The Best Way to Help Haitians Get Out of Poverty?

Let them immigrate to the US:

82 Percent of Haitians above this poverty line are here in the United States.

The Washington Post also has a good article looking at Haitian immigration.  Here are some highlights. (HT Tyler Cowen)

Nearly 55,000 Haitians have been approved for family visas but are on waiting lists to enter because Congress has set limits on how many may come each year, the State Department says…

Elliott Abrams, a deputy national security adviser under President George W. Bush who is now at the Council on Foreign Relations, said that if the United States doubled for the next five years the 25,000 Haitians who have been coming to the United States annually, it would substantially increase the remittances sent back, providing critical help as the nation tries to rebuild. Such help streaming home to families is more reliable and more likely to be spent efficiently than the ebb and flow of foreign aid, he said. Abrams suggested that to satisfy critics of increased immigration, the United States could offset the influx of Haitians by temporarily slowing immigration from elsewhere.

Incentives in Immigration Law

If you make legal immigration too tough, expect more people to opt for the illegal way instead:

From Jeff Jacoby

Those immigrants didn't come here in order to be lawbreakers; they broke a law in order to come here.

If you had a store that was the only place people could go to buy bread, and people had to wait for hours to get to the checkout counter, some ordinarily honest people would end up stealing out of frustration. We need to fix the checkout counter in our immigration store. Right now, the people our system hurts the most are the people who try to get in legally.

Indeed.

Why Immigration Matters

The first six Nobel Prize winners announced this week are U.S. citizens. Four of them were born outside the U.S.

Don't Give Me Your Talented, Your Smart, Your Educated Masses

George Will on immigration:

Two-thirds of doctoral candidates in science and engineering in U.S. universities are foreign-born. But only 140,000 employment-based green cards are available annually, and 1 million educated professionals are waiting -- often five or more years -- for cards. Congress could quickly add a zero to the number available, thereby boosting the U.S. economy and complicating matters for America's competitors.



Suppose a foreign government had a policy of sending workers to America to be trained in a sophisticated and highly remunerative skill at American taxpayers' expense, and then forced these workers to go home and compete against American companies. That is what we are doing because we are too generic in defining the immigrant pool.



Barack Obama and other Democrats are theatrically indignant about U.S. companies that locate operations outside the country. But one reason Microsoft opened a software development center in Vancouver is that Canadian immigration laws allow Microsoft to recruit skilled people it could not retain under U.S. immigration restrictions. Mr. Change We Can Believe In is not advocating the simple change -- that added zero -- and neither is Mr. Straight Talk.

See this cartoon for more.



(HT Jonathan Adler)

Relative vs. Absolute Wealth

(click map for larger view)

David Friedman:

Economists prefer to measure preference by actions rather than words. It occurred to me that we have such evidence for this question. Lots of people choose to migrate from one society to another. If you go from a rich society to a poor society you are likely to substantially increase your relative position, since you will bring with you both wealth and human capital that are high compared to the average in your new home. If you go from a poor society to a rich society, the opposite can be expected.

I don't have data, but my impression is that migration from a poorer to a richer society is much more common than migration the other way. If so, that provides evidence, at least for the alternatives that migrants face, that absolute wealth is more important than relative wealth.

Could it be they are immigrating to richer countries for reasons beyond just wealth? Many other factors correlate with average GPD per person, such as longevity, happiness, rule of law, lack of corruption, overall security, etc. Maybe people are more concerned about the beneifts of living in a wealthy society more than they are being wealthy themselves.

Here is Daniel Kahneman on happiness and wealth. (HT Tyler Cowen) It looks like happiness is far more correlated with the wealth of your country than it is with your individual wealth.

We had thought income effects are small because we were looking within countries. The GDP differences between countries are enormous, and highly predictive of differences in life satisfaction. In a sample of over 130,000 people from 126 countries, the correlation between the life satisfaction of individuals and the GDP of the country in which they live was over .40 – an exceptionally high value in social science.

Humans everywhere, from Norway to Sierra Leone, apparently evaluate their life by a common standard of material prosperity, which changes as GDP increases. The implied conclusion, that citizens of different countries do not adapt to their level of prosperity, flies against everything we thought we knew ten years ago. We have been wrong and now we know it. I suppose this means that there is a science of well-being, even if we are not doing it very well.

Seems like this implies a very strong correlation between happiness and good institutions (good courts, well developed markets, low corruption, etc.). That makes a lot of sense to me.

The USA: More Immigrants Than Anyone and Yet Still Falling Behind?

The Creative Class Exchange on immigration around the world:

The Economist devotes is special report to global immigration. The chart above shows the key flows. Two other key facts.

1. There are an estimated 200 million global migrants world-wide, 3 percent of the world's population.

2. The USA has the largest number of immigrants, but not the largest percentage. Australia does, followed by Switzerland, Canada, Germany, then the USA, Sweden, Ireland, the UK and France (see below).

Could it be, that without even restricting immigration further, the USA is already falling behind. The whole thing is here.

These statistics are interesting and I highly recommend reading The Economist's special report.

While I am in favor of easier immigration to the US, what I do wonder about is that statement that "the USA is already falling behind." By what measure? That sounds more like an alarmist rhetoric than reasoned commentary.

I would argue that the marginal benefit of an immigrant into a populous country like the US is less than that of an immigrant into a less populous country like Australia. The greater population a country has, the more opportunities there are for specialization within the economy, and a greater depth of the domestic market. The US has about 15 times the population of Australia, giving it huge benefits of economies of scale in the domestic market. That same phenomenon explains why New Zealand's economy hasn't done as well as Australia's despite many pro-market reforms. If the benefit of an additional immigrant is less to one country than to another, how can it be said the one that has a lower benefit is "falling behind"?

What I think is a better argument is that immigration usually benefits both the sending and receiving country:

Despite a growing backlash, the boom in migration has been mostly good for both sending and recipient countries, says Adam Roberts (interviewed here).

Easier immigration would benefit the US economy, the immigrants who are moving here, the citizens of the US, and the families of the immigrants who are still back in their country of origin. As I've written before, immigration may be the most effective form of foreign aid. It has many other virtues as well. For all of these reasons, I am for more open immigration policy in the US. I can even come to that conclusion without worrying about America "falling behind".

Here are all of the articles in The Economist's special report on immigration:

• The two-way traffic of migration
• Migration's uneven benefits
• The touchy politics of migration
• Troublesome tougher borders
• Adding up remittances
• Developing countries and migration
• The policies of movement
• The future of migration
• Audio interview
• Sources and acknowledgments

And here are my previous posts on immigration.

Effective Foreign Aid

Daniel Pink:

"Last year migrants from poor countries sent home $300 billion, nearly three times the world's foreign aid budgets combined." (Source: New York Times, 11.22.08)

What's great about this is that this type of aid is far more likely to go directly to people who can best use it to increase their living conditions rather than to propping up corrupt governments who keep the living conditions of those people poor.

Question: Why aren't more people who really want to help the poor of the world fighting for easier immigration?

The Virtues of Immigration

It helps people escape poverty...

If we insist on thinking of development as a matter of national growth, we may well consign most of the bottom billion, and their children and their grandchildren, to unrelenting poverty trapped within their UN-recognised national prisons. Our real moral concern should not be the Central African Republic, but its unfortunate denizens. The best thing for their prospects may simply be to get out--to leave for a place where growth has already commenced. The West's many attempts to jumpstart growth where the world's poorest already reside has yet to work. So why does the international community insist on betting the poor's lives on the gamble that it will, finally, some day?

... and it promotes freedom...

Does globalization create races to the bottom or the top? David Law suspects that in at least one area, the cycle is a virtuous one. In his view, countries now “compete for financial capital and human talent is by offering bundles of rights and freedoms that are attractive to investors and elite workers.” Moreover, he suggests that “states bid for elite workers by offering both pecuniary and non-pecuniary inducements that include more or less generous bundles of rights and freedoms. Countries that do not boast an attractive bundle of this kind must compensate by offering what this article calls a freedom premium, which amounts to a competitive disadvantage in the global market for human talent.”

... but Lou Dobbs will have none of it!

Importing Poverty

Robert Samuelson has a great article explaining how immigration explains the persistence of poverty levels in the US:

The standard story is that poverty is stuck; superficially, the statistics support that. The poverty rate measures the share of Americans below the official poverty line, which in 2006 was $20,614 for a four-person household. Last year, the poverty rate was 12.3 percent, down slightly from 12.6 percent in 2005 but higher than the recent low, 11.3 percent in 2000. It was also higher than the 11.8 percent average for the 1970s. So the conventional wisdom seems amply corroborated.

It isn't. Look again at the numbers. In 2006, there were 36.5 million people in poverty. That's the figure that translates into the 12.3 percent poverty rate. In 1990, the population was smaller, and there were 33.6 million people in poverty, a rate of 13.5 percent. The increase from 1990 to 2006 was 2.9 million people (36.5 million minus 33.6 million). Hispanics accounted for all of the gain.

Consider: From 1990 to 2006, the number of poor Hispanics increased 3.2 million, from 6 million to 9.2 million. Meanwhile, the number of non-Hispanic whites in poverty fell from 16.6 million (poverty rate: 8.8 percent) in 1990 to 16 million (8.2 percent) in 2006. Among blacks, there was a decline from 9.8 million in 1990 (poverty rate: 31.9 percent) to 9 million (24.3 percent) in 2006. White and black poverty has risen somewhat since 2000 but is down over longer periods.

Greg Mankiw notes:

Of course, many of these poor immigrants are nonetheless richer than they were in their country of origin.

Great point. Mankiw also points out that immigration changes the population distribution in the US and affects statistics like median household income.

Bottom line: Improvements in poverty levels and increasing incomes in the US are typically under-reported and misrepresented because they are skewed by data that includes recent immigrant populations. Factoring this data out shows a much truer (and optimistic) outlook for improvements in American standards of living.

(HT Cafe Hayek)

Lou Dobs Pretends To Be An Economist

Lou Dobbs gets angry at economists and then pretends to be one. He calls GMU Prof Alex Tabarrok an 'idiot' and then insists he has a greater understanding of economics than these 500 economists who signed a letter in support of immigration (including several Nobel Prize winners).



Dobbs would really benefit by sitting down with a good econ textbook and understanding the issues before insulting an entire profession. I am truly shocked by his behavior in this video and think he owes many economists a sincere apology. He could also benefit from a strong dose of humility and respect for others.

Regardless of where you stand on the immigration issue, I think you'll agree that Dobbs' comments were truly unprofessional in the worst sort of way.

The Persistence of Poverty

Tyler Cowen reviews The Persistence of Poverty:

Poor enough people will accept risk in the downward direction rather than smoothing consumption, so they buy lots of lottery tickets. They also commit more crime, so they can have at least some joyous times, and they take lots of "stupid" chances. Yet the poor are not irrational or necessarily dysfunctional in terms of procedural rationality, but rather they are optimizing given constraints. They are taking the Friedman-Savage model very very seriously.

"Getting tough" with the poor through policy is more likely to backfire than succeed, as it just encourages more mean-reducing, risk-taking behavior. At some level the marginal utility of consumption for the poor fits the standard model, so income effects will more likely bring normal behavior than will substitution effects. That's one reason why the EITC works relatively well.

The more the poor regard themselves as lagging the rich (rather than doing better than, say, their peers back home in Gujarat), the more stupid risks they will take. That's why poor immigrants are more value-maximizing than the poor that have lived in America a long time and adapted to American norms and expectations. The immigrants don't regard their burdens as insuperable and they are on standard downward-sloping marginal utility curves.

Read the whole thing.

America Can't Afford to Lose Its Common Language

Peggy Noonan:

...there's something odd about the English question. It feels old-fashioned. Because we all know America has an official language, and a national language, and that it is English. In France they speak French, and in China they speak Chinese. In Canada they have two national languages, but that's one reason Canada often seems silly. They don't even know what language they dream in.

The real question, ultimately, is whether America wants to go that route. Should we allow America devolve into a nation of two official languages--in this case, following recent demographic trends and realities, English and Spanish?

We've never done that in more than 200 years. It would be radical, and destructive, to do it now.

We speak English here. It's a great language, luckily, a rich one. It's how we do government and business. It's the language of the official life, the outer life, in America. As for the inner life of America, the language of the family, it would be just as odd to change longtime tradition there, which has always been: Anything goes. You speak what you came over speaking, and you learn the new language. Italian immigrants knew two languages, English and Italian. They enriched the first with the second--this was a great gift to all of us--and wound up with greater opportunities for personal communication to boot. Talk about win-win. And so with every group, from every place.

But in a deeper sense, we should never consider devolving from one national language down into two, or three, because if we do we won't understand each other. And we're confused enough as it is.

Legitimizing the Debate on Illegal Immigration

Don Boudreaux on immigration:

There is a legitimate debate over how open America's borders should be. But that debate today is far too soiled by those persons who think that merely calling "illegal" immigrants "criminals" settles the matter. It does not. "Illegal" immigrants are "criminals" only because government policy declares them to be -- in the same way that persons openly practicing Christianity or Judaism in Soviet Russia were "criminals" only because government policy declared them to be.

The contours and specifics of this policy are precisely what is at issue in the debate over how widely open U.S. borders ought to be. This debate should be on the economics and the national-security issues raised by immigration; it should not be confused by the confusing (and often self-serving) application of the term "criminal" to persons who come to America without Uncle Sam's permission -- permission that is very difficult to get.

What Statistics Tells Us

Don Boudreaux with some great commentary on interpreting statistics:

The same problem with averages arises when discussing average wage rates. The average wage rate can fall even though everyone's wages rise. Here's how. Suppose that America's average wage rate is now $18 per hour. Now suppose that many low-skilled immigrants arrive and find employment here at wages higher than they could earn in their home countries. Possessing lower-than-average skills means that the wages these immigrant workers earn will likely be lower than the U.S. average -- say $10 per hour.

America's average wage rate will be pulled down even though no individual's wages fall. Indeed, it is possible for every American's wages to rise and the average still fall.

Let's be clear: A change in an average might be evidence of changes in the fortunes of the individuals who compose the group for which the average is calculated. But it need not be so.

Statistics seem like straightforward, unambiguous facts; they're not. Care is required not only in their gathering but also in your interpretation of them.

(Hattip Cafe Hayek)

An Economic Agenda For the Future

Today on Marginal Revolution, GMU Professor Tyler Cowen writes:

I was asked by US News and World Report to write a short set of policy proposals, and also handicap (ha!) the chances of them passing. Here is a contrasting list from Jacob Hacker. Here is a 2004 post I wrote on the same topic.

Here's what he proposes:

1) Institute means-testing for Medicare. "The graying of America threatens to bankrupt our national finances, mostly through forthcoming Medicare expenditures. Medicare should be a welfare program for the needy, not a source of comprehensive coverage for wealthy old people."

2) Eliminate all farm subsidies, quotas, and price supports. Eliminate all tariffs. Eliminate all budget earmarks. Eliminate all corporate welfare. "No, these are not the 'big fish' in the budget, but we need to take a stand against the totally outrageous."

3) Take in more high-skilled immigrants, and make them legal. "This is a win-win situation, and we are turning our back on it."

4) Phase out all forms of capital income taxation, including the corporate income tax, and replace them with a carbon tax, including a gasoline tax. "Savings and investment boost economic growth, but when it comes to energy, global warming threatens as a major problem and our dependence on Middle Eastern oil damages our foreign policy."

5) Institute full-scale experiments with school vouchers. "Competition is a needed tonic for many of America's worst schools; in any case, many simply cannot get worse. Make sure that the money is attached to the student, not to the school."

Looks like a great list to me! As I recently mentioned in this post, I especially like number five.

Update -- Arnold Kling shares his list:

1. Solve the entitlement problem at the stroke of a pen by raising the age of eligibility.

2. Give school vouchers a real try.

3. Allow some states to experiment with radical deregulation of health care. I would like to see a state try letting anyone supply health care services, but with full disclosure of the supplier's qualifications or lack thereof.

4. Auction spectrum in a way that allows the owners to allocate it to its most valuable use, which I suspect is not any form of over-the-air television.

5. Try a pilot program that substitutes prizes for patents as incentives to develop pharmaceuticals.

Kling's idea for pharmaceuticals sounds very intriguing...

Making Babies!

HELP!!! Babies wanted (emphasis mine):

---

In his 2004 book, "The Empty Cradle: How Falling Birthrates Threaten World Prosperity and What to Do About It," Phillip Longman exploded one of the planet's most enduring modern myths. He demonstrated that population growth is not the threat that it has been made out to be and that population decline is the real challenge ahead of us.

By the time of the book's publication, many developed nations were already struggling to address the obvious result of falling fertility: What to do when so few babies are being born that eventually there won't be enough workers to sustain your country's economy, let alone support the elderly?

Falling birthrates are a concern for more than just the most prosperous countries, too. Along with all of Europe, Japan and Canada, Mr. Longman notes, China and parts of the Middle East are experiencing population loss. Russia is in one of the most dramatic demographic tailspins. Last month Russian President Vladimir Putin announced that the government will pay mothers about $9,200 to have a second child.

What a change from only a few decades ago, when conventional wisdom had it that the only route to prosperity was smaller families. In 1968, biologist Paul Ehrlich famously predicted that hundreds of millions of people would starve to death in the 1970s and '80s thanks to overpopulation. Not only have Mr. Ehrlich's proposals not been borne out, but there is no evidence that overpopulation has ever been at the root of poverty. As economist Thomas Sowell has noted, there is no country that had a higher standard of living when its population was half of what it is today.

Oddly, economic opportunity turns out to be an astoundingly effective form of birth control. When people don't need to use children as worker bees in a desperate struggle to survive, and--more important--when they can imagine a secure future for their offspring, they tend to plan families with fewer children in the hope of showering each with more advantages.

---

Here's some good news for the US:

---

Thanks in part to immigration, the U.S. is not facing a population deficit. Other factors are at work, too. This country has a high rate of religious belief, which usually corresponds to a higher birthrate, as well as a general sense of optimism. On the practical side, the U.S. has a tax regime that is not too crushing and, at present at least, a job market ready to absorb the next generation. All these things encourage parents to indulge a natural desire to raise children.

With its cradle still full, the U.S. is in effect seconding Mr. Longman's theme. Our thriving economy is testimony to the fact that human beings, so long demonized as the ultimate threat to the planet, are its most indispensable resource.

---

Interestingly, I am friends with eight couples (all Americans and all religious) who have "buns in the oven". One couple who is currently expecting their first, four couples expecting their second, two expecting their third, and yet another thier fourth! All doing their part to help make America great! "Uncle Brian" couldn't be more excited!

Also, see my previous post on "Be Fruitful and Multiply".