Immigration and Society

Open Borders for Inclusive Prosperity

January 25, 2021  • Ricardo Salinas

I believe that, in a globalized world, it is natural and desirable for all resources to flow freely. This includes capital, goods, technology, and people. Genuine liberal minds do not question this principle. Nevertheless, voices abound in the United States that seek to blame the economic crisis on immigrants, especially Latinos.

While many governments have decided to restrict immigration flows, the book “Open Borders: The Science and Ethics of Immigration” by Bryan Caplan and Zach Weinersmith provides us with solid arguments on the economic, fiscal, and cultural levels, in addition to ethical considerations, in favor of the free movement of people.

The book explains that, in the past 35 years, real annual income worldwide has almost doubled while the global poverty rate has been reduced by over two-thirds. And yet there is a tremendous disparity between countries that could be significantly reduced if free international migration were to be allowed, benefiting both migrants and the receiving communities.

The conclusion is very simple. Open borders significantly increase global wealth. It is a rare example of a public policy that improves the well-being of practically everyone.

When a worker immigrates to a country or region that is relatively capital-intensive, that is with a large number of companies equipped with technology, labor productivity increases and more goods and services are generated in that nation’s economy.

A more productive person will eventually have a higher salary, which contributes to increasing the recipient country’s aggregate income and wealth on a world scale. In fact, this also occurs when there is free labor mobility within a country—let’s say from the countryside to the city—in which the urban worker benefits from technology and can produce more and therefore earn more, than in a rural setting.

The impact for the receiving country is very favorable and can be accurately measured through net present value (NPV). It has been shown on several occasions that the NPV of a young immigrant (i.e. the wealth that he or she generates for the country throughout his or her lifetime) in constant terms, minus what the state invests in his or her well-being, is positive. This is the case even if the immigrant is poorly trained. Therefore, not only is the immigrant in a better situation, but the public finances of the receiving country also tend to be strengthened.

Open borders are a rare example of a public policy that improves the well-being of practically everyone.

In the case of older immigrants who do not generate a positive NPV, far from prohibiting them from migrating, they can simply be charged higher taxes or an initial fee to compensate for the greater cost they represent for public finances until their net value generated becomes positive.

In many countries, the argument is raised that the “a greater number of people competing in the job market with already employed workers, tends to reduce the equilibrium wage and negatively affect the income of local families.” The reality, however, is that immigrants, when employed, will increase their consumption, and as a result, companies will hire more workers to meet the new demand and the market wage will eventually tend to increase.

An additional argument used against free migration is that it causes a negative impact on public finances because it increases the cost of public services. However, in most cases it is not necessary to increase the supply of public goods if the population increases and the cost of providing them remains relatively stable. An example is the army, which with the same budget protects either few or many citizens. Another example is public street lighting—the fact that many people simultaneously use a resource is the very definition of a public good.

At the same time, a large number of social programs such as pensions and health care systems are pyramidal; in other words, they depend on a large number of young workers underpinning older people. This means that, given the population structure of several developed countries with a significant percentage of senior citizens, immigrants are required to contribute resources to cover the growing costs of pension systems that would otherwise be in the red.

In terms of the social fabric of society and healthy coexistence, immigration is also very positive. Statistics indicate that crime rates among immigrants are lower than among those born in the receiving country. In the United States, the incarceration rate for immigrants is a third lower than that of native-born US citizens.

Meanwhile, for those who argue that immigration leads to cultural disintegration, the authors’ response is that immigrants quickly assimilate the language and social values of the receiving country, in addition to generating a cosmopolitan environment that enriches cultural life and, in turn, creates economic well-being.

Through the act of migration, people tend to improve their diet, health, and education, which strengthens them physically and intellectually, increasing their human capital. In addition, open borders promote equality of opportunity and allow for the development of the individual talents of native-born residents. One clear example is the European Union, which makes it easier for each citizen to use their skills where they are most productive across a large and diverse geographical area, thus increasing specialization and promoting the creation of wealth across the continent.

At my company Grupo Salinas, we seek to promote the progress of communities and we promote the free movement of people as a key tool for expanding employment opportunities and labor productivity. This enables us to better satisfy the needs of society and strengthen family income.

While it is true that this mobility has been affected by the restrictions imposed by different countries as a result of the Covid-19 pandemic, the reality that drives people to migrate in search of better living conditions will persist and may even intensify. This is why the ideas of Caplan and Weinersmith are more valid than ever. We must place a priority on freedom and respect for people who courageously leave their homes in search of better opportunities for their families.

We need to keep this in mind now that Joe Biden is the president of the United States. Biden previously stated that he will work closely with Mexico to build the infrastructure that will underpin a new immigration policy. For everyone’s sake, we hope that this is the case. Indeed, it is the only way to create true, inclusive prosperity.

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