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Immigration Myth-Busters

Alex Nowrasteh returns for a special COVID-19 edition of immigration myth busters

For all of the missteps and failures of Big Government during in the past several months, most Americans will give the Trump administration credit for shutting down travel from China relatively early on.

This is thought to have “flattened the curve” by delaying the start of the epidemic in the U.S., and giving us time to prepare.

Unfortunately, as Alex Nowrasteh notes, the government did not prepare in that time, and the travel ban may have contributed to a false sense of security. Alex estimates that the ban may have delayed COVID’s arrival by a couple of weeks at most. Now that it’s here, any further executive orders — such as a proposed halt on H1-B high skilled worker visas — would be pointless and counterproductive.

Long-time listeners know that Alex is my show’s resident immigration “myth-buster.” We are overdue for a conversation, but that will be remedied — when he returns with a positive agenda for immigration reform which he has compiled with his colleagues at Cato in partnership with several allied organizations. We’ll discuss his new report, “12 New Immigration Ideas for the 21st Century,” featuring Grover Norquist, Robin Hanson, David Bier and others, offering alternatives to the worn-out, failed reforms of blanket amnesty, stricter border controls, and an expanded guest-worker program.

We’ll also discuss the danger of rising xenophobia towards Chinese nationals. Are we headed for a new Chinese Exclusion Act? Hopefully we will veer instead in the direction of Matt Yglesias’s bold but practical idea to open our doors to Hong Kong residents fleeing China’s oppressive regime.


Bob Zadek: I’m happy to welcome back to the show my friend and mentor in matters relating to immigration and liberty in general.

Alex Nowrasteh is the director of immigration studies at Cato Institute’s Center for Global Liberty and Prosperity. It doesn’t get any more important than that. Alex has written extensively on immigration policy, has had countless media appearances.

His insights into immigration, data-driven and fact intensive studies are a must read.

So Alex, thank you so much for joining us this morning to talk about immigration policy.

Before we start, I just want to mention the wonderful work that your organization the Cato Institute does. At times like these, with all that’s going on between the virus and now the rioting that is happening across the countr y — from the moment I wake up, I bury myself in writings and in statements issued by the Cato Institute.

Cato is a libertarian think tank which favors small government, maximum control over one’s life and freedom to run your life the way you wish. They are nonpartisan. They appear before Congress all the time. They are the go-to think tank when Congress really wants to get rid of the hyperbole and find out what the real facts are. Cato helps me when I find myself in a battle between my heart and my mind– a battle that Aristotle wrote about, that Thomas Jefferson wrote about, and now I’m mentioning that when I have a battle between my heart and my mind as to what proper policy is, Cato is the source of reason during troubled times. So Alex, thank you for your work and thank you for the wonderful work of Cato.

Alex Nowrasteh: Well, Bob, thank you so much. I just want to say this work wouldn’t be possible without the generous support of yourself and people like you – those who come to our website, read it, absorb the ideas, spread them. And I just want to say about the nonpartisan nature of Cato, we get cited about equally by Republicans and Democrats on different issues on Capitol Hill. So I think we’re doing something right when both political parties can both find aspects of our philosophy and approach that they can agree with.

Bob Zadek: Cato does not fan emotional flames. They dispassionately and with great force lay out the facts. They defend their point of view with facts, not with hyperbole. Cato is so essential to political and public life in America. Okay, Alex, thank you so much for joining us. Now let’s roll up our sleeves and do a deep dive into immigration policy.

The Historical Basis of Immigration Policy

Bob Zadek: Even the concept of immigration policy is strange. There is almost nothing in the constitution that empowers our government to affect who can come into this country. It was simply assumed that people who want to come here can come here.

Isn’t it a fair place to start by saying that there was no thing as immigration policy other than the notion that of course you can come in if you meet some minimal standards? That was the history of our country for the first a hundred plus years of our life. Is that an accurate statement, Alex?

Alex Nowrasteh: I would go even further.

Article I, Section VIII of the Constitution, which lays out Congress’s power, states there is a power to grant naturalization, the process for becoming an American citizen, but there is nothing in there about immigration restrictions, the ability to come here and live and work, nothing at all. Up until 1875, there were zero federal restrictions on immigration. It was assumed that the states were the port of entry and would be the ones that would handle this.

The predecessor to Ellis Island was Capital Island, New York where they quarantined people who were sick or tried to deport people who were obviously criminals or insane. Before the federal government got involved in that, beginning in 1875, the federal government started to ban criminals and prostitutes and other people who they considered to be moral degenerates and others. They banned the Chinese in 1882 and it wasn’t until a Supreme Court case in 1889 that the court said the federal government has power to restrict immigration.

Congress has something called plenary power, which basically means they can do whatever they want without restriction. This isjudge-made law that — due to the fact that the U.S. Congress has sovereignty in the United States — grants the government power todo whatever they want regarding immigration.

This is not consistent with what the Founders believed.

There is no sovereignty clause in the Constitution. There is no clause that says that Congress has power over immigration.

It was assumed that any sovereign government would be able to do this by the time this Supreme Court case was enacted. But all of the other powers that we assume a sovereign government has, from raising an army to levying taxes to organize itself, were all spelled out in detail in the Constitution.

“There is no sovereignty clause in the Constitution. There is no clause that says that Congress has power over immigration.”

Immigration was not. So I think it’s fair to say the Founders didn’t want the federal government to be able to limit immigration. They thought the states would play a role and keep out those who are undesirable. Immigration law today is second in complexity to the income tax code on U.S. books. This was unimaginable to people in the past. It was just assumed that free people would be able to come here, to live and work, and most of them would eventually be able to become citizens.

Fast forward to today, and it’s the exact opposite. The assumption in American law today is that nobody is allowed to come with the exception of a handful of individuals selected by the government.

Bob Zadek: One of the bedrock founding principles of our country is the unwelcoming in any way of hereditary status. We have no peerage in the U.S. unlike the UK, which is where most of our traditions came from you. We always have, in our gut, disliked the status that one inherits, and yet the status of living in America is at inherited status. If I am the child of an American, I am an American. It has nothing to do with the quality that I have or anything about me other than the accident of birth.

A country that was founded despising peerage now promotes peerage today. That is contrary to our core values.

Myths about Immigration

Bob Zadek: The first immigration statutes were born, as with so many bad policies, out of racism. At that time it was racism and dislike, if not stronger words, of the Chinese. There was the Chinese Exclusion Act. What are the profound myths in America, which are encouraged by those people who favor exclusionary policy?

“A country that was founded despising peerage now promotes peerage today. That is contrary to our core values.”

Alex Nowrasteh: The most common one we hear is that immigrants are going to come in, take our jobs, lower our wages, and make all of us poorer as a result. The evidence against that argument is so strong that it basically convinced every economist who studied this issue that it’s not true. A restrictionist will say that immigrants come in, they increase the supply of labor and, like supply and demand, that will just lower wages.

They always say supply and demand, but they only focus on supply and they ignore demand because immigrants are people. They come here, they buy things, they live, they also increase the demand curve. The net result of this is that wages of native born Americans actually slightly, just slightly, go up as a result of immigrants coming to the United States.

Even research by George Borjas of Harvard University — an economics professor who is the most widely cited skeptic of the benefits of immigration — finds that immigrants from 1990 to 2010 increased wages of native born Americans by about 0.5 percentage points.

“Having more people here in any economy in the world is beneficial for that economy helps growth, increases jobs, increases wages in the long run.”

That is the exact opposite result that immigration restrictionists predict. That is because immigrants, unlike say apples or tons of steel, increase demand in the economy as a whole. It’s the same fallacy we hear from other people, from our friends on the left, who talk about how there’s a fixed supply of resources and we need to redistribute these resources because there’s only so much to go around.

There is not a fixed supply of jobs.

There’s not a fixed supply of the types of work that people can do.

These things can change. Having more people here in any economy in the world is beneficial for that economy helps growth, increases jobs, increases wages in the long run. It is the one that has been rebutted by economists across the political spectrum so thoroughly and so completely that it has become a boring subject.

Drilling Down to the Economic Statistics

Bob Zadek: Alex, I’d like to drill down just a tiny bit. You have mentioned that influx of immigration doesn’t take away American jobs. Can you help us understand how that actually works? What is the economic dynamic that causes this relationship?

Alex Nowrasteh: Wages for people are determined by their productivity. It’s how much stuff you can make for your company. So if I can produce a maximum of $15 of revenue from my firm then I cannot be paid more than $15. It is the absolute maximum because otherwise the company would be losing money and they would fire me. The company wants to pay me less than that, but because I’m a worker who wants to make money, I can always go to another company that will pay a little bit more because I can produce $15.

So from this supply and demand interaction, we get basically workers being paid for what they are worth.

When more workers also need tools, they need capital in order to be productive. What happens is that the productivity of these workers, which you remember determines their wages, is determined by the supply of workers and the supply of these capital goods. So what happens is in the short run, more immigration comes in lower the price of labor, but it also increases the profits and the capital.

Businesses and others take advantage of this lower price of labor in the short run, but then make more and more investments in capital because the profits from owning capital increase. Wages can slightly go down with more immigration in the short run, but as businesses build more capital to take advantage of the lower labor costs, and because capital has a higher return on investment, you get an increased supply of capital and that raises productivity, which raises wages.

Investors and businesses are not stupid. They anticipate higher wages. You don’t even typically get that short-run decline, you basically just get the increase in wages because businesses and the economy anticipate a million or so immigrants coming in every year to work. They make those investments in capital in advance before they even arrive.

Bob Zadek: It is clear that the myth that immigration lowers wages is wrong on every level imaginable.

I have always railed against the concept of “my job.” No one owns a job. You have a job because your employer has concluded that you are the best person at the rate. The best person to do the function that you perform. It is only your job because you have priced your services at what they are worth. Therefore you have found a buyer for your services.

The moment that you demand to be overpaid, or the moment somebody else can do exactly what you do for a lower wage, you lose your job. Nobody is entitled to be paid more than they are worth. That’s a very simple concept, but once you understand that concept, you cannot resist immigration because if somebody is willing to come in to do your job cheaper, then you have to find some way to make yourself valuable or accept the fact that maybe you’re not the best person for that job.

Alex Nowrasteh: I completely agree with that. I know there’s probably some listeners out there who are thinking, “Well, of course he says that, you know, he has a secure job and no competition with immigrants,” but that is not true. I work in a nonprofit think tank in Washington, D.C. and under American law, my think tank can hire a numerically-unlimited number of visa holders that are the highest-skilled specialty workers to work in my job.

So I am competing with all of the higher-skilled workers around the world to keep my job at all times, I’m facing more competition than virtually any other area in the labor market. I have lots of colleagues from around the world who have come in on these different visas, from Argentina, from Costa Rica, from Eastern Europe, from South Africa, from India, from all over the place.

So this is not some kind of abstract idea for me. This is reality for me, except it’s with the entire world. It has led me to be a more productive worker. In fact, I care so much about this cause I want my employer to find somebody who’s better than me. If they can do it better than me then they should get my job.

Bob Zadek: Let’s remember that if wages go down because of immigration, that is in effect an increase in economic well being for a large majority of Americans, because the products they buy will cost less. Therefore the price of food, the price of clothing, the price of everything goes down. That is not a small number. Therefore, every time somebody comes in and becomes equally productive at a lower cost, that means everything we buy is cheaper. That is more disposable income. So all of us benefit. It’s hard to find a victim in immigration and it’s easy to find those people who are the beneficiaries.

Similarly, I don’t think any American would want to criminalize innovation because it eliminates jobs. We thrive on immigration. We need it to survive as a planet. Therefore lowering wages is a worldwide goal in effect. Those people who find themselves out of work because the skill they offer at the price they want to sell it for is overpriced simply have to find a new way to offer a service at a price people are willing to pay.

The Bracero Program: A Fundamental Mistake?

Alex Nowrasteh: From 1942 to 1964, the United States had this temporary guest worker visa program for Mexicans to work in agriculture. It was called the Bracero program. This program during the time brought in millions of Mexican workers to work temporarily in agriculture, then they would go back home at the end of the season. This program was ended in 1954 during the Johnson administration, because of labor unions like Cesar Chavez’s which lobbied Congress to end this program and call the IMF on illegal immigrants.

Their argument was that this would raise their wages. There’s recent evidence that has come forward by some fantastic economists who have taken a look at this and they found that the wages for farm workers actually slowed after this bill was passed and after the Bracero program was ended. It had the exact opposite effect. Fewer people lead to lower wage growth.

Bob Zadek: I had totally forgotten about that. That program worked. Workers sent money home. It allowed us to have fresh produce. Farmers prospered. It was win-win except for the small group of unionized immigrants who were naturalized in our country and who wanted to protect their jobs from competition. It was simply a way to build a monopoly to be overpaid.

Alex Nowrasteh: One small point on this. The result of ending that legal program is not that all the workers went away and no Mexicans came again. That is what created the modern era of illegal immigration that we know and live with today. The government took away the ability to come here illegally and to work, replaced it with nothing, and as a result, people still wanting to come here and work Americans still wanted to hire them.

So instead of coming in legally, instead of getting a work permit, instead of the U.S. Government knowing who they are, they came illegally, they crossed the border illegally, they overstayed another visa, like a tourist visa, and they hired smugglers and coyotes to work in the United States.

As a result, 60 years later, we have a large illegal immigrant population because they couldn’t come legally. That has been the great, terrible legacy of stopping legal low skilled immigration is that it’s just replaced by illegal immigration.

Bob Zadek: When the Bracero program stopped the immigration didn’t stop. Illegal activity became illegal. That points to an all-too-common event in American life. The government criminalizes an activity that everybody thinks is beneficial, or at least shouldn’t be criminalized.

You criminalize harmless behavior. Think gambling, perhaps even prostitution, perhaps artificially low speed limits, minimum wage laws, etc. Therefore people will do it anyway, as a result of which we end up having growing disrespect for the law, because it prevents you from doing something that everybody wants to do.

All you do is you send parts of the economy deeply underground and criminalize people who are not lawless. They are not harming anybody else. It harms civic life because it builds profound disrespect for the law, which is so detrimental to our core values. That was exactly what you described with the criminalizing of the natural impulse farmers have to hire workers and workers have to work. Once you criminalize that activity, it’s going to happen anyway.

Alex Nowrasteh: If we want people to respect the law, the law has to be respectable.

Dispelling Another Myth: The Welfare Argument

Bob Zadek: Another area of mythology surrounding immigration is this whole area of welfare. “Why should we pay for people who are in the country illegally?” This whole myth that illegal immigration or immigrants in general constitute a drain because they immediately have access to our extensive welfare system of welfare transfers and drain the economy. Is there any truth in that whatsoever?

Alex Nowrasteh: There’s a little bit of truth, but mostly it’s a misunderstanding.

The United States does have a large welfare state. About 66% of all federal government outlays are for welfare programs and include social security, Medicare, Medicaid, etc. The thing is that under us law, a new immigrant who is legal to the U.S. does not have access to these benefits for the first five years that they are here with the exception of a few small programs, such as school lunches, which are one of the cheapest welfare programs, and for some emergency Medicaid.

Illegal immigrants don’t have access to those welfare benefits with the exception of the two programs I already mentioned, and some states are allowed to extend welfare to some of these people if they want to, but all of that money has to come out of the state budgets because the way welfare works in the U.S. is the federal government gives block grants to States and then states have to contribute an equal amount to the welfare programs in their own state.

So if a state decides to give welfare to illegal immigrants or illegal immigrants who are here, who are not eligible out of the federal programs, then that money has to be extra money that the state government throws in on top of the amount that they’re already granted.

Now, digging down into this further, we see that immigrants in the U.S. use on a per capita basis considerably less welfare than native-born Americans — between about 20 and 40% less depending on the program than native born Americans do. Now, this is remarkable because immigrants are much more likely to be poor than native born Americans are. They’re much more likely to have less than a high school degree.

About a third of immigrants have less than a high school degree, but they’re also much more likely to work, have higher labor force participation rates, have higher rates of starting businesses, they are more entrepreneurial, and because of this they consume a lot less welfare than native born Americans do.

I’m opposed to the existence of the welfare state. I don’t think it should exist. So I think what we need to do, and this is something that we have done in the past, is to build a higher wall around the welfare state, not build a wall around the country. If welfare is what somebody is concerned about when it comes to immigration, then they should focus on limiting access to welfare. They shouldn’t focus on tinkering with American demographics by restricting immigration. We know the entitlement programs are social security and Medicare are on the verge of functional bankruptcy, but we want to reform those programs.

A Closer Look at Immigration and Crime Rates

Bob Zadek: Another big myth is that immigrants commit more crimes and disrupt life in the country because they don’t conform to American legal standards. Is there a relationship in those parts of the country which have a lot of immigrants, California, New York, Florida, Texas, between increased criminal activity and pockets of immigration or pockets of immigrants living?

Alex Nowrasteh: There is a relationship between immigrant populations in the country and crime, and that relationship is “the more immigrants there are, the less crime there is in these areas.”

That is a finding that has gone back for over a century and has even been maintained until today. If you take a look at nationwide incarceration rates, what we find is that illegal immigrants in the U.S. have an incarceration rate about half that of native born Americans, and illegal immigrants have an incarceration rate about half that of legal immigrants.

So basically illegal immigrants have an incarceration rate 75% below that of native-born Americans and illegal immigrants have one about 50% below native-born Americans. The problem with that research, I just stated, is it is based on estimates of the illegal immigrant population. The U.S. government doesn’t keep track of those who are incarcerated by their immigration status, only those who are foreign born or not.

That might be kind of funky with that incarceration data. Fortunately, there is one state that actually does track the immigration status of people once they are arrested and convicted on the state level for state level crimes. That is the glorious state of Texas. In Texas, just like we found with the incarceration rates nationwide, illegal immigrants have a criminal conviction rate of about half that of native-born Americans while legal immigrants have a conviction rate of about half that of illegal immigrants.

Let’s say the number of illegal immigrants is 11–12 million. Let’s say those numbers are wrong. That means that since the legal and illegal immigrant incarceration rates are even lower than what we are talking about. So if we’re wrong about the number of illegal immigrants in the U.S. and it’s a lot higher than we think, that means their crime rates are a lot lower than we actually think they are.

Bob Zadek: That’s a very common rhetorical argument used by those who oppose immigration, that it simply invites lawlessness. That is simply an inflammatory argument which has no data to support it. So if you were going to make an argument against open borders, is there any argument in support of restrictive immigration policy?

Alex Nowrasteh: There is an argument that if the evidence supported it, would convince me to restrict immigration, which is that immigrants might bring with them opinions about the nature of government (anti-capitalist opinions) which could undermine our government or prosperity.

The only reason why America and other countries are rich is our political institutions and rule of law. So if immigrants come in and they’re all a bunch of communists or fascists or something like that, it could be that we’d be in the long run poorer as a result of immigrants because they come from countries that are so much worse.

Along with Benjamin Powell who is a professor at Texas Tech University, we actually wrote a book about this. We analyze all of the evidence of this. Do immigrants from four countries undermine institutions and develop countries and make them poor or worse? We find no evidence that this has ever happened anywhere. And furthermore, we find a lot of evidence that they actually improve institutions in places like the United States.

One of the ways that we think that happens is that immigrants do undermine labor unions. They destroy labor unions because labor unions can’t organize effectively. Unions are one vehicle from left-wing politicians who can gain power, become more progressive over time, and have the money to successfully organize.

So labor unions, to the extent that they are harmed and undermined by immigration are the main losers of this. It’s no mistake that when immigration was most closed in this country from the mid-1920s up through the mid to late 1960s, this was a time when the federal government and state government grew in size tremendously because labor unions are growing and labor unions started to shrink and collapse beginning the late sixties and early seventies.

Exactly at the same time that immigration laws were liberalized and starting to come in. So if we want to defend our institutions from left-wing anticapitalist ideas, one of the best ways to do that is to increase immigration, because it undermines the most successful and progressive institutions in this country pushing for anticapitalist policies. So if we want to defend these, more immigration is absolutely a way to go.

Bob Zadek: Alex, when you were talking about making a straw man, a hypothetical argument against immigration is they bring in bad ideas, anticapitalist ideas, fascism, and the like which are contrary to our values. I found myself smiling. Why was I smiling? Because that is the argument that people in Colorado, and Utah, and Texas make as Californians leave California because they can’t stand the political climate. They move to more conservative states and they bring with them their progressive voting habits. Therefore there is almost proof that your fear exists interstate in the United States.

Alex Nowrasteh: I’m a native of California. I was born in LA and I moved out to Virginia a long time ago for University. But what’s funny is that if you look at the voting patterns of people from California who settled in Texas, they are actually more conservative than the native-born Texan. They vote more Republican than the native born Texas in that state. So if it wasn’t for migration Texas would be slightly more Democratic. The net effect is actually a retrenchment of a lot of these conservative policies in places like Texas.

Hong Kong and American Immigration Policy

Bob Zadek: So California’s two major exports to the rest of the country are avocados and conservatives. Interesting. That’s the two ways we contribute to improving life in the rest of the country.

There are profound opportunities to improve our country and further our arguments against China’s regressive policies. Speak for a few minutes how the U.S. can take advantage of the oppressive policies of China towards Hong Kong when it comes to our immigration policies.

“So, California’s two major exports to the rest of the country are avocados and conservatives.”

Alex Nowrasteh: There are two things that we can do to hit back at China and benefit the U.S. The first way is to basically give green cards or grants asylum status to anybody in Hong Kong who wants to come here.

So if you want to come here from Hong Kong, you come here, you leave behind that communist tyranny that is building over there, come start a new life in America. We’ll make it easy for you to by granting you immigration status.

We could also look at China and say, if you’re a skilled Chinese worker, if you have a college degree or above you come to the U.S., you can live and work here. This would result in a flow of the most highly-skilled and productive workers in China and undermine decades of effort by the Chinese communist party to eliminate the brain drain. It would make it worse for them, better for us, and it would undermine so many of their policies to try to get skilled people to come to China. And it would be a great benefit to the United States.

Bob Zadek: And a huge public relations benefit. And imagine China trying to build a Berlin wall around China. I think their existing wall would be ineffective. You often hear people say they are opposed to illegal immigration. And I always ask them when they say that, which part of it do you oppose the illegal or the immigrant part? If you oppose the illegal part, I agree with you. Let’s make it all legal. If you oppose the immigrant part, then just admit that’s your problem.



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