Let’s not Fall into the Trap of Anti-Immigration Rhetoric
The anti-immigration rhetoric on which Trump based his presidential campaign has moved from simple demagoguery to concrete policy measures. Earlier this month, President Trump gave his support to the RAISE Act whereby the bill’s sponsors, Senate Republicans David Perdue and Tom Cotton, expect to reduce legal immigration by 50% over the following decade.
In addition, the bill introduces more restrictions to the arrival of refugees and asylum seekers and eliminates the Green Card Lottery system that has been in force since 1990. It also creates a merit-based system based on six unequally-weighted criteria (age, English proficiency, education, income, extraordinary achievement and investment) under which applicants would need to score over a certain threshold to be granted a visa.
Interestingly, Ernie Tedeschi, former US Treasury economist, has estimated that only 2% of Americans would obtain a sufficient score to be considered for a visa under this new system. This gives an idea of how difficult it would be for more potential applicants to secure a visa were the RAISE Act passed by Congress (apart from revealing the absurdity of implementing such an system.)
Fortunately, the bill is not likely to pass in the Senate despite the President’s support. However, the fact that the current political debate on immigration revolves around a reform that imposes further restrictions to would-be immigrants should lead us to reflect on why politicians (and the population in general) choose to ignore the obvious benefits of immigration-friendly policies.
The answer lies in what economist Bryan Caplan calls anti-foreign bias, that is, an inclination to underestimate the economic benefits of interaction with foreigners. Politically, this bias results in barriers and restrictions that prevent the free movement of people around the globe, often in the name of protecting native workers from competition.
First, the economy is not a zero-sum game. Or put differently, the number of jobs is not static. Immigrants are both producers and consumers, which means that, other things equal, an increase in the immigrant population must necessarily bring about an expansion of total employment.
For instance, in the period 1950-2007, the US working population experienced a spectacular increase mainly due to two factors: the entry of women in the labor force and immigration. And yet, the unemployment rate on the eve of the 2007 crisis was lower than 5%.
Also, immigration-friendly policies could be a part of the solution to the demographic problems that the US has experienced over the last decades. The Population Reference Bureau estimates the Americans over 65 will represent 24% of the total population by 2060. As a result, the worker-to-beneficiary ratio (the number of workers per pension recipient) will have decreased around 30% by 2030. This trend will inevitably result in cuts in social security benefits unless the working population increases significantly.
Empirical evidence also supports lowering barriers to immigration. In a 2011 survey paper on the economic effects of immigration, Harvard Professor William R. Kerr and Wellesley College Senior Researcher Sari Pekkala Kerr concluded that immigration inflows do not have a significant impact on native wages and employment.
Regarding welfare benefits, immigrants are thought to have a substantially-negative fiscal impact (defined as taxes paid minus benefits received) on public finances. In other words, the generally-accepted wisdom is that immigrants take advantage of the welfare system at the expense of the rest of taxpayers. However, the evidence dismisses this idea. Although data varies across countries, the above-mentioned study finds the net fiscal impact of immigrants to be small relative to GDP.
Combine these benefits with the potential benefits to world GDP that reducing or eliminating barriers to labor mobility would bring about, and there are no reasonable economic arguments to oppose liberal policies towards immigration.
Despite the likely failure of the RAISE Act, Donald Trump will continue to push in this direction, trying to attract the support of anti-immigration Senators and House Representatives. For this reason, it is important to oppose anti-immigration demagoguery and emphasize repeatedly the obvious: immigration is a necessary ingredient of economic growth. Let’s not fall into the trap of economic nationalism.
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