to invent additional new things? Do you think it is destructive that we import cheap goods from China?