0:36 Intro. [Recording date: September 27, 2010.] Immigration, lively topic. In general, as with all guests, not everything that Bryan says that I leave unchallenged is true; and not everything Bryan says that I leave unchallenged do I agree with. A lot of respect for you out there in the listening audience; sometimes have to let things go because we only have an hour. Rely on your intelligence and natural skepticism not to believe everything you hear. Could apply today in many ways. Bryan: It could, but it's not really relevant. Learned about Bryan's views on immigration from a presentation he did here at George Mason University, in front of the GM Economic Society; available on video. Doesn't go much challenged there till the end, when there is a Question and Answer (Q&A); hope more interactive here. Bryan, you start your video presentation, speech, and want to start here with an interesting thought experiment. Lay it out. Suppose that moved by the plight of Haitians after the earthquake, you decided to troop down there to do Haitian relief work. You have off for two weeks, about to go home; when you go up to the desk at the airport, the person says: Sorry, you are not authorized to return. Strange; so you go talk to the U.S. representative, and he says: That's right--you can't come back. You: Why not? Representative: U.S. government does not have to answer questions; we don't give reasons. Point: almost everyone thinks it would be wrong for the U.S. government to deny the right to return. My question is: Why? Seems like it would be a terrible thing to do to a person. In Haiti, poverty is terrible; even if you could find a job, probably worse than in United; dangerous place, high death rates; isolation--interesting things to do there, but you might want to see some other parts of the world, too. Furthermore, you might think the whole problem of being stuck in Haiti is that your family and friends are here: slight variant on thought-experiment--imagine you go down to Haiti to visit with your friends and family and you are all denied readmission to the United States. Think it would be worse than just being stuck on your own--if I were stuck there with my family and they said I couldn't return but my kids could, I'd say please return my kids. Seems like awful harm to inflict on a person to prevent them from moving to the United States; but almost everybody thinks it's okay for the U.S. government to do it. Not saying strict immigration is wrong. Just saying there is a presumption against it. Not the kind of thing you can just do and say: I don't have any reasons; why should I have any reasons? Kind of thing where you do need reasons. Then in the rest of the talk I consider the main reasons people have offered for why it is okay to prevent people moving from Haiti to the United States, even though it seems like a really bad thing to do.

4:23 At least four objections raised in the talk; I'm going to add one more. Let's lay them out. Trying to find arguments against immigration that are commonly believed that are legitimate arguments, and Bryan's going to try to shoot them all down. In particular, arguments that are so strong they overcome this presumption that it's wrong to do this to someone. First: need immigration restrictions in order to protect Americans from poverty. Immigrants, when they come in, lower American wages, harmful to people already here. Probably the most important one for most people. Second: immigration restrictions are necessary to protect the American taxpayer from abuse of the welfare state. People come here not to work but to live off the rest of us. Third: need immigration restrictions to protect American culture. Effects of people who don't speak English. Last: immigrants are going to damage our politics; are going to take a country that is relatively free and prosperous and by voting are going to turn the United States into the kind of country they got away from. Add two more: One, congestion issue. Going to be congestion in areas we don't price stuff, sudden increase in population from any source--immigration being the most plausible--would lead to harm for people already here. Other would be crime. Didn't warn Bryan about. Also hear that the immigrants who come here are importing criminals. Four most legitimate objections. We're talking about open immigration here, not the current level. Not going to get into issue of people who are already here, illegally, and what should be done about that fact. We are talking about what should be the U.S. policy toward people who don't live here now and would like to live here.

7:07 Start with the financial argument: if we let in immigrants, it's going to make us poorer because they are going to lower the wages of those already here. For each of these arguments, going to do two things. First, going to say the complaints are either wrong or overstated. Secondly, going to say: suppose we accepted the arguments completely at face value; is there any cheaper way we could handle the problem other than telling people they just can't come here? Starting point: presumption immigration restrictions wrong. Once you come up with a reason, restrictions have to be among the cheaper and more humane ways of doing it; if there's some way of handling the same problem that costs less and does less to injure people, seems like that's the right road to go down. Before we get started, take a deep breath. Some of you may be thinking it's a stupid thought experiment. Obviously, if you are already a citizen you should be allowed to come back. It would be so unfair because you don't have the expectation you won't be allowed. One way to think about it to make the thought experiment even more dramatic: suppose you are a welfare recipient who goes to Haiti to volunteer and help. Would it be good if you were returning if you were a welfare recipient? What about: if you came back, it would affect people whose skills were like yours? Let's focus on the economics and see where it goes. Starting with the financial arguments: at first pass, you say this case is slam dunk against immigration. Americans suffer from immigration: you have a whole bunch of supply of other people; this is going to increase the supply of labor, which will reduce wages. QED. What can we say about this? Can go to the actual estimates of what the effect is. Contentious issue; go to the most anti-immigration of all the respectable researchers in this area, George Borjas. Go to his labor economics textbook, his estimate for the long-run effects on the wages of American high school dropouts of all recent decades is that it's reduced their wages by about 5 percentage points. Not 50%. 5.0%. Seems small to justify keeping a whole lot of people from coming to the United States. Especially when you take a look at the rest of his table and see the effect for the average American wage is much smaller. And some American workers gain. Devil's advocate: The Borjas study is of a particular class of Americans who are commonly worried about as competing with workers. Some people say it's okay to let in the right kind of immigrant--which is Borjas's position--he's okay with letting in highly educated workers, who supposedly bring in more than they take away. I think they do contribute, but everybody contributes. This effect of 5% isn't on every American, but on high school dropouts, a small portion of the U.S. population, which we should be empathetic toward, but that's the effect. So just in terms of the direct wage effects, it's quite a bit less than you think. Other researchers have redone Borjas's work with estimates more favorable to immigration. Other economists have said all this is assuming that immigrants basically have the same skills as Americans--that the skills Mexicans or Haitians would have are the same as Americans would have. In fact, they don't. Immigrants typically are better at what are called non-language jobs that don't require such great knowledge of English. Americans have an advantage in these kinds of jobs. Result you get if you re-do Borjas's approach but allow for this seemingly obvious fact that immigrants and natives have different skills, you wind up getting not only a smaller effect on American wages, you end up getting a positive effect. Basically, Americans go and specialize in areas where Americans have what economists call comparative advantage. Result, just like in other areas of trade: people specialize and trade and they all get richer. Technical way to think about this in terms of economics is that because those people's skills are different from people here already, their skills are complementary--they enhance our productivity rather than hurting us. So, the labor market effect not nearly as clear as people think. Reasonable range of estimates--actually very plausible work finding a positive effect on American wages; the harshest critics come up with a very mild negative effect. Woefully inadequate to say we are going to consign large numbers of people to countries where they earn a dollar a day. This doesn't consider all the effects on Americans. How about American employers, who seem to gain from immigration? Stockholders, investors? Many more people who effectively employers or capitalists than we realize--anyone who owns a retirement account is one, anyone who owns stock--many people are in this group of people who are benefiting. Anyone who employs personal services--if you ever plan on being elderly and maybe wanting someone to help you out. And the final one--seems particularly relevant today--the effect on real estate. Immigrants require housing, and when they come here they raise the demand for housing, which means real estate prices increase. While there are of course some Americans who don't own any real estate, who suffer from this, on average, American real estate is owned by Americans. So immigrants wind up increasing the wealth of any American who owns real estate. People in Los Angeles complaining about immigration and how awful immigrants are--hmmm? What would happen if we were to expel everyone who came over from Mexico in the last 20 years? Probably would be a massive decline in real estate values. Almost all would be suffered by Americans.

14:34 Could be that the estimates by Borjas--you've identified him as the most respectable critic of immigration; I think that's true--he'd certainly say it was true. He, by the way, is an immigrant, born in Cuba. Could be he's misestimated and effects are larger. Or might just say these are only estimates for this moderate range that we've seen. What if we had much more immigration? He is evaluating the impact of a limited amount of immigration. What's your thought on that? In order for immigration restrictions to be justified, not only would you have to identify a real problem, but you'd also have to show immigration restrictions were a cost-effective way of handling the problem. Here, I say there is obviously a cheaper and more humane way of handling whatever financial harm happens to Americans: to either charge an entry fee--so in order for an immigrant to come they'd have to pay some cash amount up front and use that entry fee to compensate Americans that lose. Not literally--you couldn't do that. That would be very imperfect. Depending upon how generous it was, it could be imperfect in two ways. Could be we end up compensating some people who actually gain--they also get a government check. Obvious places to start: earned income tax credit. Or, you could just charge a surtax to immigrants: you can come here, but you have to pay 10 percentage points higher on your income tax; and then we are going to take that money and compensate Americans who have lost. Both of these are ways of compensating Americans who have lost but which preserve the option to come here. I think it's pretty unfair, but it's vastly less unfair than to tell someone you can't come here at all. If I were stuck in Haiti, I'd rather have someone say you can return but you have to pay 10 extra percentage points on your income tax than you are not allowed to return for any reason. Different argument: to me a more humane policy isn't to charge an entry fee or a surtax. Any even more humane policy would be to improve the productivity of those high school dropouts you are talking about. For example, if we said technology, labor-saving devices of various kinds--a dishwasher, washing machine--when they came out made some people-skills less in demand. The Internet is reducing the demand for education, for college professors. You would never argue--I don't think most people would argue--that because labor-saving devices are hard on people who have limited skills, who used to be employed as people who washed dishes or clothing, therefore we shouldn't allow people to create the devices. Think the argument would be: let's encourage people to get those skills. Which it will. One of the implications of this is it will encourage people to stay in high school longer. Sure. Just lecturing on this today, and someone said: Wouldn't these subsidies encourage more people to drop out of high school? Sure. If you really want to discourage people from dropping out of high school, let in more immigrants. Record for government-created job-training programs is not very good. Case for just giving people money rather than subsidizing job-training is not so good. The wage argument--don't think the average person worried about immigration is worried about their own financial well-being through competition. Though you could be, Bryan. Throw this out at you: Easy for you to say, Bryan. You have tenure. Not really in competition with any of the immigrants we are talking about, and therefore you are not allowed to talk about it. You are not self-interested in the way everyone else is. This argument made by people who have either never been on campus or remarkably unperceptive. If there is any industry in the United States that does face open immigration and full competition from every worker in the world, it's academic. Right now, there's a loophole that makes it possible for universities to hire any professor from anywhere on earth. Russ and I are competing with them; they are in our department with us. If they were not allowed in, Russ and I would possibly be at better schools, earning higher wages. We are people who are suffering more than almost anyone because on the one hand we are in an industry where there are effectively open borders; and yet, we aren't getting much of the consumption benefits from having open immigration in all the areas where we are consumers. University professors strangely suffer more than anyone. Cue the violin music. Poignant observation. Do you like having them as colleagues? Do they make your life better, enhance our students' knowledge? Yes. In favor of open immigration, certainly at the Ph.D. level, medicine, from every level of skill. Half my friends were born in other countries; would rather have them as friends than having my wages be higher. As a matter of the financial effect on me, I am one of the biggest losers from immigration right now. Possibly. Can hear the tears of sympathy throughout the Internet.

21:23 Second one, worrisome to many people: A lot of people come here and are net takers of tax money, through welfare programs or other things that are going on in our society. Immigrants coming here to abuse the welfare state. Has some initial credibility. If you take a look at how much money you can get for free from the U.S. government, it is considerably higher than what hardworking people elsewhere. They can make more money here doing nothing than by the sweat of their brow in, say, Bangladesh. However, there are a few problems with this. Again, going to the negative respectable estimates of whether or not immigrants pay more taxes than they receive in services, only mildly negative. And there are actually other estimates, also respectable, that get the opposite effect, saying that immigrants are net taxpayers--receive less in services than they pay in taxes. If you are incredulous about this, remember: a lot of what government does is what economists call non-rival. Government can provide the service to a very large number of people for about the same cost as they can provide it to a very small number of people. Most obvious case is something like nuclear deterrents. If you double the population of the United States, we don't need any more nuclear deterrents in order to deter an attack on our population. A lot of things are like this. But most things are not. Things like direct welfare; free education; free health care. The two big ones are defense and debt. When you increase the immigrant population, you are averaging the debt and the interest that has to be paid on that debt over a larger population. Social security. One common misconception about the welfare state that makes people think immigrants are worse than they are, is that we imagine that the welfare state is mainly about helping the poor. We take a look and say, there are all these poor immigrants coming here, so obviously it's going to be a net drain. Factually wrong. Take a look at the numbers on the budget. While the poor do get a fair amount, maybe 10%, of the Federal budget, they are a very distant runner-up against the group that actually gets the biggest part, which is the elderly. Social Security and Medicare are a much bigger deal than Medicaid, Food Stamps, housing vouchers, etc. Often immigrants tend to be poor; especially those who can't legally come here tend to be poor; they often tend to be young. Which means they will not only be paying taxes into our system for a very long time, but on top of that their home country has also often paid for their education. When you put this all together, basically, as you raise the percentage of government spending up to a plausible amount that is nonrival, then you wind up actually concluding that immigrants are net taxpayers. At the Federal level, they almost certainly are. The Federal government mostly handles the payments for the elderly. At the State level, more likely to be true that immigrants are a net drain, which then creates the illusion that immigrants are a drain overall. Really what's going on when Californian taxpayers complain about immigration is that they are trying to improve the fiscal situation of California, but worsening the situation of the Federal government. If you go and add up all the effects together, much more favorable to immigrants. In terms of fiscal effect--illegal immigrants are often the best, because they often pay taxes on things they are never going to get any benefit from. Their employers contribute. Not only are there benefits they are never going to get, but often illegal immigrants are too frightened of getting caught to apply for benefits that Americans would. Flip side of that: Because they are illegal, a lot of their economic activity takes place in maybe underground activity, where maybe cash business, very little taxes paid by anybody. Still end up paying things like sales taxes and all indirect taxes. Property taxes, if renting someone is indirectly doing that. How illegal? Totally outside; or illegally work in an illegal job. Example of the young worker who is not going to be getting Social Security for a long time, or perhaps will never get it--what people worry about is situation where a person comes here, doesn't speak English, takes a very low-paying job, a job that many Americans would not be eager to do; perhaps creates an economic benefit for the rest of us, our first story; but then they get married and have kids. They are still young, but they have kids, and their kids are American citizens as a result. And schools are going to have to be built to educate them; they show up at the emergency room of the hospital, government requires hospitals care for them and are not allowed to turn anyone away. As a result, those costs all get born by non-immigrants. Thoughts? True for Americans, too. Only difference is for an immigrant, you start off 20 years and down the line. For any American, you pay for that person's education; for an immigrant you get an adult who starts working and then you wind up getting the stream of taxes and the burdens that go from 20 onwards, which is a better stream than you'd get from an American. Part of this is an empirical question. Many immigrants hold more than one job. Perception that most immigrants come here and don't work, which is not true. Side by side: they are taking our jobs and they don't work. Other, more humane argument: a free public school system is a bad program. For everybody. Doesn't work very well; incentives are lousy. If we are going to have a choice, let's get the free ride out of the system for everybody. Usually when I'm trying to convince people to have open borders, they don't want to add in public education on top of that. One controversial thing at a time. If you are concerned about immigrants using the welfare state or their kids getting educated at taxpayer expense, there is a much cheaper, more humane solution: You could say immigrants are not eligible to get these benefits, either not eligible or never eligible in perpetuity; or not eligible for 5 years or 10 years. No reason to keep people out. Could let people come here but say you have to pay taxes and you can't collect benefits for a certain period of time. Would that be Constitutional? Don't see why not, since they are not citizens.

30:21 Let's get practical. In your talk you mentioned there might be a billion people in the world who earn a dollar a day or less. Paul Collier podcast. A billion people who would like to be here. Not all will want to come here tomorrow. Don't speak the language. They do have friends. May like where they live. Might not be a billion, but a big number. Let's say they come here. Give them a 5-year moratorium--your humane solution. They come here, can't get a job, apply for food stamps, and other forms of public assistance and are told they can't have that for 5 years. What do we do now? Do we ship them back? March them to the border? Rely on private charity to help them? How are we going to enforce this more humane solution? The most obvious way of doing it, which is not what I favor so much as what I will offer to people to change their minds, convincing them that what we have is much worse, is tell them you can't come until you have got a job lined up. That actually already is part of current immigration law, but to imagine expanding that. Not really part of the actual system we have, legal and illegal. Having spoken to a contractor in confidence about the world he lives in, his workers come across the border, pay a fee, a coyote--somebody really good at fooling the border guards, interesting world, lot of specialization--come here and expect to go work for him or people like him. They have a network of people who have already come here; they don't have a job lined up, but they have the expectation of a job, and in those situations, if it doesn't turn out to be true they go back, because they don't want to live here. They are going to be sending money back home, not necessarily coming here to establish themselves. Don't know how you'd actually verify that--how would you prove you have a job lined up? Number 2: It would certainly lead to all kinds of lying and deception. Number 3: If it doesn't, maybe just keeps people out through this requirement. Cheaper and more humane. My first choice would be to say you are free to come and we'll see what happens. How you verify this: not hard if you have sufficiently high fines for fraud. If an employer signs something saying you are his worker. If he gets fired after two weeks, what are you going to do with him? Right now there are many guest worker programs where you do have to go home or find another job in that period. Right now within the United States we already have open borders between the 50 united States. Why would anyone keep living in Kansas when he could live in New York City? Isn't New York City so much more interesting? Some say no. Fair to bet there are more people in Kansas who think NYC is more interesting than Kansas than people who live in NYC who think living in Kansas more interesting than living in NYC. Different populations. Market forces at work that allow us to have free mobility in the United States without chaos. Rents and real estate prices adjust. If you want to live in Manhattan, you have to pay an arm and a leg. Kansas almost free. Secondly, in areas where people really want to live, wages are lower relative to cost of living than they'd otherwise be. High money wages in NYC, but not relative to the cost of living. Tim Harford's book. This is the market force that would also keep a billion people from showing up right away. When a large increase in low-skill population happens, there will be a large increase in rents and a large decline in wages for low skilled workers. Reason to wait. Original waves of Soviet immigrants going to Israel: initial problem, a lot of people showing up at once. Peak load problem, word gets back to Russia that things in Israel aren't really as good as they originally heard, and people wait. Slows it down. Russia empties and Israel gets its Jews.

36:38 Going to U.S. history, which we haven't talked about: there were periods in the United States when there was close to open immigration. Little reading; all the issues we talk about, people worried about then also. Culture issue, turn to next. In the case of St. Louis, a lot of German immigrants. In the late 19th century, they established their own schools, taught in German. A lot of people wrote about it: these people are never going to assimilate, they are going to ruin our country because they are living in their own world, not really Americans. Turned out to be false. Did assimilate. Brewed beer, good for beer-drinkers everywhere. What's the standard argument? The one that makes the most sense to the most people is: These people are not learning English. Bothers people the most. Even Samuel Huntington, one of the people most concerned, admit that 90% of second generation Mexican immigrants speak fluent English. The kids. Tries to argue it's still a big problem. Don't even understand what the problem is. Is the worry that if you are going down the street and you are heading into a fire, dangerous situation, and the immigrant is yelling at you in his native language? Maybe people are worried their children will live under Spanish--like living under Communism. Market forces give people a strong incentive to learn the language of the country they are in. Even in the case of Spanish, where the case is stronger that there is a subculture where you don't need to learn English, for any other language hard to make the case at all. Then, people worry it's a broader cultural thing. Going to talk about politics separately. Sticking with the language issue: part of the reason people are concerned is the state government requires certain bilingual adjustments. Never understood the argument for that, to force school districts to provide second language instruction seems very bizarre. That's one of the reasons people do resent or worry about a second language issue. For all the bilingual problems, 90% of second generation Mexicans do learn English. Hasn't done that much harm. If we allowed something closer to open borders, maybe it wouldn't be 90%. There'd be economies of scale and a subculture that would be all in Spanish. Although there would also be so many new cultures coming, what would be the lingua franca? "Lingua franca"--French language--a strange phrase. English already is the lingua franca all over the world. For broader culture, kids' names; don't appreciate baseball. Need to preserve French culture, but culture seems to be so low down in American priorities that it's odd--like the immigrants are not going to know about TV shows like "Friends," or not going to appreciate "Seinfeld." Baffled as to what kind of culture Americans do know that immigrants don't know. Not like most Americans know enough about European culture to name three operas of Wagner off the top of their heads. What are immigrants supposed to know that they don't? Shakespeare. Comedies, tragedies. Take the complaint at face value and see if there is a cheaper and more way of dealing with the culture problem than just telling people they can't come here. How about we require English fluency to come into the country? Give a test; if you pass, you can come in. Will be some corruption, not that big of a problem. Broader culture? Fine, give a test of broader cultural literacy. That's not the issue. The worry is there would be too much Mexican food, Mexican music. Happen to like both, but other people don't. Worry is our culture will be changed. Making fun od Seinfeld as low-brow culture. Worry, which I see as a plus, is somehow the mix, the American stew, would be dominated by certain cultures. Market process. The French, Canadians, do protect their domestic movie industries and other forms of so-called culture from foreign influence. Strange idea, maybe just a form of special-interest rent seeking; but people do worry about this. What's the most popular American food? Chinese food? sushi? pizza? What are the states in the United States we think of as having really good culture? New York, California. Kansas--to our Kansas listeners, Bryan loves Kansas, many Kansas listeners, know they are listening; it's a fine place with lots of culture. Less diverse as California or New York. If you look at places with the most culture in the United States, they are clearly places with a high proportion of foreign-born in the culture. If you look at the states with the lowest foreign-born percentage in the population, ones no one would claim are exception in culture--places like the Dakotas. May say California and New York would have great culture even if there were no immigrants. Hard to say, except for the case of food, where it's absolutely clear it's the immigrants who cause it. Do you really want to eat the local fare of the Dakotas? Suspect I wouldn't like it as much as what is available to me in a ten-minute drive from me in Fairfax, high-immigrant area.

45:26 Politics. What's the worry there? This is an argument that has the most appeal to libertarians and probably conservatives as well. The story is: we love you immigrants and maybe all these other arguments are exaggerated, but there's one problem with you, and that is you come from countries that aren't free; and that probably means you don't like freedom. And if you come here and start voting you are going to start voting against freedom, and you are going to kill the goose that lays the golden egg. Or, you are poor and you are going to vote for redistribution, vote for the welfare state. First of all, case where there seems to be a cheaper and more humane alternative again, which is to say you can come here but you can't vote. Secondly, there is the question of how hell-bent immigrants are on turning the United States into Mexico or Congo. May be that their opinions are moderately less pro-freedom than people who grew up here; seems unlikely this is that big a deal for them. Can count on what psychologists call status-quo bias: people tend to think that whatever is, is okay--which is one of the reasons it's so hard to get people to change their minds about immigration. Their reaction is not likely to be they've got to change things radically to how they are back home; more likely to be that's how things are here. Here seems okay, good enough for me. Greatly tones it down. Recent American politics--not clear how in love with liberty the typical American voter is anyway. On the welfare state point specifically, here's there's actually some very good evidence that immigrants do something good for liberty, that hurts the welfare state. If you look at countries that have the most generous welfare states, they generally are ones that are ethnically homogeneous, ones where people see themselves as being one identical people. Scandinavian countries--though changing in recent years. But everyone in Denmark sees we're all Danes here. People don't mind taking care of their own. Second, since you trust your own kind, much less likely to feel they are ripping you off. Do you think Europe, which has a lot more immigration lately, has become more heterogeneous--do you think their welfare state is becoming smaller? Will take the Austrian position and say smaller than it otherwise would have been. Scandinavia is curtailing the welfare state. Unlike a Dane or a Swede who would never think of taking money from the government unless he absolutely needed it, an Iraqi or Somali immigrant very well might. This is a well-established pattern around the world: the more homogeneous a country, the bigger welfare state it tends to have. Standard explanation of why we have a smaller welfare state than Europe--the American nation is a nation of immigrants. Even among populations we don't think of as immigrants, like black, different groups who are seen as being different groups. Some would say the real reason we don't have a welfare state is because of prejudice. Something to that. But in terms of the effect on our politics, good effect. If you are a libertarian or conservative who thinks the welfare state tends to be too big, there is something you can do to help: let in more immigrants so that natives feel like they are getting ripped off and don't like it any more. Circular. True; but whether it works as a marketing strategy is a different story. Net effect unclear; empirically, net effect appears to be negative. Imagine Constitutional rule saying that anyone is eligible, whether they live here or not, for any American welfare program. What do you think Americans would do to undo this constraint? Make it smaller. Might even get rid of it. If every person in the world eligible to get a free education at American taxpayer expense, or the equivalent, Americans might say maybe a private educational system is okay. Cheated a little bit on argument about the role of immigrants here, and the role of their children. Point I would raise in your support though is that a lot of people have a fear of immigrants because they are poor. Of course, there are people like Sergey Brin, who founded Google. Half the immigrants who are here earn above the median income. Highly skilled immigrants find it easy to get here legally. Head of Intel, Grove; a lot of great immigrants in the high-tech world. What people really worry about is people who would immigrate who are not like them, not just in ethnic origin, or national origin, but not like them in terms of skills. Worry that they would be on welfare could be true. Would add that a lot of people come here not to get on the welfare system--we know many immigrants work very hard, multiple jobs, hard work in Los Angeles, painting, home work, construction. But they come here for their kids. Discussion of ladder of opportunity broken--studies not only show that the second generation not only learn English, but they thrive--financially, relative to their parents. Very soon they are not immigrants any more, but Americans, like you and I whose ancestors moved here at some point in the distant past. Not a function of what country they were born in but of how much education they have, how hard they work, luck of course also. Education works. To suggest that somehow their parents will sabotage the political process to keep their kids poor--which is essentially what the argument is--to me shows no knowledge of human nature and why these people come. Actually would be less sanguine than you. It is true that second-generation Hispanics earn below the median income and have below the median educational attainment. It is fair to say they have a much better life than they would at home, and they contribute. They pull their own weight and more, and that's enough. Educational parity with Americans--so, what if they don't? Digression: People worried about inequality ignore the fact that tens of thousands of people, legally and illegally, come here to be at the very low end of the income distribution because they do not think that everyone here is stuck with where they are at--and correctly. Their kids will do better than they are doing. Some hostility against immigrants is that immigrants are a reproach of every American who didn't do more with his life. Don't know about that. Someone came here not speaking English, worked their way up from the bottom; now look at them. You were born here and these immigrants have done as well as you. Kind of question that while rude to raise is also fair. Back to Borjas study--penalty paid by dropouts. Got these millions of people desperately trying to have a better life, and we are going to prevent that because we have people here who didn't take advantage of it? Hard argument to make.

55:55 Crime. A lot of people argue that immigrants have a higher crime rate than Americans. There is a lot of violence right now on the Texas/Mexican border related to the drug trade. Recent story: Arizona issue about policing the border and fight between the State and the Feds about the laws in the State of Arizona. Many people who are afraid, see a lot of violence going on; live on a ranch in the middle of nowhere, hear about people getting killed; scared. Not sure whether you've talked on podcast about availability bias. No. Tendency for rare, memorable examples to stick in people's minds and make them overestimate the chances something will happen. Whenever an immigrant commits a crime, people remember it's an immigrant, whereas when an American commits an equally heinous crime, they don't think: Americans are violent; or we need to export our criminals outside the borders. When a young male commits a crime, we rarely think young males are terrible. They do commit more crime. Mainstream academic literature on crime rates by immigrants: raw fact is they have a lower crime rate than native Americans. Blogged on this. May be certain areas of the country where this is not true. This is not a problem with immigrants in general. If it were a problem of crime, there are still a lot of immigrants you wouldn't worry about--women, low violent crime rates; older immigrants, few men in their 30s and older commit crimes. Cheaper and more humane thing is to keep out the ones we profile as being more prone to violent crime and let in the rest. Seems harsh--deport healthy young men between ages 16 and 25, born here, didn't do anything crazy to us; but better to let in a lot than let in none.

58:45 Congestion issue. Example I have trouble thinking about. You started with important point, often forgotten, comes up often with trade issues also: we have open borders between California, Texas, New York, Vermont, etc., and you don't see all the wages driven down. Mississippi doesn't get all the jobs. Nor California. Countervailing market forces. Those forces don't work very effectively in places where we've mandated, through public policy, prices; or work in funny, not so healthy ways. City of Portland, Oregon: people who live there like it a lot. Very pleasant city. Put in place a lot of public policies to make it hard for new construction, new development, etc. Call it "smart growth." Could think of it as simply a fence. We like our life here. We have a good life. The air is clean, parks aren't crowded, roads not too crowded; and we're going to put up barriers to immigrants--in this case within America--because they are going to ruin our life. Good idea, bad idea? Bad idea. Even if they are right that they are maintaining their quality of life by making it impossible for others to move there, I think what you are doing is morally wrong. Knowing how far we can get with arguments like that, would say: there are some congestion costs, but one solution every economist knows is to stop giving everything for free. Put tolls on the roads, charge a user-fee to use the parks. We'll come back to that another time; don't think that's such an ideal solution, though common and obvious improvement, more difficult. Also negative congestion benefits worth considering. You go to New York, which historically it's been easier to build in NYC. Anything you want to do, you can do in NYC--any interest you have, etc. Benefits to this congestion. Economists would call this increasing returns to scale, agglomeration economies. When you move to an area, you are ignoring the costs you inflict by raising congestion, but also the benefits you give them in terms of creating a thicker market for the things you enjoy doing. When you move to NYC you don't consider that you are going to make it easier for somebody to find a chess partner or play Mutants and Masterminds with me--role-playing game. Every time somebody has said, NYC would be great if it weren't for all the people--wouldn't be great any more. Choices people value would be restricted. You could drive more quickly but you wouldn't want to get anywhere. Economics has a clear prediction about what the outcome will be if the congestion problem is greater than the agglomeration benefit: when more people move in, rents should fall because it becomes a less nice place to live. Certainly we can imagine a case like this. Imagine that NYC were so crowded you couldn't leave your apartment--you were physically blocked. What would the rent be in NYC? Very low. There is a point where congestion gets so bad you can clearly see it in the rents. But when we look at the most congested places in the world, we virtually always see those places are much more expensive. Says to me that the agglomeration effect is much more important than the congestion effect. If you are a misanthrope in NYC, you can move to Kansas, get away from all the people. You'll save a ton of money but give up all these choices. Back to Portland: are you suggesting that the people make a mistake, or that there is a public choice, rent-seeking explanation for why they pursue this policy? Talking to Bryan Caplan, the author of the Myth of the Rational Voter, skeptic about the wisdom of public policy mediated through democracy. Normally, when we say public choice rent seeking, we mean there are some public policies that are bad for the people living there but good for some special interests. My general view--not married to this idea--is that special interests are a pro-development force, the people who want to do something new and ask: Please let us do something new. Have to bribe or ask and ask and ask till somebody says yes. Voters like this--existing residents like "smart growth." Interest groups are probably the reason anything gets developed in Portland at all. In terms of their own financial interest they are making a mistake--development would raise the value of their own real estate. Let in a lot more construction but it makes it a better place to live. Might say: I prefer to live in a small, relaxing area. If I wanted to live in Manhattan, I would. When your real estate prices go through the roof, you have a lovely choice. You can either say: Actually I don't mind living in this high population area so much; or I'm going to sell and move to the vast majority of the United States that is more like Portland and less like Manhattan. Clever argument, but the fact is there is a limited number of such places. Would be more of them if there were more immigration. There is a physical space issue. Could live in outskirts of Portland. But they like being in the central city, downtown. Romance about that. Fine, let the growth in, and then also have an extra tax and compensate people, who build here for a certain length of time.