Fixed Costs and Open Borders
By Bryan Caplan
Given existing border controls, mild measures to prevent serious contagious disease seem morally acceptable. Yet the best choice, in my view, remains fully open borders – tear down the walls and make travel between countries as free as travel within countries.
Appearances withstanding, there is no contradiction between these views. As I explained a while back, fixed costs imply a straightforward consequentialist case for extremism:
But what if there is a fixed cost of having a carbon tax in the first place? For example, the net expected benefits could be:
-$1,000,000 + $10,000,000*p [where p=P(Al Gore is right)]
The $1,000,000 might be the overhead of the carbon tax collectors, or
the costs of every tax-payer who has to fill out a carbon tax form, or
what have you. Given this fixed cost, for p<.1, the net expected
benefits of a carbon tax are negative. On efficiency grounds, Arnold
would be correct to council inaction until p exceeds that threshold.
Every micro textbook tells us that when the price of a good gets so
low that firms can’t recoup their fixed costs, it makes sense to simply
close up shop – or not open in the first place. The same goes for
Thus, even a consequentialist could consistently favor marginally expanding a program yet prefer the program’s utter abolition: Marginal benefits can exceed marginal costs even though total costs exceed total benefits. On the more reasonable view that government action is only justified if its benefits heavily exceed its costs,
the path from fixed costs to abolition is even smoother.
Are the fixed costs of borders really that high? Absolutely. Picture what a pain it would
be to erect and navigate checkpoints at every border of every U.S.
state. Imagine what even token internal restrictions would do to U.S.
commerce, travel, jobs, and housing markets. If these checkpoints were already in place, telling border guards to screen for Ebola might be reasonable. But erecting internal checkpoints to slightly reduce the risk of Ebola is crazy. And if this judgment is obviously right for internal borders, why is it obviously wrong for external borders?