Does the Free Market Require 'Free' Immigration?

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Why
is immigration such a divisive issue among libertarians, and why
do some libertarians scoff at the notion that anything other than
an open borders policy is consistent with a free market economy?

For
the most part, it is fairly easy to discern what libertarians believe
on any given policy question. If a proposal encourages greater government
involvement, most libertarians are likely to oppose it. If the contrary
is true (that the said proposal would shrink of the size of the
government), then most libertarians would welcome such a change.

Unfortunately,
with our current omnipresent government and its numerous apologists,
most legislation and policy issues are rarely this straightforward.
What, for example, is the libertarian position on speed limits?
The easy answer is that any good libertarian should oppose such
standards as interference in the market by the nanny-state, but
is it really that simple?

True,
federal highway speed limits are probably too arbitrary and seldom
obeyed, and it is further accurate to state that many states and
localities abuse their selective enforcement of speed limits in
order to augment their revenue. However, is it really unreasonable
for a "speed-demon" who races around recklessly to be
held accountable for putting others in danger? After all, don't
private property owners also set standards for safety?

The
optimal libertarian solution would, of course, be to privatize the
roadways. That way, private property owners could rationally determine
what (if any) standards should be set for their transportation conduits
while consumers could factor in the safety of various roadways when
determining which transit route to take. Some roadway operators
could cater towards those who wish to operate their vehicles at
high velocities while others would seek less adventurous clientele.

An
argument for the privatization of all transit systems is not our
present focus; however, this libertarian proposal is peripheral
to the larger point: The existence of public property creates quite
a conundrum for libertarians. Yes, it is undesirable to have federal/state
traffic laws, but if the government owns virtually all of the major
roadways, what alternative is there other than to accept mass chaos
and innumerable perils on our socialist transit systems? Are marked
lanes, traffic lights, and "One Way" signs also excessive
burdens place upon us by the government?

This
same principle is at work with the divisive issue of immigration.
The impulsive libertarian position is a policy of open borders,
which would allow anyone to enter and depart from the US as they
see fit. The logic of the open-borders libertarians essentially
propounds that peaceable people freely migrating across borders
will generally be a cultural and economic boon. There will be a
blending of advantageous cultural traits (with most likely a gravitation
to assimilate to one superior culture) while there will be a greater
diversity and mobility of labor.

While
(to a degree) this analysis is valid when discussing voluntary movements
within the US and even modern Europe, two areas which have been
relatively culturally homogenous and economically prosperous, it
certainly fails to reflect the present condition regarding immigration
from the Third World. Contrary to traditional libertarian analysis,
such mass movements have produced little more than cultural degradation,
economic blight, resentment, and criminal activity.

This,
of course, raises an important question: How can the free market,
which usually results in mutually beneficial exchanges and overall
prosperity, produce such disastrous results? The answer is that
an open borders policy has little to do with the free market at
all. With restrictions on the use of private property, public utilities,
welfare programs, "civil rights" laws, and public transit
systems, the US has essentially been transformed into one large
common property zone.

Much
like publicly owned roads still require certain traffic rules (which
would also and more efficiently be enforced on most private roadways),
the United States must also restrict entry into its territory, a
process which would naturally exist under a system of true
private property rights. To illustrate this with an example, nobody
has a "free immigration" policy in regard to his own home:
Desired guests are invited over for finite periods of time. Only
a select few (usually family) remain for an extended period of time.
Uninvited guests are considered trespassers, and those guests who
overstay their welcome are met with resentment and are likely tossed
out after some period of time.

Some
of the more explicit problems associated with migration throughout
the US have been mitigated due to the relative cultural homogeneity
within America, the fact that there have been few mass movements
from state to state, and (in the past) the relatively limited number
of public services and institutions. The mass immigration to the
US from the third world (particularly Mexico), which the nation
is currently experiencing, has only enhanced the problematic nature
of the free movement of people into what is considered public territory.

The
perpetual mass movement of people into one location appears to be
at odds with what takes place in the private market. Suppose, for
example, a new apartment complex opens up with a great location,
spacious rooms, and impressive amenities. Naturally, many apartment
seekers would love to live at this location, but there, of course,
are only a limited number of apartments available to rent. No apartment
manager would simply allow anyone who wishes to live there to move
in and grab whatever space he can, overloading the complex and ruining
the experience for everyone. Instead, the apartment management would
restrict entry by setting prices at a market level, screening for
undesirable potential residents, and maintaining a waiting list.

An
economically oriented open-borders advocate would probably question
the relevance of the above analysis to international immigration.
After all, such an individual would probably query — Will not the
influx of cheap labor confer an economic benefit upon the whole
nation? Accordingly, labor is an input factor for all forms of production
(including the service industry). The larger the labor force, the
lower the price (wage) will be for labor in the aggregate. This
in turn will lower the cost burden for production for virtually
all firms, and ergo, as firms must compete with each other for their
customer base, the price of consumer goods will fall, increasing
consumer purchasing power.

To
be sure, a great deal of economic sophistry is promoted by various
anti-immigration advocates. The usual canard promoted by such forces
is that "immigrants are stealing jobs" from native citizens.
However, if one considers the fact that nobody owns his job but
merely contracts to perform labor services under certain conditions,
this argument appears to be rather silly. If there is merit to such
an argument, should layoffs which improve corporate efficiency be
proscribed? If all disease and ailments were suddenly cured, would
we be obliged to weep for the doctors now put out of work? Do efficiency
improving machines and robots serve as nothing more than mechanical
scabs?

Despite
the asinine nature of such reasoning, pro-immigration advocates
have their own fallacies. Immigrants, according to this side of
the debate, "Do the jobs that nobody else would be willing
to do." This statement is as erroneous as the employment theft
argument presented by the traditional restrictionists. There is
no such thing as a job nobody is willing to do. There are, however,
wages/compensation that are unacceptable to most people in order
to perform certain tasks. For example, I would not pick fruit in
California for a few dollars an hour, but if they paid me $100,000,
I might consider it.

More
sophisticated open-borders advocates recognize this, and would rebut
that free immigration is akin to the free trade of goods across
borders. Under a system where there are no tariffs (or non-tariff
barriers), there is a free flow of goods across borders, which allows
for gains in economic efficiency from the expanded world market,
which results in greater competition among firms, and according
to pro-immigration advocates, so too does free immigration foster
labor efficiency. Just as cheaper imports of steel and tomatoes
are of benefit to the US economy and US firms, the importation of
cheap labor has similarly propitious results.

There
is a glaring error in this reasoning, however. Free trade is based
upon voluntary exchange. If a US construction company purchases
foreign steel, the construction company must arrange for the transportation,
storage, and utilization of such material. The US company must actively
seek to attain the imported good.

This
situation would only be analogous to the "importation"
of labor if the labor was truly imported. If cheap labor consisted
of nothing more than some robots, which were purchased from a foreign
firm and engaged in the mundane and low skill tasks that many immigrants
engage in (such as picking fruit) and then were turned off and stored
in a warehouse overnight, most of the negative externalities associated
with immigration would be eliminated.

However,
this is certainly not the case with immigrant labor. Uninvited immigrants
hop the border in search of jobs (or state subsidies) while US firms
take advantage of the influx of labor. If we were to consider such
a scenario in terms of goods rather than people, it would be comparable
to the aforementioned foreign steel company tossing excess steel
beams across the border while US construction companies are able
to scavenge the surplus material. True, this might be good for some
US companies which now have (albeit a rather erratic) influx of
cheap steel, but the fellow who owns a house near the border (and
now has a steel beam through his door) probably would be a bit put
off. This is not dissimilar to the folks who have to live near numerous
raucous immigrants living in one house down the street while those
others who do not live nearby may benefit from their labor.

Compare
this with a system of private property where everyone is an invited
guest. Mass movements would be highly unlikely since no private
property owner or community would seek to absorb a perpetual flow
of individuals particularly those with foreign cultures and attitudes.
Residency restrictions would weed out undesirables while businesses
would only be interested in those whose skills would significantly
enhance their operations. Furthermore, financial barriers (tolls,
residency fees, health care costs, education, etc.) would restrict
entry.

One
might question why this doesn't already happen? To answer this,
let's compare an immigrant seeking entry into a generally privatized
United States (Immigrant A) with an immigrant operating under the
current system (Immigrant B).

Immigrant
A reaches the border of the United States but realizes that there
are only a number of points of entry available to him. Since all
land in this America is privately held, most of the territory on
the border is owned by individuals who don't want a bunch of immigrants
running through their backyards. Ignoring their wishes would be
considered trespassing, and under a private system, land owners
have an absolute right to defend their property either through private
security forces (for the more affluent) or private small arms (for
the less affluent or those who prefer the u2018hands on' approach).

Immigrant
A wisely decides to enter the US via a private roadway where the
owner(s) are willing to permit a larger number of individuals to
pass through. However, these businessmen will only permit Immigrant
A to use their property if he is willing to pay a toll. Additionally,
because there are probably only so many locations where one may
enter the US, they may tack on a supplementary entry fee. Immigrant
A must have some financial resources available to him in order to
cover the costs. Furthermore, the roadway company doesn't want any
damage to their road, so Immigrant A will also have to have a car
that is in fairly decent working order. Furthermore, he may have
to present some proof of a clean driving record, ability to drive,
etc. so that the roadway's other customers are not endangered.

Once
Immigrant A has gained entry he will only be able to reside at,
work in, or visit areas which are willing to welcome him. The less
of a threat he poses, the greater his character, and the more wealth
he can produce, the more receptive property owners will be to his
entry. In other words he needs to earn his invitation to enter and
remain in most parts of the country. Such invitations would most
likely be restricted to only the most qualified prospective immigrants

Immigrant
B, on the other hand may gain entry into the US either legally or
illegally. If he does so legally, he has complied with the government's
standards for immigration and probably has a more reputable background
than his illegal counterpart; however, he is still able to take
advantage of government utilities and restrictions on private property
owners. If he enters the country illegally, his background is likely
to be even more dubious, and while property owners on the border
may not particularly appreciate his illicit entry into the country,
there is little they can do about it without risking criminal sanctions
themselves.

Once
in the country, Immigrant B can essentially live wherever he desires
since local communities and private property owners are not sovereign.
He doesn't have to learn the language or adapt to the culture; not
only can he join a separate cultural enclave but the state will
also cater to his desire to remain unassimilated (bilingual education,
state documents in other languages, etc.). He'll have ample opportunities
for work since his employers probably don't need to live near him
plus they can push the responsibility for the rest of his livelihood
(not covered by his artificially low wages) onto the state and its
tax base. Anti-discrimination/affirmative action laws will also
put in him in an advantageous position for employment compared to
his native counterpart.

In
this instance the state has opened the door to the immigrant and
forced the current citizens to adjust their lives (and finances)
to accommodate him. To return to the public roadway scenario — This
is the equivalent of the federal government commandeering (as it
essentially has) all transit routes and permitting anyone to drive
as recklessly as they wish.

Via
state intervention the entire nation has essentially been transformed
into one large common property area. What area of life isn't touched
by the government? In education, there is an entrenched public primary
and secondary school system which seems to continuously fall increasingly
under federal control. There is a vast network of state-run universities
and colleges and an incredible amount of financial aid available
for even privately owned institutions. Almost all transit systems
are state owned. Renters, retailers, other property owners must
comply with an innumerable number of regulations and standards.
The healthcare system can only be considered "private"
when it is compared to that of other countries, and an innumerable
array of other subsidies, standards, and restrictions created by
the government only further underscore omnipresence of the state.

Given
the level of state intervention in society today, we cannot view
the current immigration situation merely as a free exchange of labor.
It may be true that few people come to America simply for direct
welfare transfers, but it is also true that virtually everyone who
does enter the US (either legally or illegally) becomes a beneficiary
of the state. In addition to the availability of welfare transfers,
immigrants may benefit from food and housing subsidies. The provision
of free education and healthcare and other perks are also available.
Furthermore, if they have children who are born in the US, this
only sweetens their welfare pot. Non-discrimination laws make it
impossible for private property owners and communities to keep the
immigrant tide at bay.

This
interference by the state calls into question the merit of the utilitarian
claim that we are (on balance) benefiting from a system of open
borders and lower wages/prices. Even if one ignores the fact that
some individuals may prefer a higher, more familiar quality of life
to a lower price level, the assertion that mass immigration is an
aggregate boon to the nation is specious.

The
logic behind this claim appears to be reasonable that lower wages
lead to lower prices which lead to greater economic efficiency,
but are immigrant wages really lower, or do they simply appear
to be lower? Yes, their employers may now incur lower payroll
costs, but if immigrants earn wages with which they cannot sustain
themselves, where do they turn to in order to supplement their wage
payments? The aforementioned state benefits, of course, and for
this reason businesses' demand for immigrant labor isn't for cheap
labor, per se, it's for subsidized labor. Therefore, even
discounting many of the other negative externalities of mass immigration,
this ostensible "free movement of labor" is nothing more
than corporate welfare.

Now,
suppose these firms were unable to pass these costs along and had
to absorb them themselves. It would no longer be economically advantageous
to import outside labor particularly since these companies would
have to create worker towns to house their foreign labor. It might
be cost effective for certain agro-business firms, but for the most
part, retailers would not follow this course.

Corporations
and others may hide behind the façade of cultural sensitivity
and economic efficiency, but in the end, they are just pursuing
their own self-interested objectives through the apparatus of the
state.

Of
course, for libertarians, all of this does raise another important
question: What should be done about this unnatural influx of immigrants?
The optimal solution would be to eliminate all public property and
services, abolish the welfare state, and abolish all restrictions
on how private property owners and local communities may govern
themselves. This, however, is highly unlikely.

While
there is room for debate on an imperfect solution to the issue,
it would probably be best to emulate a private property system by
permitting the states and localities to restrict entry to only those
it feels would be of benefit to the community.

If
something is not done, however, the nation will continue to feel
the strain of mass cultural and economic degradation.

Notes:
The author would like to thank Dr. Hans Hermann Hoppe for helping
him reconsider his position on this issue. Readers who are interested
in additional commentary regarding the libertarian debate over the
immigration issue should refer to The
Journal of Libertarian Studies [Vol. 13 Num. 2]
. This
article is by no means an exhaustive defense of the paleo-libertarian
objection to mass immigration.

June
6, 2005

Scott
Rosen [send him mail] is
a research analyst for a DC area trade association. He is a recent
graduate of the Kogod School of Business at American University
with a degree in business and economics. See his
blog
.

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