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Archive for August, 2014

Government as a Unicorn

August 22, 2014 Leave a comment

I recently saw an amusing and informative article by Michael Munger, an economist at Duke University (the article is here). The article concerns how one can explain the behavior of people who advocate more government while, at the same time, expressing disgust with many government policies, politicians, and so on.

Professor Munger has observed academic economists regularly express their disapproval of government actions and then, once they observe what they perceive to be poor policies, advocate more government to fix the perceived problems. This is logically inconsistent in the extreme and he puzzled over this (as I and other colleagues have done over the years) and finally realized that those who advocate more government, after expressing disapproval of government, expect a government that does not exist to solve problems they see. Thus Professor Munger sees his colleagues as wishing for a unicorn to exist. They want government to be what they imagine that it should be, not the one that we have.

For some recent evidence supporting this detachment from reality, consider a liberal economist who recently wrote that we should want the government to narrow the income distribution because this will improve the “supply-side” of the economy. How you ask? Well doing so, which I presume will follow an increase in tax rates paid by the rich however defined, will lead to some programs, programs unspecified by the liberal economist engaging in this advocacy, that will improve the quality of the workforce, thus raising productivity in the economy. So the same government that brought us healthcare.gov, the site so successful that people could not use it, will then turn around and successfully design programs to raise the human capital of the impoverished. To me, this “supply-side” story reveals a staggering ignorance of the reality of government.

I have been an academic economist for many years and I can say, based upon my own observations over the years, that Michael Munger has it right. Many academics are oblivious to the real world that surrounds them.

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Open Borders

August 12, 2014 Leave a comment

I have regularly seen statements in the press suggesting that many writers in the media think that we should have open borders, an immigration policy that literally allows anyone to enter the U.S. Indeed there are people who correctly point out that the U.S. had open borders in the past and they use this fact to argue that this evidence implies that we should do this now. The fact that we did this in the past is irrelevant for the following reasons.

In the nineteenth century, my ancestors came to the U.S. knowing that they would need to fend for themselves once they got here. There was no welfare that they would get and the state was not going to provide health care without requiring payment. Many immigrants did not attend public schools or did so for only a short time. In short, coming to the U.S. meant that the individual was on his or her own to survive once in the U.S. Compare that to the situation now.

Illegal aliens can now get health care, school access, food stamps, and other benefits once they are in the U.S. How does the existence of these subsidies affect the characteristics of the the potential immigrants to the U.S.?  Clearly we will attract some people willing to get on the public dole once they are in the U.S. Those people will ultimately draw public resources, raising government deficits or requiring increases in marginal tax rates. The latter reduce Potential GDP. So the existence of the welfare state makes past immigration policies irrelevant to what would happen now if the U.S. had open borders. More generally, why do we want people to come here who only have an interest in getting on the government dole?

Once again, policy design requires thinking about economic incentives. Open borders is a bad idea because of the incentives that it creates.

 

Categories: Immigration Policy
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