Once you’re familiar with the literature on the intergenerational income correlation, it’s easy to be complacent. But isn’t there any unfairness left to get upset about? Absolutely. The catch: Government, not “capitalism,” is clearly to blame.
Yes, income difference inside Western societies are highly heritable. However, income differences between societies depend heavily on whether or not you were born into a privileged national “family.” While your adult income doesn’t depend much on whether you’re born into a rich American family or a poor American family, being born in the U.S. instead of the Third World is crucial.
Why does your nation of birth matter so much? The answer, of course, is immigration restrictions – the legal barriers that prevent people from selling their talents wherever they’re valued the most.
When you read the literature on the inter-generational income correlation, it’s hard not to notice the thinly-veiled moral fervor. Many researchers are itching to announce, “Our society is unfair, and we need more redistributive taxation to fix it.”
If they put partisan prejudice aside, though, they’d change their tune. Redistributive taxation turns out to be just another policy that makes the economy less fair. But the effect is small compared to immigration restrictions, the most unfairest policy of all.
READER COMMENTS
ThomasL
May 16 2009 at 12:38pm
By your own argument, living in one country versus another clearly can be of value. Countries also have a limited supply of resources (land, infrastructure, etc.).
If something is clearly of value, and limited in supply, why should it be given away for free?
Stephen S
May 16 2009 at 12:43pm
Thomas: That’s a neat way of thinking about it. Perhaps there should be an open market in citizenship, rather than open borders?
ardyan
May 16 2009 at 12:47pm
What is the reason for researchers’ preference for taxation of the rich over the lifting of immigration barriers for the skilled (both of which would reduce income inequality)?
GU
May 16 2009 at 1:43pm
Prof. Caplan,
How important do you think the issue of cultural assimilation is for open borders? In today’s relativistic, anyone’s culture is just as good as another’s, do you think the U.S. could maintain a reasonable “national culture”? (Of course this argument assumes that Western culture is the best–but I don’t think that’s very controversial.)
Thinkers like Thomas Sowell are worried about this issue. I’m assuming you’re not. Why not?
Blackadder
May 16 2009 at 3:19pm
If something is clearly of value, and limited in supply, why should it be given away for free?
So, to paraphrase the recent governor of Illinois, the right to immigrate is a f*cking valuable thing, you don’t just give it away for nothing?
Eric H
May 16 2009 at 3:29pm
Stephen S & ThomasL–
An open market in citizenship sounds like a great idea. I’ve been wondering for some time now about a mechanism that would quantify the different values placed on human rights by people across the globe. Immigrants share with the citizens of their host countries a similar valuation of fundamental rights. Why else would they leave their homelands? They move to the place most in sync with their ideas of what rights should be protected.
Illegal immigration already is an example of a market for citizenship. Mexican emigrés pay exorbitant smuggling fees to ship themselves into America. Those fees, plus the cost to life and limb incurred by barbarous smugglers, are the real values poor Mexicans place on the right to make the most of their lives.
Mark Seecof
May 16 2009 at 4:27pm
Curious that your colleague’s post just below relates to family matters and the interest people take in their offspring…
People’s interest in their offspring and descendants (quaintly called “posterity” in the US Constitution) partly explains why they rationally wish to limit immigration.
Talent is only partly heritable and genetic recombination and mixing cause phenotypes to appear more or less markedly in different offspring. To promote their own genetic heritage parents commonly wish to pass some of their own advantages on to their children and grandchildren, regardless of whether particular individuals among those descendants display the same levels of specified talents as their progenitors. Parents invest even in the less promising of their children in hopes they will manage to reproduce. (Dawkins offers a whole “selfish gene” story related to this.)
Part of promoting the survival of your genes is mitigating threats to your offspring.
Immigrants constitute severe threats! The more talented they are, the worse the threat they pose, since they will compete with your offspring for economic resources (land in particular) and therefore reduce the likelihood that your offspring will multiply.
Worse, unlike your neighbors, immigrants are probably not any kin to you so they will be less likely to cooperate with your offspring. (This problem is less when prospective immigrants are to come from the same region as your own ancestors– which explains why people object a bit less to immigration from their own ancestral regions. Also, we humans are adapted to operate partly on socially-mediated quasi-kinship, so people rarely object to immigrants who marry citizens or are adopted by them– the social integration of such immigrants minimizes the threat they pose.)
No rational being wants unrelated, more talented strangers competing with his kids and grandkids for the limited economic resources which enable breeding. Rational beings want even their dull children to earn good livings (perhaps they’ll spawn less dull grandchildren. Statistically they will). Rational beings therefore limit immigration in their own genetic interests.
A glance at history shows that immigration has generally been bad for natives (ask the Cherokee). Down through the millennia immigration has largely been a matter of invasion of one group’s territory by another group either with a competitive advantage or driven by desperation to displace the locals. Survivors of conflicts over immigration are not surprisingly wary of such problems.
Now, you may argue that in the modern economy immigrants will promote economic growth, and that the rising tide will lift all boats. Too bad for you that there is little empirical evidence for this proposition– nowhere near the kind of evidence it would take for your abstract, theoretical argument to overcome people’s evolved and eminently rational distaste for immigration.
(Your appeal to fairness is naïve. Life isn’t fair and when resources are limited few people feel driven by fairness either to give the food they have gathered for their own offspring to the children of strangers, or to invite said strangers to compete for the available harvest.)
Cratinus
May 16 2009 at 4:37pm
Why does your nation of birth matter so much? The answer, of course, is immigration restrictions – the legal barriers that prevent people from selling their talents wherever they’re valued the most.
Why “Of course”? One obvious factor is that different nations have different mixtures or races. And races are basically big, slightly inbred, extended families. So if ability to earn money is mostly inherited, and different nations are basically different genetic families, then we might expect that a significant portion of the income differential come differences in genes between nations.
Kurbla
May 16 2009 at 9:00pm
Didn’t we discussed that already?
Allowing immigration doesn’t cost money, but increasing wealth of immigrants does. If that money is sent directly, as payment for workers or aid, to poor countries, that has much stronger equalizing effect.
Sure, you can have both – but these two groups compete for same limited resources.
bjk
May 17 2009 at 8:13am
Why not sell visas and then hand out the money on the streets of Bangladesh?
Economists support the most efficient division of labour, right? — so is a poor Bangladeshi moving to the US the most efficient division of labor? Or is a highly talented Bangladeshi moving to the US, his Visa paid for by his employer, more efficient?
It seems like the first is charity and the second is charity plus gains from trade. Which is preferable?
Kurbla
May 18 2009 at 10:29am
Moving talented Bangladeshi to US robs Bangladesh of its most valuable resource: genes. Such practice harms Bangladesh, not only relatively to US, but absolutely, and for indefinite time.
Steve Roth
May 18 2009 at 12:38pm
Once you’re familiar with the literature on the intergenerational income correlation, it’s easy to be complacent.
I’m not deeply conversant with the literature, but I’ve studied it a bit, and I don’t understand your statement here. The U.S. rates pretty low among *developed* countries when it comes to intergenerational upward mobility.
??
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