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Why we should treat immigration like trade

Immigration can be just as economically advantageous as trade, but it must be carefully managed if it is to be a fair process that benefits all involved

At first glance, immigration appears to be little different from free trade: instead of importing the goods that labour produced elsewhere, countries are simply importing the labour itself
At first glance, immigration appears to be little different from free trade: instead of importing the goods that labour produced elsewhere, countries are simply importing the labour itself 

Despite the current backlash against free trade, exemplified most prominently by US President Donald Trump’s protectionist ‘America First’ agenda, the economic case for easing the movement of goods and services across borders is strong and straightforward. The case for immigration – that is, the movement of labour across borders – is no less compelling, though it is far more complicated.

For a libertarian like me, the advantages of free trade are obvious: transactions between willing buyers and sellers, within an economy or across borders, almost always benefit both sides. While restrictions may be worthwhile to ensure, say, the safety of goods entering a market, barriers should be kept to a minimum.

Immigrants made New York City a cultural mecca and Los Angeles a centre of the global film industry

On the other hand, it is not worth limiting trade to punish countries that supposedly unfairly subsidise their exports or allow employers to exploit their workers. Limiting imports from countries with low wages and poor working conditions may seem justified; in reality, it deprives these countries’ low-wage workers of what little they can earn. At the same time, it imposes an unwarranted and frequently regressive tax on consumers.

Importing labour
At first glance, immigration appears to be little different from free trade: instead of importing the goods that labour produced elsewhere, countries are simply importing the labour itself. In some ways, the potential gains of immigration may be even greater than those of free trade.

The immigrants themselves benefit from higher wages, as well as greater safety and individual freedom. The native-born population wins, too, because the new labour performs menial or unpleasant tasks, broadens the tax base and expands domestic markets. More importantly, immigrants can bring considerable entrepreneurial energy and enrich the local community with their culture, food and traditions.

Supporting immigration also has an added moral appeal. Hard-nosed free traders can find it hard to persuade tenderhearted sceptics that allowing faraway sweatshops to operate is kinder than eliminating the low-wage jobs they provide. Sheltering immigrants who would face torture or starvation in their homelands aligns more easily with our humanitarian instincts.

There is no better illustration of the benefits of immigration than the US. Successive generations of immigrants turned the young country, with its industrially backwards agrarian economy, into the world’s leading technological and military power. Immigrants made New York City a cultural mecca and Los Angeles a centre of the global film industry. And welcoming the “huddled masses yearning to breathe free” long gave the country an uplifting purpose.

The costs of immigration
But not even an immigrant like me can ignore the risks that immigration carries. Unlike free trade, immigration is often a unilateral choice, rather than a voluntary, two-sided exchange. And, while immigration can bring advantages to the native-born, that is not guaranteed.

An extreme example of this is colonisation. The ‘New World’ that European explorers ‘discovered’ wasn’t new to those already living there. European immigrants, often escaping persecution or hunger, usurped the indigenous peoples’ lands and hunting grounds, forced them to sign treaties that would not be honoured, corralled them into reservations and slaughtered those who resisted. Similarly, European settlers in Australia declared the continent terra nullius, or free for the taking, butchered Aboriginal people and forced their children into foster care to advance their cultural assimilation.

Of course, today’s immigrants are not going to ransack and usurp the US or destination countries in Europe. But that does not mean that welcoming them is cost-free. While many find productive employment and pay taxes, some do not, straining social safety nets at a time of large public debts and rapid population ageing. These risks are compounded when large numbers of migrants or refugees arrive unexpectedly, overwhelming education and healthcare systems and exceeding housing capacity.

Exaggerated risks
Security risks also must be considered. To be sure, nativist and populist political forces grossly exaggerate the links between immigration and crime, including terrorism. But that does not mean that no such links exist. It is entirely possible, for example, that some members of the criminal gangs whose activities drove a ‘caravan’ of thousands of Central American migrants to walk to the US–Mexico border to apply for asylum would try to slip into the US with that caravan. Likewise, an Islamic State warrior could well try to get into Europe amid the hordes of desperate asylum seekers from Syria.

Moreover, illegal immigrants may remain connected to or even controlled by the criminal organisations that smuggled and resettled them. As for legal immigrants, ethnic enclaves insulated from effective policing in the US have historically created space for the local expansion of home-country mafias.

The risks extend beyond new arrivals. In recent years, terrorist attacks have been carried out by second-generation immigrants who reject the menial jobs their immigrant parents were forced to take, but lack the education and social acceptance needed to ascend the economic ladder. Salman Abedi, the British-born son of Libyan immigrants who carried out a suicide bombing following a concert by the American singer Ariana Grande in Manchester in May 2017, is a case in point.

Such cases are exceedingly rare. And yet, the increasing frequency of such events in recent years underscores the importance of managing immigration effectively – including investing the relevant resources – in the short and long term.

Some argue that, to mitigate the risks of immigration, countries should use a kind of points system based on credentials such as education, because the highly educated are presumably less likely to be unemployed or to commit crimes. But a person does not need an advanced degree to make invaluable entrepreneurial, technological or artistic contributions, and it would be unjust to reject asylum seekers for not having PhDs. Race-based selection is, of course, also unconscionable.

A better approach would begin with an assessment of everything from public infrastructure (how many immigrants can it reasonably support?) to the efficacy of background checks (what happens to immigrants whose histories cannot be reliably confirmed?). Nativism should have no place in such discussions, but nor should unrealistic idealism. The key to mutually beneficial immigration is clear-eyed pragmatism. The best way to minimise fear is to manage risks.

© Project Syndicate, 2019

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