Open Borders? Maybe Not. Immigration According to the Austrian School (Part I)
by Federico N. Fernández *
Immigration is a pressing issue nowadays, especially in Europe and the United States. Some of the most interesting scholarly literature about it comes from the field of economics. Within economics one can find the Austrian School of Economics or Austrian tradition.
Austrian economics are usually –and with good reason– related with the tenets of Classical Liberalism and even Libertarianism. Regarding immigration, the standard position of Austrians, classical liberals and libertarians seems to be the favoring of unrestricted immigration.
Ludwig von Mises himself, a key intellectual figure of the Austrian tradition, defended an open borders policy and thought of it as the struggle of our time: “When liberalism arose in the eighteenth and nineteenth centuries, it had to struggle for freedom of emigration. Today the struggle is over freedom of immigration” (Mises 1927:137). For Mises “the closed-door policy is one of the root causes of our wars” (Mises 1944:263).
Yet within the Austrian tradition we find no monolithic support of unrestricted immigration. What is more, it was in fact a staunch Misesian who firstly made the case against unrestricted immigration. Indeed, Murray Rothbard (1994) was the first prominent Austrian to oppose free immigration approximately two decades ago. Rothbard wrote briefly about this subject, explaining why he changed his mind about it. Nevertheless, we consider his work seminal. It seems to us that the thesis presented by him in his 1994 article “Nations by consent: decomposing the nation-state” set a blueprint for the developments carried out by his disciple Hans-Hermann Hoppe.
And it is because of Hoppe that the internal debate in the Austrian tradition exists. Since the nineties, Hoppe has provocatively suggested that free immigration and free trade do not presuppose each other. Moreover, Hoppe believes that free immigration acts against free trade. Therefore, if we want free trade we must restrict migration. Hans-Hermann Hoppe arrive to these conclusions taking anarcho-capitalism as the starting point on analysis.
Naturally, opposition against immigration is not the predominant position regarding immigration within the Austrian Tradition. As mentioned above, Mises himself was in favor of free immigration. Closer to us in time, Richard Ebeling, Benjamin Powell and Walter Block hold a strong favorable position towards immigration. Their arguments stem both from economic theory as well as Libertarian theory.
In this series, we will present in detail the main ideas regarding immigration of five authors. These are: Richard Ebeling, Benjamin Powell and Walter Block on the one hand and, Murray Rothbard and Hans-Hermann Hoppe on the other.
Richard Ebeling
“Give me your tired, your poor, your huddled masses, yearning to breathe free.”
Engraved in the Statue of Liberty
At the base of Richard Ebeling’s (1995a; 1995b) case for open immigration lies a critical effort to refute what he considers to be social fears and political myths about the subject. In doing so he not only will try to dismount these mistaken or biased views but he will also highlight some neglected advantages of immigration.
Let us start with the “They steal our jobs” fear. Ebeling notices that the presupposition for this objection against immigration is the idea of a zero sum game and the finitude of jobs that an economy has. Therefore, whenever an immigrant gets a job, this must have been previously held by a native citizen. According to this view, the foreigner’s gain is the native’s loss.
However, our author rightfully points out that as long as scarcity exists there will always be more work to be done. The supply of good and services depends of the supply of resources with which those goods and services are produced. An increase in the supply of the resources in a given market can very well result in an increase of goods and services produced in that market. Consequently, “Immigrants… rather than stealing away jobs, in fact enable the market to fill jobs for which the labor supply was previously too small. All in the society tend to benefit as the general standard of living goes up through the increased quantity and improved quality of all of the marketable goods for which there is a demand” (Ebeling 1995a).
Ebeling’s second social fear regarding immigration has to do with the question of whether immigration labor lowers wages and, in turn, the standard of living of Americans. This relates to the possible fact that immigrants, in order to be hire, might make themselves more attractive to potential employers by lowering their wage expectations from what locals are presently earning. Thus causing that natives who want to keep their jobs have to match these lower wages.
Naturally, one of the comparative advantages of immigrants consists in the fact that they tend to be willing to offer themselves at lower wages than the ones that presently exists. Nevertheless, Ebeling refers to the beneficial secondary effects of this situation.
The sectors affected by the presence of these cheaper immigrants will now have lower cost of production. Who will be the direct beneficiary of these cheaper labor costs? The consuming public. Why? Because these lower costs mean greater profits to the employers. The consequent expansion of production will cause prices to decline over time as businesses compete for consumers.
Additionally, the lower prices will leave consumers with extra money in their pockets. Consumers can now demand some product they could not previously access. The work force in the sectors with growing demand will be increased. And how could employers of these sector attract new workers? Probably by offering higher wages. Therefore, not only consumers in general benefit from less expensive goods and services; also many workers will receive higher wages.
The third social fear Ebeling addresses is cultural. How could a large number of immigrants be assimilated to American society and culture? Perhaps small numbers of immigrants every year, strict quotas and further limitations make better assimilation possible. Huge waves of immigrants will never be able to learn the language and absorb the culture.
Ebeling here makes use of history. The same concern has been expressed regarding every previous wave of immigration. Germans in the 19th century were accused of living in secluded communities and it was feared that they would never learn the English language. Similar things were in the 1970s about the Vietnamese community. However, in only one generation time, the descendants of these and other groups became completely “Americanized.”
Our author acknowledges threats to assimilation. However, they do not proceed from the immigrants themselves. As with many social problems, it is the state the one to blame. In Ebeling’s own words: “The only things that can hamper the economic progress and cultural assimilation of immigrants are bad governmental policies: licensing restrictions that make it difficult to begin small businesses and enterprises; heavy tax burdens that destroy savings and investment incentives; welfare programs that draw people into the dead end of economic dependency upon the state; government schools, with their mandatory bilingual programs and socialist educational methods, that, more often than not, make it difficult for the children of immigrants to learn English rapidly and to adapt to their new country.” These evils, and not immigration, are the ones that should be fought.
Finally, Ebeling deals with the economic effects of free and unfree flows of people across borders. Needless to say that his interest focuses on the case of Mexico and the US. How would that work? What would be the consequences of such a thing? Who and why opposes that?
Our author starts by reflecting on how free movement of people works within the US.
Freedom of trade and freedom of movement are established principles in America. Therefore, producers are able to settle in the parts of the country that best suit their preferences and needs. In turn, workers can also establish themselves wherever they want. So the wages paid in every part of the country tend to be equal. Now suppose that an increase of demand for the products produced in let’s say California happens at the same time that a decrease or the products produced in New York. Californian producers will now offer higher wages to attract more workers to their industries. The unfortunate New Yorkers producers, on the contrary, will now start offering lower wages. This can very well create an incentive for New York workers to move to California. As more and more of them do so, California wages will tend to decline due to the increase of labor supply. Moreover, the departure of workers from New York and its logical consequence of a diminishing in the labor force will tend to raise New York’s salaries. How does this process end? With California and New York’s wages being roughly equivalent.
Ebeling thinks that the same principles apply when the geographical area considered is comprised of –not of two states within the same national entity– but two different countries. Hence, the barriers that forbid free immigration are the ones to blame regarding the disparate wage rates between the US and Mexico. “Under laissez-passer, the discrepancy between what was paid for one type of labor in the United States and what was received for the same type of labor in Mexico would act as an incentive for workers to move, until economic adjustments were made. Instead, this rigidity imposed on the market by the governments concerned has caused the wage differentials to widen more and more” (Ebeling 1995). Although Mexican immigrants may earn less than the average in the US, these immigrants will earn much more than what they did if they stayed in Mexico.
References
Ebeling, R.
(1995a) “The case for open immigration” in The case for free trade and open immigration, on line publication:http://www.amatecon.com/etext/cftoi/cftoi-toc.html
(1995b) “The case against immigration laws” in The case for free trade and open immigration, on line publication:http://www.amatecon.com/etext/cftoi/cftoi-toc.html
Mises, L. von
(1927)Liberalism, Foundation for Economic Education, Irvington-on-Hudson, 1985
(1944)Omnipotent government, Liberty Fund & The Ludwig von Mises Institute, Auburn, 2010
Rothbard, M.
(1994) “Nations by consent: decomposing the nation-state” in Journal of Libertarian Studies (Volume 11), on line publication: http://mises.org/journals/jls/11_1/11_1_1.pdf
* Federico N. Fernández is President of Fundación Internacional Bases (Rosario, Argentina) and a Senior Fellow with the Austrian Economics Center (Vienna, Austria). He is also the president of the Organizing Committee of the International Conference “The Austrian School of Economics in the 21st Century,” which has taken place every two years since 2006 in Rosario (Argentina).
Originally published at Values 4 Europe
