How we should update our views on immigration

I am writing this post on a somewhat bumpy plane ride, so I will try doing it without links.  Most of the relevant sources you can find through perplexity.Ai, or even on MR itself.  Google too.

Overall, I am distressed by the contagion effects when it comes to immigration views.  A large number of people are much more anti-immigration than they used to be, in part because yet others are more anti-immigration.  All sorts of anecdotes circulate.  But let’s look more systematically at what we have learned about immigration in the last ten years or so.  Not all of it should count as pro-immigration, but a lot of it should, with one huge caveat.

When it comes to the wage effects of immigration, there is very modest additional evidence in the positive direction.  I wouldn’t put much weight on that, but it certainly is not pointing in the other direction.

The United States is showing it can have a higher stock of immigrants and also falling crime rates.  I am not suggesting a causal model there, but again that should be more reassuring than not.

There is additional evidence for the positive fiscal benefits of immigrants, including less skilled immigrants.  Some of this is from the CBO, some of it I outlined in a Bloomberg column maybe a month or so ago.  I don’t view those results as major revisions, but again they are not pointing in the wrong direction.

There is reasonable though not decisive macroeconomic evidence that immigrant labor supply was a significant contributor to America’s strong post-pandemic recovery.

If you are a right-winger who was worried that incoming Latinos would vote Democratic in some huge percentage, you can set your mind at ease on that one.  You also can take this as evidence of a particular kind of assimilation.

Fertility rates are falling much more than we had expected, including in the United States.  This makes the case for immigration much stronger.

It is increasingly evident that immigrant-rich Florida and Texas are doing just great.  The picture is decidedly less positive for many parts of California, but I suppose I see evidence that the white Progressive Left is mainly at fault there, not the immigrants. Still, I do think you can make a reasonable argument that immigrants and the Progressive Left interact in a dysfunctional manner.  It is no surprise to me that so many of the leading anti-immigrant voices come from California.

Overall, I am struck by the fact that immigration critics do not send me cost-benefit studies, nor do they seem to commission them.  If the case against immigration is so strong, why aren’t these studies created and then sent to me?  You could have a good one for a few hundred thousand dollars, right?  Instead, in my emails and the like I receive a blizzard of negative emotion, and all sorts of anecdotal claims about how terrible various things are, but never a decent CBA.  I take that to be endogenous.  I think it is widely accepted that America having taken in the people who are now Italian-Americans would pass a cost-benefit test, even though the Mafia ruled New Jersey and Rhode Island for decades.  Somehow people are less keen to apply this same kind of reasoning looking forward, though they are happy to regale you with tales of crimes by current immigrants.

I do see good evidence that trust in American government is falling, but I attribute that mainly to the Martin Gurri effect.  I mean look at the current gaslighters in the White House and in the media — they are not primarily immigrants, quite the contrary.  Or all the Covid mistakes, were they due to “the immigrants”?  I don’t see it.

Now let us look at knowledge updates on the other side of the ledger, namely new knowledge that should make us more skeptical about immigration.

We now see that external hostility to Israel and Taiwan is stronger than we had thought.  So the case for a looser immigration policy in Israel is much weaker than it used to be.  As for Taiwan, they should be more careful about letting in mainland Chinese.  Estonia needs to be more wary about letting in Russians, and indeed they are.  And there might be other countries where this kind of logic applies.  Do I really know so much about the situation between Burundi and Rwanda?  In general, as the level of conflict in the world rises, there will be more of these cases.  It is also a major consideration for anywhere near Ukraine.  Small countries need to worry about this most of all.

I should note this problem does not seem to apply to North America, though you might require tougher security clearances for some jobs currently held by Chinese migrants.

The second issue, and it is a biggie, is that voters dislike immigration much, much more than they used to.  The size of this effect has been surprising, and also the extent of its spread.  I am writing this post on Election Day in France, and preliminary results suggest a very real risk that France ends up ungovernable.  Immigrants are clearly a major factor in this outcome, even under super-benign views that do not “blame” the immigrants themselves at all.

Versions of this are happening in many countries, not just a few, and often these are countries that previously were fairly well governed.

I think it is better for countries in such positions to be much tougher on immigration, rather than to suffer these kinds of political consequences.

But let’s look honestly at the overall revision to our views.  Politics is stupider and less ethical than before, including when it comes immigration (but not only!  Fellow citizens also have become more negative about other fellow citizens of differing views, and I view negativism as the root of the problem all around).  We need to take that into account, and so all sorts of pro-migration dreams need to be set aside for the time being, at least in many countries.  Nonetheless the actual practical consequences of immigration, political backlash excluded, are somewhat more positive than we had thought.  For some smaller countries, however, that may not hold, Israel being the easiest example to grasp but not the only.  In the longer run, we also would like to prepare for the day when higher levels of immigration might resume, even if that currently seems far off.  So we shouldn’t talk down immigration per se.  Instead we should try to combat excess negativism in many spheres of life.

Somehow that view is too complicated for people to process, and so instead they instinctively jump on the anti-immigration bandwagon.  Too much negativism.  But in fact my view is better than theirs, and so they ought to hold it.

The Gary Becker Papers

The Gary Becker Papers (117.42 linear feet, 223 boxes) are now open at the University of Chicago:

The collection documents much of Gary Becker’s intellectual history. One of his autobiographical essays, “A Personal Statement About My Intellectual Development” (see Box 120, Folder 10 and Box 189, Folder 1), traces his academic career from his youth to his origins as a student at Princeton University, to his graduate student years and professorship at the University of Chicago, and his extra collegial engagement on corporate advisory boards, political participation, and governmental councils. The essay could have been written based on some of the records collected here. The collection documents an intellectual trajectory primarily through intellectual productions, research files, and communications. His approach to the research and writing, his publishing history, his engagement with others in the field of economics and other individuals in public service and global politics are contained here. Though the collection primarily concerns his professional life, there is also mention of his relationship with Guity Nashat, his wife, as they traveled together to the many conferences and events in the United States and abroad, and other incidents of his life for a minor study or treatment of his biography.

The collection materials include Becker’s handwritten and printed copies of his scholarship, including notes (and bibliographic cards), papers (and drafts), diagrams and charts, data sheets, correspondence, periodical reprints, magazines, newspapers and clippings, grant documents, reports, referee files, course and instructional materials, photographs, VHS tapes, DVD’s, and related ephemera.

Hat tip: Peter Istzin.

Economic valuation of becoming a superhero

Have you ever wished that you were a superhero? If so, how much would you be willing to pay to become one? In this study, we measured the economic value of becoming a superhero or obtaining a superpower using a discrete choice experiment. We focused on four superpowers: mind-control, flight, teleportation, and supernatural physical strength and measured values for each power. Our results indicate that of the four powers, our participants valued teleportation the most.

That is from a newly published paper by Julian J. Hwang and Dongso Lee.  Via John Whitehead.

Demographic Origins of the Start-up Deficit

We propose a simple explanation for the long-run decline in the US start-up rate. It originates from a slowdown in labor supply growth since the late 1970s, largely predetermined by demographics. This channel can explain roughly half of the decline and why incumbent firm survival and average growth over the life cycle have changed little. We show these results in a standard model of firm dynamics and test the mechanism using cross-state variation in labor supply growth. Finally, we show that a longer entry rate series imputed using historical establishment tabulations rises over the 1960s–1970s period of accelerating labor force growth.

That is from a new AER piece by Fatih Karahan, Benjamin Pugsley, and Ayşegül Şahin.  Here are less gated versions of the paper.

What should I ask Kyla Scanlon?

Yes I will be doing a Conversation with her.  Here is a reprise of an MR post reviewing her new book In This Economy;

“The subtitle is How Money & Markets Really Work.  I am a big fan of Kyla Scanlon (see the link for her other work), who is a force of nature.  She graduated from Western Kentucky University in 2019, and she has a new and very effective approach to how to talk.  I first learned of her through her explanatory videos, and it turns out she does one almost every day.

Apart from being very well done, this economics book has two notable features.  First, it elevates Kyla’s notion of “vibes” as a significant determinant of economic activity.  I use the older (and less vibey) terminology of “cultural contagion,” but in any case I consider this a neglected and under-analyzed set of forces, including in the economic realm.

Second, this is the first popular economics book I have seen that takes 2024 seriously.  Imagine you trained a “large language human” on what people actually talk and worry about today, and set that human loose to write an economics book.  This is what you would get.  It is a good and bracing shock to those who have trained their memories on some weighted average of the more distant past.

As an aside, here are some of Kyla’s favorite poems.  Why are there no major MSM profiles of her?”

So what should I ask?

Milei update

Complicating the recovery is the overvalued peso, which is making the country unjustifiably expensive in dollar terms. The official exchange rate is currently set by the government, which also imposes capital controls. Almost all of the devaluation in December has been eroded (see chart 2). It involved initially devaluing the peso by over 50% and then by 2% each month. But monthly inflation has been greater than the crawling peg. The result is that the real effective exchange rate is rising.

The effects are obvious from atop the Andes. On a single long weekend in April some 40,000 Argentines crossed the mountains into Chile to buy everything from trainers to car tyres because, surreally, Chile has become cheaper than Argentina. Mr Milei slams those who say the peso is overvalued as “intellectually dishonest”. Yet when an Argentine president says there won’t be a devaluation, taxi drivers know there is a good chance there will be one, quips Nicolás Gadano of Empiria Consulting in Buenos Aires.

A pricey peso scares off tourists, makes exports expensive and deters investors. An overvalued currency often eventually crashes. “If you see Argentina appreciating, this is always a sign of worse things to come,” says Eduardo Levy Yeyati of Torcuato Di Tella University in Buenos Aires. Falling exports make it harder for the central bank to accumulate dollars, which it needs to pay off foreign debts and to build up its safety buffers.

The government could allow the peso to float or accelerate the 2% crawling peg. But either would probably push up inflation, thus endangering Mr Milei’s popularity and undermining some of the benefits of the devaluation. For now, Mr Milei is able to keep a tight grip on the exchange rate because of capital controls.

What happens next? Mr Milei has promised to ultimately remove capital controls as part of his plan to restore investor confidence. He insists that inflation will soon be 2% a month, the same as the rate of devaluation. This, he says, would allow him to slowly ease the restrictions and float the peso without its value plunging.

Here is more from The Economist.  File under “difficult balancing act, nor is this market prices working their magic.”

Claude read the Chevron pdf

“This is a very significant overturning of Chevron deference, which has been a cornerstone of administrative law for the past 40 years. Some key points about the implications:

  1. It fundamentally shifts power from executive agencies to courts in interpreting ambiguous statutes. Courts will now have primary authority to interpret statutory ambiguities rather than deferring to reasonable agency interpretations.
  2. It opens up many existing agency regulations and interpretations to potential new legal challenges. Regulations that were previously upheld under Chevron may now be more vulnerable.
  3. It will likely make it harder for agencies to issue new regulations or take new regulatory actions, as they will have less latitude in interpreting their statutory authority.
  4. It may lead to less stability and consistency in regulatory policy, as different courts may reach different interpretations of statutes.
  5. It could slow down the regulatory process, as more issues may end up being litigated in court rather than deferred to agency expertise.

Some areas that may see significant impacts:

  1. Environmental regulations (EPA, Dept of Interior, etc.)
  2. Healthcare regulations (HHS, CMS)
  3. Financial regulations (SEC, CFPB)
  4. Labor regulations (DOL, NLRB)
  5. Immigration policies
  6. Telecommunications regulations (FCC)

Regulations that rely heavily on agencies filling in statutory gaps or interpreting broad statutory language are most likely to be affected. Major Obama and Biden-era regulations on issues like climate change, healthcare, and financial reform may be particularly vulnerable to new challenges.

However, the majority opinion does state that prior judicial decisions upholding agency actions under Chevron should not necessarily be overturned based on this ruling alone. So there is some effort to limit the disruptive impact, though the dissent expresses skepticism about how effective that will be in practice.

Overall, this represents a major shift in the balance of power between the executive and judicial branches when it comes to administrative law and regulation. The full practical implications will likely take years to play out through new litigation and regulatory processes.”

What does RN stand for in the pending French election?

The RN intends to move ahead with a proposed law that states as its aim “to combat Islamist ideologies”. It includes measures to make it easier to close mosques and deport imams deemed to be radicalised, and a ban on clothing that “constitute in themselves an unequivocal and ostentatious affirmation” of Islamist ideology.  Bardella said this would include various types of veils and the so-called burkini, or head-to-toe swimwear. “The veil is not desirable in French society,” he said. “The battle is in part legislative, but is also a cultural battle that needs to be pursued.”

Some of the RN’s economic proposals remain unfunded and scant on detail, such as cutting income tax for those under 30 to combat brain drain and the repeal “in principle” of Macron’s retirement age increase from 62 to 64. Bardella wants to undertake an audit of public finances before deciding spending priorities in the autumn.

But he said his first move if the RN takes power would be to boost working-class people’s purchasing power by cutting value added tax on energy and petrol, which he says would cost €12bn a year. Funding is to come from taxing windfall profits of energy companies, closing tax loopholes on maritime shipping companies, and cutting France’s annual contribution to the EU budget by €2bn, he said.

Here is much more from Leila Abboud and Ben Hall the FT.

With immigration, perceptions matter more than reality

That is the topic of my latest Bloomberg column.  Rather than work through the argument, which requires you to read the whole column, I’ll just reproduce the most trollish part:

When I am in a foreign city and in search of interesting food, I have a trick: In which neighborhood, I ask the locals, am I most likely to get murdered? In Stockholm, Rinkeby was the answer, even though many of the people I asked had never been.

So I went to Rinkeby, which is mostly non-White and most notably Somalian. There were Yemeni, Ethiopian, Persian and other restaurants. (I had a good chicken mandi at one called Maida.) I felt safe the entire time, and saw plenty of solo women, including some blonde Swedes, walking leisurely along the main street, as well as many women with head coverings. I saw a Western Union office and a driving school, signs that people have some funds to send away or invest in a car.

I hope to write a longer post on immigration for you all soon.

The Turku food hall

This is perhaps my favorite food hall.  Dating from 1896, the basic building is notable, the displays are lovely and suitably Nordic, and for lunch you can try a wide variety of cuisines, including excellent Mexican food, a rarity in Europe.  (They told me they buy their tortillas from other Mexicans in Czechia.)  From separate stalls I bought some salami and also black bread, and both were as good as any I have tried, ever.

Many food halls are overrated.  They create an illusion of plenitude, while not offering many items you actually wish to buy and consume.  The Turku food hall, however, is a real winner.

Overall, Turku felt more Swedish and also more stylish than Helsinki.  The Swedish name for the city — Åbo — you see all over, and one of the universities still teaches in Swedish.  It is much more of a college town.  That said, at population 202,000 it is slower and there is much less to do there.  You can see some of Alvar Aalto’s early buildings.

I was told that 77 Mexicans live in Turku.