Showing posts with label immigration. Show all posts
Showing posts with label immigration. Show all posts

Monday, April 4, 2022

The Economics of Immigration in One Lesson

Or perhaps I should say in one equation properly explained . . .

Political thinking: 
    ALL THE STUFF divided by ALL THE WORKERS equals STUFF PER WORKER
The implication of this is more workers means less stuff for workers.

Economic thinking: 
    ALL THE WORKERS multiplied by STUFF PER WORKER equals ALL THE STUFF
The implication of this is more workers or more productivity means more stuff for workers.

Definitions: 
All the stuff = production, the output;
all the workers = resources, the input; 
stuff per worker = productivity, the rate at which we can produce stuff

Allowing more workers (immigration as well as the removal of barriers to entry like licensure laws and minimum wages) is clearly a net good when total output rises. 

The key to consumption is production. The key to mass consumption is mass production.*
(HT: Bryan Caplan)






*Note for minimalists, environmentalists, etc.: Don't get hung up by the term "mass" here. This does not mean "excessive". It means flourishing for the masses. Limitations on production/consumption hit the worst off first and the best off almost never.

Friday, July 3, 2020

From Hong Kong With Love

We stand at the precipice of a great opportunity. The government of China is doing what governments do by going state on Hong Kong. The leaders there correctly perceive HK as a threat to their power and way of life. While I continue to predict that in the long run HK will eat China rather than the other way around, there are alternatives.

Many are suggesting a policy tool to challenge Beijing is to open borders to HK emigration. This is a classic tails we don't lose, heads we win situation. To wit: If China balks, HK keeps its autonomy and the progress of freedom marches on; if China digs in, we get a giant gift. I'm sure you can see the first case, but I expect the second case is a bit harder to swallow. Allow me to explain the benefits of Open Borders with this extreme example.

A few years ago I had the pleasure of visiting HK. Although I was fairly familiar with it, I was still completely amazed. I look forward to one day returning. At the time I planned on doing a post about the HK economy in comparison to my native Oklahoma economy. Unfortunately, I didn't get around to it, but I think I can quickly summarize one of the economic points I wanted to make: 

Hong Kong is 138% more productive than Oklahoma and most of that difference is because of population. The average Hongkonger is only 25% more productive than the average Oklahoman. And that is despite/because HK has much less land area on which to work. Key takaway: More people equals more opportunity.

(sources below)PopulationArea2019 GDP (PPP)2019 GPD per capita (PPP)
Oklahoma3.95 million69k sq miles$206 billion $52,150 
Hong Kong7.45 million1k sq miles $491 billion $64,928 
% difference89%-99%138%25%

My extreme example to illustrate the benefits of Open Borders begins with a bold proposition: I propose we open the borders of Oklahoma to ALL residents of Hong Kong to become permanent guests with the opportunity to become citizens if they so wish. 

I can already hear the dismissive laughter followed by the panicked apoplexy. "Dear God, you can't be serious!"

Of course I am! This is easy. Do you think there is something magical about the small island of Hong Kong? Well, there might be, but it is nothing a little policy changing can't fix. And fortunately Oklahoma is not too far off from the HK freedom trail. 

"But wouldn't that influx crash the local economy? Think of all those mouths to feed."

Yes, and think of all those hands to work and minds to think! 

The one big stumbling block to a massive migration like this would be finding a place to house all the people. Well, Oklahoma has 69 times as much space as HK and construction here is cheap. 

Not convinced? The heart of my extreme example is how this would affect my personal employment. When I was in HK, it was for a couple of CFA Institute conferences. While there I was treated to a personal tour of part of the city by the president of the Hong Kong CFA society. We had a chance to chat about our relative societies--I was president of CFA Society Oklahoma at the time. His society was one of the world's largest with about 6,700 members. Mine was one of the smallest with only about 170. 

So what would happen if 6,700 CFA charterholders began migrating to Oklahoma? Would there be pressure on my job? Probably not immediately as people aren't as interchangeable as classical economics assumes. Over time there would be competitive pressures, but so too would there be competitive gains. With that massive increase in talent would come much in the way of business opportunities. I would have new job offers as well as a bunch of new job competitors. Would the net effect be to lower my wages? Maybe, but even here there less to worry about. 

The median total compensation* for a charterholder in HK is about 4% higher than for a charterholder in Oklahoma. While the cost of living in HK is perhaps 67% higher than in Oklahoma, most of that is housing, which remember is much easier to come by in OK. And for those like me who own a home, this influx should greatly increase my personal wealth. 

Think about it this way: Should current charterholders in HK want more or fewer charterholders in HK? The instinctual answer is as simple as it is wrong--fewer sounds good until you answer the question of how would there be fewer. A shrinking market for any type of employment is not good for those in that line of employment. As a native charterholder I stand to gain much if other charterholders want to migrate to my community. The likely worst-case scenario isn't that I lose my job and/or take a massive pay cut. It is that my job changes and new opportunities force me to make some changes. Change is scary, but change is inevitable. I would much rather have the trends of change as tailwinds than crosswinds much less headwinds. Growth is good.

Open borders in Oklahoma for Hong Kong citizens is unfortunately not going to happen. And even if it did, 8 million people would not show up tomorrow. In fact, most would choose not to make the journey at all. But for those that did it would be a great benefit for those already in the place of their reception. 



Sources for data in table: 
*CFA charterholder compensation data is from CFA Institute's 2019 Compensation Survey, which is proprietary to members--unfortunately, I can't directly share it.

Saturday, March 23, 2019

The Big Five - Choose Your Battles Wisely

Here is the low-hanging fruit of public policy. 90% solutions (improvements) on these issues are several orders of magnitude more important than 99% solutions on a thousand others. They are in no particular order (alphabetical):
  • Drug Prohibition (end it--allow adults to make their own choices)
  • Education (privatize it--give the government an ever-smaller role)
  • Immigration (open it up--allow people to freely move and freely interact with other people)
  • Taxation (simplify and redirect it--efficiently tax the use of resources not the creation of resources)
  • War (move away from it--make postures less bellicose and violence less of an option). 
Everything else at this point is details. They are interesting details, yes. For example, the recent interesting, generally important, but marginally insignificant issue of the legality of blackmail. [note: I side with Robin Hanson, but I am sympathetic to and willing to live with the counter case.]

How should you vote? I would suggest an equal weighting of these Big Five policy stances as the guiding framework. While this recommendation is a prescription to be a few/select-issue voter, that should be considered a feature not a bug. Similarly straight-party voting isn't necessarily morally or intellectually inferior to a strategy of "voting the person not the party". By what criteria is a candidate-by-candidate voter deciding? Why should they believe they are properly weighting the issues, correctly identifying the stance on the issues, and accurately evaluating each candidate's position and expected actions on the issues? Using a few benchmark issues as the litmus test keeps the focus properly on that which meaningfully matters and gives the best hope the rationally ignorant voter is making a good decision.

More importantly, how should you advocate (much more bang for the buck)? Let's say solutions are just as simple as awareness (I know it is not, but it is a useful analogy). Spend about 95% one's advocacy efforts roughly evenly on the Big Five: ending the drug war, privatizing education, opening immigration, reforming taxation, and reducing war. The remaining 5% goes for everything else. My own behavior has not adhered to this framework, but since I am just now formally defining this, I grant myself pardon. Will I follow this going forward? All I can do is try.

Monday, January 15, 2018

Trump - One Year In

About a year ago, I posted on Trump looking at what I saw as the reasons to be optimistic and pessimistic. Let's revisit that now that we have a year under our belt.

Overall, I think my predictions were good with some notable variance in a couple areas. Of course, I was vague enough to prevent too much inaccuracy (or accuracy) by design. Here are the areas that standout to me with a look back at my prior comments.

The Good

  • Taxes - this one was somewhat surprisingly good, blemishes and all. [remember with all of these we are grading on a curve] Much like Chance, Trump only gets credit for being there to sign the bill. 
  • Regulation - 1.25 steps forward with 1 step back is still progress. Congress and Trump completely failed to reform much less repeal the ACA (Obamacare). I have low and ebbing faith Dodd-Frank, et al. will be meaningfully changed. Still, there are success stories, and slowing the rate of growth is itself improvement
  • Judicial Appointments - I somehow missed mentioning this previously, and it would have been in the optimism bucket. This one has lived up to realistic (not full libertarian) hope. 
  • Lost Respect for the Sanctity of the Office - yes this is a feature--let the scales fall from your eyes, the emperors have never been well dressed. But . . .
The Bad
  • Presidential Power & Authority - we may be chipping away at the Cult of the Presidency, but I don't yet see the groundswell from the left or the center that I might hope for. They are much to tied up in the emotion of this particular president's actions and words.
  • Immigration - unlike in trade (below), Trump's actions have matched his rhetoric in this area. Here it looks to be an on-going real fight and will perhaps be the most lasting and impactful negative consequence of Trump.
  • Trade - as I mentioned, his administration is a lot of (bad) talk on this, but so far little action. Still, he has many opportunities to make good on his very bad desires.
  • War - I was not pessimistic enough on this. Drone attacks have increased under Trump as the list of places we are at war have grown. The U.S. government with the help of a complicit even if blissfully ignorant populace continues to be wrongfully aggressive. Include in this the surveillance state, but I am fairly certain this one is sadly nonpartisan. 
  • Drug Policy - yep, unfortunately I nailed this one.
The Ugly
  • Hatred, Nationalism, Bullying, etc. - I was not as pessimistic as I should have been in this general area. The downside of losing the always undue respect for the U.S. presidency is that it took this buffoon to get us there. He is at best sloppy and inconsiderate, at worst hateful and demagogic. If you need links on this topic to prove the point, you have been in a coma for 12+ months.
On balance there are reasons to claim "silver linings" and reasons to claim "not so fast".

PS. For a better analysis of the economic policy results of Trump's first year, read Scott Sumner's take

Thursday, February 2, 2017

Choosing Your Neighbors

If I had my druthers, I would choose retired couples who are infatuated with my children. The advantages are numerous including:

  • They'd be quiet.
  • They'd keep an eye out.
  • They'd keep their yard tidy.
  • They'd dote on my children.
  • They'd think I invented technology.
  • They'd be dependable and predictable.

One might think I'd say sorority girls who enjoy their pool parties. Problems range from making me feel old and unattractive to finding me attractive and tempting me to throw away a lifetime for 30 minutes of bliss (or performance anxiety).

The reality is you can't choose your neighbors. And you probably wouldn't want to. Turns out those older retired couples have some bad qualities too. They are pretty good at minding your business. They are always up for conversation--ALWAYS. If they spot you in the yard, you are automatically in for a round of "Let's Talk About My Latest Doctor Visit". They know the neighborhood covenants extremely well including all the ones you are currently breaking, and they know that those covenants are not suggestions--they are serious dogma to be followed with strict religiosity. They like things as they are and better yet as they were and best yet as never changing.

There are no perfect neighbors. This documentary proves it.

Planning out and carefully choosing those around us would create a stale, uninspiring bubble world with high susceptibility to overrate the qualities we think we want and underrate those we think we want to avoid. Those biases would yield continuously disappointing results.

To a large degree you do get to pick your neighbors and they get to pick you. Our lives are characterized greatly by self selection. Fortunately it isn't the sole determining factor, though. New ideas, new opportunities, new methods: these things come from chance encounters and unplanned coordination and interaction.

Look at immigration as this microcosm writ large, and think about it from a purely selfish perspective. Every immigrant we discourage, turn away, or ban is another worker, another set of new ideas, another opportunity to discover something didn't know existed but now eagerly want.

Wednesday, January 25, 2017

Walls? Walls! We don't need no stinkin' walls!

Partial list of nations and empires with famous walls:

China: The Great Wall
Germany: Berlin Wall
Israel: Israeli West Bank barrier
Roman Empire: Hadrian’s Wall
Roman Empire: Walls of Constantinople
Jerusalem: Western Wall (AKA, Wailing Wall)


Partial list of great American bridges.

Golden Gate
Brooklyn
Chesapeake Bay
Seven Mile
Rio Grande Gorge
covered bridges in Madison County
Multnomah Falls footbridge


You can argue about which actually make it in the list. Name the great American walls. The Vietnam Wall is the only one that comes to my mind--a wall very different than walls as we think of them.

We have always been a nation that built bridges. Freedom works. Trade works. Immigration works.

Wednesday, February 3, 2016

Highly Linkable

Let's begin with a few on immigration (I've been saving these; hence, the late dates on some):
Alex Tabarrok made the case for completely open borders in The Atlantic.
Bryan Caplan continues to fight the good fight. Here are some points he didn't have an opportunity to make at a workshop but did get to share with us, fortunately. And don't miss his speech at the Open Borders Meetup. 
Found this advice on idling cars in the cold helpful and attractively counterintuitive.

Let me take a moment to sing the praises of Comedy Central's "Drunk History". If you haven't watched it yet, start now before finishing this sentence . . . too late. I can think of three ways it is awesome:

  1. It is a better way to learn history than traditional approaches because you remember and enjoy it; therefore, you stick with it longer. In that sense learning is a lot like exercise--the best method is the one you will stick with and the one that will stick with you. 
  2. It tells stories that our traditional, state-driven history instruction won't tell. 
  3. While it is uproariously hilarious to listen to the various drunk narrators describing history, it is also a pretty insightful take on history in a meta sense. Namely, history is vague and uncertain. We should be careful not to be too confident that we've got it figured out precisely.
Tyler Cowen's interview with Chris Asness is extremely rewarding. A few of the money quotes:
"There’s no investment process so good that there’s not a fee high enough that can’t make it bad."
"High frequency trading [which he doesn't engage in] has made the world more just and fair, particularly for small investors."
"This is not Lake Wobegon. We can’t all beat the index. It’s actually a precise mathematical identity."
On superheros: "Even the most insane billionaire cannot afford a hundredth of what frigging Tony Stark or Bruce Wayne have. It’s infuriating. ... I’ve done well. I’m not the most insane out there. But if I wanted to go build a Batcave at my house, it would take approximately 600 times my wealth, and everyone would know about it."
Speaking of rewarding, George Will always delivers as he does here on Michael Bloomberg's potential entry into the presidential election.

And lastly, Scott Sumner on economists who lack an imagination. (I agree in all four cases, and there is no contradiction between that and my other strongly held views.)

Monday, March 30, 2015

Highly Linkable

Doin' the wave. (don't miss the video at the bottom)

Michael Pollan drops in to see what condition LSD's condition is in. [HT: Tyler Cowen]

Guess I'll have to dial back my snobbish detesting of the imbeciles who are doing tomatoes "wrong".

And while we're getting off our dietary high horses, Megan McArdle offers some balanced food for thought.

Accountability is an important concept. We should apply it to important institutions like the Fed; so argues Scott Sumner and George Selgin. Bash the Fed!

We end with three on immigration: First, Adam Davidson in the NYT Magazine debunks the myth of the job-stealing immigrant (HT: John Cochrane). Second, Bryan Caplan challenges the idea of immigrant idleness. Third, Arnold Kling reasonably dismisses the conservatarian argument against immigration.

Sunday, March 15, 2015

On The Boats, And On The Planes . . .

For roughly 70 years since end of World War II, we've been trying to bring America to "them". Isn't it time we gave bringing "them" to America a try?

What a better way to demonstrate the virtues and strengths of our relatively free and open society? This is my essay for Open Borders Day 2015.

We've spilled oceans of blood and mountains of treasure fighting for change in foreign lands. It seems that the best way to make the world safe for democracy is to let the most people into the world's leading democracy.

Instead of exporting The American Dream as an ideal, why not import those who wish to live the dream on very soil from which it springs? I know, I know . . . goods are imported, people are . . . well, they are largely denied a chance to voluntarily participate in a society in which they desperately want to belong. Why must that be?

Do we fear they will arrive only to be wards of the state where they take more than they provide? Then have them forfeit or delay eligibility to the programs we fear they will overuse. Or have them pay an entry fee (tax) of a substantial amount.

Do we fear they will arrive only to begin voting for policies truly "un-American"? Then let them in conditional on not being citizens; therefore, not eligible to vote. Let them stay indefinitely in this status or perhaps be eligible for citizenship after however many years we believe it takes for the assimilation we desire. Of course, I might quibble that all these fears and restrictions are themselves un-American. Nevertheless, let us not argue a side point while those who await our decision suffer.

Do we fear they will arrive only to drive down natives' wages and dilute our standard of living?
Then we must be talking about productive, working people. Now ask yourself how much better or worse off your local community would be if a substantial number of the workers exited (or were removed) from said community.

Another way to look at this is to say, "then for goodness sake let them in!" Surely they will do less economic damage to us as fully part of our national economy being both producers and consumers than if they continue to afflict us with their asymmetric warfare of only being low-cost producers from afar. Disagree with that framing of the economics? Good. You should, but perhaps not for the reason you suspect--assuming you hold the immigration-diluted-economy fear.

Eventually all production must be matched with consumption. If would-be immigrants are producing from abroad things we are buying from them, they directly or indirectly must eventually buy from us (consume our production)--accepting our IOUs is consuming our production in the future. They are already producers and consumers in our economy--they just do it inefficiently from far away. If all of this leads you to the conclusion that we should close the borders to both things as well as people to preserve our economy, I would remind you that economies don't get larger by getting smaller. The bigger the market, the more it can provide, the more specialization it can allow, the more productive and efficient and creative and prosperous it can become.

It is kind to say that our attempts at bringing America to the world has been expensive and with varying results. But why would we expect otherwise? We seem to be solving the problem in the worst possible way--we are trying to move an entire country and ethos to a person rather than move the person to the country.

Someone is knocking at the door. Do us all a favor. Open the door. Let 'em in.

Sunday, April 27, 2014

Highly Linkable

Kojak. Bang! Bang!

Virginia Postrel gives us four questions courtesy of FIRE to ask prospective universities regarding their attitudes on free speech.

Federal land ownership looks like an epidemic outbreak (HT: Mungowitz):


Scott Sumner gives two posts on taxes that are both important examples of thinking like an economist. He then follows it up with a lesson on why it is all about consumption--not income--when it comes to inequality.

Bryan Caplan recently participated in a debate hosted by Reason on immigration (hopefully it will be up in video form soon at ReasonTV). As such, he is on an immigration posting roll. Each one is worth reading.

Tuesday, February 25, 2014

Highly linkable - on high-minded steriods

I want to go to there. And while we're at it, here too.

So let's talk about misled people doing selfish things. But perhaps it is not as bad as it seems.

Here is a different example of the same kind of high-minded nonsense as above. I particularly like the quote: "It’s time for the altruists to get over themselves. We cannot afford the price of their convictions."

The high-minded Fed controls interest rates, right? Wrong.

Just how bad are the effects of rent control--one of many forms of high-minded real estate planning? Maybe to the tune of about $1 billion dollars on a $3 billion neighborhood. Dr. Evil would be proud.

Lenin was a prohibitionist!?! Shocking . . . well, no; that makes sense. He was high-minded enough to want to help every aspect of Russian life.

Speaking of turn of the 20th century garbage, apparently my Spidey Sense was correct when it picked up on something rotten in Downton. The George Will piece quoted in the previous link deserves its own link. Still a good show; let's just not romanticize how hard life was for most everyone in prior generations.

Enough negative stuff, for the moment. Let's think about a cool new business idea. While we're at it, let's think about how fabulously wealthy cool new business ideas continue to make us.

Okay, moment's over. You know, college football isn't a business; hey, stop laughing! Like all NCAA sports, it is about pure amateurism.

Sticking with sports, I think I am being consistent when I believe both (1) that Oklahoma State's Marcus Smart was potentially justified in pushing a Texas Tech fan (if the fan had been injured and I was on a jury, I would be giving heavy consideration to a self-defense argument in favor of Smart) and (2) people in public (state-owned) spaces or attending official-state-functions have wide latitude to say nearly whatever they want in the act of cheering. The First Amendment doesn't have a carve-out exemption for your or my high-minded respectfulness or proper etiquette. You don't like cussing, hatefulness, and otherwise ugly slurs coming from the crowd? Quit funding sports arenas and sports teams with taxpayer money.

When it comes to sports and high-mindedness, you don't get any higher than the Olympics. And you'd have to be high not to see through the veil of virtue and right into the corruption, state run-amok wastefulness, and panglossian denial of oppression that is the Olympic gathering. I very much like the stories of so many of the athletes. I like the history of competition. I detest the desire to pretend there hasn't been and doesn't continue to be intense nationalism (an illogical and evil conception) at the heart of The Games. Don't get me wrong. I root for Team USA, but I also root for others. These sports aren't my sports, and some aren't even sports. These are interesting curiosities that viewing for just a few moments will satisfy my interest for four years at least. But if you're really into it, great! Just don't tell me we are obligated to root for our country. And don't tell me it is "us" versus "them". And PUH-LEASE don't tell me how great The Olympics are for world peace, the economy, or NBC ratings.

Saving the best for last, Megan McArdle busts the high-minded bubble of paint-by-numbers educational excellence cum success. "Let your kids fail!" is perhaps the best advice one can give a parent.