Brad DeLong's Semi-Daily Journal (2004)

Brad writes:

"This is an example of Milton Friedman's dictum that in the end almost all disagreements between economists can be phrased as disagreements over matters of fact rather than matters of value.

Footnote 2: I'm not a cosmopolite: I care about myself and my family first; my friends second; my country third; and the world fourth."

I think you contradicted yourself almost immediately there. I'm sure there are lots of economists who disagree with your statement of your values in footnote 2.

Yes, I know, this doesn't go to the main point you're making. Sorry. But I study ethics, so I was drawn to think about (and want to contradict!) what you were saying in footnote #1, which is why it amused me when you so quickly contradicted it.

Professor Delong, you forgot to tell Professor Cowen for whom not to vote!

While I certainly understand that increased immigration may lead to less political support for social welfare programs, I don't see why as an individual I can't support both. I strongly support many social welfare programs (education, social security, unemployment insurance, national healthcare, smart government support for private ownership of homes, etc). I also strongly support immigration. In fact, doesn't the economic growth that comes with immigration help FUND the social welfare programs I like? Can't immigration be structured so that new immigrants do not immediately receive all the benefits of these programs (for instance, children could all be eligible for schooling, but people's reciept of social security, unemployment, etc could be predicated on time in the work force or in the country (have to find a way to support women who work in the home))? Why is all of this a huge problem?

Also, this isn't something that I often encounter in my discussions with ordinary (ie. not policy wonk or economist) people. Almost everyone I meet who support Liberal social welfare also supports immigration, and MOST of the people I meet who oppose social welfare programs and Liberalism also oppose immigration. Isn't the Republican Party more opposed to immigration than the Democratic Party?

I don't see why there is a huge trade off here. While I think I understand why some people think there would be a trade off, all those problems seem like they can be overcome. Personally, I think much of the anti-immigration and anti-social welfare state attitudes may both be rooted in a kind of racism/ethnic chauvinism, however, I don't see why we have to assume this ethnic chauvinism is insurmountable. Arguing that increased immigration will necessarily lead to less of a social welfare state because people will be angry that "foreigners" are receiving the benefits seems to concede that we can't change people's attitudes about foreigners, which seems to give up on the battle before it's begun.

Brad's second footnote does not contradict his first one. Friedman's comment was obviously about disputes over matters of economics (he wouldn't say that two economists, for instance, might not disagree about abortion). Brad's rejection of pure cosmopolitanism has nothing to do with the substance of the economic argument.

"Development is far more important from a world welfare perspective than social insurance within rich countries. And immigration is a powerful tool for world development."

Given these two statements, isn't it Chinese, Indian, Brazilian, Argentine, Malian, and Vietnamese immigration policies that are by far more important than US policies?

The US, already well off, receives immigrants who themselves (on average) become better off than they were in their home countries. Their home countries receive some benefit, but that benefit is rather small on a per capital basis.

Populations are higher and living standards lower in the sending than receiving countires. The above-mentions countries need capital, technology and expertise. So proper immigration policy for those countries, countries whose immigration policies arguably matter far more for world welfare than do US policies, should encourage immigrants to bring capital, technology and expertise. Often, immigration policies do just the opposite.

> I will in advance volunteer the concession that
> most tax systems should be mildly progressive
> rather than flat or regressive.

Gee. What's he going to do next, admit that taxation without representation is tyranny?

I am really missing a few points here.

By welfare state are we talking about TANF and General Assistance (which have both a financial and medical benefit), or are including our public education, educational grants and scholarships, Child Protective Services, Adult Protective Services, Social Security, Food Stamps, Medicaid, CHIP, WIC, SSI, Unemployment Insurance, Workman's Compensation, Mental Health and Mental Retardation and a host of other federal, state and local programs? TANF and GA are very much on the decline, Medicaid and CHIP are getting tattooed by state budget problems.

By immigration are we talking about legal (i.e. documented) immigrants or are we including undocumented immigrants?

Documented aliens already participate in the above with some limitations. They are part of the above ground employment system.

Undocumented aliens do not participate in most of the national systems above and they are rarely part of the above ground employment system since they do not have social security numbers. They are heavy users of local public sector health care systems because their employment does not provide health care. They work for sub-standard wages with sub-standard protections. Last I saw, undocumented aliens (mostly adults) outnumber TANF recipients (mostly children) by 8 million to 2 million.

I guess I would like the question framed more clearly. For example, is the question: are we better off with more immigration, legal or not, than strengthening our Child Protective Services? Or our programs for the aged and disabled? Our our public health care system? (Pick one or all...) Or is the question: legal immigration benefits our society to a greater degree than financial components of General Assistance and TANF?

Isn't this illegal?

My political economy argument for less immigration is as follows:
I favor restricted immigration. I'll make the Global Liberal argument for this case.

The great benefit of the U.S. to the world at large is its existence as a middle-class, multi-ethnic, democratic, economically succesful country that has provided a consistent escalator to middle-class status for succesive waves of immigrants. The continued existence of the U.S. as an example is more important than the undeniable economics benefits from expanded immigration.

What we see in California, Texas, and other heavy immigrant states is that the public is not willing to put the investments into education and public health and other basic social infrastructure that are consistent with giving new immigrant children a reasonable chance at middle-class life. I would like it if the majority were willing to pay more to educate hispanic kids, but they are not. There seems to be a definite upper-limit on hom much people will pay in taxes to help people who look different.

Therefore, immigration should be set at a level where the necessary educational investments are politically supportable by the middle class. I think that is a fair amount below what we have now.

If you allow immigration to exceed this threshold you might have a case where new immigrants are taking much longer to assimalate and reach middle-class status than we have seen with past immigration waves. This would be a potentially large and long-term underclass and a real threat to the kind of country the U.S. needs to continue to be in order to be a beacon to the world.

http://www.nytimes.com/2004/04/06/business/worldbusiness/06trade.html

Central American Deal Ignites a Trade Debate
By ELIZABETH BECKER

SAN SALVADOR - Marina del Carmen Leiva, a 32-year-old mother, struggles to keep her job earning $152 every month bent over sewing machines, making clothes for famous American brand-name companies.

The pressure to produce garments quickly is so great, she says, that she and her co-workers are regularly refused permission to visit the bathroom or get a drink of water for fear it would slow the line.

"If they would just treat us like human beings, even without raising the minimum wage, my life would be better," said Mrs. del Carmen Leiva, a slender, dark-eyed woman who is the sole supporter of her three children.

With the Bush administration asking Congress to approve the Central American Free Trade Agreement late this spring, the next big battle over the politically explosive issue of trade will revolve around people like Mrs. del Carmen Leiva and their labor rights.

For President Bush, the best help for workers like Mrs. del Carmen Leiva is his Central America agreement. Cafta, as the agreement is called, promises more trade with the United States and a new commitment that the five countries included - Costa Rica, Guatemala, Honduras and Panama as well as El Salvador - will do a better job enforcing their national labor laws.

But Democrats say that is not enough. Cafta, they say, needs to include explicit guarantees of the internationally recognized labor rights to organize unions and to prohibit child labor and discrimination in employment. Then, they say, increased trade would lead to better protection for jobs abroad and at home, and the benefits of globalization would be spread more evenly.

Cafta would create a free trade zone between the United States and the five Central American nations, immediately dropping most duties for imports. It would also help prepare the textile industry in all the countries for stiff international competition next year, especially from China, when the global textile quota system is eliminated under an global trade agreement. The Central American nations opened their protected insurance, telecommunications and agricultural sectors to American competition, but the United States resisted requests to reduce its annual $19 billion in agriculture subsidies or allow more immigration....

I see the value of traditional immigration, where newcomers, or at least their children, desperately want to assimilate into the receiving culture. It scares me to think that we would allow people to immigrate who flatly intend to maintain their own cultures. Consider France. Not just in Paris, but all over, there are immigrants who refuse to learn French, or insist on their own cultural norms, like the African immigrants who insist on female circumsion, or the Moslems who insist on wearing the burqa, and refuse to be photographed full face for documents. These are people who want the benefits of modern societies, wealth, consumer choice, safety, clean water, and French cooking, but insist on maintaining religious cultures that are inimical to French ideas of social organization.

Defiantly wearing religious symbols in French culture is just as noxious to the secular French as atheists are in our society. Why should the French surrender their culture, which they have evolved over centuries of history known to all French children, in order to accomodate the interests of people of violently different cultures?

Historically, we have expected people to assimilate, which includes the part where our culture picks up parts of the cultures of our immigrants, and who is there who thinks we would be better off without Kielbasa? Still there are limits here. Immigrants whose religious views include second-class status for women, those who refuse to learn English, those who insist on their right to ignore laws and customs for cultural reasons, and others, just cannot be welcome here.

We have a culture here. Just ask David Brooks about bobos and others in the exotic edge cities. We like it. It supports us in our chosen life-styles, as what H.L. Mencken called us, an amiable commercial people. So, to the extent that immigration does not include assimilation, I do not favor it at all.

The proposition that "increased immigration is superior to strenthening the welfare state" is only true, without numerous qualifications and amendments, if one assumes that there is zero value to the attachment of human beings to their local community. The social gain of human beings from migration is enormously reduced by the opportunity costs of sacrificing existing social capital in the immigrants' original home community.

It is worth considering why immigration to the U.S. isn't much higher than it already is. We don't really have much in the way of effective enforcement of existing immigration laws. Why aren't there many more immigrants, given the enormous wage disparities between the U.S. and other countries, particularly Mexico? Presumably,immigration is constrained because the wage differential for many potential immigrants does not offset the "mobility costs". These mobility costs are in large part the sacrifice of proximity to family, friends, and familiar places. These losses also occur for immigrants who do move, although obviously the perceived wage gains from moving exceed the perceived losses for those who choose migration. Still, these losses should be seriously considered in any benefit cost analysis of expanding immigration versus alternative policies, including social welfare policies, but also including economic development policies in the immigrants' home countries.

Ties of individuals to their local communities are also important in determining appropriate policy for American governments. Stronger local communities in the U.S. have an economic and ethical claim that we should include in our policy analysis, not ignore.

Over 200 years ago, Adam Smith said that "a man is of all sorts of luggage the most difficult to be transported." Economists today often tend to ignore or minimize such "market frictions", despite their obvious importance to how most individuals behave and vote. Perhaps such ties of individuals to places are ignored because economists as a group tend to be a particularly mobile group, with relatively few strong local ties.

I suppose I'm the only one here who thought the observations about caring for family first, friends second and country third was a little blithely put . . . . though not a surprising tone for a liberal.

One ought to be able to care greatly for one's family and country at close to the same level, if not the same level. I think.

The story of immigration in France is not about immigrants failing to assimilate. It's also about France failing to assimilate immigrants. A culture that cannot handle EITHER open secularism or open religiousity is a fundamentally flawed culture that needs changing.

Where the heck does this idea that high levels of immigration and high levels of social welfare are somehow opposed to each other, come from?

Speaking as a Canadian... look at immigration and social attitudes in Canada versus the US. Canada has a much higher immigration rate than the US (compared to the size of its population), at least as far as legal immigrants go. When you count the Mexican illegals in the US, the numbers might be closer to parity. The Canadian population fully supports this - over 3/4 of the population thinks immigration is good for the country, compared to a bit less than 1/2 in the US. As far as the attitudes of average people go, Canada appears to be the most pro-immigration country in the world. Yet at the same time, Canada also has significantly stronger social welfare programs than the US, and again the population strongly supports those programs.

If you look at values surveys and political psychology research, you find that tolerance, support for immigration, and support for social welfare programs are all substantially correlated with each other. Basically it's a common package of left/liberal ideals. Exceptions to these correlations, such as pro-immigration but anti-welfare libertarians and anti-immigration but pro-welfare communitarians, are a distinct minority in Canada and the US. So there is no reason to think that in terms of politics and votes, there is some sort of either/or tradeoff between immigration and welfare. Most liberals are supportive of both and most conservatives are wary of both.

And if you look at international comparisons and trends, you also find interesting things (including major trends in political orientation and support for social welfare which don't look faintly like anything having to do with immigration). During the 1990s, the Canadian immigration rate was high and relatively steady, and the Canadian population continued its steady leftward, pro-multiculturalism opinion shift. During the same period the US immigration rate was at least officially much lower, also relatively steady, and the US economy experienced an unprecedented boom meaning that people had less reason that ever to worry about immigrants taking jobs or taking welfare. Yet during the 1990s the US population experienced a significant increase in anti-immigrant sentiment, and also a substantial increase in anti-welfare, anti-egalitarian sentiment.

Basically, it looks to me that for societies like Canada and the US which are historically and ideologically "used to" immigration, actual immigration levels aren't a major player in public attitudes. The great attitude factors and changes that determine the political landscape are overwhelmingly the result of other domestic factors.

In the US, for example, it's pretty obvious that a large amount of opposition to social welfare programs comes from racism. Basically the US has a large impoverished minority, primarily black but also a fair number of hispanics, and they are disproportionately who Americans think of when social welfare programs are mentioned. Americans thinking of who benefits from social programs disproportionately think of the "other" - someone not of their race and culture, someone from a subgroup who they associate with violence, persistent poverty, and so forth. This makes it much, much easier to think of social welfare going to the "undeserving", as a payment from one's ingroup to an alien outgroup rather than as support for members of one's own community.

Brad sez:
I'm not a cosmopolite: I care about myself and my family first; my friends second; my country third; and the world fourth.

To quote Brad on the same day - it's a question of how much. After the basic needs of your family, etc.
are met, what marginal extras are you willing to yield to the greater good. You, of all people, should not pose this as an either/or issue.

"From a cosmopolitan world perspective, almost all of the costs of maldistribution come from income gaps between nations and very little come from within-nation inequality."

I think that's only true if you look at the very short term costs. Inequality in the developing world - in wealth, income, and education, and resulting from that, in political influence - seems to be to be a powerful impediment to development. Granted this means supporting democracy and social welfare in Mexico and Indonesia and India rather than in the US. But social welfare within the developing world seems to be to be a much more powerful tool for progress than immigration to the US. (And for US policy, I expect that promotion of sensible and egalitarian development policies in those countries, is far more important than providing a new home for a few million of their citizens).

"Development is far more important from a world welfare perspective than social insurance within rich countries. And immigration is a powerful tool for world development."

First, I dispute that permanent immigration is a powerful tool for world development. How do you figure that? _Temporary_ immigration (when someone comes to a rich country, builds wealth and knowledge, then goes back home to increase the knowledge there), is something I can see as a powerful tool. But even if permanent immigration were an order of magnitude higher than it is today, it wouldn't be more than a trickle compared to the overall population of the developing world. Let's say the US accepted a million people a year each from India and China. That's 0.1% of their population per year, and under the immigration preferences system, it's going to be mostly the younger and better educated, not those who would have been in the worst poverty in their home country. (And let's not kid ourselves that the modern US could absorb many millions of immigrants a year if they were mostly impoverished, unskilled refugees).

So no, I don't really see how immigration has all that much to do with the main problem of development.

And don't underestimate the usefuless of social insurance in rich countries. There are perhaps over a billion people in the world in utter, abject poverty whose quality of life could be dramatically improved for a fraction of the cost of social welfare to a poor first-worlder. But let's not kid ourselves, these people aren't the sort who do or would get into the US as anything but a trickle of refugees. If there was political will to let them come in a flood, assimilating them would still be stupendously difficult.

The people who actually get in mostly weren't in abject poverty. They tend to have been middle class or better in regions which are fairly poor, but are not humanitarian disaster areas. Mexico is a favorite example because of the high number of immigrants to the US. Some of the poorest come as illegals, but they're illegals because they don't meet the qualifications for legal immigration. If you look at Mexicans who immigrate legally, I suspect they're average Mexicans, not the poorest. There is, then, an interesting question - just how poor do you have to be in the US to be worse off than the average Mexican?

My guess is "not all that poor" - I would guesstimate that at least 10% of the US population has a lower wellbeing than the average Mexican, and 20% wouldn't shock me. Mexicans have a lot less _purchasing power_, but that's not the same as wellbeing. Consider, for example, that the last several decades in the US have seen a substantial increase in purchasing power, but subjective wellbeing is actually down.

Once a person has decent shelter, nutrition, health, and security, the main contributors to wellbeing have nothing to do with more purchasing power. More money gets you more stuff, but a society with more stuff is not a happier society. (However, a more egalitarian society _is_ a happier society - directly, and also due to being healthier and more secure). Happiness is more influenced by social connections and so on. Now in much of the developing world, people are so poor that they broadly lack the fundamentals - shelter, nutrition, health, and security. But the favorite example of US immigration is Mexico, not Sudan. The average Mexican has adequate shelter and nutrition. Their health care is not nearly as good - at least when you compare it to that available to an insured American. Is it really worse than what's provided by medicaid in the poorest parts of the US? And on the subject of security, the Mexican government has a history of being oppressive, but as far as I know, actual crime rates are considerably higher in the more violent areas of the US.

So, I am actually very hesitant about the idea that the US legal immigration system (regardless of how many people come in) is a dramatic boon to wellbeing. It's a dramatic boon to the purchasing power of the immigrants but that is not the same thing.

"This is an example of Milton Friedman's dictum that in the end almost all disagreements between economists can be phrased as disagreements over matters of fact rather than matters of value."

My experience with economists, at least as much as other scientists, is that the individual mostly fits their assessment of the facts to match their values (and also to some extent fits their values to match those of their profession - economics has a political/values orthodoxy more apparent than that in most fields of science).

Brad was kind to mention me but didn't include the link
http://rjwaldmann.blogspot.com/2004_04_04_rjwaldmann_archive.html#108122306389752719

At last count DeLong removed about 20 postings in this thread. What's your problem professor? Cannot take it? You are perfect Berkeley Free Speech Movement Liberal.

"This is an example of Milton Friedman's dictum that in the end almost all disagreements between economists can be phrased as disagreements over matters of fact rather than matters of value.

The key words in Friedman's dictum (as quoted by Brad) is "can be phrased". That is, a smart guy like Friedman can hide his then minority values by pretending that normative disagrements are positive.

Economists do it all the time. It is usually a trick

To Friedman. I don't think your trade off is like Tyler Cowen's. I mean you disagree with him twice.
Yours is political not fiscal. Even if you thought the benefits of immigration outweighed the costs in reduced social welfare spending, you would still fight for more social welfare spending.

to Masaccio
Earlier waves of immigrants did *not* intend to assimilate. For example I believe that 2 thirds of Italian immigrants to the USA intended to return to Italy and 1 third did. They did not accept US laws (prohibition ok native born US citizens didn't either but someone must have been for it or the amendment wouldn't have passed). They, like the Irish, had a then alien religion.

By the way, I am an atheist and I never had the impression that any American perceived me as "noxious ... as atheists are in our society.

Oh and in case you are offended by the statements I made about Italian immigrants in the USA, I should point out that I am an American immigrant in Italy.

Immigration strengthens social welfare states, not weakens them.

More immigration is a done deal, because allowing more people to immigrate helps prop up social insurance policies.

Effectively - the safety net depresses number of children, and therefore future population. Since social insurance relies on worker/pensioner ratios - either one has to raise taxes, raise GDP/capita or allow more immigration, which skips the expensive step of raising someone.

The first one is unpalatable, the second beyond direct political control, and the third - a few phone calls a way and some legislation can be passed.

If immigrant diversity is thought to often cause support for social welfare programs to fall off, this could mean saying that there is an increase in hostility between groups as the diversity increases. Joanna Shepherd at Clemson has a new study (searchable under the title 'racial diversity, residential segregation, and crime...')which finds that the interracial murder rates increase three times faster than the diversity. The elasticity is threefold; a 1% (racial) diversity increase yielded a 3% increase in the interracial murder rate. If hostility and empathy are in a perfect inverse relation, it might be expected that immigrant (as much as migrant) diversity would lead to less enthusiasm for public support to the needs of the diversity. I've heard it said that the right should support immigration because it tends to destroy the welfare state, but perhaps the opposite outcome is even more likely.

One of the reasons that Canada and Australia have such high immigrant percentages without social problems is that they are careful about who they let in. Specifically they select educated and skilled (high income) professionals and students, as well as admitting unskilled and uneducated (low income)refugees and relatives.
The immigrants as a group are therefore not likely to decrease wages for unskilled and low income Australians, nor are they likely to need more in services than they pay in taxes and therefore increase taxes for high income Australians. They are politically neutral in economic terms.
It would be possible to design an immigration policy that ONLY let in high skill and education immigrants. We could charge ten million educated people 100 dollars a day to work in the US and so depress high skilled American's wages, and then we would certainly cancel the effects of allowing forty million unskilled immigrants to depress low skilled American's wages.
And pigs will loop the loop around the Golden Gate bridge before that happens.

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