Tuesday, August 22, 2017

Thumbs up, Nick

At Worthwhile Canadian Initiative: Thinking about Costs and Benefits of Immigration. Nick Rowe sets up a scenario:

The country clones itself and becomes twice as big. Everything scales up in proportion. The supply of everything doubles, and the demand for everything doubles, so all prices (and wages) stay the same...

It's an economic model of a nation enlarged by immigration. Then Nick considers the costs and benefits of immigration in the following areas:

  • Money and Say's Law.
  • Land.
  • Capital.
  • Economies of Scale.
  • Non-Rival Goods.
  • National Debt and Assets.
  • Comparative Advantage.
  • Productivity and Terms of Trade.
  • Redistributive Taxation.

After that, Nick considers one additional area -- "All The Other Things" -- and says:

If a doubling of the population caused a civil war, because the immigrants and original population had incompatible visions of how the country should be governed, that would obviously be a cost to the original population. And that cost might outweigh or nullify any of the other possible benefits listed above.

It doesn't have to be civil war. At the start, it might only be a growing discomfort. Nick's observation stands: This one immigration-related cost might outweigh all the benefits.

When economists talk about immigration they always talk of economic quantities: income, labor, employment, demand. They always talk about how these quantities will be affected. But they never talk about the nation itself, how the nation is affected, the society, and the culture.

The costs to the nation, the society and the culture may be the greatest costs of all.

1 comment:

The Arthurian said...

Paul Krugman from 2006, at Economist's View:

First, the net benefits to the U.S. economy from immigration, aside from the large gains to the immigrants themselves, are small. Realistic estimates suggest that immigration since 1980 has raised the total income of native-born Americans by no more than a fraction of 1 percent.