Immigration Laws and Economic Protectionism

In a recent policy analysis for the Cato Institute, Alex Nowrasteh has set out a compelling case against the Arizona immigration law (SB 1070), portions of which were overturned in the United States Supreme Court in Arizona v. United States on the grounds that they were inconsistent with federal law, which therefore preempted their use. The analysis given in the Arizona case was of a decidedly textual nature, in which the Court sought to determine the extent of conflict between the state law and the federal statute, such that the former had to yield to the latter.

As Nowrasteh makes clear, the Arizona statute should be regarded as unwise even if it is not preempted by federal law. The simple case against SB 1070 is that it contains several key provisions of unquestioned constitutional validity whose consistent enforcement disrupts the economic operation of the statute by preventing gainful exchanges between aliens from outside the United States and persons within the state. Critical on that list is Arizona’s E-Verify, an employee verification system that puts on employers the heavy burden of verifying the legal status of those whom it hires. Multiple breaches of this statute could easily result in the loss of a business license, which leads firms, as Nowrasteh notes, to refuse to hire aliens, to do so underground, or to leave the state altogether, all of which raise the cost of doing business in ways that hurt Arizona residents along with local citizens.

It seems impossible to deny that the effects Nowrasteh points out exist, given the huge demand for services from immigrant labor that will go unsatisfied if these individuals are barred from entering the United States or excluded from it. In fact, the economic losses are even greater than those pointed out in this simple observation because illegal immigrants also require goods and services in the United States, and this element of demand is also removed to the extent that immigrants are sent home. The first order effect of the ban on immigration is thus to shrink the size of the local economy.

The situation with immigration is, of course, more complicated than this simple economic calculus suggests, because the introduction of immigrants into the United States also has profound political consequences. Immigrants can demand public services, and with the passage of time they can also become citizens, which could easily transform the political balance of power in the United States (as it has already started to do).

 The question comes down to how best to square the economic plusses with the asserted political minuses. On this score, it is clear that much of the force against immigration stems from a protectionist impulse to keep out individuals who might compete with American labor, even at the upper end of the market under our convoluted H-1B Visa.  That protectionist impulse creates a bureaucratic nightmare, which can induce American firms to invest and develop their business overseas to gain access to that labor pool. It is also doubly unwise because it is possible to admit foreigners into this country with long–term visas without the promise of citizenship. That approach too could be self-defeating, because in many ways we should try to recruit skilled immigrants into the United States by imitating the Canadian policy that has scored such notable benefits.

All and all, there has to be a better way to balance the economic and political considerations than is done today. There can be many honest disagreements about how this is best done, but there can be no principled defense of a fortress-America immigration policy that rests so heavily on overtly protectionist policies.

  1. Todd

    There is a theory, advocated by GMU economist Bryan Caplan, that the more heterogeneous the population, the less appetite there will be for policies that redistribute income. On an Econtalk episode, he point out the following : “This is a well-established pattern around the world: the more homogeneous a country, the bigger welfare state it tends to have.”

    Therefore, he argues, there is no trade-off between the economic and political impact of immigration.  More immigration means less government.

    He sums it up this way: “If you are a libertarian or conservative who thinks the welfare state tends to be too big, there is something you can do to help: let in more immigrants so that natives feel like they are getting ripped off and don’t like it any more. ”

  2. James Of England

    I’m shocked, shocked, to hear that the CATO institute’s view of the Constitution is in sync with its policy preferences. Again.

  3. TeeJaw

    I wonder if Professor Epstein were a family member of one the several Phoenix police officers killed in recent years by illegal alien criminals who cross the border from Mexico with near impunity, or a member of the family of the U.S. Border patrol agent killed in the last few days, if he could so will-nilly advocate open borders on some screwball theory that it would be economic protectionism to do otherwise. 

    The charge that those who want to protect the borders and keep criminals who kill cops out of the country are really motivated by a “protectionist impulse” is wrong if not scurrilous.  We don’t want to stop immigration from Mexico, we just want it to be accomplished in an orderly and legal fashion.  We want to know who is coming through, where they are going, and what their criminal record might be.  We want to be able to identify them and hold them to the same laws the rest of us must obey.

    The “protectionist impulse” is libertarian hogwash.  There is no choice that must be made here.  We can both be a sovereign country with a protected border and have a free trade policy. 

  4. Robert Lux
    Todd: “the more homogeneous a country, the bigger welfare state it tends to have.”

    “[...] let in more immigrants so that natives feel like they are getting ripped off and don’t like it any more. “ 

    The most crucial imperative as Americans is the creation of small “r” republican citizens through time. The hard reality is something fundamentally political, not simply economic. Libertarian immigration policy leads to a less libertarian polity.  The natives whom you cite may simply adjust to the new normal: sluggish economic dysfunction. “Adjustment” to the point that a society is basically ungovernable: Argentina over the last century, from First to basically Third World.  A society which, funny enough, is also very heterogenous.  

    The belief that greater heterogeneity easily translates into a smaller welfare state is belied by the experience of just my home state, California. Mexicans vote 68% Democratic, even over generations. Is only open borders consistent with non-bigotry?

    There’s the serious question of whether a republic of 300+ million people is even governable. Is it some imperative, economic or moral, to increase one’s population indefinitely? 

  5. wmartin
    Todd

    wmartin: Libertarians are just nuts on immigration. Just nuts… · 4 minutes ago

    This is a very productive comment. · 32 minutes ago

    Edited 8 minutes ago

    It was a frustrated sigh….

  6. Rhoda at the Door

    I can’t assess the influence of the protectionism, but I think it’s lighter in right-to-work Arizona than where unions have more clout. Yes, the problems of illegal immigration would be almost nullified if we weren’t a welfare state. Our complaint in Arizona is burdensome tax-paid services. The grave issue is this: that when law is generally flouted the whole society is impoverished. Changing poor law is the good solution; but though in cases of archaic or unenforceable laws we might find the breach less damaging, it still cultivates scofflaws.

    With this, the massive influx of illegal border crossers, intensified by drug business, we acquire the ugly aspects that have made Mexico such a “desirable” place to live and work. I have loved my Spanish-speaking next-door neighbors all my life, but I do not want to import Mexico’s ideas of governance. I don’t think I’ve too many illusions about the presence of bribery in the USA, but south of the border “la mordida” is a way of life at every level, a communicable, irreversible cancer in the body politic.

  7. James Of England
    Ecdysis

    James Of England:

    In this instance, Cato is saying that the law is “Constitutional but Bad Policy“.  To me, Cato seems the be the most ideologically consistent  think-tank.

    Nowrashteh makes some good points that SB 1070 may cause some economic  harms from unintended consequences, but this is nothing new.  He fails to address the overall economic environment and whether, as a whole, it is economically better.

     While there must be increased direct enforcement costs, he acknowledges the drastic decrease in immigration. It may be that, in total, it decreases enforcement costs otherwise spent.   Combine that with the reduction in entitlements and public schooling and it may be a net economic benefit.  

    I would be 100% in line with the Libertarian policy on immigration if we lived in a state with classical liberal principles.  Unfortunately, this is another area where progressivism  limits freedom.  Paradoxically, it is the state that Progressives created (and the majority of Latinos vote for) that is the reason why Republicans rationally want to limit immigration.  ·

    He seems to me to agree with the SCOTUS decision, partially striking the law down, but I agree that, reading through more of it, he is not focused on that.

  8. wmartin

    Libertarians are just nuts on immigration. Just nuts…

  9. Robert Lux

    Purblind libertarian immigration policy actually corresponds intrinsically to the “imaginary principality” proffered by John Grant’s condign criticism of Epstein over Locke:

    I would suggest that  one is living in what Machiavelli called an “imaginary principality” if one actually believes that a reading of Locke’s Letter Concerning Toleration would alter the politics of the Middle East or North Africa.

  10. mask

    I would entertain a pure libertarian immigration policy if the entitlement state was dismantled first.  In other words – never.

  11. mask
    TeeJaw:

    The “protectionist impulse” is libertarian hogwash.  There is no choice that must be made here.  We can both be a sovereign country with a protected border and have a free trade policy.  · 1 hour ago

    I agree

  12. wmartin
    Robert Lux

    The most crucial imperative as Americans is the creation of small “r” republican citizens through time. The hard reality is something fundamentally political, not simply economic. Libertarian immigration policy leads to a less libertarian polity.  The natives whom you cite may simply adjust to the new normal: sluggish economic dysfunction. “Adjustment” to the point that a society is basically ungovernable: Argentina over the last century, from First to basically Third World.  A society which, funny enough, is also very heterogenous.  

    The belief that greater heterogeneity easily translates into a smaller welfare state is belied by the experience of just my home state, California. Mexicans vote 68% Democratic, even over generations. Is only open borders consistent with non-bigotry

    We may get more libertarian economic policy in an unexpected way-as third-world immigrants become a larger and larger portion of the population, our society will eventually become so unskilled and low-earning that we won’t have the tax base to fund a big welfare state anymore (we don’t now, actually, but you know what I mean).  We will get that libertarian policy, but that’s not a society that I want to live in.

  13. Sumomitch

    Todd: …”There is a theory, advocated by GMU economist Bryan Caplan, that the more heterogeneous the population, the less appetite there will be for policies that redistribute income.”

    Yeah, that’s exactly how it’s played out in California. The common ground of Libertarians and the Left is addiction to theory, to the extent of denying reality when it contradicts theory. I think that both Mexican and Asian immigrants voted for Obama by huge margins in 2008. As we drift into a political culture that rewards narratives of racial and ethnic grievance and openly demonizes white males (dead and alive) as the source of all the world’s injustices, by all means lets open the borders wider. In theory, we’ll all be better off.

  14. Robert Lux
    wmartin

    Robert Lux

     

    The most crucial imperative as Americans is the creation of small “r” republican citizens through time. The hard reality is something fundamentally political, not simply economic. Libertarian immigration policy leads to a less libertarian polity.  The natives whom you cite may simply adjust to the new normal: sluggish economic dysfunction. “Adjustment” to the point that a society is basically ungovernable: Argentina over the last century, from First to basically Third World.  A society which, funny enough, is also very heterogenous.  

    We may get more libertarian economic policy in an unexpected way-as third-world immigrants become a larger and larger portion of the population, our society will eventually become so unskilled and low-earning that we won’t have the tax base to fund a big welfare state anymore… 

    Exactly.  

    I don’t completely care for Francis Fukuyama, he has some good points in a talk he gave about his Origins of Political Order, a nice little droll one which was: if you want to see some great libertarian societies, by all means go visit some third world African countries. 

  15. Robert Lux
    TeeJaw: 

    The charge that those who want to protect the borders . . . are really motivated by a “protectionist impulse” is wrong if not scurrilous.  

    Exactly.  Seeing the world through an economic lense, we shouldn’t be surprised when libertarians psychologically project. 

  16. Ecdysis
    James Of England: I’m shocked, shocked, to hear that the CATO institute’s view of the Constitution is in sync with its policy preferences. Again. · 1 hour ago

    In this instance, Cato is saying that the law is “Constitutional but Bad Policy“.  To me, Cato seems the be the most ideologically consistent  think-tank.

    Nowrashteh makes some good points that SB 1070 may cause some economic  harms from unintended consequences, but this is nothing new.  He fails to address the overall economic environment and whether, as a whole, it is economically better.

     While there must be increased direct enforcement costs, he acknowledges the drastic decrease in immigration. It may be that, in total, it decreases enforcement costs otherwise spent.   Combine that with the reduction in entitlements and public schooling and it may be a net economic benefit.  

    I would be 100% in line with the Libertarian policy on immigration if we lived in a state with classical liberal principles.  Unfortunately, this is another area where progressivism  limits freedom.  Paradoxically, it is the state that Progressives created (and the majority of Latinos vote for) that is the reason why Republicans rationally want to limit immigration. 

  17. Todd
    Robert Mitchell

     

    Yeah, that’s exactly how it’s played out in California. The common ground of Libertarians and the Left is addiction to theory, to the extent of denying reality when it contradicts theory. I think that both Mexican and Asian immigrants voted for Obama by huge margins in 2008. As we drift into a political culture that rewards narratives of racial and ethnic grievance and openly demonizes white males (dead and alive) as the source of all the world’s injustices, by all means lets open the borders wider. In theory, we’ll all be better off. · 10 minutes ago

    California is  a good counterexample. 

    I would suggest a solution whereby immigrants are not allowed to have any benefits…but making it outright illegal for a US citizen to hire someone who happens to be from another country is an assault on liberty.

  18. Todd
    wmartin: Libertarians are just nuts on immigration. Just nuts… · 4 minutes ago

    This is a very productive comment.

  19. john marzan

    But prof. epstein, blue collar Americans cannot compete with cheap labor. How do you solve this problem? With regards to high skilled workers, fine, let them in.

    If we are talking about a guest worker program aimed at the agriculture sector, sure. As long as they don’t bring their three children and wife illegally to the states too. Unless of course this migrant worker can afford to send his children to U.S. private schools and his meager salary is enough to cover his family’s cost of living expenses in the U.S. without gov’t assistance.

  20. john marzan

    hahaha… maybe in Europe.

    But the U.S. is different from Socialist Europe.

    Todd: There is a theory, advocated by GMU economist Bryan Caplan, that the more heterogeneous the population, the less appetite there will be for policies that redistribute income. On an Econtalk episode, he point out the following : “This is a well-established pattern around the world: the more homogeneous a country, the bigger welfare state it tends to have.”