In a recent substack post, David Friedman points out a problem with judging immigrants solely by their fiscal impact. His analysis is so clear that it’s worth reposting part of it. Here it is:
What is bizarre about [Emil] Kierkegaard’s argument is that he identifies fiscal impact with contribution to society, writing, on the basis of calculations of fiscal impact:
There is no age at which this group contributes more to society than it receives.
What he means is “contributes more to the state than it receives.” That is not the same thing.
Suppose the Danish government is running a mild deficit. A plague kills everyone in Denmark. Since nobody is either paying taxes or receiving government services, net government revenue has increased from a negative value to zero. By Kierkegaard’s definition, Danish society is now better off.
For a more realistic example of the point imagine that the US lets in lots of Mexican immigrants. Their net fiscal impact is negative; my taxes go up by a thousand dollars a year to cover the fiscal loss. My ability to hire immigrants to clean my house, mow my lawn, trim my trees, repair my house, none of which was worth the cost of doing before they arrived, makes me better off by two thousand dollars a year, and similarly for other Americans. The immigrants’ net contribution to society is positive even though their contribution to government revenue is negative.
There may be effects in the other direction as well. If the immigrants commit lots of violent crime that decreases their contribution to society whether or not it decreases government revenue. Figuring out the net contribution of immigrants, or anyone else, to a society is a hard problem. That is no excuse for calculating the contribution to net government revenue and using that instead.
Well said.
The article “Immigration” in David R. Henderson, ed., The Concise Encyclopedia of Economics is by immigration skeptic George J. Borjas. He estimates both the gains to “natives” from interaction with immigrants in the labor market and the losses to “natives” from higher welfare costs.
The pic above is of David Friedman.
READER COMMENTS
Knut P. Heen
Feb 23 2024 at 8:22am
The problem with all calculations of this sort (including GDP) is that consumer surplus is left out.
David Henderson
Feb 23 2024 at 1:38pm
Not true. Both David and George Borjas estimated consumer surplus.
Thomas L Hutcheson
Feb 23 2024 at 9:50am
Can even the fiscal impact be negative? Don’t the profits of firms immigrants work for increase? Yes in the case of direct employment of individual-immigrant that would be non-measured non-taxed income increase. And if the costs include public schools do the benefits include the effects of the eventual higher earnings of the schooled persons?
The idea doing a cost benefit analysis based only on fiscal flows is so absurd, why would anyone even do it?
MarkW
Feb 23 2024 at 10:32am
Probably the biggest advantage to immigration for US society in the long term is that it will keep our population from graying and ultimately shrinking — at least not nearly as much as it would have otherwise. Immigrants are younger than average, and more likely to bring and have children than average. More likely to start new businesses than average. More likely to pay the FICA taxes that will reduce the need to cut Social Security payments. The ‘donor’ countries with below average fertility, however, where the immigrants are coming from are going to have even bigger problems for the loss of emigrants. We here in the US should count our blessings.
David Henderson
Feb 23 2024 at 1:39pm
Actually, I agree with everything you said except the last part. Because so many immigrants come from low-income countries, they can (and often do) send back to their relatives an amount equal to what they had earned in those countries. I’ve written about this elsewhere. Ask me if you want to find the link.
john hare
Feb 23 2024 at 7:08pm
My wife has a son, daughter, and five grandkids in Mexico. A son and six grandkids here in Florida. We send some money to Mexico sometimes to tide them through. I don’t think it is as much as they earn there, though it may be as much as my wife’s potential earnings there. We are both frugal enough that a few hundred from time to time is painless.
OT At the checkout in a Home Depot today, I had a short argument with one that sees things differently. I forget the trigger, but he started ranting on the need for a wall and to get rid of the (profanities). I argued a bit when I remembered that we were in a store where such was inappropriate. The cashier was from Cuba, manager about 30 feet away from Mexico, and several hispanic customers in earshot. I don’t normally get angry as that. I do post under redneck on some forums and that aspect of my personality was definitely forefront.
MarkW
Feb 23 2024 at 8:20pm
Yes, remittances are important. But I don’t think they’ll ultimately make up for steeper declines in population and more rapid graying in countries with fertility rates that are well below replacement. That does not mean that people should not be able to move to make their lives better — of course they should. I just doubt that the emigration will make their original home countries better off. That said, Ireland has still not regained the population it lost in the potato famine and the mass emigration of the 19th century, and it has (finally) turned out OK.
Thomas L Hutcheson
Feb 24 2024 at 8:54am
Would immigrants sending money out of the country reduce the net benefit? I would not think so.
David Henderson
Feb 24 2024 at 10:19am
You ask, “Would immigrants sending money out of the country reduce the net benefit? ”
No, they wouldn’t.
Thomas L Hutcheson
Feb 27 2024 at 2:46pm
Thanks. I’ll quote you if necessary. 🙂
Thomas L Hutcheson
Feb 24 2024 at 8:38am
We don’t need immigration in order not to cut SS and medicare benefits, we just need to finance them properly, with a VAT instead of the silly wage tax. The wage tax was cutting edge policy in 1940, not not since the invention of the VAT.
BTW the immigration/wage tax is an example of judging immigration according to its fiscal effects instead of a proper full scale cost benefit analysis. I have not tried doing it, but I suspect that fiscal effects do not appear in the correct analysis.
Scott Sumner
Feb 23 2024 at 2:46pm
I would add that immigrants have a lower crime rate than native born Americans.
Monte
Feb 24 2024 at 3:10pm
Use whatever adjective you like, but this isn’t a good argument for illegal immigration, and it’s certainly not a great source of comfort for those who’ve lost loved ones to illegal immigrants.
This statistic is starting to lose its savor, what with all the focus and priority on illegal immigrants, murders, assaults on police officers, robberies, gang members,, etc.
David Henderson
Feb 24 2024 at 4:30pm
You write:
So you’re saying that the focus on those things should cause us not to care about the overall data?
Monte
Feb 24 2024 at 6:26pm
I’m saying that those things should cause us to care about open borders. And I suspect (but would need to verify) that illegal immigrants, having little to no regard for current immigration law (or any of our laws, for that matter) commit more overall crime than those who come here legally.
Jon Murphy
Feb 24 2024 at 6:44pm
That’s specious reasoning
Monte
Feb 24 2024 at 6:50pm
It’s only specious if you can provide data to the contrary.
Jose Pablo
Feb 24 2024 at 8:51pm
One third of adult Americans have a criminal record. Including a former (future?) President of the US. “Open borders” policies definitely dilute the proportion of criminals among people living in the States.
And, in any case, don’t worry. The government protects us against crime and prosecutes criminals. We should be fine.
And criminalizing emigrants because some people have been a victim of crimes committed by emigrants, is like criminalizing black people because some people have been a victim of crimes committed by black people, or criminalizing males because some people have been a victim of crimes committed by males.
Monte
Feb 24 2024 at 9:13pm
I don’t know why you’re going off on some rant about criminalizing emigrants. I implied nothing of the kind. Staying on point, we’ve had record numbers of illegal immigrants flooding into this country, and every crime committed by an illegal immigrant is, by definition, a crime that should have been prevented, whether you dilute it or not (crimes committed by native-born Americans and former, CURRENT, or future presidents notwithstanding).
Seriously? Have you been paying attention to the news lately in blue cities and states across the U.S?
Jon Murphy
Feb 25 2024 at 10:35am
No. “Specious” refers to the logical process.
Let’s apply the argument to other situations. Almost everyone has broken some law: jaywalked, speeding, Lord knows what else. If we apply your reasoning, then one can ask: “if this person has such disregard for traffic laws, who knows what other laws they will break?” Bu that logic, we can forcibly exclude everyone from society.
Monte
Feb 25 2024 at 11:40am
When there are no supporting facts or contradictory data to a particular line of reasoning, it’s often more accurate to characterize it as speculative rather than immediately dismissing it as specious. Illegal immigration, IMO, is more akin to the crime of criminal trespass or breaking and entering rather than jaywalking or speeding. Most law-abiding citizens are guilty of the former. Very few are guilty of the latter.
Many illegal immigrants crossing into our country come from backgrounds of extreme poverty and remain poor. Research reveals that simply living in poverty increases one’s likelihood of being incarcerated. When we’re having trouble making ends meet, we’re under intense stress and more likely to resort to crime. This pattern of behavior by illegal immigrants has been on display quite frequently in the news.
Monte
Feb 25 2024 at 12:29pm
What’s more, we know there are criminal elements among the illegal immigrants crossing our borders. There’s no question that they wish to avoid the proper channels of coming here legally and are likely to continue a life of crime.
Jon Murphy
Feb 25 2024 at 1:20pm
No. When the conclusion does not follow from the premise, one can immediately dismiss it as specious. And changing the crime does not change the speciousness of the reasoning. It’s still incorrect.
Monte
Feb 25 2024 at 9:04pm
But it IS reasonable to conclude from the premise that those who willfully disregard our immigration laws are more inclined to ignore other U.S. laws than those who choose to strictly observe them. Just as people who tell small, self-serving lies are likely to progress to bigger falsehoods in order to enable or enrich themselves. That’s what makes my argument more speculative than specious, but we’re obviously going to disagree on that point, so I digress.
Monte
Feb 24 2024 at 6:37pm
If we take as a starting point the last couple of years, I’ll wager the data will back my suspicions. This recently from Heritage.
Monte
Feb 24 2024 at 6:48pm
Here‘s another.
TMC
Feb 24 2024 at 3:40pm
*Legal* immigrants have a lower crime rate than native born Americans
David Henderson
Feb 24 2024 at 4:28pm
You wrote:
True, and illegal immigrants have a lower crime rate than native-born Americans also. Of course, that’s not true if being illegal is itself a crime. My impression is that it’s not. But if it is, then the statement simply needs to be revised: Not counting the crime of being here illegally, illegal immigrants have a lower crime rate than native-born Americans.
One sample point that suggests it’s not a crime: In 1977, I was working illegally at the University of Rochester without knowing it. My employer had applied for Labor Department certification so that I could get my green card. There were 2 months between when my F-1 student visa (practical training) expired and the Labor Department certification came through. When I went to INS in Buffalo for my green card interview, the INS official told me I had been working illegally. She told me that the INS was obligated to start deportation proceedings, but she never hinted that I had committed a crime. Of course, the law could have changed in a dramatic way since then, but I doubt it.
Mactoul
Feb 23 2024 at 10:08pm
This point is often raised. Classical liberalism in general, and libertarianism in particular, are Western political doctrines, not having much purchase in the wider world.
So the unrestricted influx of non-Western people into the West might be expected to put the political future of liberalism in some jeopardy.
Matthias
Feb 23 2024 at 11:41pm
That’s pretty easy to test.
Pick your favourite country, give a questionair to a representative sample of people, and check whether you can find a correlation between opinions on classical liberalism and migration status (and migration status of ancestors).
Such data might even already exist and be publicly available.
My guess is that after the second generation in the new country, the outcome pretty much a wash, and people’s opinions on average will be pretty much indistinguishable from the whole population average.
Of course, even a significant difference wouldn’t really argue in favour of massively restricting migration.
You could eg try to assess the damage, and just charge individual migrants a fee to cover that.
Thomas L Hutcheson
Feb 24 2024 at 9:00am
And merit based immigration is not “unrestricted.” My guess is that people selected as making the highest contributions to our capitalist society will be pretty favorable to capitalisms, maybe more so that “natives.” At least in religion, I think converts are generally more orthodox than non-converts.
David Henderson
Feb 24 2024 at 10:19am
Bryan Caplan discusses this issue with some detail in his book on immigration. I recommend it.
Jose Pablo
Feb 24 2024 at 8:56pm
That’s, indeed, a great book!
But, you know, don’t confuse me with the facts when my mind is already made up.
Jose Pablo
Feb 24 2024 at 8:30pm
So the unrestricted influx of non-Western people into the West might be expected to put the political future of liberalism in some jeopardy.
What puts the political future of (American) liberalism in some jeopardy are mostly American politicians (basically because they are what can do it). Think, for instance, of FDR or Donald Trump. And natives wearing “MAGA” baseball caps.
The main problem of the “unrestricted influx of non-Western people into the West” is that their culture of origin is all but lost by the second generation.
And that’s a pity. They soon start eating big portions of fast food with their hands, forget the names of countries outside the US, and start questioning the theory of evolution. Like proper, Trump voting, natives.
Mactoul
Feb 24 2024 at 10:14pm
What about sexual crimes in Sweden? It is said that they have increased manifold in recent years and the dominant contribution has come from Muslim immigrants.
Do these tallies include second-generation immigrants ie local-birn children of immigrants as immigrants or not?
This could seriously muddle the conclusions.
Jon Murphy
Feb 25 2024 at 10:42am
The argument that Monte and Mactoul try to make, that illegals (or immigrants in general; not sure which given they keep going back and forth) cause more crime is a powerful emotional argument, but ultimately irrelevant for a just society. It should be rejected as the foundation of a legal order.
If an individual commits a crime, they ought to be punished for it (and, indeed, I will contend it is the just realm of the state to punish). But if individuals do not commit a crime, they should not be punished simply because of some accidental connection to the criminal; the son should not be punished for the sins of his father, nor the countryman punished for the sins of another. To punish the innocent for no other reason than this accidental connection is the height of injustice. The law, a tool and hammer of justice, becomes corrupted into a tool for discrimination.
Within any group, there will be criminals. Natives are no different (and, indeed, at a higher rate!). If immigrants can be punished for the sins of this minority, why not also natives? Prevent new births. Or highly restrict births. It’s the same thing.
Mactoul
Feb 25 2024 at 7:34pm
To restrict immigration doesn’t amount to punishment. For your premise that unrestricted immigration is a universal right has no basis in either national or international law.
This expectation is based solely on extreme libertarian position which has to be argued for first and not taken for an undisputed premise.
Jose Pablo
Feb 26 2024 at 7:46pm
To restrict immigration doesn’t amount to punishment.
To prevent new birds doesn’t amount to punishment. Afterall, the premise that having babies is a universal right has no basis in either national or international law.
Monte
Feb 25 2024 at 10:05pm
I’m all for legal immigration. Does it need to be reformed? Absolutely! I harbor zero prejudice against any person wishing to legally immigrate to the U.S. My issue is with illegal immigration. We are a country of laws, and to willfully ignore the process for legally crossing our borders is a violation of the law, for which there should be consequences. Contra Douglas MacArther, [laws] with which we disagree are [not] made to be broken and are [not] for the lazy to hide behind.
Until we choose, as a nation, to adopt a policy of open borders, we should ensure that they are secure against illegal entry, period.
vince
Feb 26 2024 at 1:13pm
It’s incredible that there’s even any discussion to the contrary.
Jose Pablo
Feb 26 2024 at 8:02pm
The idea that obedience to the law should be “content independent” is, in fact, extremely questionable.
I don’t really think that discussing before Loving v Virginia (when we choose, as a nation, that miscegenation was legal) that a marriage could be illegal just because it involved people of different races was “incredible”.
As it was thinking that just because somebody engaged in a mixed race marriage, he/she was more likely to be a criminal.
vince
Feb 26 2024 at 11:40pm
Jose: You equate marriage with protecting national borders? I don’t.
Monte
Feb 26 2024 at 11:43pm
Disagreeing with the law doesn’t justify ignoring it.
Jose Pablo
Feb 27 2024 at 10:59am
Vince,
running away from your master’s plantation was illegal until 1865. I don’t think that discussing that “plantation borders” should not be protected before 1865 was something “incredible”. On the contrary, it was the only morally acceptable option.
Marrying a person of a different race was illegal until 1967 (!!). I don’t think that supporting “free marriage” was “incredible”, even before 1967.
The moral case for supporting immigration is at that very same level. Condenming thousands of people to a horrible life just because we don’t want to suffer some minor, and debatable, inconvenience is just morally horrendous.
That’s well above the legal/illegal debate. As in the cases mentioned before.
The moral abjection of the anti-immigration camp is what is “incredible”.
vince
Feb 27 2024 at 12:47pm
Straw man. Opposition to ILLEGAL immigration is not opposition to LEGAL immigration. Enough of this incredible discussion.
Jose Pablo
Feb 26 2024 at 7:51pm
Staying on point, we’ve had record numbers of illegal immigrants flooding into this country, and every crime committed by an illegal immigrant is, by definition, a crime that should have been prevented,
Only one third of the crimes committed by natives are cleared. Every crime committed by a native that should be in jail is, by definition a crime that should have been prevented.
So, if what worries you is “crimes that should have been prevented” focusing on the jailing of native criminals would made much more sense.
Including the jailing of former convicted presidents to avoid future crimes that should have been prevented.
Monte
Feb 26 2024 at 11:40pm
So why don’t we just focus on jailing everyone who commits a crime, native or not.
…and our current president who is guilty of past and present crimes.
Jose Pablo
Feb 27 2024 at 11:06am
So why don’t we just focus on jailing everyone who commits a crime, native or not.
Sure, we should. I am afraid this is going to be very difficult having the government on charge of this matter.
And I have doubts when it comes to victimless crimes (like immigration). I don’t see the necessity to devote scarce and very inefficient resources to that kind of crimes.
Why don’t we just focus on jailing everyone who commits a crime “with victims”?
Regarding politicians I do think that most of them should be jailed. If we don’t know why they sure do.
T Boyle
Feb 28 2024 at 12:11pm
I’m very confident that my fiscal impact has been enormously positive in every country I’ve lived in, thanks very much. Which is more than I can say for a lot of people who stay where they were born.
Maybe don’t practice statistical discrimination.
Comments are closed.