August 28, 2017


A world of free movement would be $78 trillion richer (The Economist, Jul 13th 2017)

Michael Clemens, an economist at the Centre for Global Development, an anti-poverty think-tank in Washington, DC, argues that there are "trillion-dollar bills on the sidewalk". One seemingly simple policy could make the world twice as rich as it is: open borders. [...]

The potential gains from open borders dwarf those of, say, completely free trade, let alone foreign aid. Yet the idea is everywhere treated as a fantasy. In most countries fewer than 10% of people favour it. In the era of Brexit and Donald Trump, it is a political non-starter. Nonetheless, it is worth asking what might happen if borders were, indeed, open.

To clarify, "open borders" means that people are free to move to find work. It does not mean "no borders" or "the abolition of the nation-state". On the contrary, the reason why migration is so attractive is that some countries are well-run and others, abysmally so. [...]

If borders were open, how many people would up sticks? Gallup, a pollster, estimated in 2013 that 630m people--about 13% of the world's population--would migrate permanently if they could, and even more would move temporarily. Some 138m would settle in the United States, 42m in Britain and 29m in Saudi Arabia.

Gallup's numbers could be an overestimate. People do not always do what they say they will. Leaving one's homeland requires courage and resilience. Migrants must wave goodbye to familiar people, familiar customs and grandma's cooking. Many people would rather not make that sacrifice, even for the prospect of large material rewards. [...]

If the worry is that immigrants will outvote the locals and impose an uncongenial government on them, one solution would be not to let immigrants vote--for five years, ten years or even a lifetime. This may seem harsh, but it is far kinder than not letting them in. If the worry is that future migrants might not pay their way, why not charge them more for visas, or make them pay extra taxes, or restrict their access to welfare benefits? Such levies could also be used to regulate the flow of migrants, thus avoiding big, sudden surges.

This sounds horribly discriminatory, and it is. But it is better for the migrants than the status quo, in which they are excluded from rich-world labour markets unless they pay tens of thousands of dollars to people-smugglers--and even then they must work in the shadows and are subject to sudden deportation. Today, millions of migrants work in the Gulf, where they have no political rights at all. Despite this, they keep coming. No one is forcing them to.

"Open borders would make foreigners trillions of dollars richer," observes Mr Caplan. A thoughtful voter, even if he does not care about the welfare of foreigners, "should not say...'So what?' Instead, he should say, 'Trillions of dollars of wealth are on the table. How can my countrymen get a hefty piece of the action?' Modern governments routinely use taxes and transfers to redistribute from young to old and rich to poor. Why not use the same policy tools to redistribute from foreign to native?" If a world of free movement would be $78trn richer, should not liberals be prepared to make big political compromises to bring it about?

Notably, the figures omit the gain in human capital.

Posted by at August 28, 2017 7:43 AM