Friday, February 13, 2009

Immigration

I just listened to another Intelligence Squared debate. This one was on the proposition Let's stop welcoming undocumented immigrants. I have previously mentioned my particular bent on this topic. In general, I find myself fairly conservative, but on this topic I find myself at great odds with most conservatives. I simply don’t understand the full logic by which it makes sense to impose immigration restrictions. Honestly, if asked to play the role of a conservative and make their argument for them, I couldn’t do it. There are only a few points that are made that I understand. But these points are, in my opinion, grossly insufficient to justify the stance.

Here are the points that I understand:
  1. Illegal immigrants consume services that are funded by taxes, without paying taxes into that system.
  2. Illegal immigrants provide competition with Americans for low paying jobs.
  3. Illegal immigrants represent a security threat to the US.
  4. Illegal immigrants are breaking the law.
UPDATE: I disagree with all of these positions While I agree that all of these positions are true, I disagree that they are sufficient to decide the issue, as I will describe below. First I wish to state my own logic for supporting a dramatic loosening of immigration laws. I have only two points:
  1. Immigration is constitutionally guaranteed
  2. Immigration is economically literate beneficial
First, the US declaration of independence describes rights as “endowed by our creator”. In other words, rights are those things that are inherent to people. They are not a thing granted by the government. Among the constitutionally enumerates rights is the right to free peaceable assembly. According to the founding documents of our country, restricting movement for the purpose of peaceable assembly is not something that the government can do. Moreover, it is specifically instructed to protect that right within the borders of the US. When a Mexican (or German or Ugandan) comes to this country to work, why is it suddenly ok to restrict that person’s inherent right to peaceably assemble with those who wish to employ him? I do not see any moral authority that enables us to impose restrictions on anyone who wishes to peaceably come here.

Second from an economic perspective, restriction of trade usually makes all parties to the restriction poorer. This is true if the trade is goods being traded and a high tax applied to them, or if the trade is services. Coming to this country to work is trade. Imposing restrictions on immigration is the exact same thing as imposing restrictions on trade. If you understand the benefits of free trade, then I see no way to imply that those same benefits don’t also apply to trade with Mexicans. Artificially restricting that trade serves no purpose other than to do us harm by making us poorer.

Now let me respond to the points that I understand from the conservative argument.

First, that illegal immigrants consume taxpayer services without themselves paying taxes is true. But this is an indictment of fiscal policy more than of immigration policy. Those services were specifically set up to serve those who couldn’t afford to pay for them. We have public education I this country for the purpose of ensuring that everyone, including those who can’t afford it, can get an education. We have Medicaid to ensure the indigent get medical attention when they need it. A huge number of American born citizens simply are exempt from taxes due to their income level. This, correctly, does not qualify them for deportation. What it indicates is that a system designed to provide services, for free, to people will attract more people to it, including immigrants. I think a safety net is a rational thing. But when people (regardless of their national origin) start trying to live there, the safety net may be a bit too comfortable. The purpose of a safety net is to prevent catastrophe, not provide a safe place to live forever. Our “safety nets” come fully furnished and plumbed. And as a result, they attract people to them. Should this at all be a surprise? That immigrants are living for free off of taxpayers is an indictment of the policies that support that, not enforcement of immigration law.

Second, it is also true that illegal immigrants compete with Americans for jobs. But all jobs face competition. All business faces competition. And that’s good. Because competition is the tool that has raised our standard of living well past that of every other nation on the planet. Restricting competition, at any level, is foolish. In the debate that I listened to, one of the panelists mentioned that if immigrants were competing with high dollar jobs, there would already be laws in place to restrict it. And he’s (unfortunately) right. Physicians and lawyers, and many other professions have licensure laws that restrict the supply of workers and thus raise wages. I find that to be equally harmful. Trade should be free. Immigrants provide competition for jobs. Yep. Welcome to the world. It’s takes a lot of effort trying to prevent something that occurs naturally. We might as well pass a law forbidding the sun from dieing on a couple of billion years.

Third, illegal immigrants most certainly can provide a security threat to the US. And for those who wish to come here with non-peaceable goals in mind, I am fully in support of restricting their entry. The constitution provides for peaceable assembly. It does not proscribe any requirement to protect the assembly of those who wish to do us harm. If immigration policy were exclusively focused on that standard, then I would have no qualms with enforcing it. But immigration policy is, instead, trying to enforce things that are unenforceable. And even if they were enforceable, they hurt us when they’re enforced.

Fourth, it’s true that illegal immigrants are breaking the law. But when a law violates our core principles and, in practice, does us harm, then that law is a bad law and has no moral authority. Such laws should be abolished. And while I can’t condone the violation of the law, the violation of laws without moral authority carries significantly less moral gravity as the violation of other laws.

In summary, I simply am unconvinced by what I understand as the conservative argument in favor of imposing restrictions on immigration. Perhaps there is some part of the argument that I’m missing?

Update 4/20/09: I presented this argument to one of my conservative friends. He commented that he doesn't think that the process for coming to this country should be the same as getting citizenship. He is, of course, scared that if citizenship becomes too easy, then immigrants will be seen by politicians as a voting block.

I think it's reasonable to be stricter on the requirements of being a citizen. But I think it's wrong to restrict people from coming. living, and working here, even if they're not citizens.

10 comments:

Jimazing said...

I like the way you think through the whole problem. It's easy to look at the surface issue without questioning the underlying causes. This is well stated and thought provoking. Thanks for sharing.

supercheetah said...

That first issue can be dealt with if the tax system was a consumption tax instead of an income tax. I would advocate VAT over sales taxes simply because they're easier to enforce, not to mention that in general, it results in higher revenue than sales taxes. People could then not complain about immigrants of any kind not paying taxes.

mjh said...

I don't know why you think a VAT is easier to enforce than a sales tax. The VAT applies at every level of production. The sales tax applies at only the final stage. It's certainly easier to enforce because there are fewer points that you have to watch. Moreover, a VAT still gives politicians too much wiggle room to benefit cronies at the expensive of everyone else by tinkering with what is and isn't considered added value.

That said, I prefer consumption taxes to income taxes. The former encourage savings - something that is really useful when a downturn comes along. The latter discourage savings compared to consumption. And we end up with people who follow those incentives and end up in deep trouble when the inevitible economic downturn comes by.

So, a VAT is fine by me. It's not as good as a sales tax but it's way better than an income tax. That is, of course, assuming that it replaces the income tax rather than supplementing it. In which case, it's worse than an income tax. It's just an additional power grab by politicians.

And, generally speaking, liberals have a problem with consumption taxes. They're regressive. They have a bigger impact on the poor than on the wealthy. Frankly I think that's a strange argument. Mainly because even today's poor are dramatically wealthier than almost all of society from about 100 years ago, and absolutely all of society from 200 years ago. The wealthiest of the wealthy then had no access to emergency rooms with the kind of equipment we have today. A huge percentage of the population died from the flu. A trip across the country took weeks. And that says nothing of the advances in telecommunications that have occurred during that time. The idea that we should give the poor a pass on taxes means that we should dramatically tax today's poor (and wealthy) in order to pay off the debt incurred by yesterday's even poorer. Moreover, we shouldn't even do that. We should spend like madmen because it's very likely that future generations are going to be even wealthier than we are, so they can pay our taxes for us.

This latter attitude ignores that fact that by government spending, we make tomorrow's generation poorer in two ways: 1) we directly take money from them and 2) we reduce productivity which is the engine of wealth.

But enough of that tangent. I have little problem with a VAT as a replacement for the income tax. I'd prefer that a sales tax replaced income tax. But I really *hate* the idea of a VAT as a supplement to the income tax. If we want to reduce the defecit, we need to do what everyone else in the economy does when they have a budget defecit. Cut spending.

And if we cut spending, we'll simultaneously discourage the type of welfare state that attracts immigrants in the first place, reducing the problem of immigrants leaching government services. Living for free off of someone else is an indictment of social programs, not immigration policy.

supercheetah said...

I think the argument that a consumption tax is regressive is inherently false. We have in this day and age statisticians, demographers, and actuarials that understand who buys what, and how much, so it's not difficult to see how goods, and services that are used disproportionately by the poor (likewise by the rich), and can then be taxed accordingly.

Cronyism is going to happen to some degree either way (with sales tax, it would be easy to lower the tax rate for a particular industry that funnels money to certain politicians), but there are things that can be done to minimize the effects, and consequences of such cronyism, mostly by imposing laws on how government agencies, and agents themselves (including politicians) can behave to continue to be in the employ of the government (along with other possible consequences).

The reason I said that VAT taxes are easier to enforce is because when companies are considering the final cost of a product, they will naturally take into any kind of VAT, where as with sales tax, this doesn't happen.

Another thing is that it's harder with VAT to escape the tax with products bought under the table, or with deception. With sales tax, it's not uncommon for many people to sell something to another without any accounting, and not charge sales tax (as happens with the black market, especially for illegal drugs). It's also easy to pass off as a distributor, and buy certain goods in bulk, and avoid the sales tax that way as well.

mjh said...

As I said, I'm more in favor of a VAT than the income tax, as long as it's a replacement for the income tax rather than a supplement.

But I have to pick some nit with this comment: "We have in this day and age statisticians, demographers, and actuarials that understand who buys what, and how much, so it's not difficult to see how goods, and services that are used disproportionately by the poor (likewise by the rich), and can then be taxed accordingly."

The assumption underlying this statement is that there is a subset of people who have sufficient knowledge of the transactions w/in an economy to be able to track all of them. And I think that assumption is demonstrably false. If you would consider being convinced of this, I would recommend two things to read. The first is "I, Pencil" by Leonard Reed. It's available here:

http://www.fee.org/pdf/books/I,%20Pencil%202006.pdf

It's a pretty easy read. It tells the story of the incredible complexity that goes into making a simple pencil. I would think that it should be sufficient to convince you that if tracking the production of a pencil is that complex, then there's no practical way for anyone to track the production of the myriad other goods and services that exist in the economy.

But if that doesn't convince you, perhaps the paper by F.A. Hayek called "The Use of Knowledge in Society" will cement it. It's a much more difficult read than "I, Pencil" but I think it does a fairly good job of providing the theoretical grounds for why it's entirely impossible for anyone to track the production and allocation of resources in society. It is also available for free on the internet here:

http://www.econlib.org/library/Essays/hykKnw1.html

I'm a very big proponent of reducing the size and scope of the government. As a result, I'm in favor of allowing, as much as possible, for everyone to "escape the tax". Increased taxation has, so far, produced exactly one result: bigger government. And bigger government has a pretty bad track record when it comes to individual liberty. Yes cronyism is going to happen no matter what. But when the government is smaller, the impact is equivalently smaller.

One more reading recommendation. Julian Simon, "The Ultimate Resource". This one (sadly) isn't available online. It explains what the source of wealth is. If you'd like a taste at the answer, you might read this:

http://www.coyoteblog.com/coyote_blog/2004/12/60_second_refut.html

supercheetah said...

Is it really necessary to understand all the intricacies of a particular product to be able to understand who buys what? No. Most businesses already know who most of their customers are, and the kind of money they make. Information like that comes dime a dozen with just about any business, and is extremely important to understanding what their selling, and how. This doesn't require intricate knowledge all the economic transactions that happen out there. I'm pretty certain that Toyota knows that much of their used car business is with the lower middle class and poor, and that Lexus' are bought by the rich. If they don't, they have a problem.

In fact, it doesn't even require an in depth knowledge of a product's supply chain. It wouldn't be difficult for an industry to present data showing that one particular ingredient in their product is a huge expense, and that most of their customers are on the lower end of the income scale, and so to ask for special exception to the a VAT rate for that ingredient when being sold in that industry (or a lower sales tax on a particular product).

I didn't mention anything about the size of government in my post. I'm an advocate of decentralization (not unlike a Green, but I'm not certain I want to call myself that).

I also think that your assumption that laws that are harder to enforce (or escaping the tax) will keep a check on the size of the government, but I think you're mistaken. Easier to understand laws will do that better than laws that are difficult to enforce. In fact, I think laws that are needlessly difficult to enforce will more likely lead to hue and cry about the lack of enforcement whenever something tragic happens, and so thus more needless laws with greater complexity will be created, which does more to increase the size of the government.

mjh said...

If you're going to apply a value added tax, don't you need to do that any time value is added? Wouldn't that be at every single link in the supply chain? Perhaps there's something I misunderstand about the VAT. But it seems to me that in order to correctly apply it, you have to know every single supply relationship.

Now of course, each business knows their immediate suppliers. But they have an incentive not to report a supply chain link. Which means that the IRS would have to be able to go back and track down all supply chain links in order to accurately assess whether or not the correct tax was applied. So I don't see how the IRS can possibly know all those supply chain links in order to correctly enforce a VAT. And of course the IRS will then make a call to be bigger so that they can attempt to correctly enforce a VAT.

I don't worry about industry asking for exceptions to the VAT. What I worry about is politicians using the power to grant exceptions as chips that they can toss around in return for campaign promises. This current system is extremely prone to cronyism. I think the VAT is nearly as susceptible to it, hence why I don't favor it over a sales tax.

And none of this goes to the idea that taxation should not be used as a punishment for increasing value. We want companies, individuals, and organizations to increase value. If we then punish them for it, we decrease their incentive to do that, and we all end up poorer as a result.

I think the Greens are only advocates of decentralization in a very small number of areas in life. But they're huge advocates of more centralization in almost all other areas. The Greens are the first people to call on the government to fix problems that they don't like. They're the first people to jump in and demand additional regulations or laws. Call them what you like, but advocates for smaller government is the last thing that comes to my mind. IMHO, only the libertarians really have any leg to stand on as advocates of small government. I thought that the Democrats had turned a table during the 2008 campaign. But that was wrong. We've just finished 8 years of Republican government expansion, so they aren't it, either. But the Greens? When I read their platform, the only decentralization that they support is government enforced decentralization: e.g. take the money away from the people they don't like and give it to the people they do. But the *ONLY* way that can be accomplished is by centralizing power in a government to enforce that.

I think you misunderstood when I said that I want everyone to escape the tax. I don't mean that I think that there should be more unenforcible laws. I mean that there should be fewer laws that the government is in charge of enforcing. People should be free to live as adults.

As far as the hue and cry of lack of enforcement goes, it is not ever the libertarians making that hue and cry. It is always someone who wishes to make the government bigger making that cry. You don't see libertarians running around asking for more regulation of banks. You see libertarians asking the government to let failing firms fail. It is those who favor central government who are constantly saying that more strict regulation will solve the crisis of the moment. Hogwash. The market will punish misbehaving companies more quickly and completely than government regulation. What the government almost always does is jump in and pay for the mistakes that their politically connected friends make. The end result, stupidity gets rewarded.

There is much, supercheetah, in your post that I do not comprehend. Whether that's because of poor thinking on my part or your part is TBD. It could be me.

All of that said, this is a far cry from the original topic of immigration.

supercheetah said...

As far as VAT is concerned, the IRS only needs to track sales that are not to end users (final consumer products). For example, the lumber company would charge the VAT to the pencil company that will be building the pencils. The pencil company would not be charging the VAT to it's customers since that would be considered an end product (i.e. it is itself not meant to be resold again). In other words, all sales would be taxed, except for the final product, as happens in sales tax.

As far as the Greens are concerned, what you pointed out is part of the reason I'm not certain I'd call myself a Green. I pointed it out because they're the only party I know of actually advocating decentralization.

As far as some libertarian vision of government is concerned, I find it to be very non-pragmatic. We live in a democracy where it would be very difficult to convince enough people that such a vision is viable. I don't think that people calling for new needless laws are necessarily thinking about how those laws will make the government bigger. I think they're just responding to what ever is the current hot topic that induces fear (or some other strong emotion). And the politicians will bow to that pressure if they want to keep their jobs.

This is the reason I consider decentralization to be a very important concept of my vision of politics. If a significant number of people really the implementation of a particular policy, they can do so within their own local governments, and not affect everyone else who may find the policy to be needless, counterproductive, or even immoral.

supercheetah said...

And yes, this is very OT.

mjh said...

supercheetah: this turns out to be a non-issue w.r.t. immigration. I made a mistake that I have corrected here:

http://dullgeek.blogspot.com/2010/05/i-was-wrong-about-immigration.html

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