If Immigration to America and Europe No Longer Pays
By Anthony de Jasay
What are the conditions that made immigration from Central America and Mexico to the United States and from Africa to Europe economically unattractive? The question has some importance if only because the receiving countries in both the United States and Europe have populations which show themselves more and more hostile to new immigration, although they do not object to immigrants who have to some extent already assimilated themselves to the majority population.
When running for President of the United States, Donald Trump promised many good things to his audiences, something every candidate did, but he also threatened the enemies of America or at least those who would deny that America comes first. One of his promises was to teach a lesson to Mexico, which in his view, was disloyally profiting from NAFTA (North American Free Trade Agreement), but also sent millions of Mexicans to settle in America and take the jobs that should rightfully belong to Americans. He told his delighted audiences that he would build a tall cement wall along the Mexican border and get the Mexican government to pay for it. The wall will or will not be built, but in any case, Mexico will not pay for it. Experts are of the view that the wall, assuming it is eventually built, will not materially influence the immigration of Mexicans and Central Americans.
The referendum by which a majority of the British public voted for Brexit (June 2016) was in no smaller part an anti-immigrant vote. This was a curious reaction because the vote was technically to emancipate the British government from the obligation to allow EU citizens to reside and work in the United Kingdom, a right which only a small percentage of net UK immigrants have ever utilised. In the year 2016, net immigration was 248,000 people, 133,000 of whom were from EU countries. It is difficult to conceive why national sovereignty had to become of such vital importance and a decisive factor in Britain deciding to leave the EU. One might as well say that it was much ado about nothing, or at least about rather little. The bulk of UK immigration has always been from countries, like India and Africa, which the UK government has always been able to control and which had nothing to do with the immigration from EU countries which the United Kingdom was obliged to allow freely as long as the country was a member of the European Union. In other words, the United Kingdom has decided to leave the European Union in order to get the freedom to exclude the immigration of other EU residents who were not trying to enter in any case. For the UK voter who opted for Brexit, however, the vote was against all immigration, whether it was from the EU or from regions outside, even though the latter was rigorously independent from the EU and the right of European free entry. It was immigration under whatever legal title that the UK voter was against.
Under the initiative of German Chancellor Angela Merkel, the European Union agreed to pay one billion euros for Turkey to receive refugees from Syria and to prevent them from continuing their way to Greece and beyond and thus to become the problem of the European Union. Hungary and Slovakia are petitioning the European Court of Justice against the decision of the European Union requiring them to receive a certain number of Syrian refugees. They consider this requirement to be contrary to their sovereignty.
There is now an agreement between the Italian navy and other European navies both to rescue refugee boats sinking on their way from the Libyan coast to Italy, but also and most importantly, to prevent such refugee boats from leaving the Libyan coast at all. This agreement, called Operation Triton, is designed to make it more difficult and expensive for people to traffic refugee customers leaving Africa and getting to Europe.
“Such a dilemma could only be resolved if people in Africa and other habitual sources of immigration would no longer aspire to go and live in Europe or America, but were content voluntarily to live their lives in their own countries.”
There is a growing tendency in both the European and American public and their governments to regard immigrants with little sympathy and indeed to try and refuse their admittance. Such a dilemma could only be resolved if people in Africa and other habitual sources of immigration would no longer aspire to go and live in Europe or America, but were content voluntarily to live their lives in their own countries. Such a dilemma would almost by definition exclude refugees who flee from civil strife or war, but could include so-called “economic refugees,” whose main motive for moving or staying put are matters of more or less accepted levels of well-being. In this paper we will only consider the conditions that would govern the choices of these economic immigrants.
In a simplified economic story, the unskilled wage rate of the migrant is below the unskilled wage rate of the immigrant. The gap between the two is the incentive for the voluntary migrant to abandon his country of origin and migrate. However, this gap would have to be greater than the cost the migrant would incur to change countries. The cost, including the risk of capture or even death, would have to be less than people have to find in order to get from Mexico to Arizona or from Central Africa to the Italian coast, for example.
Good Government: When the Future is Worth More than the Present
The period since World War II was characterised by the technology of transport developing more rapidly than the average technology of all output. The result of this was called “globalisation,” notably the merchandise of distant origins and destinations entering into world trade but also the transport of people from distant parts becoming cheaper in terms of their income. Globalisation manifested itself in mass migration from the erstwhile British colonies of Southeast Asia and Africa to Great Britain, from Arabs in North Africa to France, and from Turks and Kurds from Turkey to Germany. The tail end of this mass migration is now being accompanied by public opinion too tired to receive additional economic migrants. There is a widespread but not universal desire by the receiving countries for migrants to be contented with living in their original home countries. How can this be achieved without harsh measures for controlling immigration? How can staying at home become the preferred alternative?
Africans used to call dictatorial head of state of their country the “Big Man.” We will consider two alternatives of how to govern that a Big Man can choose, assuming he has almost complete dictatorial powers to do so.
The Big Man will collect taxes to satisfy his army and the police which is necessary to enforce the collection of all other taxes, including what will satisfy the Big Man’s wealthy friends and whatever will be needed to pacify the poor. He will have to retain for himself a residue of taxes that we will estimate to be 10 per cent per annum; we will call this Bad Government. He will deposit this sum in the Cayman Islands for the benefit of his family. Under such a heavy tax burden, his country will have little industrialization or other development. It will have annual emigration corresponding to population growth. We might say that people in this country immigrate because there is no employment under the heavy tax burden, or else we might say on the contrary that immigration from the country will prevent industrialization and may require this heavy tax burden. In any event, there will be bad government under the Big Man.
For more on these topics, see Immigration, by George J. Borjas, in the Concise Encyclopedia of Economics. See also “Immigration: What is the Liberal Stand?” by Anthony de Jasay, Library of Economics and Liberty, August 7, 2006; and see the EconTalk podcast episode Clemens on Aid, Migration, and Poverty, July 2013.
There is a different scenario that we might imagine with a little good will. In what we might call the Good Government version, the Big Man deposits 7.5% of a growing—at say 7.5% per annum—tax revenue base so that by year 20, his income will have tripled. His children will benefit from a cumulative income 1.5 times greater than what he would have collected for them under the Bad Government scenario.
In the post-colonial state there will be a frequent requirement to affirm or change political power by the method of “one man (one woman) one vote,” a method which tends to have a bias in favour of near instead of distant rewards. However, this feature of the democratic method is not likely sufficiently to the bad or the good government the Big Man will be able to choose. When in a short generation the good government rewards both the Big Man’s children and the total population by nearly 3 times as much as the bad government can do, the choice between the good and the bad government is in the long run very easy. It is no longer a question of a shorter or longer time preference which various persons may have according to their temperament, a temperament that cannot prejudge but a matter of very ordinary common sense that ordinary numbers will dictate.
The State is also available online on this website.
For more articles by Anthony de Jasay, see the Archive.