Tuesday, December 4, 2007

"Foreignization of Poverty" in the US

From leading immigration economist Professor George Borjas' blog (citing a Center for Immigration Studies study):
1. The number of immigrants arriving in the past seven years (both legal and
illegal) is a historical high.
2. More than half of these recent arrivals
are illegal.
3. About a third of adult immigrants lack a high school
diploma.
4. One of every 3 persons lacking health insurance is foreign-born.
5. A third of immigrant households use at least one major welfare program;
as compared to only 19 percent of native households.

These data tell us almost nothing about the impact of immigration on natives, and less about what we should do about immigration. The only conclusions we can draw are ones that are motivated by our existing prejudices and biases before seeing this information. The study seems to promote that these statistics imply that there should be reduced immigration through stricter control (tightening quotes and enforcing them more stringently), and Borjas, though he attempts to keep his comments vague and intellectually detached, seems to agree.

(Aside: With regard to the last two above, I'm imagining a funny scene where an undocumented immigrant is arriving for his first day of work at some meat processing plant or something and begins to negotiate his contract to include health benefits. In my mind the negotiation takes place in esparanto. Guess what program those one in every three of immigrants who don't have health insurance are on!)


But what do these statistics really mean? OK, if you mix one sample with another and one sample and the sample you introduce has a higher (lower) mean, it will pull the pooled mean up(down). In our examle, if immigrants have higher rates of poverty, heck if MEXICO has higher poverty rates and you mix them randomly with the US population, there will be an apparent increase in poverty. But so what?

There's absolutely nothing here to suggest that immigrants are making natives more poor, less educated, less likely to have health insurance or more likely to be on welfare. It's possible that these things could be occurring, but there's nothing in the study to support it. It's equally possible, if not likely judging from the conclusions drawn by other noted labor economists, that natives may enjoy a small boost to their own incomes around the middle 20% of the income distribution and above. Furthermore, it is logical to conjecture that the immigrants themselves are better off, otherwise the pipeline (both legal and illegal) would stop. So, before going further, who's hurt by immigration and why should we invest scarce resources in preventing it?

Now let's dig deeper: Does the Center for Immigration Studies or Professor Borjas have a magic wand that makes the Fundamental Economic Problem of Scarcity disappear? If cutting off immigration is your objective, how should we do it and how much should we spend to keep people out? Immigration's net strain on the fiscal budget has been estimated at around $10 billion. That was a few years ago, so I'll be generous and double it, so say that today it's about $20 billion per year (heck, triple or quadruple it for all I care). Set every red cent of that aside into a fund for a "fight immigration task force" and do you know what would happen? We would still have countless numbers of undocumented immigrants streaming into our country, imposing a lesser but still a substantial amount of fiscal strain on the budget, and we would have diverted billions of dollars of productive resources away from the private economy to tilt at windmills. Bottom line: the cure is worse than the (alleged) disease.

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