Can Romney Recapture the Center on Immigration?

Pete Dominick, a radio talk show host for POTUS, recently asked how Mitt Romney, a politician often viewed as a centrist who veered right in running for president in the Republican primaries could move toward the center if he the nomination. I will describe how Romney can move to the center and increase his appeal to Hispanic voters by further describing rather than changing his immigration policy.

Romney described his plan before the Hispanic Leadership Network (“Mitt Romney & Newt Gingrich Attend Hispanic Conservatives Conference”) He would establish a low cost method for employers to verify that an employee was qualified to work in the United States. Deprived of employment, many illegal immigrants would return to their countries of origin. Workers that are here illegally would be given a temporary work permit to an orderly exit. He would also expand the visa program for hospitality and agriculture.

Before proceeding, I have a small confession. Mitt Romney and I share the same religion and we both served missions for the Church of Jesus Christ of Latter-day Saints, Romney in France and I in Argentina. Because of that shared experience, I looked for candidates that were not LDS (Mormons) that I could support but they did not run or dropped out of the race. I now grudgingly and reluctantly support his run for the Republican nomination despite my mission experience. The dynamic nature of our economy and foreign policy distracted potential proselytes from our gospel message. People often approached us, and yes we travel in twos, asking questions like why President Ford or Carter took some action or why the United States spent so much on the NASA rather than giving more international aid. These distractions would explode under a Romney presidency.

I also find Romney’s position on illegal immigration, which I will describe latter, harsh. My opinion is three parts normative and one part positive. First, having lived in Argentina, a relatively prosperous country that was mired in a low grade civil war known as the Dirty War, I understand completely why many wish the peace and security of the United States. Like virtually every other religion, mine teaches that parents have a God given duty to care for their families. For many, illegal immigration not only helps fulfill that mandate, it is the only chance they have to do so successfully. Second, Romney’s policy also fails to explicitly address the problem of families with split nationalities. Mexican parents may have four kids under ten, two who are Mexican citizens and two who are United States citizens. Under Romney’s plan, parents without legal status would return to Mexico and apply for legal status. In the meantime, two of their children would remain in Mexico, receive a bad education for the U.S. workforce and have the legal right to enter the United States and earn welfare benefits when the turn eighteen. The plan to end illegal immigration could slow the growth of the LDS church in Hispanic communities, a very high price to pay for having and LDS president (“Romney's tough line on immigration jars with some Mormons”). Finally, the economic literature does not support the contention that illegal immigration is costly to our country. The opposite is probably correct (“Economists’ on Immigration”).

Romney’s plan could easily become generous to current illegal immigrants while slowing future entrants. The Unites States has a quota of 700,000 for those seeking to immigrate. That number could be raised to two million per year. Grant work visas for five years for the parents of U.S. citizens born prior to January 1, 2012 and give them priority when filing for citizenship from their countries of origin. He already plans to expand work visas; granting a generous number of visas makes economic sense. Vigorously enforce the law. These changes are within the bounds of the policy that Romney has described and would be generous to current illegal workers, clarify their legal status without attracting people to enter illegally to work in the future.
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The Social Cost of Illegal Immigration

Bloggers and economics teachers face a paradox.  We want to convince students and readers that economic ideas are valuable and the best way to grab attention is to use those ideas to analyze the economics of current events.  The best way to lose them is to use economic ideas to come to a conclusion that contradict their prior beliefs.  The intersection of economic analysis and prior beliefs is small; if it were large, there would be no reason to teach economics.

The current debate about illegal immigration illustrates the gulf that often separates the views of economists and everybody else.  The popular debate posits high domestic net costs to illegal immigration and the economic literature finds empirical evidence of net benefits or small net costs.

Arizona, Georgia, Indiana, Oklahoma, Texas and Utah have passed or are considering legislation aimed at reversing the tide of illegal immigration.  The severity of these laws hints at the large costs that backers believe illegal immigration imposes on society.  The new Alabama law, heralded or decried as the toughest yet to be enacted would require public schools to determine the citizenship status of students, force police to detain someone they have stopped for any reason if they believe that person may be an illegal alien and if the person cannot produce documentation.  It would make it a crime to transport or harbor someone who is in the country illegally, and allows government to suspend or revoke the business licenses of a business that knowingly hires an illegal alien.  It also requires businesses to use the E-Verify database to confirm the immigration status of new employees. 

In my last post, “Political Chicken and the Debt Ceiling,” I sided with the Republican position on the debt ceiling negotiations.  In this post, I will take a shot at them.  Republicans claim to support smaller government, a lighter regulatory burden, and constitutional rights.  The anti immigration law is more strongly supported by Republicans than Democrats.  It is increases the size and scope of government, increases regulatory burden of schools and businesses, and limits my first amendment right of freedom of assembly, the right to collectively gather to promote, pursue and defend common interests.  The impact of these laws is the opposite of the claimed position of the Republican party.

A petition to President Bush and the Congress that was signed by 523 economists presents what I believe is the majority opinion.  In part, it reads

Overall, immigration has been a net gain for American citizens, though a modest one in proportion to the size of our 13 trillion-dollar economy. 


Immigrants do not   take American jobs. The American economy can create as many jobs as there are workers willing to work so long as labor markets remain free, flexible and open to all workers on an equal basis.


In recent decades, immigration of low-skilled workers may have lowered the wages of domestic low-skilled workers, but the effect is likely to have been small, with estimates of wage reductions for high-school dropouts ranging from eight percent to as little as zero percent.


While a small percentage of native-born Americans may be harmed by immigration, vastly more Americans benefit from the contributions that immigrants make to our economy, including lower consumer prices. As with trade in goods and services, the gains from immigration outweigh the losses. The effect of all immigration on low-skilled workers is very likely positive as many immigrants bring skills, capital and entrepreneurship to the American economy. 


Legitimate concerns about the impact of immigration on the poorest Americans should not be addressed by penalizing even poorer immigrants. Instead, we should promote policies, such as improving our education system, that enable Americans to be more productive with high-wage skills.

To my knowledge, there is not a competing anti-illegal immigration petition (see David Hedengren, Daniel B. Klein, and Carrie Milton.  “Economist Petitions: Ideology Revealed,” Econ Journal Watch, Volume 7, Number 3, September 2010, pp 288-319).
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Cowen on Immigration

Tyler Cowen presents evidence that immigration has a net positive impact on the economy in “How Immigrants Create More Jobs.” 

Over all, it turns out that the continuing arrival of immigrants to American shores is encouraging business activity here, thereby producing more jobs, according to a new study. Its authors argue that the easier it is to find cheap immigrant labor at home, the less likely that production will relocate offshore.

The study, “Immigration, Offshoring and American Jobs,” was written by two economics professors — Gianmarco I. P. Ottaviano of Bocconi University in Italy and Giovanni Peri of the University of California, Davis — along with Greg C. Wright, a Ph.D. candidate at Davis.

The study notes that when companies move production offshore, they pull away not only low-wage jobs but also many related jobs, which can include high-skilled managers, tech repairmen and others. But hiring immigrants even for low-wage jobs helps keep many kinds of jobs in the United States, the authors say. In fact, when immigration is rising as a share of employment in an economic sector, offshoring tends to be falling, and vice versa, the study found.

In other words, immigrants may be competing more with offshored workers than with other laborers in America.

Cowen also presents evidence that immigration does not cause unemployment. 

We’re all worried about unemployment, but the problem is usually rooted in macroeconomic conditions, not in immigration or offshoring. (According to a Pew study, the number of illegal immigrants from the Caribbean and Latin America fell 22 percent from 2007 to 2009; their departure has not had much effect on the weak United States job market.) Remember, too, that each immigrant consumes products sold here, therefore also helping to create jobs.

When it comes to immigration, positive-sum thinking is too often absent in public discourse these days. Debates on immigration and labor markets reflect some common human cognitive failings — namely, that we are quicker to vilify groups of different “others” than we are to blame impersonal forces.

These results fall into the mainstream of economic thought.  Immigrants, both legal and illegal, are resources.  They expand the production possibilities frontier, what we as a nation can produce.  With a little time for adjustment, markets utilize resources.   
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The Utah Compact

If I had to summarize the economic impact of illegal immigration I would conclude that it is a net benefit to the U.S. economy.  Illegal immigrants are a resource to our economy.  They produce goods and service that native born Americans enjoy.  They pay property taxes, sales taxes, and many pay income and social insurance taxes.  The economic literature is not clear on their net burden on taxes.  They may take out more tax revenue than they pay into the system or they may not.  They lower the wages of low skill workers, but there is evidence that they raise the wages of native born low skill workers.  It is more correct say that they expand goods and service offered within our economy rather than that they take resources from others.   

Illegal immigrants often live in households with American citizens.  Many illegal parents have legal children.  Some parents have legal and illegal children.  How can a compassionate nation divide these families?  It is not even clear how a cost conscious nation should deal with illegal immigration to minimize costs.  Should we deport illegal immigrants and place their children in foster care?  Would it be cheaper to send their American children to Mexico and allow them to return to the United States with little or no education, or knowledge of our country, English, and qualified for benefits of the welfare state?

In Utah, a group of Republican and Democratic politicians, businessmen, and religious leaders have signed a framework for a political settlement of the immigration issue, that I believe would be useful in the national debate (“Community leaders urge moderate approach to immigration reform”).  It has been named the Utah compact.  The Church of Jesus Christ of Latter-Day Saints, and the bishop of the Catholic Diocese of Salt Lake have both endorsed it.  The compact reads (“Official text of Utah Compact declaration on immigration reform”)

FEDERAL SOLUTIONS: Immigration is a federal policy issue between the U.S. government and other countries — not Utah and other countries. We urge Utah's congressional delegation, and others, to lead efforts to strengthen federal laws and protect our national borders. We urge state leaders to adopt reasonable policies addressing immigrants in Utah.

LAW ENFORCEMENT: We respect the rule of law and support law enforcement's professional judgment and discretion. Local law enforcement resources should focus on criminal activities, not civil violations of federal code.

FAMILIES: Strong families are the foundation of successful communities. We oppose policies that unnecessarily separate families. We champion policies that support families and improve the health, education and well-being of all Utah children.

ECONOMY: Utah is best served by a free-market philosophy that maximizes individual freedom and opportunity. We acknowledge the economic role immigrants play as workers and taxpayers. Utah's immigration policies must reaffirm our global reputation as a welcoming and business-friendly state.

A FREE SOCIETY: Immigrants are integrated into communities across Utah. We must adopt a humane approach to this reality, reflecting our unique culture, history and spirit of inclusion. The way we treat immigrants will say more about us as a free society and less about our immigrant neighbors. Utah should always be a place that welcomes people of goodwill.

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Caplan on Immigration

I believe that most economists are mystified by the strong public sentiments against immigration.  Let me be clear that I don’t wish to nit pick with those who favor legal immigration but not illegal immigration.  If you prefer, my comments apply to illegal immigration.  Although I have not seen a survey of economists on this issue, it is my guess that a majority would claim that the cost of immigration is small or that the nation benefits from the additional resource.  Russ Roberts interviewed Bryan Caplan last week on the topic of immigration (“Caplan on Immigration”).  In the interview, Caplan is asked to defend immigration using empirical findings and economic reasoning against six of the main arguments that are used to oppose it.  The arguments are

1.  The U.S. needs restrictions on immigration in order to protect American wages.

2. Restrictions are necessary to protect the American taxpayer from abuse of the welfare state by immigrants.

3.  Restrictions to protect American culture including but not limited to the use of English.

4. Immigrants who do not understand our political system are going to damage our relatively free and prosperous economy by turning the United States into the kind of country they fled.

5. The increase in population in congested areas would harm naturally born citizens.

6.  Immigration increases crime.

After listening to the podcast, read the comments.  Caplan did not convince most of those who took the time to respond to his arguments.  As an economist, I found his arguments persuasive.
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Fukuyama on Immigration

Francis Fukuyama wrote a wonderful piece on immigration, "Immigrants and Crime: Time for a Sensible Debate," for the Wall Street Journal.  It is wonderful because it describes the background and motivation of most illegal immigrants to the United States and because it distinguishes between criminal and more benign economic immigrants and presents many of my own thoughts on the subject. 

But the problem of gangs and drug violence should not be confounded with the behavior of the vast majority of illegal immigrants to the U.S., who by and large are seeking the same thing that every immigrant to America has wanted since the time of the Mayflower: to better their condition and that of their families. They are not criminals in the sense of people who make a living by breaking the law. They would be happy to live legally, but they come from societies in which legal rules were never quite extended to them. They are therefore better described as "informal" rather than "illegal."

Understanding this distinction requires knowing something about the social order in Latin America or, for that matter, in many other developing countries. These societies are often characterized by sharp class distinctions between a relatively small, well-educated elite and a much broader and poorer population.

The rule of law exists in places like Mexico, Colombia and El Salvador; the problem is that access to the legal system tends to be a privilege of the well-to-do. The vast majority of illegal immigrants to the U.S. come from poor rural areas, or shantytowns in large cities, where the state—in the form of courts, government agencies and the like—is often absent. Registering a small business, or seeking help from the police, or negotiating a contract requires money, time and political influence that the poor do not possess. In many Latin American countries, as much as 70%-80% of the population lives and works in the informal sector.

The lack of legal access does not make everyone in these regions criminals. It simply means that they get by as best they can through informal institutions they themselves create. The Peruvian economist Hernando de Soto has written extensively about the lack of formal property rights, not just in his own country but throughout the developing world. The poor do not hold legal title to their homes, despite having lived in them for years, because of the insuperable barriers the system throws up to formal registration. So they squat in their homes, constantly insecure and unable to use their property as collateral.

The poor are entrepreneurial and form businesses like restaurants and bus companies, but they are unlicensed and don't conform to official safety rules. They and everyone else would be much better off if they could be brought into the formal legal system, but it is a dysfunctional political system that prevents that from happening.

I shall adopt Fukuyama's and de Soto's term informal to describe peaceful if illegal immigrants.  Most informal immigrants do not understand our emphasis on the rule of law.  They must view our legal system in much the same way that they view the legal system in their native countries, as systems that only allow them to compete at the margin, given that the margin in the United States is much nicer than the margin in Latin American.  They do understand the proud words of the Declaration of Independence.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

There is a conflict between the Law of God cited in the Declaration of Independence and our own laws governing immigration, a conflict that did not exist until we began limiting immigration in the late eighteenth century.  While this conflict may be inevitable due to our inability to absorb the tsunami of humanity seeking a better life that would inundate our shores if immigration were open to all, this limitation should give us discomfort.  It turns America from a lighthouse to the world to Reagan's shining city upon a hill, a noble example of freedom but not necessarily a refuge from tyranny, or perhaps worse, a club for those fortunate enough to be born within its shores. 

While it may not be in our power to absorb all those informal immigrants seeking their God given rights, we can give them a taste of the rule of law that benefits them and out country.  Fukuyama supports a comprehensive immigration reform, and while I wince at the word comprehensive, I largely agree that reform should include a guest worker program, a path to citizenship for many of the informals, particularly those who were brought here as children.  Limit entry, but make sure that those with legitimate business interests such as farmers and agribusinesses who have relied upon these workers to harvest and transport crops for generations can continue to do so.  Require proof of citizenship or a green card for employment, but don't push the cost of enforcing immigration law on employers.  They should not be made an extension of law enforcement, and frankly, I don't want my employer to acquire policing skills.  Let us maintain our identity as a freedom loving people with a zest for economic opportunity.
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Thoughts on Schumer and Graham's Immigration Reform Outline

Now that health care reform has been signed into law, it appears that comprehensive immigration reform will be the next item on the legislative agenda.  Senators Charles E. Schumer of New York and Lindsey Graham of South Carolina presented an outline of a comprehensive immigration reform bill in "The right way to mend immigration" which was published in the Washington Post and supported by President Obama according to a Washington Times article "Obama backs plan to legalize illegals" written by Stephen Dinan.  Schumer and Graham offer justification for reform.

Our immigration system is badly broken. Although our borders have become far more secure in recent years, too many people seeking illegal entry get through. We have no way to track whether the millions who enter the United States on valid visas each year leave when they are supposed to. And employers are burdened by a complicated system for verifying workers' immigration status.

I am weary of politicians who call for legislation by decrying some part of our economy as "badly broken" and comprehensive legislation to fix these problems.  While the senators do not call their proposal a comprehensive plan, it certainly is.  While the senators correctly observe that the government has difficulty keeping track of people entering the country illegally or overstaying their visas, they do not claim economic damage due to illegal entry.  This damage is harder to find and quantify than many might believe and some researchers find net gains.  For example, Ottaviano and Peri find that the wages of low skilled workers do fall, but that is based on the low wages earned by immigrants.  Low skilled workers born in the experience a 3 to 4% increase in wages ("Rethinking the Gains from Immigration: Theory and Evidence from the U.S.," National Bureau of Economic Research, Working Paper 11672, September 2005.

If illegal immigration does not cause economic or other damage, then the governmental apparatus designed to stop it could be considered an unwarranted expense and intrusion on people's liberty.  The people I refer to are legal citizens who trade with illegal immigrants.  I suppose that I am part of a tiny minority that does not view immigration, particularly illegal immigration as a big problem and if immigration is to be limited rationally, the senators' outline could improve existing laws.  They provide a very broad outline.

Our plan has four pillars: requiring biometric Social Security cards to ensure that illegal workers cannot get jobs; fulfilling and strengthening our commitments on border security and interior enforcement; creating a process for admitting temporary workers; and implementing a tough but fair path to legalization for those already here.

I have a couple of comments on their pillars.  If you wish to limit illegal immigration, some sort of high tech identification will be necessary.  Carrying yet another card is a legal citizen's burden of controlling the border. 

Their plan for stopping illegal immigration does not deal with the problem of anchor babies: foreign parents securing U.S. citizenship for their children by birthing them in the U.S. and then using U.S. law that attempts to keep families intact to secure their own citizenship.  If the senator's plan works at curbing illegal employment, we may find that successfully stopping the parents from gaining employment may be more expensive to taxpayers than allowing them to work illegally.  For example, perhaps the parents will return to Mexico until the child turns eighteen and then return to the U.S.  Their child will have a substandard education, will not speak English, and may not have their parents' drive to succeed.  They will qualify for welfare benefits. 

The four pillars do not separate high skilled workers who wish to work legally in the U.S. from low skilled workers who come illegally, but the rest of their article does make this distinction.  The high skilled workers could certainly be dealt with in an independent, less controversial bill that if more likely to pass.  The economist in me finds it difficult to oppose intelligent, high skilled workers from working in the U.S.  The Grinch in me must point out that if immigration of low skilled workers hurts the wages of American born low skilled workers than the immigration of high skilled workers must have the same impact on the wages high skilled workers. 

Finally, a plan to deal with illegal immigrants should have a path to citizenship.  I am not big on punishment for arriving illegally because I do not believe that the crime is big.  I rate it about like driving ten miles an hour over the limit on the highway and most of us do that or worse on a daily basis.  By coming illegally to the U.S., many guarantee their children better nutrition, health, education and higher standard of living.  While it is illegal behavior, it is also moral behavior. 
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Pew Global Attitudes Project: Mexico

Economics students learn that trade of goods and services benefits trading partners. They generally do not consider models that examine the impact of resource flows such as labor through migration. Our economy draws Mexican immigrants like a giant magnet. With their proximity to our country, and handed down knowledge of family and friends who have immigrated, Mexicans understand that American society is freer of violence, and the need to have political connections to succeed. A Pew Global Attitudes Project titled, "Most Mexicans See Better Life in U.S.," reports interesting but not surprising results.

Facing a variety of national problems -- crime, drugs, corruption, a troubled economy -- Mexicans overwhelmingly are dissatisfied with the direction of their country. With drug-related violence affecting much of Mexico, large majorities describe crime (81%) and illegal drugs (73%) as very big problems, and Mexicans overwhelmingly endorse President Felipe Calderón's tough stance against drug traffickers.

Most believe life is better in the United States. Close to six-in-ten (57%) say that people who move from Mexico enjoy a better life in the U.S., up from 51% in 2007. And the vast majority of those who are in regular contact with friends and relatives living in the U.S. say those friends and relatives have largely achieved their goals.

A substantial minority of Mexicans say that if they had the means and opportunity to go live in the U.S. they would do so, and more than half of those who would migrate if they had the chance say they would do so without authorization.

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Why Illegals Don't Respect Our Laws

On Sunday, a good friend and I began talking about illegal aliens and the law. My friend is very bright, and understands the economic magnet that draws so many to cross our border, but he also has a deep and abiding respect for the legal process established in the constitution and the laws that develop through that process. He believes in the rule of law, the principle that nobody is above the law, and in crossing our border illegally, these people put themselves above the law. What he does not understand is why so many illegal aliens unabashedly demand rights once established within our country.

I have heard the same question voiced by others and I would like to take a crack at answering it. Like many deep questions in life, it reminds me of a conversation between Spock and McCoy in a Star Trek movie. Through a series of movies, Spock dies, but transfers is "katra" the essence of his soul, to McCoy's body. His body is laid to rest on a planet undergoing the rapid evolution to life through the Genesis technology. The process not only creates life on this dead planet, but brings back a Spock that does not have his soul. Our heroes are able to transfer Spock's katra to his body. McCoy asks the obvious question, "What is it like being dead?" Spock answers by telling him that they cannot discuss this question because they do not have a common experience, death, on which to base their discussion.

We do not share a common experience, the rule of law, with most people living in our country illegally. Largely, they come from countries that North, Wallis, and Weingast refer to as a limited access order. The most powerful groups form a dominant coalition that rules the country. It doles out economic benefits to coalition members roughly in proportion to the violence each group could bring to the coalition if not rewarded. Economic benefits are distributed, not earned.

Groups and individuals outside the ruling coalition have resources, and attempt to use them to earn profits or income to better their lives, but their ability to use these resources is limited by the ruling or dominant coalition. The dominant coalition will protect the economic distribution of benefits they establish because disrupting it could plunge the country into something akin to a civil war.

Hernando De Soto wrote an influential book titled, El Otro Sendero, or The Other Path, in which he describes the plight of many Peruvians, most of whom are indigenous, and outside the dominant ruling coalition. They have resources and energy, but the law is against them. The law makes it hard for them to migrate to the cities where there are better economic opportunities, and better access to health care and education. When the book was written, they could not build homes, obtain business licenses, or otherwise legally engage in production or retail trade.

They responded by operating outside the law in informal markets exercising what our founders believed were God given rights of life, liberty (economic and otherwise) and the pursuit of happiness. These illegal activities improved their lives, increasing their economic prosperity, and access to better health care and education for their children. They would like to live within the law, but the law as currently constituted is stacked against them. They would like to change their country through elections, but this is dangerous because it challenges the dominant coalition that limits violence, bringing peace.

When people from these countries cross our borders illegally, their frame of reference is a land of limited access, where the law was designed to punish them. Before they arrive, they know that they will be acting illegally, but for them, it is no different than their current existence. Their law and our law punishes them. They don't understand how our constitution provides opportunity to all citizens operating within the law. It is beyond their experience.

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