Liberalizing immigration will not lead to the Camp of the Saints

Russell Peters has a funny routine about the mixing of different groups and the coming "beige-ification" of the planet--that eventually we the global population will be a mix of Indian and Chinese genes with the rest, because these two populations account for a third of the world.

There is a serious demographic argument underlying that joke--the different rates of population growth across the geographic areas, especially across countries.  With Europe and Japan rapidly depopulating, whether or not to allow foreigners into the borders will take on a more urgent tone.  In relatively immigration-friendly countries like the US and the UK, it also means that we are at important crossroads where the tightening or relaxing of immigration policies could have long lasting economic implications.

In the absence of tight border controls against migration, people would move around a lot more than they do now because of the immense economic incentives:

An individual worker, however talented, cannot hope to replicate the fertile environment of a rich economy all on his own. But transplanting a worker into rich soil can supercharge his productivity. A Mexican worker earns more in the United States than in Mexico because he can produce more, thanks to the quality of US technology and institutions.

This is, after all, another way of presenting Warren Buffett's argument on winning the "ovarian lottery" and that he couldn't have produced all the wealth that he did if he had been born in some country that is much poorer than the US. 

What could happen in a hypothetical scenario where half of the developing world’s workforce moved to to the rich world?

If migration closes a quarter of the migrants’ productivity gap with the rich world, their average income would rise by $7,000. That would be enough to raise global output by 30%, or about $21 trillion. Other studies find even bigger effects. A 2007 paper by Paul Klein, now at Simon Fraser University, and Gustavo Ventura, now at Arizona State University, reckons that full labour mobility could raise global output by up to 122%. Such gains swamp the benefits of eliminating remaining barriers to trade, which amount to just 1.8-2.8% of GDP, reckons Mr Mukand.

Yes, a strictly theoretical argument it is, because there is no way that such a large-scale movement of people will ever be allowed, despite the healthy track record that we have about the successes: from the US, the UK, Canada, Australia, the Persian Gulf countries, Singapore, ...

There is, of course, a gut-level economic opposition to an inflow of labor--from the worry that it will depress wages.  That it could lead to a Grapes of Wrath scenario of labor undercutting each other's wages as they search for productive employment. But, more often than not, our guts mislead us:

In a recent paper on western Europe Francesco D’Amuri of the Italian central bank and Giovanni Peri of the University of California, Davis find that immigration encourages natives to take more complex work. Such “job upgrades” are responsible for a 0.6% increase in native wages for each doubling in immigrant labour-force share. Where immigration disadvantages subsets of the population, Gordon Hanson of the University of California, San Diego reckons that charging an entry fee to migrants or their employers could help pay for training or benefits for those who lose out.

There is then the social opposition to immigration: people coming in from other cultures will mess up the "native" culture.  The controversial novel, The Camp of the Saints, captured this very well, though, when I read it a few years ago, there were many instances when I had to force myself to read through despite the atrocious attitudes towards the brown skin.  People might couch the same worries in more polite and politically-correct ways, but the non-economic reasons might perhaps be even weightier than the "they will take my jobs" argument.  It is considerably easier to present the logic and evidence on economic issues than it is to educate people to get rid of their biases against peoples of other cultures.  

As the GOP found out from the recently concluded elections, demographics is destiny.  It is yet another case of political contradictions: the Democrats will all their unions are stereotypically against more labor coming into the country, and yet they are the party overwhelmingly preferred by the non-Whites, including the immigrant population.  The GOP, which talks way more economic liberalization, is increasingly hostile to reforming immigration policies because of the worry deep down that immigrants and their children vote Democratic.

The rich countries have very little time left to figure out how they want to deal with immigration.  It is a demographic race against the clock.