Deludedly Deeming Deregulation a Disaster

I posted this on Twitter two weeks ago.

The results were much as expected.  Housing deregulation could deliver everything its proponents promise.  Housing deregulation could bring back a world where high school grads commonly buy shiny new homes in high-wage regions.  And if my respondents are correct, this seemingly rosy scenario would still outrage a great swath of the population.  Note, moreover, that if a third of Americans would decry deregulation as a “disaster,” then we can safely assume over half would at least deem it a “mistake.”

Most people would probably chalk the disaster rhetoric up to human selfishness, but don’t be hasty.  Consider the myriad ways that homeowners could nevertheless selfishly benefit from deregulation:

1. Homeowners who own little or no equity could walk away from their small, expensive home in favor of a larger, cheaper home.

2. Homeowners who eventually planned to move to a larger, more expensive home could easily find that their losses on their old home are smaller than their savings on their new home.  And they wouldn’t have to wait as many years to upgrade.

3. The grown children of settled homeowners could much more easily afford to live near their parents – and wouldn’t need so much help for a down payment.

4. Yes, higher local population means more congestion.  Yet it also means better shopping, entertainment and employment opportunities.  What’s the net value of all the good effects of more people bundled with all the bad effects of more people?  The very fact that prices are much higher in densely-population areas strongly suggests that the net value is highly positive.  “New York would be great without all the people” is sadly naive, because without all the people, New York would no longer be great.  Upshot: When prices fall in half, established homeowners get at least some offsetting gain in consumers’ surplus.

5. If you’re willing to move, improve, or subdivide, deregulation allows even established owners with lots of equity to readily profit.  If you suddenly gain the right to legally subdivide your lot into three homesites, a 50% fall in the value of the home you own is a fair price to pay.  The same goes if you can now build up.  Replace your home with a 10-story apartment and pocket the difference.  Cha-ching.

Do I seriously believe that many – perhaps most – existing homeowners will profit from deregulation?  Earnestly, I do.

Doesn’t this mean that tens of millions of homeowners are simply confused?  Indeed it does.

Isn’t that an absurd view?  So it might seem – until you realize that much of the population rents, but only a tiny minority of the population sees housing regulation as a problem.  Deeper research confirms that renters strongly oppose deregulation, too!  Since tenants are plainly deluded on this, why is it so hard to believe that homeowners are deluded as well?

Personally, I own a lot of home equity, and hope never to move.  If housing prices fell 50%, it would directly cost me hundreds of thousands of dollars.  Yet even from a totally selfish point of view, I still say deregulation would be awesome.

Why?  Because I want my kids to be able to afford to live in my neighborhood when they grow up.

Don’t you?

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So If Incentives Are Overrated…

New Nobelists Duflo and Bannerjee in the NYT:

[E]conomists have somehow managed to hide in plain sight an enormously consequential finding from their research: Financial incentives are nowhere near as powerful as they are usually assumed to be.

David’s critique is excellent.  But supposing Duflo and Bannerjee are right, I have a few questions.

If incentives are overrated…

1. Is it OK to reduce penalties for tax evasion?

2. Is it OK to cut regulatory enforcement?

3. Is it OK to curtail the right to sue?

4. Is it OK to cut pay and benefits for government employees?

My underlying point, as I’ve said before: The connection between heterodox economics and left-wing policies is fragile at best.

Yes, “incentives matter” helps the case for some right-wing policies.  But “incentives matter” also helps the case for some left-wing policies.  If you think textbook economics is misleading – as I often do – you should do a full rethinking of your policy views.  Don’t just single out the policies you dislike because they rest on questionable assumptions.  Scrupulously investigate the implications for policies you like, too.

What if the heterodox assumptions turn out, on balance, to be politically inconvenient for you?

Perhaps you went heterodox a little too hastily.

Or perhaps reality just isn’t politically convenient.

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Cheer the Fall of the Wall

On the 20th anniversary of the fall of the Berlin Wall, I explored Eugen Richter’s prescient dystopian novelPictures of the Socialistic Future.  Eventually I even wrote a new introduction to a re-release of this classic book.

For the 30th anniversary, let me share what is perhaps the most inspirational page Zach Weinersmith drew for Open Borders.  And if you object to the comparison between their walls and ours, think again.

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The One Big Fact that Overawes All Doubts

How do I pick book topics?  On reflection, I usually start with what appears to be a big blatant neglected fact.  Then I try to discover whether anything in the universe is big enough to explain this alleged fact away.  If a laborious search uncovers nothing sufficient, I am left with the seed of a book: One Big Fact that Overawes All Doubts.

Thus, my Myth of the Rational Voter starts with what appears to be a big blatant neglected fact: the typical voter seems highly irrational.  He uses deeply flawed intellectual methods, and holds a wide range of absurd views.  Twist and turn the issue as you please, and this big blatant neglected fact remains.

Selfish Reasons to Have More Kids, similarly, begins with a rather different big blatant neglected alleged fact: Modern parenting is obsessed with “investing” in kids’ long-run outcomes, yet twin and adoption researchers consistently conclude that the long-run effect of nurture is grossly overrated.  Yes, the latter fact is only “blatant” after you read the research, but once you read it, you can’t unread it.

What’s the One Big Fact that Overawes All Doubts in The Case Against Education?  This: education is highly lucrative even though the curriculum is highly irrelevant in the real world.  Yes, it takes a book to investigate the many efforts to explain this One Big Fact away (“learning how to learn,” anyone?).  But without One Big Fact, there’d be no book.

Finally, the big motivated fact behind Open Borders is that simply letting a foreigner move to the First World vastly multiplies his labor earnings overnight.  A Haitian really can make twenty times as much money in Miami the week after he leaves Port-au-Prince – and the reason is clearly that the Haitian is vastly more productive in the U.S.  Which really makes you wonder: Why would anyone want to stop another human being from escaping poverty by enriching the world?  Giving this starting point, anti-immigration arguments are largely attempts to explain this big blatant neglected fact away.  Given what restrictionist arguments are up against, it’s hardly surprising that they don’t measure up.

On reflection, my current book project, Poverty: Who To Blame doesn’t seem to fit this formula.  The book will rest on three or four big blatant neglected facts rather than one.  Yet perhaps as I write, One Big Fact that Overawes All Doubts will come into focus…

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Open Borders Are a Trillion-Dollar Idea

Tearing down all barriers to migration isn’t crazy—it’s an opportunity for a global boom.

The world’s nations, especially the world’s richest nations, are missing an enormous chance to do well while doing good. The name of this massive missed opportunity—and the name of my book on the topic—is “open borders.”

Critics of immigration often hyperbolically accuse their opponents of favoring open borders—a world where all nationalities are free to live and work in any nation they like. For most, that’s an unfair label: They want more visas for high-skilled workers, family reunification, or refugees—not the end of immigration restrictions. In my case, however, this accusation is no overstatement. I think that free trade in labor is a massive missed opportunity. Open borders are not only just but the most promising shortcut to global prosperity.

To see the massive missed opportunity of which I speak, consider the migration of a low-skilled Haitian from Port-au-Prince to Miami. In Haiti, he would earn about $1,000 per year. In Miami, he could easily earn $25,000 per year. How is such upward mobility possible? Simply put: Human beings are much more productive in Florida than in Haiti—thanks to better government policies, better management, better technology, and much more. The main reason Haitians suffer in poverty is not because they are from Haiti but because they are in Haiti. If you were stuck in Haiti, you, too, would probably be destitute.

But borders aren’t just a missed opportunity for those stuck on the wrong side on them. If the walls come down, almost everyone benefits because immigrants sell the new wealth they create—and the inhabitants of their new country are their top customers. As long as Haitians remain in Haiti, they produce next to nothing—and therefore do next to nothing to enrich the rest of the world. When they move, their productivity skyrockets—and so does their contribution to their new customers. When you see a Haitian restaurant in Miami, you shouldn’t picture the relocation of a restaurant from Port-au-Prince; you should picture the creation of a restaurant that otherwise would never have existed—not even in Haiti itself.

The central function of existing immigration laws is to prevent this wealth creation from happening—to trap human talent in low-productivity countries. Out of all the destructive economic policies known to man, nothing on Earth is worse. I’m not joking. Standard estimates say open borders would ultimately double humanity’s wealth production. How is this possible? Because immigration sharply increases workers’ productivity—and the world contains many hundreds of millions of would-be immigrants. Multiply a massive gain per person by a massive number of people and you end up with what the economist Michael Clemens calls “trillion-dollar bills on the sidewalk.”

Or do we? An old saying warns, “If it seems too good to be true, it probably is.” Far lower levels of immigration already inspire vocal complaints. After presenting my basic case in Open Borders, I strive to evaluate all the common (and many not-so-common) objections to immigration. My bottom line: While open borders are undeniably unpopular, they deserve to be popular. Like every social change, immigration has downsides. Yet when we patiently quantify the downsides, the trillions of dollars of gains of open borders dwarf any credible estimate of the harms.

The simplest objection to open borders is logistical: Even the largest countries cannot absorb hundreds of millions of immigrants overnight. True enough, but no reasonable person expects hundreds of millions to come overnight, either. Instead, immigration usually begins slowly and then snowballs. Puerto Ricans have been legally allowed to move to the United States since 1904, but it took almost a century before Puerto Ricans in the United States came to outnumber the population left on the island. Wasn’t the European migration crisis an unmanageable flood of humanity? Hardly. Despite media outcry, total arrivals from 2014 to 2018 came to less than 1 percent of the population of the European Union. Many European countries—most notably West Germany during the Cold War—have swiftly absorbed much larger inflows in the past.

The standard explanation for these asymmetric public reactions is that resistance to immigration is primarily cultural and political, not economic or logistical. While West Germans welcomed millions of East German migrants, a much lower dose of Middle Eastern and African migration has made the whole EU shiver. Aren’t economists who dwell on economic gains just missing the point?

Yes and no. As a matter of political psychology, cultural and political arguments against immigration are indeed persuasive and influential. That does not show, however, that these arguments are correct or decisive. Does immigration really have the negative cultural and political effects critics decry? Even if it did, are there cheaper and more humane remedies than immigration restriction? In any case, what is a prudent price tag to put on these cultural and political effects?

Let’s start with readily measurable cultural and political effects. In the United States, the most common cultural complaint is probably that—in contrast to the days of Ellis Island—today’s immigrants fail to learn English. The real story, though, is that few first-generation immigrants have ever become fluent in adulthood; it’s just too hard. German and Dutch immigrants in the 19th century maintained their stubborn accents and linguistic isolation all their lives; New York’s Yiddish newspapers were a fixture for decades. For their sons and daughters, however, acquiring fluency is child’s play—even for groups like Asians and Hispanics that are often accused of not learning English.

Native-born citizens also frequently worry that immigrants, supposedly lacking Western culture’s deep respect for law and order, will be criminally inclined. At least in the United States, however, this is the reverse of the truth. The incarceration rate of the foreign-born is about a third less than that of the native-born.

What about the greatest crime of all—terrorism? In the United States, non-citizens have indeed committed 88 percent of all terrorist murders. When you think statistically, however, this is 88 percent of a tiny sum. In an average year from 1975 to 2017, terrorists murdered fewer than a hundred people on U.S. soil per year. Less than 1 percent of all deaths are murders, and less than 1 percent of all murders are terrorism-related. Worrying about terrorism really is comparable to worrying about lightning strikes. After you take a few common-sense precautions—do not draw a sword during a thunderstorm—you should just focus on living your life.

The most cogent objection to immigration, though, is that productivity depends on politics—and politics depend on immigration. Native-born citizens of developed countries have a long track record of voting for the policies that made their industries thrive and their countries rich. Who knows how vast numbers of new immigrants would vote? Indeed, shouldn’t we expect people from dysfunctional polities to bring dysfunctional politics with them?

These are fine questions, but the answers are not alarming. At least in the United States, the main political division between the native- and foreign-born is engagement. Even immigrants legally able to vote are markedly less likely than native-born citizens to exercise this right. In the 2012 U.S. presidential election, for example, 72 percent of eligible native-born citizens voted versus just 48 percent of eligible immigrants. Wherever they politically stand, then, immigrants’ opinions are relatively inert.

In any case, immigrants’ political opinions don’t actually stand out. On average, they’re a little more economically liberal and a little more socially conservative, and that’s about it. Yes, low-skilled immigrants’ economic liberalism and social conservatism are more pronounced, but their turnout is low; in 2012, only 27 percent of those eligible to vote opted to do so. So while it would not be alarmist to think that immigration will slightly tilt policy in an economically liberal, socially conservative direction, warning that “immigrants will vote to kill the goose that lays the golden eggs” is paranoid.

Note, moreover, that free immigration hardly implies automatic citizenship. Welcoming would-be migrants is a clear-cut blessing for them and the world. Granting citizenship is more of a mixed bag. While I am personally happy to have new citizens, I often dwell on the strange fact that the Persian Gulf monarchies are more open to immigration than almost anywhere else on Earth. According to the Pew Research Center, 76 percent of people in Kuwait—and 88 percent in the United Arab Emirates—are foreign-born. Why do the native-born tolerate this? Probably because the Gulf monarchies generously share their oil wealth with citizens—and jealously protect the value of citizenship by making naturalization almost impossible. You do not have to ignore the Gulf monarchies’ occasional mistreatment of immigrants to realize that it is much better to welcome immigrants with conditions than to refuse to admit them at all. Migrants—mostly from much poorer parts of the Islamic world—accept this deal, however unfair, exactly because they can still do far better in the Gulf than at home.

In Open Borders, I have the space to address many more concerns about immigration in more detail. What I can’t do, I confess, is address the unmeasured and the unmeasurable. In real life, however, everyone routinely copes with ambiguous dangers—“unknown unknowns.” How do we cope?

For starters, we remember Chicken Little. When people’s warnings about measured dangers turn out to be wrong or overstated, we rightly discount their warnings about unmeasured and unmeasurable dangers. This is how I see mainstream critics of immigration. Their grasp of the basic facts, especially their neglect of the tremendous gains of moving labor from low-productivity countries to high-productivity countries, is too weak to take their so-called vision seriously.

Our other response to unmeasured and unmeasurable dangers, however, is to fall back on existing moral presumptions. Until same-sex marriage was legalized in certain countries, for example, how were we supposed to know its long-term social effects? The honest answer is, “We couldn’t.” But in the absence of strong evidence that these overall social effects would be very bad, a lot of us have now decided to respect individuals’ right to marry whom they like.

This is ultimately how I see the case for open borders. Denying human beings the right to rent an apartment from a willing landlord or accept a job offer from a willing employer is a serious harm. How much would someone have to pay the average American to spend the rest of his or her life in Haiti or Syria? To morally justify such harm, we need a clear and present danger, not gloomy speculation. Yet when we patiently and calmly study immigration, the main thing we observe is: people moving from places where their talent goes to waste to places where they can realize their potential. What we see, in short, is immigrants enriching themselves by enriching the world.

Do I seriously think I am going to convert people to open borders with a short article—or even a full book? No. My immediate goal is more modest: I’d like to convince you that open borders aren’t crazy. While we take draconian regulation of migration for granted, the central goal of this regulation is to trap valuable labor in unproductive regions of the world. This sounds cruel and misguided. Shouldn’t we at least double-check our work to make sure we’re not missing a massive opportunity for ourselves and humanity?

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Do You Talk About X in Open Borders? Yes!

The modal question about Open Borders is, “Do you talk about X?”  The answer is “YES” for all of the following…

1. Do you talk about the historical pattern of global poverty rates?

2. Do you talk about people’s attachment to their country of birth?

3. Do you talk about overcrowding?

4. Do you talk about the global poor’s ability to function in a modern society?

5. Do you talk about global apartheid?

6. Do you talk about the level of illegal immigration?

7. Do you talk about human smuggling?

8. Do you talk about the effectiveness of immigration law at preventing and deterring illegal immigration?

9. Do you talk about immigration as a civil right?

10. Do you talk about whether the plight of the immigrant is our problem?

11. Do you talk about whether there is a right to immigrate?

12. Do you talk about whether this right is absolute?

13. Do you talk about America’s open borders era?

14. Do you talk about how America’s open borders era ended?

15. Do you talk about the potential dangers of open borders?

16. Do you talk about whether we should look before we leap?

17. Do you talk about the Antarctican farmer hypothetical?

18. Do you talk about the connection between mass consumption and mass production?

19. Do you talk about the benefits of immigration for immigrants?

20. Do you talk about the benefits of immigration for natives?

21. Do you talk about how much immigration actually helps immigrants?

22. Do you talk about why immigration helps immigrants?

23. Do you talk about how much a trillion dollars of gains really buys?

24. Do you talk about whether open borders is “trickle-down economics”?

25. Do you talk about how immigration affects native workers?

26. Do you talk about how immigration affects you personally?

27. Do you talk about the effect of immigration on average national incomes?

28. Do you talk about the Arithmetic Fallacy?

29. Do you talk about what open borders would really look like?

30. Do you talk about the effect of open borders on the visibility of poverty?

31. Do you talk about “swamping”?

32. Do you talk about diaspora dynamics?

33. Do you talk about Puerto Rico?

34. Do you talk about brain drain?

35. Do you talk about what good for places versus what’s good for people?

36. Do you talk about zombie economies?

37. Do you talk about how immigration’s fiscal effects vary by immigrant skill?

38. Do you talk about whether open borders and the welfare state are compatible?

39. Do you talk about rival versus non-rival government services?

40. Do you talk about how welfare states prioritize the old versus the poor?

41. Do you talk about the cost of educating immigrants’ children?

42. Do you talk about the effect of immigration on the sustainability of retirement systems?

43. Do you talk about the best way to measure immigrants’ overall fiscal effects?

44. Do you talk about Net Present Value?

45. Do you talk about empirical estimates of  immigrants’ overall fiscal effects?

46. Do you talk about whether more immigration is likely to save Social Security and Medicare?

47. Do you talk about empirical estimates of immigrants’ overall fiscal effects as a function of their education and age?

48. Do you talk about Milton Friedman’s arguments against open borders?

49. Do you talk about the parallels between the fiscal effects of native births versus immigration?

50. Do you talk about how human beings value their cultures?

51. Do you talk about the value of Western civilization?

52. Do you talk about the cultural dangers of admitting non-Western immigrants?

53. Do you talk about terrorism, mass rape, human trafficking, Sharia, and the decline of English?

54. Do you talk about numeracy?

55. Do you talk about the statistics of terrorism, including the share of terrorism committed by foreigners?

56. Do you talk about the Skittles argument against refugees?

57. Do you talk about immigrant crime rates?

58. Do you talk about the effect of immigration on overall crime rates?

59. Do you talk about the “What if it happened to you?” objection to statistical evidence?

60. Do you talk about first-generation immigrant language acquisition?

61. Do you talk about later-generation immigrant language acquisition?

62. Do you talk about immigrant assimilation across generations?

63. Do you talk about how modernity makes assimilation slower?

64. Do you talk about how modernity makes assimilation faster?

65. Do you talk about the social importance of trust?

66. Do you talk about the effect of immigration on national trust?

67. Do you talk about trust assimilation?

68. Do you talk about how much trust a successful society needs?

69.  Do you talk about the cultural benefits of immigration?

70. Do you talk about immigrants’ desire for freedom?

71. Do you talk about immigrants’ disdain for freedom?

72. Do you talk about the danger that immigrants will vote to “kill the goose that lays the golden eggs”?

73. Do you talk about how Democratic immigrant voters are?

74. Do you talk about Indian-American voting?

75. Do you talk about immigrants’ specific policy views?

76. Do you talk about how immigrants’ specific policy views vary by education?

77. Do you talk about the effect of immigration on actual government policy?

78. Do you talk about immigrants’ political assimilation?

79. Do you talk about whether immigrants undermine natives’ support for the welfare state?

80. Do you talk about “Magic Dirt”?

81. Do you talk about research on “Deep Roots”?

82. Do you talk about whether Deep Roots research shows that “trillion-dollar bills on the sidewalk” are illusory?

83. Do you talk about national IQ?

84. Do you talk about the effect of immigration on national IQ?

85. Do you talk about whether you’re virtue signaling?

86. Do you talk about whether IQ research shows that “trillion-dollar bills on the sidewalk” are illusory?

87. Do you talk about the effect of immigration on immigrants’ IQs?

88. Do you talk about human genetics?

89. Do you talk about “keyhole solutions”?

90. Do you talk about imposing admission fees and surtaxes on immigrants to help less-fortune natives?

91. Do you talk about why tax-and-transfer schemes are any better than simple exclusion?

92. Do you talk about restricting immigrants’ eligibility for government benefits?

93. Do you talk about requiring immigrants to learn English?

94. Do you talk about requiring immigrants to acquire cultural literacy?

95. Do you talk about the dangers of Islam?

96. Do you talk about Muslim bans?

97. Do you talk about keyhole solutions for the dangers of Islam?

98. Do you talk about restricting immigrant voting rights?

99. Do you talk about the political feasibility of keyhole solutions?

100. Do you talk about the bracero program?

101. Do you talk about H-1Bs and other work visas?

102. Do you talk about the fairness of keyhole solutions?

103. Do you talk about Sodom and Gomorrah?

104. Do you talk about what utilitarians, egalitarians, libertarians, wealth-maximizers, meritocrats, Christians, and Kantian should think about open borders?

105. Do you talk about whether immigrants have a right to immigrate to your house?

106. Do you talk about who Jesus would deport?

107. Do you talk about the connection between open borders and socialism?

108. Do you talk about immigration and political polarization?

109. Do you talk about why conservatives should favor open borders?

110. Do you talk about why liberals should favor open borders?

111. Do you talk about citizenism?

112. Do you talk about Trump’s views and policies?

113. Do you talk about the best argument against open borders?

114. Do you talk about whether any human is illegal?

115. Do you talk about the best way to frame the immigration debate?

116. Do you talk about immigration as charity?

117. Do you talk about immigration as justice and abundance?

118. Do you talk about open borders with Canada?

119. Do you talk about why you talk so much about the United States?

120. Do you talk about whether you hate America?

121. Do you talk about earlier cosmopolitan transformations?

122. Do you talk about Brexit?

123. Do you talk about public opinion on immigration?

124. Do you talk about scaring people with extremism?

125. Do you talk about the Overton Window?

126. Do you talk about whether open borders is another crazy Ivory Tower Proposal?

127. Do you talk about how to get there from here?

128. Do you have endnotes?  Lots of them?

129. Do you have references?  Lots of them?

130. Do you have acknowledgements?  Lots of them?

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