I have been quite busy lately and have not had much time for blogging, for which I am terribly sorry. But this morning I encountered a comments-section argument so poorly thought through that it compelled me to place my face in my hands for a few moments and weep, so I must say something. In a comment on a post by Bryan Caplan on EconLog making the case for open borders, the user Pajser takes on Caplan’s claim that “Being just to foreigners would cost us less than nothing” with the following response:
It is false. Realistic outcome of open borders is increased crime, fall of the GDP/capita, increased poverty of American working class, worse and more corrupted police and courts. Political consequences could be surprising. All that may be acceptable sacrifice, but it is certainly ‘more than nothing.’
The fall-in-GDP-per-capita argument is one I have heard several times before in defense of immigration restrictions—horribly enough, the first time was from my Introductory Macroëconomics professor—so I think it would be a good move to take a few seconds and point out why this is a bad argument.
What Pajser says about GDP per capita possibly is true, but perhaps for different reasons than he understands. Imagine a village of ninety-nine people where the GDP is 9,900 dollars, thus GDP per capita is 100 dollars. And let us assume that each denizen of the village’s labor contributes precisely 100 dollars to GDP. Now imagine a foreigner whose village had burned to the ground emerges from the woods seeking a new home. (Everyone except him has died and his former village’s GDP is now zero.) The folks living in the village of ninety-nine are all huge fans of Bryan Caplan, so they welcome the foreigner into their community and, although he does not have many skills, allow the foreigner to work a job delivering shipments of firewood.
What, now, has happened to GDP per capital? Our immigrant does not have quite the specialized skills that his new neighbors have and only adds about 25 dollars to the village’s GDP. GDP per capita for the village is now 99.25 dollars. Wow, that’s less than it was before the foreigner joined the village community! This lower GDP per capita must mean the standard of living for all those in the village has fallen, or so commenter Pajser seems to mistakenly believe. What has really happened is that everyone’s standard of living has increased. Using aggregates such as GDP, in this case, do not give us any sort of picture of what actual individuals experience. I will borrow an analogy from Don Boudreaux that I particularly liked:
Let’s say that you annually keep track of the average height of your three kids. This year, their average height is, say, four feet two inches. Next year, you have a fourth child and you calculate the average height again. The addition of that infant will lower your kids’ average height even though each of your first three kids have grown in height during the year. Clearly you wouldn’t conclude from the lower average height of your children that your children are shrinking in size. That would be absurd.
In the fixation on simply increasing the value of a certain datum, we see no concern for real people’s standard of living, which in our example has actually now risen.
We can apply the same reasoning to Pajser’s concern that “increased poverty of American working class” would be an outcome of an open-borders immigration policy. Once again, the data would likely corroborate his claim. If a large number of unskilled, impoverished people are allowed to relocate to the United States, many of them will greatly improve their own living conditions but will be, according to U.S. standards, in poverty. So, yes, as a percentage, there will be more working people in the U.S. in “poverty,” but this data obscures the fact that immigrant population is living better than they were and the U.S.-born population is too due to more affordable consumer products.
For more on the economic case for unrestrained movement of people, check out openborders.info and this essay by Caplan. I apologize for apparent sluggishness with this blog over the past few months and for perhaps undue brevity with this post. More and more-frequent posts are soon to come!