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Posts Tagged ‘Migration’

When trying to educate people about the superiority of free enterprise over statism, I generally show them long-run data comparing market-oriented jurisdictions with those that have state-driven economies. Here are some of my favorite examples.

It’s my hope that when readers look at these comparisons, they will recognize the value of economic freedom because it is very obvious that ordinary people become far more prosperous when government is small.

But there’s also another way of determining which approach is superior. Just look and see what happens when people are allowed to vote with their feet. Or, just as important, look at places where people are not allowed to vote with their feet.

The Berlin Wall and the Iron Curtain, for instance, existed to prevent people from escaping the horror of Soviet communism. Likewise, people in North Korea and Cuba don’t have the freedom to emigrate.

Totalitarian governments realize that their citizens would escape en masse if they had the chance.

In free countries, by contrast, there’s no need to imprison people.

And that’s why this Imgur image is not only funny, but also a good summary of population shifts around the world.

I’ll definitely have to add this to my collection of libertarian humor.

To be sure, not everybody who moves from a statist hellhole to a prosperous capitalist society is motivated by an appreciation for liberty. They may simply want a better life and have no idea that national prosperity is a function of economic liberty.

And they may not even want to earn a better life. They may simply want to get on the gravy train of government handouts (which is why I’m not a fan of America’s dependency-inducing refugee program).

But I’m digressing. The simple moral of today’s story is that decent societies don’t have to imprison their citizens. That only happens in place where government is not only big, but also evil.

P.S. Unlike some libertarians, I like borders.

P.P.S. People also vote with their feet inside nations, and the lesson to be learned is that smaller governments attract more people.

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Whenever mass shootings occur, some people quickly jump to conclusions before there’s any evidence.

Folks on the right are occasionally guilty of immediately assuming Islamic terrorism, which is somewhat understandable. Folks on the left, meanwhile, are sometimes guilty of instinctively assuming Tea Party-inspired violence (I’m not joking).

I confess that I’m prone to do something similar. Whenever there is a terrorist attack, I automatically wonder if we’ll find out welfare payments and other goodies from the government helped subsidize the evil actions.

In my defense, there’s a reason I think this way. Whether we’re talking about Jihadi John or the Tsarnaev brothers, there are lots of examples of dirtbag terrorists getting handouts from taxpayers.

It happens a lot in other nations. And it’s now happening with disturbing frequency in the United States.

It’s even gotten to the point where I’ve created a special terror wing in the Moocher Hall of Fame. And, as more evidence accumulates, the medieval savage who drove a truck through a Christmas market in Germany may be eligible for membership.

Here’s some of what we know, as reported by the Daily Caller.

Berlin truck attack terrorist Anis Amri used several different identities to claim multiple welfare checks simultaneously in different cities around Germany. Amri, the Tunisian refugee who killed 12 and injured 48 at a Christmas market in Berlin Dec. 19… The investigation was closed in November because Amri’s whereabouts were unknown. …Welfare is a common way for terrorists to fund their activities in Europe.

The U.K.-based Express reveals that the terrorist was very proficient at ripping off taxpayers before deciding to kill them.

Despite being shot dead in Italy just days after the attack, the Tunisian refugee is now under investigation for fraud after conning German authorities into handing over cash to fund his terror exploits. After travelling from Tunisia to Europe in 2011, he used up to eight different aliases and several different nationalities – at times even claiming to be from Egypt or Lebanon. Reports claim Amri carried several different false identity documents and used aliases to collect welfare in cities across Germany.

The story also has details on how welfare payments subsidized previous terrorist actions.

Welfare fraud was key to funding terror attacks in Brussels in March and in Paris last year. Terrorists collected around £45,000 in benefits which they used to pay for the brutal attacks in the major European cities. …Meanwhile, Danish authorities came under fire recently after it emerged 36 Islamic State fighters continued to receive benefits for months after leaving the country to join other members of the brutal regime in Syria and Iraq.

And while I’m not sure RT is a legitimate news source, it says Amri used 14 identities for mooching.

Anis Amri, the Tunisian man accused of driving a truck into a crowd of Christmas market shoppers in Berlin, used at least 14 different identities, a German police chief said. …Among other things, this allowed the man to receive social benefits under different names in different municipalities, the police chief said.

A close associate (and suspected co-conspirator) of Amri also was mooching off the system according to news reports.

A spokeswoman for the office of Germany’s chief prosecutor on Wednesday said authorities have taken a second Tunisian suspect into custody following raids in Berlin on Tuesday. …However, she added that there was insufficient evidence to charge the suspect. In a separate statement, the federal prosecutor’s office announced the man had been charged with committing social welfare fraud and would remain in custody. …the suspect had previously been detained on suspicion of supplying explosives intended for a prospective attack in Dusseldorf. …The 26-year-old suspect allegedly had dinner with Amri at a restaurant the night before the attack, according to Köhler. The suspect allegedly met Amri in late 2015. “Süddeutsche Zeitung” reported that the two men traveled together from Italy to Germany that year.

Gee, sounds like a model citizen. Merkel must be proud of her caring and sharing welfare state.

Last but not least, a story in the U.K.-based Telegraph has some added details on the sordid history of welfare-funded terrorism in Europe.

The jihadists suspected of carrying out the bomb and gun attacks in Paris and Brussels used British benefits payments to fund international terrorism, a court has heard. …Zakaria Bouffassil, 26, from Birmingham is accused of handing over the cash which had been withdrawn from the bank account of Anouar Haddouchi, a Belgian national, who had been claiming benefits while living in the West Midlands with his wife. Kingston Crown Court heard how thousands of pounds of taxpayers’ money continued to be paid into Haddouchi’s bank account, even after he had left Britain for Syria and had begun fighting for Islamic State in Iraq and Levant (Isil). …On the opening day of their trial, jurors heard how some of the most notorious and wanted terrorists in Europe had used British taxpayers’ money to fund their activities in Syria and elsewhere.

Though I suppose I shouldn’t say “sordid history.” This is more like societal suicide.

After all, we’re not talking about welfare payments for a tiny fraction of terrorists. It really is a theme.

I linked to some examples above, and if you want more evidence, click here, here, here, here, and here.

By the way, I’m not claiming that welfare causes terrorism. Though I do wonder if Mickey Kaus has a point when he does make that link.

…extreme anti-social terrorist ideologies (radical Islam, in particular) seem to breed in “oppositional” cultures supported by various government welfare benefits. …The social logic is simple: Ethnic differences make it easy for those outside of, for example, French Arab neighborhoods to discriminate against those inside, and easy for those inside to resent the mainstream culture around them. Meanwhile, relatively generous welfare benefits enable those in the ethnic ghetto to stay there, stay unemployed, and seethe. Without government subsidies, they would have to overcome the prejudice against them and integrate into the mainstream working culture. Work, in this sense, is anti-terrorist medicine.

I don’t particularly like government-provided welfare of any kind, but I definitely think there should be strict rules against handouts for immigrants. And if that makes them less susceptible to terrorist ideologies, that’s a big fringe benefit.

P.S. It goes without saying that politicians aren’t trying to subsidize terrorism. It’s just a byproduct of bad policy. They do, however, explicitly and deliberately subsidize terrorism insurance for big companies. A rather unique example of corporate welfare.

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There’s a somewhat famous quote from Adam Smith (“there is a great deal of ruin in a nation“) about the ability of a country to survive and withstand lots of bad public policy. I’ve tried to get across the same point by explaining that you don’t need perfect policy, or even good policy. A nation can enjoy a bit of growth so long as policy is merely adequate. Just give the private sector some “breathing room,” I’ve argued.

Growth will be weaker with bad policy, of course, but if a nation already is relatively rich, then perhaps voters don’t really care.

But there’s a catch. If you add demographic change to the equation, then bad policy can be a recipe for crisis rather than slow growth. This is one of the reasons why I’m worried about the long-run outlook for Europe, with particular concern about Eastern Europe (by the way, we also have to worry in America).

Welfare State Wagon CartoonsSimply stated, you have to pay attention to the ratio of producers to consumers. And that’s why demographics is important. Falling birthrates and increasing lifespans will wreak havoc with Europe’s tax-and-transfer welfare states.

But there’s another form of demographic change that also can have a big impact. Migration patterns can alter the economic vitality of a jurisdiction. I’ve written about the exodus of French entrepreneurs who move to other countries with better tax systems, and the same thing happens with migration between American states.

And you probably won’t be surprised to learn that Illinois is usually on the losing end.

The Wall Street Journal opines on the state’s grim outlook.

…taxpayers are fleeing the Land of Lincoln in record numbers. According to the Census Bureau, Illinois now leads the nation for the steepest population decline. Between July 2015 and July 2016, Illinois lost some 114,000 people in net migration to other states, with total population decline of 37,508 (including births and deaths). For the third year in a row it was the only state to have lost population among the nine in its Great Lakes and Mid-America region.

But what’s really important, the WSJ explains, is that Illinois is losing people who are net producers and contributors.

…the average person moving out of the state earns some $20,000 more than the average person moving in. According to IRS data for tax year 2014 (filed in 2015), the average income of the taxpayer leaving Illinois was $76,824 while the average income of the new arrival was $56,689. That gap is widening and the differential can be traced to policy decisions as the state staggers under pension debt and an entrenched Democratic-public union machine in Springfield. In an effort to cover growing debt, in January 2011 state lawmakers raised the personal income tax rate to 5% from 3% and the corporate income tax to 9.5% from 7.3%. …The exodus accelerated to 73,500 from July 2011 to July 2012, 67,300 in 2012-2013, 95,000 in 2013-2014, 105,000 in 2014-2015 and 114,000 this year.

The class-warfare tax hike in 2011 was a terrible signal to investors and entrepreneurs.

Illinois already was losing both taxpayers and taxable income during the first decade of the century and the tax increase accelerated the process.

And keep in mind that the state also has a gigantic unfunded liability because of absurd promises of lavish pensions and fringe benefits for state and local government employees.

It’s almost as if the politicians in Springfield want to make the state unattractive.

Though the situation isn’t totally hopeless. Voters elected an anti-tax governor in 2014 and there’s a possibility that the destructive tax increase of 2011 won’t be renewed.

The Wall Street Journal makes a very wise recommendation to the Governor.

Democrats are trying to shake Mr. Rauner down for a repeat. He needs to hold firm to stop the state’s population exodus.

Needless to say, it would be a good idea to let the tax hike expire. That being said, that simply gets the state back to where it was in 2010, which wasn’t exactly a strong position.

The bottom line is that Illinois may have passed the tipping point and entered a death spiral. Sort of akin to being the Greece of America.

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While the overall issue of immigration is highly controversial and emotional, I’ve explained before that everyone should be able to agree that it’s a very good idea to bring in people who can be expected to increase per-capita economic output.

The good news is that we have some policies designed to make this happen, including the H-1B visa for skilled workers and the EB-5 visa for job-creating investors. And if the data on median income for certain immigrant groups is any indication, we’re getting some good results.

Today, motivated in part by the fact that I’ll be participating next month in a conference in London on the topic of “economic citizenship” and therefore having to prepare for that discussion,  let’s take a closer look at the EB-5 policy and why it’s a smart approach (by the way, I’m allowed to share a few discounted registrations since I’m a speaker, so contact me if you’re interested in the London event).

To put things in context, we’ll begin by reviewing a four-author study published by the National Bureau of Economic Research that looks at the growing effort by many nations to attract highly productive and capable immigrants.

Highly skilled workers play a central and starring role in today’s knowledge economy. Talented individuals make exceptional direct contributions—including breakthrough innovations and scientific discoveries—and coordinate and guide the actions of many others, propelling the knowledge frontier and spurring economic growth. In this process, the mobility of skilled workers becomes critical to enhancing productivity. …In the 2013 World Population Policies report, 40 percent of countries reported policies to raise immigration of high-skilled workers, a large increase from 22 percent in 2005. …For recipient countries, high-skilled immigration is often linked to clusters of technology and knowledge production that are certainly important for local economies and are plausibly important at the national level. …When it comes to talented foreigners, a number of countries…implement recruiting programs. …Canada has been very active in targeting skilled migrants who are denied or frustrated by the H-1B visa system in the United States, even taking out ads on billboards in the United States to attract such migrants.

By the way, I can’t resist observing that the authors recognize that highly talented (and therefore highly compensated) people are very important for economic growth. Based on the tax policies they advocate, that’s something politicians such as Hillary Clinton have a hard time understanding. Heck, upper-income taxpayers are the ones who finance the lion’s share of big government, so you’d think leftist politicians would be slapping them on their backs rather than across their faces.

But I digress. Let’s look at what the study says about migration by those most capable of producing growth.

Observed migration flows are the result of a complex tangle of multinational firms and other employers pursuing scarce talent, governments and other gatekeepers trying to manage these flows with policies, and individuals seeking their best options given the constraints imposed upon them. …The number of migrants with a tertiary degree rose nearly 130 percent from 1990 to 2010, while low skilled (primary educated) migrants increased by only 40 percent during that time. A pattern is emerging in which these high-skilled migrants are departing from a broader range of countries and heading to a narrower range of countries—in particular, the United States, the United Kingdom, Canada, and Australia. …More than half of the high-skilled technology workers and entrepreneurs in Silicon Valley are foreign-born. …host countries may end up with high concentrations of high-skilled immigrants in particular occupations. For example, immigrants account for some 57 percent of scientists residing in Switzerland, 45 percent in Australia, and 38 percent in the United States (Franzoni et al. 2012). In the United States, 27 percent of all physicians and surgeons and over 35 percent of current medical residents were foreign born in 2010. Immigrants also accounted for over 35 percent of recent enrollments in STEM fields, with very high proportions in specific areas like Electrical Engineering (70 percent), Computer Science (63 percent) and Economics (55 percent)… The global migration of inventors and the resulting concentration in a handful of countries have been particularly well documented. …the global migration rate of inventors in 2000 stood at 8.6 percent, at least 50 percent greater in share terms than the average for high-skilled workers as a whole. Figure 4 builds on WIPO global patent filings from 2001-2010. The United States has received an enormous net surplus of inventors from abroad.

The authors then consider the policies that different nations adopt in their search for GDP-enhancing immigrants.

…we then review the “gatekeepers” for global talent flows. At the government level, we compare the points-based skilled migration regimes as historically implemented by Canada and Australia with the employment-based policies used in the United States through mechanisms like the H-1B visa program. …The exceptional rise in the number of high-skilled migrants to OECD countries is the result of several forces, including increased efforts to attract them by policymakers as they recognize the central role of human capital in economic growth, positive spillovers generated by skill agglomeration, declines in transportation and communication costs, and rising pursuit of foreign education by young people. Among the resulting effects are the doubling of the share of the tertiary-educated in the labor force and fierce competition among countries hoping to attract talent. …One can explain certain aspects of current high-skilled migration patterns using this model. For example, the United States has a very wide earnings distribution and low tax levels and progressivity, especially compared to most source countries, including many high-income European countries. As a result, we can see why the United States would attract more high-skilled migrants…relative to other high-income countries.

By the way, I can’t resist making one minor correction. While we generally have lower taxes than other developed nations, we actually have a very “progressive” tax system. But US-style progressivity is the result of very low taxes on lower- and middle-income workers (no value-added tax, for instance), not unusually steep taxes on higher-income workers.

Returning to our main topic , the authors explain that developed nations either use a points-based system or an employment-based system when seeking to facilitate more high-skilled immigration.

Here’s how the the points-based system works.

Canada and Australia are prominent examples of countries that implement points-based systems for skilled migration. These programs select individuals based upon their observable education, language skills, work experience, and existing employment arrangements. …In the Canadian example, migrants need to collect 67 points across six categories. In terms of education, for example, 15 points are awarded for one-year post-secondary diploma, trade certificate or apprenticeship, compared to 25 for a doctorate degree. With regards work experience, six or more years of applicable experience receive 15 points, compared to 9 points for just one year of experience.

And here’s information on the employment-based approach, with the US being an obvious example.

The United States is the most cited example of a country that uses an employer-driven program for highskilled immigration, with the H-1B and L1 visas as primary categories (Kerr et al. 2015a). The H-1B visa allows US companies to temporarily employ skilled foreigners in “specialty occupations,” defined to be those demanding application of specialized knowledge like engineering or accounting. …Virtually all H-1B holders have a bachelor’s degree or higher and about 70% of the visas in recent years went to STEM-related occupations. India is by far the largest source country, accounting for about two-thirds of H-1B recipients in recent years. …most real-world regimes combine different features of points-based and employment-driven systems.

But the study notes that America also has a special system for bringing in ostensible superstars. Sort of a points system for the super talented.

Superstar talent rarely competes for H-1B visas, for example, but instead gains direct access to the United States through O1 temporary visas for extraordinary ability and direct green card applications of the EB-1 level for those with even more exceptional talent. …In effect, the US operates a points system for individuals with truly exceptional talents such as Nobel Prize winners, superstar athletes and musicians.

Now let’s turn the EB-5 program, which is another way that the United States seeks to attract those capable of making big economic contributions.

In part because the natural inefficiency of government creates opportunities for corruption in implementation, the EB-5 program has become very controversial. Some lawmakers even want the entire program to lapse when its authorization expires in December.

At the risk of understatement, I hope they don’t throw the baby out with the bathwater.

The Brookings Institution notes that Senators Chuck Grassley (R-IA) and Patrick Leahy (D-VT) want to impose stricter rules and micro-manage how the investment occurs.

It also raises the minimum investment amount to $800,000 within a [targeted employment area] and $1.2 million otherwise. Most important for reaching the program’s economic development goals, however, are the bill’s new rules on defining TEAs. …The bill would revise the TEA definition to include rural areas, closed military bases, or single census tracts within metro areas with an unemployment rate at 150 percent of the national average. To further increase the effect of EB-5 financing, at least 50 percent of the job creation would have to be within the metro area, or within the county in which a rural TEA is located.

The business community doesn’t object to some stricter standards, as reported by The Hill, but wants the program to remain and wants it made permanent.

A coalition of business groups is pushing Congress to permanently renew a controversial investor visa program before it expires in September. …In a letter shared with The Hill on Thursday, those groups called on lawmakers to renew the EB-5 investor visa program with bolstered security and anti-fraud checks, adjustments to highly criticized investment incentives and streamlined visa processing. “Congress must not let this important job-creating program lapse, in large measure because of the immediate negative consequences to U.S. businesses and projects counting on EB-5 investment to create jobs for Americans,” wrote the groups to the Senate and House Judiciary committees. …The EB-5 program is responsible for more than $15 billion in investment and 100,000 jobs between 2005 and 2010, the coalition says.

Ike Brannon, writing for the Weekly Standard, worries that politicians will undermine the positive impact of the program with some back-door central planning.

That EB-5 program has succeeded at its intended purpose is not in dispute: A Brookings Institution study estimated that the program has created nearly 100,000 jobs along with over $5 billion of new investment since its inception. The current EB-5 program technically consists of two different pieces: The first is the original EB-5 visa program, which Congress enacted in 1990. Its intent was to help American business compete for foreign investment with countries like Canada and Australia, which had similar investor programs in place. …The overriding intent of the program has always been about job creation, anywhere and everywhere. Senator Paul Simon, a sponsor of the original EB-5 program, took care to emphasize that its purpose was first and foremost to attract entrepreneurs and spur job creation, noting that “neither the Senate nor the House bill established any sort of criteria about the type of business investment…As long as the employment goal is met, it is unnecessary to needlessly regulate the type of business or the character of the investment.”

But politicians love the “needlessly regulate,” so the EB-5 system has lots of red tape and Ike fears it may get even more.

Congress nonetheless attempted to spur some sort of geographic balance-cum-urban development with the creation of Target Employment Areas [TEAs], which consist of areas with high unemployment rates or rural areas outside the boundary of any city or town with a population over 20,000. In a TEA, the necessary investment need only be $500,000, so long as it creates the requisite number of jobs. …The problem with a federal top-down approach of this sort is that such a constraint could limit the efficacy of the program. …imposing a new rule that restricts how states designate Targeted Employment Areas will only make EB-5 more of a political football than it already is. Creating a welter of restrictions about where such investment can and cannot go would likely dampen the economic impact of the program.

A columnist for Forbes explains why the program should continue.

The EB-5 immigration visa may be the best immigration program the U.S. has to offer. Foreign investors…are putting up a minimum of $500,000 to renew and rebuild rundown urban areas and create jobs. It’s a legal way in for the kind of immigrant, a fortunate one, that tends to contribute to the neighborhood by bringing in money and jobs. …“EB-5 has economic benefits that doesn’t stop at the five hundred thousand dollars they need to invest to participate,” says Julian Montero, a partner in the Miami law office of Arnstein & Lehr. “It’s just the beginning of a more significant investment that will be made by these families when the come here. They’re going to private schools. They’re making good income. They’re paying taxes. And most of them start other businesses once here.” …The EB-5 has become a way for developers to attract foreign capital at low, project finance-style structured interest rates because the people giving the money are getting a prize: the right to live, work and study in the United States.

Perhaps most notably, even the International Monetary Fund recognizes the advantages of this type of program.

…economic residency programs were recently launched across a wide range of (generally much larger) European countries, including Bulgaria, France, Hungary, Ireland, the Netherlands, Portugal, and Spain. Almost half of EU member states now have a dedicated immigrant investor route. Also known as golden visa programs, these arrangements give investors residency rights…some advanced economies, such as Canada, the United Kingdom, and the United States, have had immigrant investor programs since the late 1980s or early 1990s, offering a route to citizenship in exchange for specific investment conditions… The inflows of funds to countries from these programs can be substantial, with far-reaching macroeconomic implications for nearly every sector.

The IMF article includes a helpful summary of nations that have programs to attract investors.

The bottom line is that there are many high-income and high-wealth people in the world (including the “super-entrepreneurs“) who would like to move to places that offer more stability, security, and opportunity. This creates a potential win-win situation for both the people migrating and the recipient nations.

The United States is already a big beneficiary of economic-based migration, but we could reap even greater benefits with a more sensible, streamlined, and expanded EB-5 system.

P.S. Zooming out to the broader issue of immigration and whether people want to come to the United States for the wrong reason, Professor Tyler Cowen of George Mason University has a very intriguing proposal to have open immigration with nations such as Denmark that have bigger welfare states than America.

P.P.S. Today’s column is about economic-based immigration. There’s also the issue of economic-based emigration. Sadly, the United States policy on allowing people to leave is even worse than France’s system.

P.P.P.S. If you want to enjoy some migration-related humor, we have a video about Americans emigrating to Peru and a story about American leftists escaping to Canada.

P.P.P.P.S. Remember to contact me if you’re interested in the London conference.

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As a general rule, I like immigration and I don’t like redistribution.

As such, I share the late Milton Friedman’s concern about the risks of having a welfare state combined with open borders. And based on many conversations all over the country, I think that’s a big reason why many people oppose amnesty (augmented by Republican partisans who fear, probably with some validity, that changing the political landscape of America is the real reason Senator Schumer is a big advocate of amnesty).

So how can we reap the benefits of immigration without the risk of a bigger welfare state?

In part, we should have programs designed to attract people with skills and education.

I’m a big advocate and defender, for instance, of the EB-5 program that gives a preference for foreigners who invest in America’s economy and create jobs.

And if you peruse Mark Perry’s chart, we must be doing something right. Look at all these immigrant groups that are boosting per-capita income for the United States (including people from Lebanon, home of the Princess of the Levant).

I’ve always thought far more Americans would be sympathetic to immigration if they could be convinced that people were coming to America for the right reasons – i.e., to earn money rather than mooch off taxpayers.

With that in mind, Professor Tyler Cowen of George Mason University has a Bloomberg column about Denmark that cites the great work of Nima Sanandaji about how Americans of Nordic descent have much higher incomes than the people remaining in Nordic nations. Tyler’s entire article is worth reading, but I want to focus on a quasi-open-borders proposal that he puts forth in his conclusion.

For all the anti-immigrant sentiment that is circulating at the moment, would it hurt the U.S. to have fully open borders with Denmark? It would boost American gross domestic product and probably also improve American education. History teaches that serious assimilation problems would be unlikely, especially since many Danes already speak English. Open borders wouldn’t attract Danes who want to live off welfare because the benefits are so generous at home. How’s this for a simple rule: Open borders for the residents of any democratic country with more generous transfer payments than Uncle Sam’s.

I can’t think of any reasonable objection to this idea. Everything Tyler says makes sense. People like “Lazy Robert” won’t be lining up to get plane tickets to America. Instead, we’ll get the young and aspirational Danes.

For what it’s worth, I even think he understates the case since the type of people who would migrate to America wouldn’t just boost GDP. They almost surely would do something arguably more important, which is to boost per-capita GDP.

Just think of all the productive entrepreneurs who would take the opportunity to escape over-taxed Denmark and come to the United States. Along with ambitious and skilled people from nations such as Italy, France, and Sweden (though our welfare state is very expensive, so I admit I’m just guessing at nations which would be eligible based on Tyler’s rule about “more generous transfer payments”).

By the way, Denmark apparently has learned a lesson about the risks of being a welfare magnet.

A story from Spiegel Online has the details.

Denmark’s strict immigration laws have saved the country billions in benefits, a government report has claimed. …The extremely strict laws have dramatically reduced the flow of people into Denmark in recent years, and many government figures are delighted with the outcome. “Now that we can see that it does matter who comes into the country, I have no scruples in further restricting those who one can suspect will be a burden on Denmark,” the center-right liberal integration minister, Søren Pind, told the Jyllands Postennewspaper. Pind was talking after the ministry’s report — initiated by the right-wing populist Danish People’s Party (DPP) — came to the conclusion that by tightening immigration laws, Denmark has saved €6.7 billion ($10 billion) over the last 10 years, money which otherwise would supposedly have been spent on social benefits or housing. According to the figures, migrants from non-Western countries who did manage to come to Denmark have cost the state €2.3 billion, while those from the West have actually contributed €295 million to government coffers.

Sounds like Danish lawmakers don’t want to add even more passengers to the nation’s already-overburdened “party boat.”

And who can blame them. The nation already has a crippling problem of too many people depending on government.

P.S. If you want to enjoy some immigration-related humor, we have a video about Americans migrating to Peru and a story about American leftists escaping to Canada.

P.P.S. For those interested in the issue of birthright citizenship (a.k.a. anchor babies), I’ve shared some interesting analysis from Will Wilkinson and George Will.

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Long-run trends are an enormously important – yet greatly underappreciated – feature of public policy.

  • Slight differences in growth can have enormous implications for a nation’s long-run prosperity.
  • Gradual shifts in population trends may determine whether a nation faces demographic decline.
  • Modest changes in the growth of government can make the difference between budgetary stability and fiscal crisis.
  • And migration patterns can impact a jurisdiction’s viability.

Or, in the case of California, its lack of viability. Simply stated, the Golden State is committing slow-motion suicide by discouraging jobs, entrepreneurs, investors, and workers.

Let’s look at some of the data. Carson Bruno of the Hoover Institution reviews data showing that the aspirational class is escaping California.

California’s consistent net domestic out-migration should be concerning to Sacramento as it develops state policy. As the adage goes, people vote with their feet and one thing is clear, more people are choosing to leave California than come. …Between 2004 and 2015, roughly 930,000 more people left California than moved to the Golden State… The biggest beneficiaries of California’s net loss are Arizona, Texas, Nevada, Oregon, and Washington. California is bleeding working young professional families. …those in the heart of their prime working-age are moving out. Moreover, while 18-to-24 year olds (college-age individuals) make up just 1% of the net domestic out-migrants, the percentage swells to 17% for recent college graduates (25 to 39 year olds).

And here’s why these long-run migration trends matter.

…while there is a narrative that the rich are fleeing California, the real flight is among the middle-class. …the Golden State’s oppressive tax burden – California ranks 6th, nationally, in state-local tax burdens – those living in California are hit with a variety of higher bills, which cuts into their bottom line. …which leads to a less economically productive environment and less tax revenue for the state and municipalities, but a need for more social services. And when coupled with the fact that immigrants – who are helping to drive population growth in California – tend to be, on average, less affluent and educated and also are more likely to need more social services, state, county, and municipal governments could find themselves under serious administrative and financial stress. …the state’s favorable climate and natural beauty can only anchor the working young professionals for so long.

We’re concentrating today on California, but other high-tax states are making the same mistake.

Here’s some data from a recent Gallup survey.

Residents living in states with the highest aggregated state tax burden are the most likely to report they would like to leave their state if they had the opportunity. Connecticut and New Jersey lead in the percentage of residents who would like to leave… Nearly half (46%) of Connecticut and New Jersey residents say they would like to leave their state if they had the opportunity. …States with growing populations typically have strong advantages, which include growing economies and a larger tax base. Gallup data indicate that states with the highest state tax burden may be vulnerable to migration out of the state…data suggest that even moderate reductions in the tax burden in these states could alleviate residents’ desire to leave the state.

Writing for the Orange County Register, Joel Kotkin explains how statist policies have created a moribund and unequal society.

…in the Middle Ages, and throughout much of Europe, conservatism meant something very different: a focus primarily on maintaining comfortable places for the gentry… California’s new conservatism, often misleadingly called progressivism, seeks to prevent change by discouraging everything – from the construction of new job-generating infrastructure to virtually any kind of family-friendly housing. …since 2000 the state has lost a net 1.7 million domestic migrants. …California’s middle class is being hammered. …Rather than a land of opportunity, our “new” California increasingly resembles a class-bound medieval society. …California is the most unequal state when it comes to well-being… Like a medieval cleric railing against sin, Brown seems somewhat unconcerned that his beloved “coercive power of the state” is also largely responsible for California’s high electricity prices, regulation-driven spikes in home values and the highest oil prices in the continental United States. Once the beacon of opportunity, California is becoming a graveyard for middle-class aspiration, particularly among the young.

In other words, class-warfare policies have a very negative impact_ on ordinary people.

Meanwhile, returning to California, a post at the American Interest ponders some of the grim implications of bad policy.

…many of the biggest, bluest states in the country—including New York, Illinois, and Massachusetts—have also experienced major exoduses over the last five years (although these outflows have been offset, to varying degrees, by foreign immigration). These large out-migrations represent serious policy failures… The new statistics out of California are a bad omen for the future of the state’s doctrinaire blue model governance. …if families and the young continue to flee California, the population will become older and less economically dynamic, creating a shortfall in tax revenue and possibly pressuring Sacramento raise rates even higher. Meanwhile, California faces a severe pension shortfall, both at the state and local level.

Here’s a map from the Tax Foundation showing top income tax rates in each state. If you remember what Carson Bruno wrote about California’s emigrants, you’ll notice that states with no income tax (Washington, Texas, and Nevada) are among the main beneficiaries.

So the moral of the story is that states with no income taxes are winning, attracting jobs and investment. And high-tax states like California are losing.

But remember that the most important variable, at least for purposes of today’s discussion, is how these migration trends impact long-run prosperity. More jobs and investment mean a bigger tax base, which means the legitimate and proper functions of a state government can be financed with a modest tax burden.

In states such as California, by contrast, even small levels of emigration begin to erode the tax base. And if emigration is a long-run trend (as is the case in California), there’s a very serious risk of a “death spiral” as politicians respond to a shrinking tax base by imposing even higher rates, which then results in even higher levels of emigration.

Think France and Greece and you’ll understand what that means in the long run.

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Taxpayers don’t like coughing up big amounts of money so other people can choose not to work.

And they really get upset when welfare payments are so generous that newcomers are encouraged to climb in the wagon of government dependency.

This has an effect on the immigration debate in the United States. Most Americans presumably are sympathetic to migrants who will boost per-capita GDP, but there is legitimate concern about those who might become wards of the state.

Welfare migration also has become a big issue in Europe.

Reuters has a report on efforts by the U.K. government to limit and restrict the degree to which migrants from other E.U. nations can take advantage of redistribution programs.

Cameron says he needs a pact to curb benefits for new migrant workers from EU countries… Proposals to allow British authorities to withhold in-work benefits for up to four years from EU citizens moving to work in Britain are under intense scrutiny.

You can understand why Cameron feels pressure to address this issue when you read horror stories about foreigners coming to England and living comfortable lives at taxpayer expense.

This isn’t just a controversy in Britain.

The U.K.-based Guardian has a story on support for such measures in Austria.

The Austrian foreign minister, Sebastian Kurz,…would not only call on the chancellor, Werner Faymann, to vote in favour of Cameron’s “emergency brake” on migrants’ benefits, but also to adopt the measure in Austria as soon as possible. …”Those who don’t pay into the system will get fewer benefits or none at all,” Kurz told the newspaper Kronen Zeitung. “We should embrace that principle if we want to guarantee that our welfare state remains affordable and attractive for top talent.” …he also supported Cameron’s call for the UK to be allowed to stop paying child benefit to EU migrants whose children live abroad.

European politicians are right to be worried. There’s evidence even from Sweden that welfare programs lure migrants into dependency.

And studies of American data show that excessive levels of redistribution can be at least a partial magnet for welfare recipients.

Here are some of the findings from a 2005 scholarly article by Professor Martin Bailey of Georgetown University.

…the results also indicate that welfare benefits exert a nontrivial effect on state residential choice. …the welfare migration hypothesis does not require welfare to exert a dominant effect, only a real effect. And here, the results provide strong, robust indications that the effect is real. …the results imply that migration may discourage states from providing high welfare benefits because such generosity attracts and retains potential welfare recipients.

Professor Bailey then found in a 2007 academic study that states understandably impose some restraints on welfare spending because of concerns that excessive benefits will lure more dependents.

Whether states keep welfare benefits low in order to prevent in-migration of benefit-seeking individuals is one of the great questions in the study of federalism. …This article develops a model which…suggests that competition on redistributive programs does…constrain spending to be less than what the states would spend if migration were not a concern.

This makes sense, and it echoes the findings of a study I wrote about in 2012 by some German economists.

Simply stated, you get better policy when governments compete.

But that doesn’t mean Cameron and other European politicians are doing the right thing. Instead of limiting handouts just for migrants, they should be lowering redistribution payments for everybody, including natives.

After all, European nations (like many American states) have elaborate redistribution systems that often make dependency more attractive than work.

Indeed, the United Kingdom has a more generous package of handouts that almost every other European nation.

The bottom line is that it’s a bit hypocritical (and in some cases perhaps even racist) for Cameron and others to target welfare for migrants without also addressing the negative impact of similar payments for natives.

P.S. To give British politicians credit, there have been some recent positive steps to reduce welfare dependency by cutting back on handouts.

P.P.S. In any event, Americans shouldn’t throw stones because we live in a glass house based on our foolish laws that shower refugees with initiative-sapping handouts.

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