The Case for Open Borders

Immigration is accused of many evils. Immigrants supposedly steal ‘our’ jobs and leach off of social welfare programs. They are lazy and contentious, the ignorant proclaim, and they are here merely to cause trouble. How wrong they are. Immigration, if opened in the United States to all migrants, would benefit all Americans tremendously.

The most prominent argument against looser immigration is that immigrants steal Americans’ jobs by working longer and for less money. Even if this were really the case, being required to become more competitive in the job market is hardly the injustice anti-immigrationists espouse. The truth, however, reveals something vastly different. Immigrants in fact contribute to increasing employment among Americans as well as increasing wages that Americans earn. In recent years the United States has admitted a large number of immigrants, 9.1 million in the 1990s, along with an estimated 500,000 illegal immigrants each year, and unemployment has actually gone down.

How is such phenomenon possible? After all, if there are more immigrants working, must not that mean that less Americans are working? Such is the logic of many detractors of open immigration. Their fallacy, however, is that there is not a fixed number of jobs available; in a growing economy, the amount of available jobs is always increasing. Indeed, immigrants contribute to creating jobs. Immigrants work, often for low wages, increasing companies’ productivity and profits. This in turn allows companies to hire more workers. Additionally, many immigrants start their own businesses, creating capital and hiring workers themselves. One must only look at Silicon Valley, where many (perhaps the majority) firms were founded by foreign born. Google, for example, was co-founded by a Russian immigrant, Yahoo! by a Taiwanese immigrant and Sun Microsystems by an Indian immigrant. All three companies have thousands of employees.

Wages are also increased by immigrants. A study by two Italian economists, Gianmarco Ottaviano and Giovanni Peri, found that a flow of immigrants that increases the total labour force by 10% increases the wages of US-born workers by 3-4 percentage points. This is because immigrants’ skills are not identical to those of Americans and thus the immigrants and Americans complement each other. Americans, for instance, are less likely to be willing to work menial jobs unless they are highly paid. Immigrants on the other hand are readily willing to work such jobs as even the lowest paying American jobs oftentimes pay leagues better than the next-best alternative in their native countries. That is, after all, why they immigrate. As such, immigrants work low-paying jobs, freeing Americans to pursue higher-paying occupations. A mother, for example, can hire a foreign-born nanny at a low cost and return to work as an investment banker. Such an effect both increases employment and wages. Furthermore, as stated above, immigrants’ willingness to work for less increases the productivity of firms and allows them to both hire and pay more.

It is worried further that immigrants come solely to benefit from the welfare state – that is, they come not to work but rather to claim unemployment benefits. Such, as well as being empirically proven false, is logically nonsensical. Immigrants to the United States are by and large extremely poor, and the process of immigrating itself is arduous. Oftentimes immigrants come to the United States to support a family in their native country. Why then, would they settle simply for the meagre benefits they would get from leaching off the welfare state when their potential returns from working are so much higher? Immigrating to the United States requires courage and enterprise; does one assume that these qualities in an immigrant will simply evaporate once he reaches the USA, where he will subsequently become slothful? Besides, the benefits immigrants can receive, since the passage of the Welfare Reform Act of 1997, are miniscule.

Detractors state further that immigrants place strains on society. They contribute to overcrowding of schools, crime and general unrest. To say such is simply xenophobic. Immigrants contribute to the vibrancy and modernity of America’s cities. What would New York be, for example, without its immigrants? And without ethnic restaurants Americans would surely be worse off. Immigrants provide culture and diversity to America, not strife and turbulence. The United States is, lest we forget, a nation of immigrants.

Instead of spending billions to patrol our borders, the government should open them and regulate immigration, not block it. Of course, potential terrorists and former criminals should be denied entry, but on the whole immigration should be allowed and even encouraged. Americans pine so feverishly for freer trade yet they fail to realize that freer immigration has even greater benefits. The World Bank estimates that if rich countries allowed their workforces to swell by 3 percent by letting in an extra 14 million workers from developing countries between 2001 and 2025 the world would be $356 billion a year better off. Immigration is met with hostility, but for entirely illogical reasons. It is time for America to open wide its borders.

Should Government Run The Lottery?

Currently 43 states in the United States run lotteries as a government operation. In Illinois and Texas, there is currently debate as to whether these state lotteries should be privatized. Privatization of the lottery would garner ostensible benefits – a large amount of cash, a more efficiently operated industry and less government involvement in an activity that could be run by the free-market. Yet if the revenue gained by state lotteries was used to fund beneficial government programs the privatization of the lottery would be counterproductive.

The Texas State Lottery, for example, reported sales of $3.77 billion in 2006; the cost of running the lottery was substantially lower. Such a large revenue stream, if put to the correct uses, would act as a deterrent of higher taxes and indeed could help both the programs it funds as well as the well-being of the individual. Participating in a lottery is a choice, compulsory taxation is not. So while a government-operated industry is to be avoided at all costs, a state-run lottery could in fact amount to be the exception that proves the rule.

In order for a state-run lottery to be beneficial certain criteria must be met. Primarily, it must be ensured that all revenue derived from the lottery not given out as prizes must be either used in positive government programs or given back to taxpayers in the form of tax rebates or permanent tax cuts. A lottery that funds school vouchers, or the expansion of a state’s Earned Income Tax Credit, would be entirely acceptable. And indeed, if lottery revenue is used to fund such beneficial government programs, less tax money is needed.

The problem, however, lies in the distribution of lottery generated revenue. Currently no state effectively uses lottery revenue; instead, state politicians use the revenue to fund pet-projects or destructive government policies. If such practices exist the state-run lottery is counterproductive in two ways: one, it is an industry that could be operated privately, but run by the state, and two, it funds destructive programs. It is, therefore, imperative that state-run lotteries be supported and continued only if they use their revenue effectively.

Unfortunately, such is in all likelihood never bound to occur, which is why privatization of the Texas and Illinois lotteries should, at the present time, be encouraged. If a state enacts lottery legislation that does, however, use the lottery’s revenue effectively, a state-run lottery should not be looked at in contempt and should, perhaps, be encouraged.

Social Welfare: Incentives Matter

Social welfare programs championed by the liberal-minded inevitably employ compassion as their primary justification. Government should protect and assist those in need. To the extent that social welfare programs actually help the needy is, however, not the simple black-and-white result that liberals claim. It must be realized that in discussing the effects of social welfare programs, one must keep in mind not just the short-term benefits but also the potential long-term destructive effects. In short, incentives must be considered, because incentives matter.

The short-term effects of social welfare are indeed beneficial. The downtrodden receive assistance. The elderly who cannot provide for themselves receive the means by which to do so from the government. The unemployed receive unemployment insurance. One may not have a free lunch, however. The government is not, in carrying out its social welfare programs, simply giving away funds to the needy. The government is partaking in two destructive activities that hurt the needy more than they help.

The first destructive activity undertaken by the government in funding social welfare programs is taxation. Taxation is inherently destructive – it takes money away from individuals and families. Social welfare programs undertake a Robin Hoodian objective – redistribute the nation’s wealth so as to best benefit society as a whole. The idea is that a dollar in Bill Gates’ pocket is worth less to him than would be a dollar in a poor person’s. Therefore, the government should tax Gates and give the money to the individual who values the money more.

Such logic is rife with fallacy. First, one must assume that the reason Gates has more money than the rest of us is due to his superior ability to make that money. Therefore, taking money from Gates and giving to someone of lesser-ability destroys Gates’ incentives to make more of that money. If his incentives to make money do not exist, he will cease to do so, thus destroying all the potential wealth that Gates has proven to be able to accrue. Gates’ money without taxation contributes by itself to the welfare of the needy. His money provides jobs, higher wages, cheaper products, better technology and countless more benefits to society. Furthermore, because Gates values one dollar less than anyone else, he must earn ever-more dollars each year in order to satisfy his present needs. Thus, his incentives to innovate and satisfy consumer demands are ever-increasing. This is the very way in which capitalism produces wealth; and wealth produces overall well-being.

In such a way, one (although I do not make it) may make a case for regressive taxation. If the burden of tax is placed more heavily on the poor, the poor have more of an incentive to lift themselves out of poverty, and the rich have more of an incentive to continue creating wealth. Of course, regressive taxation also limits the opportunities of the downtrodden and thus is contradictory with regard to its aims. Nevertheless, giving incentives to the poor to create wealth themselves rather than allowing them to simply collect it from the government is necessary.

Therein lies the problem with social welfare. Giving the poor benefits eliminates their incentive to create those benefits themselves. Why work when the government can provide for you instead? Especially destructive is unemployment insurance. Why search for employment when the government will pay you anyways? Such social-welfare programs foster a feeling of complacency and eliminate the incentive to work. And thus the long-term effects of social welfare rear their ugly head. In the short-term, the unemployed individual receives benefits and is better off. In the long run, however, his lack of employment hurts society as a whole. Leeching off the government is a burden bore by the taxpayer, who now has less money in his pocket to spend. The money the taxpayer would have spent would have been reinvested, providing more jobs and opportunity for other individuals. Thus, the leach is not only hurting his own prospects by not amassing as much wealth as he potentially can, he is hurting the taxpayer, and consequently, he is hurting individuals who do want work.

The government cannot support such activity. It is destructive, irresponsible and unjust. One individual cannot be punished for the fault of another. The burden of fault must be carried by the one responsible. That is not to say that the government should not assist the needy. Certainly, they need the government’s support. But supporting them through social welfare programs is not productive. Instead, government should pursue programs that allow the needy to benefit while also providing incentive for them to help themselves. Programs such as the Earned Income Tax Credit (EITC) or school vouchers keep in tact incentives for the needy to better their economic status themselves, while also providing them with assistance. It is that which should be government’s objective, not appealing to the illogical compassion of social welfare.