Immigration Reform is Overdue

The U.S. Supreme Court’s 5-3 decision to overturn the Obama administration and the U.S. Chamber of Commerce appeal against the Legal Arizona Workers Act is indicative of the extent to which legal and public opinion on immigration is dangerously polarised.  In Arizona and elsewhere the smouldering debate over migration policy has generated more heat than light, risking progress on the stuttering but overdue reform agenda.  Immigration reform is too important to be lost in the political maze.  The USA’s future depends on it.  Evidence from the past experience and analysis, not fear mongering, should drive the agenda.

Immigration reform in the USA is overdue.  This is vital to rekindle the dynamism of the U.S. economy and create sustainable jobs.  Migration has always been the driving force of civilisations and economic development.  The USA is no exception. Indeed the motto on the national seal, E Pluribus Unum—Out of Many, One—dates from the 1782 recognition by Congress of the defining role played by migrants. 

Migrants have always been central to not only the identity but vibrancy of the USA.  This cannot be taken for granted.  The widespread belief in the primacy of the free market used to extend to the movement of people, but now is regarded as unnecessary and even unacceptable.  Adam Smith and John Stuart Mill are among the founding fathers of our economic philosophy.  They saw labor mobility as vital to economic growth and would have been appalled by the modern claim that our interests can be served by a tighter restriction on the cross-border movement of labor.

Labor movement has never been more restricted.  While all other economic activity is now more globally integrated, labor markets are more regulated and closed.  Before World War I, passports had been abandoned by many western states out of the conviction that they were unnecessary obstacles to movement and that open borders would promote economic growth.

John Stuart Mill saw migration as "one of the primary sources of progress."  Adam Smith objected to restrictions on labor mobility and Kenneth Galbraith showed how migration was the "oldest action against poverty."  Before the resurgence of early twentieth-century nationalism, borders were imaginary lines crossed by moving people, goods, and capital.  Over the past one hundred years, and with increasing force and effectiveness over the past decade, countries have sought to control the movement of people across the frontiers.  The systems that have been put in place are designed to prevent movement, not stimulate it.  This objective contradicts the needs of society and undermines its long term growth potential and competitiveness.  As Peri at the Federal Reserve Bank of San Francisco recently concluded, "immigrants expand the economy’s productive capacity by stimulating investment and promoting specialization… This produces efficiency gains and boosts income per worker."

Completely opening borders, some economists predict, would produce gains as high as $39 trillion for the world economy over twenty-five years.  These numbers compare with the $70 billion that is currently spent every year in overseas development assistance and the estimated gains of $104 billion from fully liberalizing international trade.  A small increase in migration would produce a much greater boon to the global economy and developing countries than free trade and development assistance combined.

Critics of higher levels of migration say that immigrants depress wages and place a strain on social services.  The overwhelming conclusion of economists, however, is that the impact of migration on wages even in the short-term is marginal at worst and that immigrants make net contributions to the government coffers—paying more in taxes than they draw in social services.  There are costs to higher levels of migration, but they are out-weighed by the benefits, they bring to society as a whole and to the building of economic dynamism which is the key to long-term growth

The negative reaction against migration reflects a failure of burden sharing.  The budgetary and social costs of migration tend to be concentrated, local, and short-run, whereas the benefits are widely diffused and typically only fully realized in the medium-term.  This creates a dilemma at the state and federal level as not all the gains can be realized within an election cycle.  Short-term and local concerns overwhelm the longer term national interest.

Policy makers need to recognize the legitimate concerns of communities and workers whose jobs or cultural identity may be threatened by what are considered to be excessive inflows of migrants.  Burden sharing is required to ensure that no one community bears the brunt of the arrivals and associated costs.  Because it is in the national interest, budgetary and other support should be available to support communities which are affected. 

Ensuring that migrants are law abiding, legal and part of the tax, social security and criminal justice system is also vital.  Some legalization is therefore beneficial, although this needs to be on an exceptional basis and following rigorous screening so as to not create incentives for additional waves of illegal migrants.

The migration policy challenge is likely to become starker in the coming years.  Population levels have already been declining in Europe for some time, and in most parts of the world the ageing population is growing faster than the workforce.  As global populations are expected to stabilize around 2050, the world will be faced with a competition for workers.

The problem with our migration policies is not limited to shortcomings in law or process.  While we are increasingly conscious of global interdependence, this awareness has not penetrated our approach to human movement.  We need to embrace policies that foster greater openness, that promote mobility, and that are designed to relieve the local costs and burdens associated with migration.

Now, more than ever before, the world needs to embrace fair and rational approaches to migration governance.  The United States embodies the benefits of migration.  Overcoming the current impasse in immigration reform is vital if the USA is to build on its proud history and unlock the engine of its economic growth and dynamism.