Ep. 11 The Economics of Immigration and a Border Wall

Bob flies solo to provide an introductory framework on how to analyze the economics of immigration, as well as the politics involved in this controversial topic. The point isn’t to pick sides but to sharpen everyone’s arguments. For example: Make sure your arguments about immigration don’t “prove” that having babies makes a country poorer.
Mentioned in the Episode and Other Links of Interest:

The sound engineer for this episode was Chris Williams. Learn more about his work at ChrisWilliamsAudio.com.

About the author, Robert

Christian and economist, Research Assistant Professor with the Free Market Institute at Texas Tech, Senior Fellow with the Mises Institute, and co-host with Tom Woods of the podcast "Contra Krugman."

16 Comments

  1. Lenny on 01/09/2019 at 11:54 PM

    On your spot at approximately 32:25 for the Carlos-Murphy Report you said: “For more analysis, not just big picture, Oh, Federal Reserve — Bad; QE — Bad, no, no, no, we get much more detailed than that.” I realize that he only occasionally interacts with a “real” economist on his shows, but that was quite a shot you took at the apparent lack of economic detail of the Tom Woods show! Funny.

  2. Mike on 01/10/2019 at 8:36 AM

    I like your take on the economics of illegal immigration, but it should be highlighted that economics is not the end all be all. Our way of life is what is essentially key here. 1 in 5 kids in school in Texas do not speak English. Civics is not taught in schools anymore. At the very least, when you come here legally there is a chance that you will learn what makes America America. This is what scraes me … an influx of people who will grow up not understanding this system of governmnet and thus, fail to perpetuate it. Reagan famously said it only takes one generation. We are being overloaded now more than any time in our short history without any pauses whatsoever to adjust and reset. But I appreciate your bit on the economics of piece of the pie. Not the whole pie though.

  3. 2VNews on 01/10/2019 at 6:13 PM

    Make Immigration Great Again
    1. Abolish the tax code, replace with consumption tax.
    2. Privatize government schools.
    3. Eliminate red tape in the immigration process.
    4. Decriminalize drugs, end the drug war.
    5. Phase out all federal safety net programs, states can decide their own safety nets.

    Plan liberals might accept?

  4. 2VNews on 01/10/2019 at 7:48 PM

    Either you believe in freedom and markets (including the labor market) or you don’t.

  5. Nathan Byrd on 01/10/2019 at 10:06 PM

    Regarding the “right to move freely,” consider a couple cases. If someone else owned all the land around you, would it be legitimate for them to prevent you from leaving your property? I would think not.

    Similarly, if you have invited me to visit you on your property, and your property is surrounded by people who don’t want you to have any visitors, would it be legitimate for them to prevent me from visiting you? Again, I wouldn’t think so.

    And this is what a right to move freely implies. It’s not a denial of private property rights. It doesn’t mean we should be able to use anyone’s property just because.

    People can eject you for saying something they don’t like, but that’s not a reason to deny a right to speak freely. There are certain stipulations attached to any right, but it would be strange to say that no one is ever “free” to do anything because of that.

    • Lysander Spooner on 01/16/2019 at 8:10 AM

      With regard to the moving freely question: land purchasers already check for easements and rights of passage (for people, vehicles, water, electricity etc) before buying land.

      The free market covers this issue just fine.

  6. Christian Hoffman on 01/11/2019 at 5:32 AM

    Wow. Disappointing to see such left libertarian analysis of immigration from Murphy. I expected a nuanced discussion of the economic pros and cons of immigration but instead was treated to a one sided stream of pro immigration propaganda.

    “If we imported a whole bunch of heart surgeons wouldn’t that be great.” Really? That is the nuanced level of analysis of different types of people with different skill sets moving in and out of a society? Oh and IQ doesn’t matter because hammers and pack animals are capital goods. What if a country admits a hundred million chimpanzees or hyenas or ticks? Would that be great as well?

    And culture doesn’t matter because stupid leftists and other culturally bankrupt citizens have kids too… Well let’s just expedite the fall of western civilization by replacing the populations then. Great idea.

    And on that point, organic population growth is very different from immigration. Having children is almost always accompanied by an increased in deferred consumption and capital accumulation by parents. Meaning there is a general increase in the capital stock of the country during the long lead time when children are educated and skills are developed. This is an entirely different process than dumping millions of unskilled, uneducated migrants into the economy with no additional capital goods for them to employ in production. Oh, but who cares if the low skilled and uneducated already in our society lose 30% of their wages, and see a spike in crime and other social dysfunction in their neighborhoods (I lived in South FL during the Mariel boatlift BTW)… let them eat cake.

    Loved the argument about the US having plenty of space though. Really brilliant stuff there. Texas with the population density of NY!!! Sounds lovely. I am sure that is what most Americans dream of for their communities. How on earth could they be against unlimited immigration with the promise of living in noise and filth and with the added bonus of all that economic growth? Obviously just racists.

    Murphy lives in Texas, so you think he would understand what a waste land 80% of that state is with no capacity to produce the food or water or anything else to support the 7 billion people Murphy implies wound settle nicely into the state. I’m sure there would be absolutely no conflict over resources. Why doesn’t all the 3rd world just settle the Sahara? Plenty of space there! (I really cannot believe the weakness of this particular point. Natural resources are not unlimited! Timing of population changes matter!!)

    As for productive employment vs welfare consumption of immigrant populations, look at Sweden. They have a population that is at least 10% first generation immigrants from MENA countries (IQ 70-80 in a native population with IQ 100). And guess what, they have not all become heart surgeons, nor do their kids. In fact, less than 50% find any employment at all after 10 years in the country, and most of those jobs are government make work. They are a huge drain (like 10% of the budget) on the state resources of that country.

    I am still in shock after listening to Murphy’s analysis. So many of his points are so shallow that he seem to be begging the question all the way though. Like “oh well economists can prove anything with numbers, so we can never really know if immigrants are a drain on resources or not”. Yes we can, and we can break it down by immigrant groups. SE Asians, not so much. Somalians, yes indeed. Voting patterns are just as clear, and guess what… populations that consume welfare at much higher rates than the native population vote left at much higher rates.

    No one listening to the Bob Murphy Show wants to see the government empowered to do anything. But a free, private property based society is not in the offing. The government already has the power over the borders whether there is a wall there or not. The only question relating to the issue of immigrants (how many and where from) is whether we want to preserve as much liberty as we can and for how long. More immigration from certain populations demonstrably leads to a larger welfare state, higher taxes, more surveillance (look at London), less social trust and cohesion (look at Scandinavia), and all other sorts of ills both economic and otherwise.

    This would have been a fine talk to give at an Ocasio-Cortez rally, but really some low level economics from the school of Rothbard, Rockwell and Hoppe.

    • Robert Murphy on 01/11/2019 at 6:19 PM

      Christian Hoffman wrote:

      “Loved the argument about the US having plenty of space though. Really brilliant stuff there. Texas with the population density of NY!!! Sounds lovely. I am sure that is what most Americans dream of for their communities. How on earth could they be against unlimited immigration with the promise of living in noise and filth and with the added bonus of all that economic growth? Obviously just racists.”

      Mr. Hoffman, can you point the timestamp where I said immigration opponents were racists? I don’t remember saying that. I *do* remember saying that it was unfair to say immigration opponents were racists, i.e. the exact opposite of what you claim above.

      • Christian Hoffman on 01/11/2019 at 7:02 PM

        My mistake. I never meant to imply that you expressed that opinion.

        In the context of my rant, I was satirically appropriating the expressed opinion of most open border advocates (on the left) that any opposition to free migration is latent racism.

        My sincerest apologies for seeming to ascribe that opinion to you. And thanks for your reply.

        • Robert Murphy on 01/11/2019 at 10:06 PM

          OK. Also, just to defend the idea that I wasn’t picking on (merely) one side: I opened up with a lengthy critique of Bryan Caplan and the “open borders” position. That’s not a standard move for a “left-libertarian…stream of pro-immigration propaganda.”

          I also showed how the basic economic analysis would mean that if a certain occupation immigrated in, the original workers in that particular sector would be hurt. I showed that both theoretically (with the heart surgeon thought experiment) and empirically (with the Borjas paper). Again, that’s not something you typically hear from bleeding heart libertarians. They would often have you think that just about everyone benefits from more immigration, full stop.

          I also criticized one of the standard pro-immigration arguments, namely that “they spend their money here.”

          So, it’s true that I think a fully private society would have a lot more human beings moving into the current United States than happens right now, but I think your assessment of my episode was a bit sweeping in its characterizations.

          • Christian Hoffman on 01/12/2019 at 6:03 PM

            I only listened to the podcast once, so excuse me if I am misremembering, but as I recall it, your only critique of Caplan had to do with ‘branding’. I believe he holds the same opinion as you (and I) that the correct solution is a private property society. Your only complaint was that he uses the imprecise phrase “open borders” like he uses “against education”.

            Regarding the heart surgeon thought experiment, your analysis is actually worse than that of a “bleeding heart libertarian” because you confuse the issue behind a veneer of impartial economic analysis to come to the same conclusion. But almost nobody, not even the extreme nationalistic Ann Coulter types, are against immigration of highly skilled people with western values . The value of having more heart surgeons in a society is clear, and nobody worries about millions of displaced native heart surgeons retraining for other work because 1. People with that intelligence can easily retrain, and 2. The number of immigrant heart surgeons is minuscule compared to the domestic population of heart surgeons.

            But there are not millions of heart surgeons clambering at the gates. The millions are generally unskilled, uneducated, and the people they displace at the bottom rungs of our society cannot easily transition to other occupations. The immigrants flooding into the US and Europe right now also have a higher propensity toward violence, criminality, welfare consumption, and all sorts of other social dysfunction.

            My criticism is that your podcast discusses none of the costs to a society in the current state run system from low skilled, low intelligence, often uncivilized immigrants. (I am not trying to be unkind here, but these are just the facts of the matter) You only talk about the benefits by way of cheaper labor as an input to production, and dismiss the costs by saying we can never really know how much welfare they consume. Your job as an economist is just that, to account for the costs vs the benefits. And from an economist of your stature I would expect you to examine second and third order order costs like criminality, loss of social trust, and the cost of the long run political effects.

            Heck, you did not even approach more mundane concerns like timing issues related to population changes- humans need things to survive which must be produced and capital goods in order to work. Or even the problem with skills mismatches in the economy relating to immigration. Like in my Sweden example where they now have about 1 million unskilled, undereducated immigrants (in a country of 10 million) in an economy where they have about 0 low skill jobs. And it is not like they have acres and acres of unowned arable land waiting to be tilled by hand. Could there possibly be any negative economic consequences of that situation?

            I am a big fan of your work and your wit, and I was very excited to get your opinion on these matters in your podcast. And not that I wanted my own bias confirmed, I just wanted some good perspective. It was disappointing that you did not even attempt to address these important issues relating to the costs of immigration in your podcast. You approach seemed rather ideological, unbalanced, and without nuance.



        • Danan on 01/13/2019 at 10:04 PM

          What even is your objection to the racism allegation? You literally went on a diatribe over how much other groups of people are inherently intellectually inferior and therefore a potential threat to society. Just stand by that label.

  7. Aaron on 01/11/2019 at 2:43 PM

    This is a really great episode, thanks Bob.

    Just want to leave a link to another gem: https://www.youtube.com/watch?v=qwUTDA3stfc

    This is a video by a small, but smart, YouTube channel. He takes a similar approach; the video is not really trying to convince either side that they are right or wrong. This video actually comes at it not from economics but from the rights point of view. And I think it succinctly shows why you can’t fully resolve the issue to everyone’s satisfaction. The reason for this is mainly due to the state, pretty much any solution involving the state will be violating somebody’s rights.

    I’ll also pat myself on the back, my year-old YouTube comment is still on that video, talking about how we shouldn’t frame the debate as open vs closed, but as private vs public. 🙂

  8. Steve Maughan on 01/11/2019 at 6:46 PM

    Question: How would a privatized border work? Do you mean someone owns the border?

    • Robert Murphy on 01/11/2019 at 10:07 PM

      Steve, I mean every piece of real estate is owned by private individual(s). So yes, every landowner decides the rules for which people can enter his or her property.

      • Steve Maughan on 01/12/2019 at 4:41 AM

        OK, so it’s not the current border, it’s the border to every individual property. That makes sense.

        Thanks

Leave a Comment