Ezra Klein posted an article in the Washington Post which states that immigration is good for economic growth. Most economists I know would agree. He also shows some graphs, unfortunately poorly explained-- for example tell me what this graph means since budget is usually understood to be planned expenditures, that Americans are made better off from immigration. I would like to believe his argument, but I find it less compelling, because a lot of Americans seem to be concerned. Furthermore politicians are responding. Arizona is a recent case in point. So why do we see so much concern? One possible answer is because people are in fact being made worse off. Klein suggests an alternative possibility which goes like this. People tend to think in terms of trade-offs. If an immigrant gets a job, then an American must be losing a job. But, Klein argues, that this is not true. So instead, Americans are concerned because they fear being made worse off, even though they are not being made worse off.
Fear is a powerful motivator, and it is clear that at least some anti-immigration groups use fear as one of their main rhetorical devices, but I am not convinced by Klein's argument. For the argument to work it must be that Americans fear the unknown consequences of immigration. But, we have always had immigration. How long can it be an unknown? An alternative answer is that immigration raises competition in the labor force, and it is this increased competition that makes people worse off. This requires some explanation since, as an economist, I was trained that competition makes people better off. What I was taught was that competition causes the best ideas, products, technologies, and human skills to be discovered. and as long as competition is regulated by market prices, social norms, and rule of law, and there is enough diversity so that everyone can 'win' on some competitive front, then we are all made better off. So how can I claim competition makes us worse off?
Here is my hypothesis. I think we all enjoy some competition, but we differ in how much. For most of us we reach a point, call it our success point, where we are satisfied with the return we are getting from our competitive effort and increasing our effort is not worth the cost. Most Americans are near their success points. Immigrants are not. Note, the untold story in the Klein article is that after a generation, or two, immigrants are no longer immigrants, and therefore must be in the part of Klein's data where the immigrant advantage is gone -- note by my hypothesis it is because over time immigrants are now much closer to their success points. So people are made worse off, not by immigration per se, but because any change can drive them away from their success points. If I am right then Americans would not be so concerned if they knew they faced a consistent immigration policy that was in steady state with respect to their individual success points.
