Does the Free Market Require 'Free' Immigration?

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