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Bishop: Immigration, is it Really black and White?

Thursday, April 13, 2017


Bishop asks if immigration is black and white

Identity politics is toxic. It doomed Hilary Clinton’s bid for president. But, the shoe can be on the other foot. Under President Trump, the debate is whether white privilege is a made up concept to enable colored victimology or correctly depicts the circling of the wagons of disillusioned whites into a closed, dead-end culture.

Conservative scholar Charles Murray has gotten himself run off of campuses around the country for the temerity of suggesting that poor whites have more in common with disadvantaged minorities than with the country’s elites. I thought that was the message of the class warriors all along, but they are so lost in racial identity that they can’t even see when someone agrees with them.

Harvard, of all unsuspected places, is home to an equally controversial academic, labor economist George Borjas, who has done for the question of immigration what Murray has done for class in America. Borjas’ recent book: We Wanted Workers takes on the narratives of immigration in this country.  He equally skewers the mulitculturalist’s “melting pot”; the libertarian’s “open borders”; and the nativist’s “fortress America”.

An immigrant academic’s view of immigation

Borjas, an immigrant himself whose family’s small garment factory in Cuba was confiscated after the revolution and who flew to the United States as a pre-teen on one of the last Pan-Am flights before the Cuban Missile Crisis, finds few friends in any camp. Still, his skepticism of the dominant academic narrative that immigration is a good thing for America means that many concerned about securing the border and about policy for assimilation of the existing immigrant population or deportation of elements of the undocumented population find a degree of comfort in what he has written.

They are right in two notable respects. First, Borjas believes that securing the border is critical to immigration policy because it is essentially impossible to have an immigration policy without borders. Under such a scenario, he believes in mixed immigration including both low skill individuals which reflects a historic commitment to the betterment of the huddled masses and high skill individuals who contribute an economic surplus to the country by their presence.

Secondly, Borjas, who pioneered the field of immigration economics, demolishes the notion that immigration does not negatively affect natives. On balance he finds immigration is about a break even for the country itself when it comes to tax and GDP contributions of immigrants and the benefits they draw and expenses they pose. But he highlights that the costs and benefits are not evenly distributed, particularly relative to labor rates. His findings are that a 10% increase in immigration in a particular skill level results in a 3% decline in labor rates for that sector, thus negatively affecting natives who are in direct competition. The simple economics of supply and demand are born out by the empirical data.

This is true whether we are speaking about legal and illegal low skilled immigrants or high skilled H-1B visa recipients who famously are granted entry on the basis that their skills are needed but who, in many unrefuted anecdotal cases, simply supplant native workers at lower salaries.

An academic who says immigration policy can’t be charted by academics

But Borjas introduces yet another self-deprecating irony in his approach, which is not to argue from authority. He says it is his values and not his research and academic credentials that are the basis for his ideas about immigration policy:

I have been employed by the Harvard Kennedy School for the past two decades, probably the premier place to study public policy in the world. Nevertheless, I happen to believe that the claim that mathematical modeling and data analysis can somehow lead to a scientific determination of social policy is sheer nonsense.

Actually, Borjas’ value based approach is not incompatible with another onetime Kennedy School lecturer, Lant Pritchett, who advocates that rather than build the wall at the border, we should build the wall around the welfare system.

The idea that we wouldn’t help a peasant trying to eke out a living on the side of a mountain in Nepal by letting him work in the United States, just because we have to, if he comes to the United States, endow him with all the rights of U.S. citizens – I think that moral calculus is backward.


This is actually somewhat coordinate with Milton Freidman’s outlook that you can’t have open borders and a welfare state. Borjas notes that Freidman went so far as to say that illegal immigration is better than legal immigration because it was a higher bar to welfare state benefits. Borjas though is suspicious of that in real world outcomes. His findings from the Census Bureau’s Survey of Income and Program Participation (SIPP) data is that an incredible 46% of households headed by foreign born individuals receive government benefits when such benefits are not only barred to illegal immigrants to but to legal immigrants who have not first worked for 10 years in America.

One way to break the immigration logjam is to enforce meaningful sponsorship requirement

That provision, strengthened in the 1996 welfare reform signed by Bill Clinton, but nevertheless never enforced, is the remnant of the forgotten understanding that the family reunion process and sponsorship mechanisms in our immigration policy were meant to provide support to immigrants as a substitute for public benefits as they assimilated culturally and economically. So it would be the efficiencies of sharing expenses and living arrangements with family and friends that would help immigrants bridge periods of unemployment or underemployment.

This arrangement has likely been most oft but not exclusively altered by the birth of a child to an immigrant household in the United States making the child a citizen in an immigrant household and drawing benefits to the head of household in the name of the child.

Even with this stunning failure to enforce benefits law, Borjas believes the costs and benefits to the country of immigration are close to a wash. Depending on how you manipulate the statistics you could show a modest benefit or a modest cost. But the optics that it is our policy to subsidize immigrants who lower wages for American workers is the kind of double jeopardy that you don’t have to be a nativist to decry.

One way to introduce a degree of discipline into the existing framework of legal immigration, and even a notion of how to incorporate illegal immigrants whose only crime in America is to have come here, is to enforce sponsorship arrangements that require citizen sponsors to cover the costs of benefits if the household of the immigrant they sponsor becomes a “public charge”.

The optics of immigration subsidies need address even more than the costs

Every time we dream up a way for government to fix something, we import costs. It may indeed be true that, everything being equal, the cost to enforce sponsorship, in light of likely administrative effort and collection rates, might exceed the benefit. But that assumes that everything would be equal, that people might not think twice about sponsoring someone. And if sponsorship were made a serious institution, it could actually chart a way out of the shadows for those here illegally, i.e. that any program for regularizing undocumented aliens would depend not only upon their own commitments toward assimilation, but upon sponsorship.

And enforcing the economic commitment that was made by the immigrant and sponsor is far different than a mass deportation campaign. And since the current economic outcome of immigration is pretty close to a wash, such a program is not contemplated to raise money so much as change incentives.

It has the potential to do that for natives as well: from buoying the spirits of those who eschew welfare benefits themselves and are loathe to see them passed out to immigrants with whom they compete for work; to those native welfare recipients who could not help but be embarrassed by a program that could result in family, friends and community closing ranks around economic adversity rather than doing so with a government check.

This is about the incentive and perception of cash benefits, direct handouts like Temporary Assistance to Needy Families, TANF ; Section 8 housing vouchers; food stamps and heating assistance.  Some indirect benefits would remain such as public education for children of immigrants and indigent medical care. Whatever the many faults of Obamacare or any conceivable replacement, Americans are simply unwilling to see the school house or hospital door closed to anyone in our country.

Immigration, it isn’t black and white!

An important insight from Borjas’ work is that immigration is not an identity issue. It is not black and white in terms of how constituencies are served racially. The success of both African American communities and the racially distinct cohorts of earlier immigrant citizens and their children, especially those in enclaves, are more negatively affected by the redistributive effects he identifies. The benefits of cheaper labor that crowds out workers in sectors more predominately occupied by African Americans and earlier immigrants flow to capital rich employers, i.e. the top of the economic food chain. So an unwillingness to confront freer immigration policy based on a loyalty to the multi-cultural ideal ignores that, as currently administered, immigration in this country is making the rich richer and the poor poorer.

That is a gross oversimplification and there are good arguments that the spillover profits going up the chain simply catalyze more growth and employment, but it is so difficult to model this reliably Borjas finds nothing but gibberish or desired outcome in the presentation of numbers that correspond to the outlook of the analyst. He argues that the exception is, in the short term, immigration hurts some natives and we should control the borders, the welfare state, and the administrative state to give consideration to those natives negatively affected, even while recognizing that immigrants and the country are themselves lifted up by the process of immigration.

Brian Bishop is on the board of OSTPA and has spent 20 years of activism protecting property rights, fighting overregulation and perverse incentives in tax policy. 


Related Slideshow: Winners and Losers in Raimondo’s FY18 Budget Proposal

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Criminal Justice Reform

Per recommendations from the Justice Reinvestment Working Group, the Governor is proposing nearly $1 million in investments such as the public defender mental health program ($185,000), improved mental health services at the ACI ($410,000), recovery housing ($200,000) and domestic violence intervention, in her FY18 budget. 

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English Language Learners

Under the heading of “promoting 3rd grade reading,” Raimondo proposed adding $2.5 million to make English Language Learning (ELL) K-12 funding permanent.  The Governor’s office points out that RI is one of four states that doesn’t have permanent funding.

The suggestion was one made by the Funding Formula Working Group in January 2016, who said that “in the event that Rhode Island chooses to make an additional investment in ELLs, the funding should be calculated to be responsive to the number of ELLs in the system and based on reliable data, and include reasonable restrictions to ensure that the money is used to benefit ELLs — and promote the appropriate exiting of ELL students from services.”

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Car Owners - and Drivers

Governor Raimondo wants to reduce assessed motor vehicle values by 30% - a change that would reduce total car tax bills by about $58 million in calendar year 2018. Speaker of the House Nicholas Mattiello, however, has indicated that he might want to go further in its repeal.  

In her budget proposal, Raimondo also put forth adding 8 staffers to the the Department of Motor Vehicles to "address wait times."

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T.F. Green

The “Air Services Development Fund” would get an influx of $500,000 to “provide incentives to airlines interested in launching new routes or increasing service to T.F. Green Airport.” The Commerce Corporation set the criteria at the end of 2016 for how to grant money through the new (at the time $1.5 million fund).

Also getting a shot in the arm is the I-195 development fund, which would receive $10.1 million from debt-service savings to “resupply” the Fund to “catalyze development & attract anchor employers.”

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Minimum Wage Increase

An increase in the state minimum wage is part of Raimondo’s proposal, which would see it go from $9.60 an hour to $10.50 an hour.  Raimondo was unsuccessful in her effort in 2016 to bring it up to $10.10 — it was June 2015 that she signed legislation into law that last raised Rhode Island’s minimum wage, from $9 to 9.60.  

The state's minimum hourly wage has gone up from $6.75 in January 2004 to $7.75 in 2013, $8 in 2014, and $9 on Jan. 1, 2015.  Business groups such as the National Federation of Independent Business however have historically been against such measures, citing a hamper on job creation.  

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Cigarette Tax

Like the minimum wage, Raimondo is looking for an increase - in this instance, the cigarette tax, and revenue to state coffers.  Raimondo was unsuccessful in her effort to go from a tax of $3.75 to $4 last year. Now she is looking for an increase to $4.25 per pack, which the administration says would equate to $8.7 million in general revenue — and go in part towards outdoor recreation and smoking cessation programs.  

The National Federation of Independent Business and other trade groups have historically been against such an increase, saying it will hurt small businesses - i.e. convenience stores. And clearly, if you’re a smoker, you’re likely to place this squarely in the loser category instead. 

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As often happens in the state budget, winner one year, loser the next. As GoLocal reported in 2016, “the Rhode Island Hospital Association immediately lauded the budget following its introduction, and addressed that while it is facing some reductions, that it "applauds" this years budget after landing on the "loser" list last year.”

This year, it falls back on the loser list, with a Medicaid rate freeze to hospitals, nursing homes, providers, and payers — at FY 2017 levels, with a 1% rate cut come January 1, 2018. 

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Online Shoppers

The taxman cometh — maybe.  Raimondo proposed an “Internet Sales Tax Initiative” — which would purportedly equate to $34.7 million in revenues.

"Online sales and the fact that online sellers do not collect sales tax has created a structural problem for Rhode Island's budget — our sales taxes have been flat," said Director of Administration Michael DiBiase, of the tax that Amazon collects in 33 states, but not Rhode Island. "We think mostly due to online sales, we’re able to capture the growth. The revenue number is $35 million dollars — it improves our structural deficit problem. It’s an important fiscal development."

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Long Term Care Funding

The Governor’s proposal recommends “redesigning the nature” of the State’s Integrated Care Initiative, by transferring long-term stay nursing home members from Neighborhood Health to Medicaid Fee-for-Service and repurposing a portion of the anticipated savings (from reduced administrative payments to Neighborhood Health) for “enhanced services in the community.” “The investments in home- and community-based care will help achieve the goal of rebalancing the long-term care system," states the Administration. 

Cutting that program is tagged at saving $12.2 million; cuts and “restructuring” at Health and Human Services is slated to save $46.3 million. 


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