Immigration's Economic Impact

0:00:07.2 Aaron Ross Powell: Welcome to Free Thoughts. I’m Aaron Powell.

0:00:09.1 Trevor Burrus: And I’m Trevor Burrus.

0:00:10.9 Aaron Ross Powell: And our guest today is Alex Nowrasteh, he’s the Director of Immigration Studies at the Cato Institute’s Center for Global Liberty and Prosperity, and the co-​author with Benjamin Powell of Wretched Refuse: The Political Economy of Immigration and Institutions. Welcome back to Free Thoughts, Alex.

0:00:27.0 Alex Nowrasteh: Thanks a bunch for having me, guys.

0:00:29.8 Aaron Ross Powell: You make an interesting claim in the book about the burden of proof when it comes to immigration. You write, “The starting point for crafting policy should begin with a baseline presumption of free trade and free immigration.” Why start with the assumption of openness?

0:00:46.2 Alex Nowrasteh: Well I think if I… As a Libertarian I need to start with the assumption that government actions, I think, should be the ones that are justified, and if there is no reason for a government action, there’s no reason to take it. And the action needs to be pretty good. So my base assumption, I think for just about everything, is that the government wants to do something, it needs to justify that action, while inaction should be the default for just about everything. And it’s basically the same justification I apply to everything I run in my life, which is I don’t do a whole lot of actions for things unless they require my action. So it’s sort of, I think, a general principle for deciding whether the state or really anybody should do something, as you need to have a good reason to act, and a… Yeah, a good reason to act.

0:01:41.5 Trevor Burrus: But as an economist too there’s another presumption about voluntary trade and interaction.

0:01:47.8 Alex Nowrasteh: Yeah, that’s right.

0:01:48.8 Trevor Burrus: But the baseline of economics, if you don’t think voluntary trade benefits both then you can’t really do economics.

0:01:55.8 Alex Nowrasteh: That’s right, so it’s sort of this idea that voluntary exchanges are presumed to be mutually beneficial and positive sum. So values are subjective, they’re marginal, and our values are revealed by our actions, and so it’s a really safe assumption that people who act, who do things, do it because they think it’s in their own personal benefit. And people make mistakes, it’s not perfect, but it’s a much better way of judging whether an action is worth it or not, whether it’s efficient or not, than anything else.

0:02:32.3 Trevor Burrus: On that point, I just wanna… Something… The way you’ve said this in the past, and I think it’s a good way of putting it in the context here, how are immigration restrictions restrictions on native Americans, or people who live within borders? Because that’s a point that you make which I think is not often pointed out.

0:02:51.1 Alex Nowrasteh: Right, so native-​born Americans wanna hire, they wanna sell to, they wanna rent to, they wanna marry immigrants, people overseas. And so any restriction on immigrants coming here to engage in these types of exchanges with native-​born Americans of course restricts the immigrant, but it’s also a restriction on what native-​born Americans can do.

0:03:13.0 Alex Nowrasteh: So if I own property and I wanna rent out to people, the fact that immigration laws prevent me from renting out to about 95% of the world’s population, unless they get explicit government permission, is something that severely limits my ability to contract and to use my property as I see fit. And so you can expand that to everything else, to employment relationships, to marriage, to any kind of personal relationship, to even something as simple as, you know, buying and selling an apple at the corner store. The government severely limits the ability of native-​born Americans to deal with foreigners, and thus every immigration restriction is also a restriction on what native-​born Americans can do.

0:03:55.4 Aaron Ross Powell: And we know that economic freedom, that allowing people to make the choices you just told us we are off the table for most Americans, leads to economic growth, leads to greater wealth. So I’m just curious, if we went fully open in terms of immigration, or close to it, what kind of economic impact are we potentially talking about?

0:04:20.5 Alex Nowrasteh: So we’re talking about a very large potential impact. Economist Michael Clemens at the Center for Global Development wrote a very influential paper in 2011 called “Trillion dollar bills on the sidewalk”. And he estimates that the global economic benefit from expanding basically going to open borders or something close to it would be to increase GDP around the world, so, gross world product, by 50-150%, which would be an annual figure. Which means global world product is somewhere around 80-$90 trillion.

0:05:00.0 Alex Nowrasteh: So you’re talking about 40-45 up to almost 150 trillion dollars of additional global output each year by having something close to open borders. And that’s the reason why, is because immigrants are in countries with bad institutions where they’re unproductive. And by allowing them to move to countries like the United States where there are better economic institutions, there’s more economic freedom, it increases their productivity, increases their wages as a result, because their productivity goes up, and the result of increased productivity is more goods and services being made, which increases the material prosperity of the world.

0:05:41.0 Alex Nowrasteh: And so that is sort of the base assumption of what would happen globally if there were free immigration. And most of those gains would go to the immigrants, of course. Some would go to native-​born Americans and other people in rich countries, but they would also be concentrated geographically in the countries where these people would move, so primarily the United States, Western Europe, and elsewhere, would get the main economic benefits of a massive flow of people under such a large system.

0:06:10.5 Aaron Ross Powell: Is that a problem though, or at least something that we should worry about? Because if we open up immigration yes the United States and these places where people want to move may see tremendous benefits, but is it going to come at the cost of driving people in third world countries or unstable countries or the kinds of countries that people leave into even greater poverty?

0:06:34.8 Alex Nowrasteh: So there’s some good research about this, the main reason why these countries are poor in other parts of the world is because their institutions are worse than ours, and you have to think why would a government want to improve the quality of, say, legal and economic institutions. And it turns out one of the big reasons why is to keep people in the country, because if everybody leaves then all of a sudden the government doesn’t have any taxpayers, it doesn’t have anybody to fund the government to support the autocrats who are there.

0:07:04.8 Alex Nowrasteh: So by allowing so many people to leave and go to other better countries, what it does is it gives an incentive of all of a sudden for politicians in these countries to actually support reforming laws in a way that will incentivize people to leave. They could create a new Berlin Wall, they could do something like that, but in the long run those aren’t very effective. And we see this around the world, we see that countries that are able to send out a lot of immigrants for various reasons, like Mexico, some countries in Africa and Asia who have sent large numbers of immigrants to Europe, the United States, other countries in East Asia, is they do typically improve the quality of their economic institutions as a result. Sort of the more immigration that occurs the more they are interested in improving the quality of these laws so that people will actually stay.

0:07:56.3 Alex Nowrasteh: So in a way, what this does is sort of take the incentives, the public choice incentives of government agents, of politicians and bureaucrats, and makes them actually want to improve the quality of institutions because they wanna maintain just at least some people staying in their countries who will pay taxes. If you think about it, I think a country like Haiti for instance, which is the poorest country in the Western hemisphere, one of the poorest in the world, if the US had a free immigration policy with Haiti I would suspect that 90% plus of that population of that island would come to the United States, unless the government there were to create some policies to make it attractive for people to stay.

0:08:37.2 Alex Nowrasteh: So I think that that would be the situation that would be faced by a lot of countries around the world, is they would become, in the words of Lant Pritchett, “zombie countries”, which is basically entirely depopulated of people and because their people have gone on to bigger and better things in other countries.

0:08:54.5 Trevor Burrus: Of course, this raises the question that your book deals with extensively and kind of hits everyone’s mind when they hear this isn’t one of the reasons, or at least a contributing factor, to Haiti’s lack of good institutions is Haitian culture and history and attitudes that people have, not even necessarily being some sort of Western chauvinist, ’cause there are different ways of doing things, sometimes you have informal economy, sometimes you have formal economies, so some countries they’re used to informal ways of driving, I mean driving is a great example, right? We drive very formally in America, according to rules, go to South Asia or Eastern Europe and you’ll find very quickly that people drive very differently. And the reason they do that is because of who they are.

0:09:41.8 Trevor Burrus: So if they all come here, they… Let’s just take that, let’s just take driving as an example, it can get bigger, but like if you had an influx of 11 million, that’s why I looked at the population of Haitians, come to a few cities in America it would have to change things about the culture there, that just seems to be obvious. And it could be for the worse.

0:10:04.7 Alex Nowrasteh: Yeah, that’s the question that we try to deal with, I think culture matters in some sense, but you also have to realize that our institutions, they’re collective, they’re ontologically collective, in the sense that I’m a supporter of free markets and individual liberty, if I move to Cuba it doesn’t increase the amount of free markets or individual liberty in Cuba, just because one more person with those opinions or characteristics moved there. I’m sort of going to be able to fit in to the institutions that are already in Cuba already.

0:10:39.5 Alex Nowrasteh: So what happens generally is there’s these things called founder effects, which is the founders of institutions, the people who either create them or enshrine them in law, they’re already created through spontaneous order, but they might be enshrined in law by some of the first people who are in an area, that has enormous sort of stickiness and lasting power.

0:11:00.3 Alex Nowrasteh: So let’s say Haitians who have different norms about driving come to the United States, and in large numbers. There might be a bit of a learning curve, but let’s say 10,000 people a week come to Miami from Haiti over the course of several years, those 10,000 people are not on all of a sudden gonna up-​end all the driving norms in that state, they’re gonna slowly assimilate or maybe very rapidly assimilate in terms of driving to the norms of driving in Miami. And that’s because there are institutions which are the rules of the game, plus the enforcement measures, that are gonna basically force them to follow those rules. Because if you’re the only guy in Miami driving in the left-​hand side of the road, you’re not gonna be driving very long. You’re probably gonna be driving for about 10 minutes, maximum, before you get in a serious accident. And you’re gonna adjust and you’re gonna learn.

0:11:51.3 Alex Nowrasteh: And it’s sort of similar for other habits and actions, everything from acceptable social conduct to economic exchange, to how you sign contracts, people are fairly malleable in these ways. Culture is not something that’s designed, or not inherently genetic or anything like that, it’s not genetic. It’s sort of the practice, the modes, that are most effective that people have developed over time to deal with situations, in the words of Douglass North, “Culture is the partial solutions to the frequently encounter problems of the past.” And when people realize that those problems have changed, culture changes quite dramatically, quite radically, and in many cases quite quickly. So in terms of driving on the right side of the road, that is a… Versus having basically no driving rules, that’s something that people very quickly learn in a new environment, because the benefits of doing so are so high.

0:12:47.4 Aaron Ross Powell: But those things have an immediate feedback loop, driving on the wrong side of the road has the obvious one of you’re going to get either arrested or killed, and it’s gonna happen pretty quickly. But… And that if you move 10,000 people to Miami, those 10,000 people are going to have to, when it comes to driving, interact with other people in Miami on a pretty regular basis, because people are driving all over the roads in Miami all the time. But what about things like political beliefs, values, ideological positions, where on the one hand there isn’t a feedback loop, you could vote for anything and the cost to you is going to be zero. And where immigrants… It’s not like immigrants tend to come into an area and just disperse evenly throughout it, they cluster. We have a… Every day when the Cato office was still open, I walked through Chinatown. That’s a common occurrence, and so if you’re simply around other people who have the same beliefs and values you did in the old country, you’re gonna be able to maintain them easier, but now you’re gonna be a voting block.

0:14:11.4 Alex Nowrasteh: Right, and this is something… We have a sort of a chapter dealing with this in the book. It’s not just that it’s sort of random people from these countries who are selected to come here, it’s self-​selection. And so the people who tend to be those who self-​select are those who are more cosmopolitan or open to change in circumstances, who are sort of okay with being away from the culture they grew up with in search of opportunities. So it’s sort of a more classically liberal cosmopolitan group of people than ones that sort of represent the average in a lot of these poor countries around the world.

0:14:50.0 Alex Nowrasteh: One of the other things is, in a lot of ways, they also… Immigrants, and I think we all do this, I’m from California, so I compare the institutions in my home state of California to that of Virginia where I live now. And so by comparison I think Virginia’s Institutions are generally a lot better than California, and I appreciate that. And a lot of immigrants sort of implicitly compare the institutions of the United States to those of their home countries, and they decide generally that the institutions here are a lot better.

0:15:19.9 Alex Nowrasteh: So you take a look at polls that are done of trust that immigrants have in specific American institutions, they have much higher trust and Congress and the Supreme Court, in the Executive Branch, and American business, and even in big business, than native-​born Americans do. And so it makes them in a way a “lower-​case C” conservative voting block, in that they tend to support these things a lot more, because you can see right off the bat that they’re better here, the lack of corruption relative to other places, and people seem to sort of get into that mode of supporting them a lot more rapidly than say native-​born Americans do.

0:16:04.2 Alex Nowrasteh: And now, as a libertarian, I realize the humor in that, right? Praising immigrants for having more trust in Congress, for instance, is something absurd, and I like to joke that perhaps that’s because they haven’t had as much experience as we had yet. But we also haven’t had experience with the institutions in their home countries, which are generally much worse across the board. So a lot of these sort of adaptation to American values, American norms, they might be in their heart of hearts, support socialism or the bad institutions, but when it comes to seeing the world around them, and to seeing the institutions as they behave, they tend to form very rapidly opinions that are, at least in terms of trust of these institutions, higher and more trusting than that of native-​born Americans.

0:16:56.1 Trevor Burrus: On this question of self-​selection, which is a point that I make a lot, and I think is one of the most misunderstood concepts in immigration, that I think a lot of people who are against immigration think, when you say, “Let’s have a bunch of Iranians come to one part of your family”, a bunch of Iranians come to the United States and they think of it as…

0:17:18.1 Alex Nowrasteh: “Oh no, not the Iranians!”

[chuckle]

0:17:20.1 Trevor Burrus: Yeah, yeah, exactly, “Perish the thought”. Andrew’s wife too, so… But they think of it as a representative sample of Iranians, that it’s like the average Iranian, “I don’t wanna be an American”, but of course it’s not, it’s the ones who want to leave Iran because they don’t like the kind of policies in Iran. And that’s true across the board. But when we analyze it that way does it matter how difficult it is to get here? Not even in terms of… I mean, possibly in terms of law, but even just physically, like getting to America in 1700 was very difficult. So the people who chose to come here were obviously highly motivated to make it in America. And the immigration system was open so they were highly motivated, and then if you think about travel costs now or Middle Eastern Arabs going to Europe, it’s not as far, they can go back easily. And so maybe something we should be concerned with is how difficult is… Will create that self-​selection mechanism to work better and get a better quality of immigrant.

0:18:28.0 Alex Nowrasteh: So I think that that’s interesting. I think there’s two responses to that. One is because it’s so much easier to go back and forth, that means it’s not like a one-​way trip necessarily, so you’re gonna have a lot of people who may not be that interested in assimilating, say, into French culture if they’re from Algeria, but it also means that France has to be less worried about that because a lot of those who want to remain Algerian go back to Algeria after working and saving money in France for a while. So there’s a lot of this sort of back and forth. During the late 19th century a majority of Italian immigrants, for instance, in the United States, went back to Italy, they were called “birds of passage”, because they’d come for one year, go back, come another years, go back…

0:19:10.7 Trevor Burrus: And those are my people, and some of them did.

0:19:12.1 Alex Nowrasteh: Yeah, those are your people we’re making fun of now.

[laughter]

0:19:15.3 Alex Nowrasteh: And that was very common. And prior to the United States vastly increasing border security along the border with Mexico in the 1980s, it was around 80% of Mexicans went back to Mexico, because they didn’t wanna settle here. They came up to work and they went back and forth. And so by increasing border security we actually had the effect of locking them in, because it raised the price of going back and forth. So I think what you’d see in this world is… We think of immigration as sort of one way and permanent, but in this type of world I think immigration would be… There’d be a lot more of it, but a lot of it would also be temporary, and that people will go back and forth. And that just is easier in the modern world.

0:19:56.9 Alex Nowrasteh: The other thing, and this is I think especially important for Americans and in English-​speaking countries, is the amount of pre-​assimilation that occurs. So American movies, culture, television, internet norms, language, everything related to entertainment and culture are really dominant around the world, and increasingly so. And so a lot of immigrants just know more about the United States before they come nowadays than they did like 100 or 200 years ago. So they’re already a lot closer to the American norms in terms of their support for things like democratic government, the role of women in society, their opinions about, say, how homosexuality is totally acceptable. They’re just a lot closer than they were, say, in 1850. Like a Mexican immigrant today from Guadalajara has a lot less to learn about American culture than an Irish immigrant in 1840 does.

0:20:57.2 Aaron Ross Powell: A lot of your book, a lot of the new economic case against immigration that you’re pushing back on is a story of productivity. What are we talking about when we talk about productivity at a national level, and how are we measuring it?

0:21:17.9 Alex Nowrasteh: So, economists have a lot of different ways of measuring productivity, and the main one that we’re talking about in this book is that if you take sort of a native-​born American, let’s say somebody with a high school degree, and in the United States let’s say that they earn like $40,000 a year on average, and you put them into a place like Haiti, all of a sudden their income is gonna drop to something like a few thousand dollars a year.

0:21:43.9 Alex Nowrasteh: You haven’t changed anything about that person, you’ve just changed where they are working and living. And the main reason why there’s that difference is that in the United States there’s a lot of capital, which are the machines that we use to make things, there’s a lot of… People have made huge investments in their human capital, that is their education and other productive capabilities. People have invested the time in building firms and managing them effectively, and that’s because there is just a much smaller chance that criminals or the government… And they’re often the same, but criminals or the government will steal them, so people can make these wise investments in the United States and increase productivity.

0:22:23.9 Alex Nowrasteh: They increase the amount of stuff that you can make per unit of input. And as we know from economics, the productivity of the worker basically determines the wage that that worker is gonna have. So a worker in Haiti is just not that productive, they can’t make very many things because there’s not very many machines there, there’s not much capital, nobody’s made the investments because there’s no reason to, ’cause the government can take everything. But in the United States that’s not the case, it’s a lot better than that. So in the United States, per person, even controlling for education, controlling for all the physical characteristics of the individual involved, can produce a lot more goods and services with many fewer inputs, and as a result be a lot wealthier.

0:23:07.9 Alex Nowrasteh: And the theory that is… There’s many theories about why that’s true in a place like the United States, and not a place like Haiti. One of the dominant ones is known as “new institutional economics”, it’s a theory developed by Doug North and others, where basically the incentives created by a private property system, by freedom of contract, by a lower level of government intervention in the economy, incentivize people to make these wise investments in themselves and the economy that increases productivity and over time increases the standard of living in a country, and the fear is that immigrants come from countries where they don’t have these institutions, so maybe if enough of them come in enough numbers they’ll bring some of these bad ideas with them and sort of undermine our productivity here.

0:23:57.0 Trevor Burrus: On that question about speed, it seems clear that… I mean we’re kind of hypothesizing here, you can name parts where huge amounts of people move to a place and it created huge problems. So for example, the gold rushes of California, if you were living in California at the time, or Alaska, also a huge amount of young men, so crime problems, just trying to get services problems, not having the infrastructure. We saw similar things happen in North Dakota with the fracking boom, you had towns go from 3000 to 30,000 in so quick of time that it had law enforcement infrastructural problems.

0:24:34.9 Trevor Burrus: You have very extreme examples like the case in Wild Wild Country, which is a Netflix documentary about a huge group of cultists, Rajneeshi, moving into county in Oregon and basically taking it over, and the people there seemed to have a justifiable grievance that their entire town, their local coffee shop turned into a wheatgrass emporium or something, that they… Those are all problems, so those are concerns, but even on a broader level… So I want you to address those, but then also at the second level, this is all qualitative stuff. Do we have any examples where we studied mass movements of people and seen what actually happened?

0:25:13.3 Alex Nowrasteh: Yeah, so those are mostly examples of immigrants affecting the local culture, in terms of the wheatgrass emporium, or just due to the fact that there’s an increase in the population of young men you have a surge of crime in some of these fracking towns in North Dakota. Sort of what I’m talking about in this book is sort of a more fundamental change, which would be that immigrants move into a lot of areas and hypothetically, say, just fundamentally change the rules of private property. So all of a sudden you’re less secure in your ownership of land, you’re less secure in your ownership of financial assets. It’s harder to contract because of the high taxes, more regulations, or the courts just don’t honor contracts as much, for whatever reason, or the state government is empowered or local government is empowered to confiscate land under much lower burdens than currently.

0:26:12.0 Alex Nowrasteh: And this will sort of have much bigger effects than whether it’s more difficult to buy wheatgrass or coffee at the local coffee shop, this will affect it of every single economic exchange that occurs, it will affect the productivity of every worker, hypothetically. It will affect whether a society like the United States can maintain its high level of a standard of living. And this is something that I think is one of the potentially better criticisms against my position of immigration, is that these institutions seem to be kind of fragile that we have, these sort of productive institutions. And if they are fragile, then we should try to not have policies like, say, maybe liberalize immigration, that could upset them, if the upsetting of these policies could lead to their degradation and if immigrants can undermine them.

0:27:04.8 Alex Nowrasteh: So this is sort of like the point, it’s like the point of our giant book about this, right, is if that were true that would be a great argument against immigration. And then we take a look at it, in all these different case studies, we take a look at the best evidence that we have, and we find that in every situation that we look at, by every measure that we take a look at in this book, immigrants either don’t undermine at all the institutions, the economic and political institutions of the areas where they go, or they actually improve them in some cases, through some methods that we sort of hypothesize about, some mechanisms that we hypothesize about.

0:27:44.6 Aaron Ross Powell: It seems like a lot of this critique would depend on why immigrants come here, because if you’re choosing to leave your country, and particularly if you’re leaving a poor country and, as we discussed, the poor countries are poor for a reason, and a lot of it is because they have bad institutions or missing institutions, it would seem odd for immigrants to say, “This country was bad enough that I want to… ” Even in an era of easy travel and easy communication across borders and all of that, it is still very costly and time consuming and disruptive to change your country of residence. It seems odd that they would think these problems were bad enough to undertake those costs just to come here to undertake steps that would make this country look more like the one that they just left.

0:28:31.8 Alex Nowrasteh: It does seem odd. Right, of course, politics is more of a collective action problem rather than an individual one, so in the same sense that earlier in this conversation, you said, you know, people don’t get those feedback mechanisms if they have silly opinions, so they might maintain those opinions for a long time. So that’s sort of the counter-​argument to what you’re talking about, but a lot of people just don’t seem to be so enamored by the places where they’re born that they wanna recreate them everywhere. They don’t necessarily know how to recreate them everywhere, and they don’t necessarily want to, right, so if you’re a Pakistani immigrant to Great Britain, you may not wanna create the cityscape and institutions of Pakistan, it might just be enough for you that you can eat Pakistani food with your Pakistani family and occasionally go to a Pakistani restaurant. That might just be enough for you to get sort of the joys of that, and you can talk with your Pakistani family back in Pakistan in Urdu. So that might be enough for you, right? I don’t need a packaged good. There are some things that I miss about California where I’m from, and almost all of them I can get out here in Virginia in un-​bundled packages, without having to deal with the higher taxes, gun regulation, other nonsense of living in California. The only thing I can’t really get is good Mexican food, but I’m working on that.

0:30:00.3 Trevor Burrus: This is true, but a lot of people, Alex, would be saying, as you know and maybe will be telling on Twitter later, you’re being sort of willfully naive about the real problem. Sure, maybe Pakistanis in the UK just want to be able to go to the mosque and to have some Pakistani food, but seemingly some of them want to become terrorists, and seemingly some of them want to take things down. And one thing you hear from Conservatives all the time, ones who actually maybe do believe in immigration would say… Who take the old Ronald Reagan line, but they will say something like, “I’d rather have America’s immigration problem than Europe’s.” And it seems like Europe is kind of a standing argument against almost everything that you’re saying, in terms of how dangerous immigrants can be in changing different neighborhoods and changing cultures away from where they were.

0:30:48.8 Alex Nowrasteh: Yeah, yeah, that’s right. And there’s a lot of commentary about that. There are problems in Europe related to immigration, most of them have to do with the institutions in these countries, related to welfare, labor market regulations, etcetera, which were created in times without any immigration into Europe and have since run against them. So as a result a lot of immigrants just don’t have the experience of working in the labor market, because they’re not allowed to by law, and that’s a lot of problems.

0:31:20.5 Alex Nowrasteh: But we also ignore a lot of the positives and we tend to exaggerate the dangers. So for instance, like in 2017 in France, the chance that you’d be killed in a terrorist attack is about 1 and 22 million that year in France. In Germany it was about 1 in 82 million. In the United States, it was higher, at about 1 in 19 million. And in that year was almost all Islamic… Islamist immigrants who were, in all these countries, who were foreign born who were committing these attacks. So, judging on that level, the United States actually looks a little bit worse, worse than a lot of these European countries in that way. Now, there’s a lot of variation year by year, but those are also very small chances annually of being murdered. I for instance said in the United States it’s 1 in about 19 million per year, in 2017, annual chance of being murdered in a terrorist attack. The annual chance of being murdered in a normal homicide was about 1 in 25,000 that year. So we’re talking about a magnitude of about 100 times or so larger than that of just being killed in a homicide, so that’s.

0:32:38.3 Alex Nowrasteh: These dangers are pretty low, terrorism is not the great risk to our institutions, to our country, that people make it out to be. That’s not to say terrorist attacks aren’t brutal and bad and need to be punished and deterred, they absolutely need to be, but as an argument for ending or diminishing immigration, they really don’t pass the smell test.

0:32:57.6 Trevor Burrus: Aside from the terrorism though the other issue I think that’s brought up is just lack of assimilation, which maybe is true that a lot of the Middle Eastern Arab population coming into European countries are not assimilating, but it seems like sometimes that’s the destination country’s fault.

0:33:14.1 Alex Nowrasteh: Sometimes, yeah. Of course, the immigration in Europe is also pretty new, it’s basically since the 1960s in most of these cases, and when you take a look at the third generation Turks for instance, the Turkish immigrants and their kids in Germany, they’re actually doing quite well in the third to fourth generation, in terms of speaking German, in terms of considering themselves German, in terms of their educational and job access in the country. And part of that is due to the fact that Germany has reformed a lot of its laws. Germany used to have this system where you basically couldn’t get citizenship, it’d be very difficult to get citizenship if you were born in Germany unless all of your ancestors were German, and they changed this around the year 2000, a lot of ethnically Turkish Germans got citizenship, and they very rapidly rose in terms of their language acquisition, whether they considered themselves German, whether they read German newspapers, sort of all these different measures of being German, culturally. Big improvements on this.

0:34:19.9 Alex Nowrasteh: And what’s fascinating is when the Syrian refugees went to Germany in large numbers, beginning around 2015-2016, a lot of the commentary in Germany suddenly switched from “Well Turkish immigrants and their descendants have done fine, but these new Syrian ones, I think it’s not gonna work out too well.” So there are different issues, and there are more issues in Europe, but I don’t think we should be blind to the fact that it’s actually going a lot better than what people realize. And part of the reason why it doesn’t appear to be going as well as it really is, is because it’s so new, it’d be like comparing just immigrants in the United States who have come since 1970 and their descendants, whereas we have hundreds and hundreds of years of immigration to look back on. Europe doesn’t have that yet, but it’s gaining it and it seems to be going okay. It’s not a disaster, it’s not as good as the United States, but it’s not fundamentally overturning European economic institutions. There’s some evidence that it seems to be changing them in some more cosmopolitan, more liberal, classically liberal directions.

0:35:24.3 Aaron Ross Powell: I wanna go back briefly to the terrorism question, because I think there might be a worry that you are under-​selling the dangers of terrorism. So we look at, say, September 11th, when 19 people killed 3000 people, which is not a lot in a city of… As a percentage, in a city of I think 18 million at the time, so your chances of being killed by a terrorist attack, even on September 11th, 2001 were relatively small. But that one… Terrorist attacks tended to have much larger impacts than regular homicides do, and so we watched in the 20 years since a dramatic change in America’s institutions, largely for the worst, arguably rise of Trump-​ism is related to what happened then.

0:36:19.9 Aaron Ross Powell: It had huge… The war in Iraq, it had huge negative effects, much more so than if there had just been 3000 homicides in New York City. And so those costs would seem to say, “Yeah, maybe the chances of terrorism are great, but the damage that a single terrorist attack does is so large that we should consider the dangers worse than individual deaths.”

0:36:46.0 Alex Nowrasteh: Yeah, and I think there’s some evidence for that, but I think the danger in that situation is the government’s response to the terrorism rather than the terrorism itself. So whether the immigrants themselves are gonna fundamentally change American institutions does somewhat depend of course upon how Americans respond to the immigration and respond to the terrorism. But that is something that is more so in our control than is the opinions of the immigrants themselves. And if that’s the problem, the solution is not to react in the way that we reacted after 9/11, but instead to be calmer, more circumspect, and to not invade Iraq, pass the Patriot Act and do all this other stuff that was so bad.

0:37:37.9 Alex Nowrasteh: So there have been numerous terrorist attacks in a lot of these countries, in France for instance, of the Bataclan, that large terrorist attack there several years ago, and their response was to reduce some freedom of speech protections in France, in order to try to root out more Islamic extremism. And I think that is the exact wrong approach. If you are worried about immigrants undermining institutions in your country due to terrorism, I think one of the things to do is to not overreact to terrorism by reducing your freedoms in the meantime. Then you’re sort of… In that situation it’s not the immigrants causing the destruction in our freedom and liberty, it is the US government or the French government, whatever government it is, doing so because the majority of native-​born people in these countries want to restrict freedom in response to some actions taken by a small number of foreign-​born people.

0:38:36.5 Trevor Burrus: One of the more fascinating arguments I’ve heard you make, which I find extremely compelling, but it kind of fits into… It’s a little counter-​intuitive, but it fits some of this whole motif, is that you’ve argued that over the course of the 20th century in particular that the restrictions on immigration between ’24 and ’65 in particular contributed to the growth of the state, that actually open immigration can create more libertarian, or least Classical Liberal policies on the outcome, including labor policies and taxes and things like this, which might surprise a lot of people. How does that argument work?

0:39:17.2 Alex Nowrasteh: I’ll set it up in this way, right, it’s the idea, on the other side, is that immigrants are very supportive of socialism, of big government, so if we have just more migrants coming to the United States then that will sort of mechanically just lead to more political support for big government, and as a result of this we’re gonna have a larger government in the United States. And what we found is when we take a look at, say, proxy measurements for economic freedom, which would be something like federal spending as a percentage of GDP, we found a strong inverse correlation, meaning that government growth, growth in the size of government, the federal government, is a lot slower or even zero during times when the border is more open and much larger when the border is closed. So from this period of the early 1920s to the late 1960s when the border was practically closed in the United States, that’s when the size of government increased dramatically and vastly in the United States. That’s where size of federal expenditures as a percent of GDP went from something like 4-5%, to in about late 1960s about 20% of GDP.

0:40:33.0 Alex Nowrasteh: So you see a vast increase there in terms of real spending in the United States as a percent of GDP, exactly the period of time when immigration is the most closed. So all the correlations go against the idea that somehow more immigration leads to support or even larger government in practice. While prior to 1920, when immigration was basically open borders with Europe and much of the rest of the world, not East Asia but much of the rest of the world, growth in the size of the Federal government was flat or shrank even slightly. Since 1970 the size of the federal government measured by expenditures as a percent of GDP has remained about flat since then, it’s increased by about a percentage point, but not by much, during the time when immigration is more open and this is something that…

0:41:20.5 Trevor Burrus: We’ll exempt the pandemic from some of that spending, I guess. [chuckle] Overall.

0:41:23.5 Alex Nowrasteh: Yeah, this goes through 2018. Unfortunately the book came out in the middle of the pandemic, so we couldn’t absolve that.

0:41:33.4 Trevor Burrus: But overall, it hasn’t gone up as much. Yeah.

0:41:35.0 Alex Nowrasteh: Hasn’t gone up on that, and interestingly, by the way, the borders have been closed during the pandemic. So that might even be some more evidence in our favor. And part of the reason is that there’s several different theories about why this is true. One is that, welfare states around the world tend to be very homogeneous: Ethnically, religiously, racially and socially homogeneous. And there might be a psychology story there where people really wanna help out others if they’re poor, if they sort of look and sound like them, they make excuses for people who look and sound like them, so they’re more supportive of welfare, that’s one possibility. And that would mean, of course, that more immigration and more people who are diverse really undermines political support for welfare and government benefits. So that’s one possible answer.

0:42:22.5 Trevor Burrus: Undercutting labor unions seems like a good thing too.

0:42:25.5 Alex Nowrasteh: And that’s the one that I am sort of most in favor of, that we really take a look at in this book, is that we think a lot of support for organization for growth in the size and scope of government comes from labor units. And there’s all this research that shows like once people join a labor union they become more left-​wing than if they wouldn’t have joined one, they just mechanically become more… Not mechanically but they sort of become aware of the propaganda, they organize more successfully for more government spending and more welfare. And one of the things we know for sure is that immigration really undermines the growth of labor unions, it really kills labor unions. So the thing that I think is a twofer, or it’s a three-​fer I guess, is that immigration increases economic productivity in the United States, increases the number of people making a lot of things.

0:43:16.7 Alex Nowrasteh: It seems to lower the growth rate, or or maybe even flatten growth in the size of the federal government, and it does it by killing unions, which are the most effective organizations lobbying for the expansion of the size of government. So this is sort of the theory that we come up with and we try to quantitatively develop in Chapter Nine of our book, is the reason why the United States has better institutions than so many other countries is partly because the pressure is that seek to undermine these institutions, primarily through labor unions, are killed by immigration and the resulting diversity, which makes it much harder for labor unions to organize.

0:43:54.3 Aaron Ross Powell: Thank you for listening. If you enjoy Free Thought, make sure to rate and review us on Apple Podcast or in your favorite podcast app. Free Thoughts is produced by Landry Ayres. If you’d like to learn more about libertarianism, visit us on the web at www​.lib​er​tar​i​an​ism​.org.