Wednesday, June 14, 2006

Examining Immigration Policy More Closely

How do we define what makes an immigration policy good or bad? A lot of the rhetoric on the pro-immigration side implicitly sets the bar low, ridiculously low, to more or less this question: Does the benefit of immigration exceed the cost? There are several problems with this formula.

1) We can do better. While I am skeptical that the long-term and comprehensive costs are less than the benefits of current illegal immigration, this is still the wrong question. The appropriate economic question is: Are these immigrants the best immigrants we can get? Even if one accepts that massive immigration is good, that does not mean that mass immigration among the unskilled and uneducated is the optimal policy. Would, for example, immigration among the skilled and educated be of more benefit? Simply put: Can we do better? Economics is about achieving the optimal, not merely that-will-do policy analysis.* If there is a better immigration policy, then we should adopt it.

2) Underestimation of costs. Massive immigration causes real economic losses that are undestimated or ignored in cost-benefit analysis. First among these costs is crime. Killing or injury individuals carries real economic costs (not to mention the emotional impact on the victims, their families, and society). Incarceration then compounds that cost further.

Most cost-benefit analysis does not include the cost to educate immigrant children (around $7,000 per child per year), usually because the children themselves are American citizens. Likewise, welfare and medicaid costs for the American born children of immigrants are excluded from most calculations. This is inexcusable because these children are a direct result of immigration policy, even if they are not "immigrants" themselves. Another cost is the degradation in the quality of public schools. Flooding public schools with low SES students and English learners is a tremendous burden to our public school system that our lower and middle classes depend on; the education of their children suffers as a direct result of massive immigration, reducing the lifetime economic output of those educated in increasingly ineffective public schools. Finally, immigrants place inflationary pressures on our economy in several sectors, principally housing and health services. By importing poverty we import more uninsured, which causes medical prices to increase. As discussed in a previous post and contrary to popular belief, immigrants actually increase the cost of housing.

3) Underestimation of intangibles. Most agree (or at least say they agree) that American welfare should be the exclusive policy concern of American immigration policy. Immigration policy should not be formulated by placing any weight on the benefits to the immigrants themselves (some traitors disagree). If one accepts this premise, how do we not account for the pyschic disutility created by massive immigration? A 45-year-old construction worker doesn't want to have to learn Spanish to keep his skillset competitive. Soccer moms don't want to be bombarded by a foreign language when they visit the super market. They want to live in the country the grew up in; they want to feel at home at home; they don't want to feel like a foreigner in their own country.

Contrary to popular belief, these costs should be considered in economic analysis if the purported objective is to maximize native well being. Though these sorts of costs cannot be precisely defined (they're intangibles) they should bias the analysis in favor of less immigration. If the benefit of massive unskilled immigration is small (if there are long term benefits at all, they are small), one should reject the policy because of the presence of many intangible costs (a partial list of intangible costs: increase in inequality, loss of monolingual society, loss of national cohesion, chance of irredentism, and fear of crime).

*Immigration must be necessarily limited by transition costs and assimilation concerns. Given this limitation, we should offer the limited spaces to the immigrants that will be of the greatest net benefit to America.

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