Free movement of goods, capitals and…persons?


The faith in individual liberty is the pillar on which libertarians have been treating the affair of “Free movement and Open Borders”. This controversial discussion has divided to economists, creating a very intense debate during the last decade. 

The question we try to answer in this post is whether or not immigration should be unconditional or conditional; totally free or restricted.

On the whole, we are going to consider that the major group of immigrant people is constituted by unskilled workers. The usual claim of economists is that these unskilled foreign workers have made a huge contribution to the economic growth of the receptor countries. We can quote examples like the case of United States or Spain in the European Union where the immigration was rapidly absorbed in construction´s sector during bubble years. In addition, many economists argue that the cost of keeping immigrants is much lower than the wealth and added value they generate to the economy. According to this assertion, the increase of cheap supply in labor market implies a reduction of the price of certain commodities, goods and services. Thus, consumers can save money and firms find funds for investment.

Anyway, the current message of supporters of free movement and open borders may be summarized in a simple sentence: “Immigrants do work that Americans (or Spaniards, etc) refuse to do”.

Nevertheless, despite the apparent logic of this reasoning, the inconsistency of the argument is obvious. In fact, if all immigrant people become suddenly legal, they will enjoy the same wage scales of native workers. They will compete for the same jobs and will pay the same taxes. Accordingly, finally there will not be any work that “Americans won´t do”. Besides, if we consider a plausible reduction in the price of some commodities, goods and services, this fact does not imply the statement that “the more immigrant workers come, the better for national economy”. This is so because great part of the work executed in sectors where unskilled people go is made chiefly by machines. That is why it is very difficult to believe that, despite the reduction of wages produced by an increasing of labor supply, it will mean a net substitution of machines by muscles.

Regarding to the argument which states that immigrants give more wealth to the economy than the expenditure of keeping them, I must point out it is completely false. Not only because is well known that illegal immigrants avoid paying taxes, but anyway, the common income of unskilled people is slightly above the minimum wage. Therefore the public revenues in terms of taxes will be very low. On the other hand, the benefits and state aids that immigrants receive because of welfare programs (schools, healthcare, flats, etc) add a higher amount than the income they can give.

So, all this said without considering other social costs, like the high criminality, cultural integration and shadow economy.

After these considerations, we shall now analyze the case of free trade and free immigration:

It is used to say that free trade implies free immigration to work. Of course we believe in free trading and I think we all know the high cost of protectionism. So, given the case for free trade, what about free immigration?

The relation between trade and immgration is simple: elastic substitutibility: the more you have of one, the less you need of the other, and viceversa. The governments should foster free trade. That´s why 40% of poor people want to move a rich country.For instance, as long as mexican products may freely enter in US, the incentive for mexican people to move to a high-wage zone is lower (and viceversa). So, the possible strategies are basicly two: unconditional immigration and conditional or restricted immgration. Because there is a huge difference in the term “free”depending on what topic it is applied. Indeed, free trade implies that seller and buyer agree in the movement of goods and services. But free immigration doesn´t imply a previous agreement or invitation. That´s why it could be considered like an invasion. Do not be fooled by the way some experts employ the term free. It is much more complicated.

Free immigrants are not necessarily invited. That is why unconditional immigration would lead us to a progressive invasion, with fatal consequences (social clashes and tensions, criminality, etc).

We need to take some measures: restricted immigration, understanding the term “restricted” in the way of protecting native people of an unwanted immigration.

In conclusion, our approach model is the following: Immigration, for being free, must be invited immigration.

Quoting to Hoppe: “There is no such thing as free immigration, or an immigrant´s right of way. What does exist is the freedom of independent private property owners to admit or exclude others from their own property in accordance with their own restricted or unrestricted property titles”.

There is a very important field of research in this way, and libertarian economists must carry on with their committment of defending individual liberty and affording all these public debates from this perspective.

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