Ricardo himself acknowledged that his theory of the mutual advantage of trade would would not be true if there were large-scale cross-border movements of capital, or by implication, migrations of people. In that case, he pointed out, the living standards of the richer country would fall towards the level of the poorer country. Here's the relevant passage:
"If capital freely flowed towards those countries where it could be most profitably employed, there could be no difference in the rate of profit, and no other difference in the real or labour price of commodities, than the additional quantity of labour required to convey them to the various markets where they were to be sold.
"Experience, however, shews, that the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination which every man has to quit the country of his birth and connexions, and intrust himself with all his habits fixed, to a strange government and new laws, check the emigration of capital. These feelings, which I should be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations."
@Anon - interesting quote. Of course modern commmunications are crucial - in the past people who left to emigrate were often never heard from again, whereas now they can easily tell the folks back home about how things are going. I suppose also that throughout history migrants were treated as second class citizens of low status for quite a while; whereas now the natives are second class relative to recent arrivals.
treated en masse in a fashion precisely analogous to economic goods.
This is just weird. Is it "allowed" or "enforced"? What's the "disruption"? What do you mean by "treating" someone as an economic good?
Let's consider the marginal migrant, that is, the first guy who can't find productive employment in the new country. Why does he come? Most people don't, even when they can. Why doesn't he go back? Many migrants do so right now, as when the economy heads south.
If he still comes, then, presumably things are even worse where he's from. If he stays home and starves to death, he's being "allowed" to starve to death in that case. If he's kept home, when someone would take him in, then he's being "made" to starve to death. If he shows up in some place, can't work, and no one helps him, then he starves, but how is he "made" to starve, let alone "corralled" anywhere? Are you talking about stopping him from stealing food from others?
If we are in some kind of Malthusian limit state, there's going to be starvation somewhere. (Typically, Libertarians model migration as going from low-productivity areas to high-productivity areas, so the quantity of goods (e.g. food) goes up, rather than divvying up a fixed amount separated by national borders.)
Upon re-reading the comments here, I noticed this: Anonymous' quote from Ricardo does not support his claim that Ricardo believed that with the free movement of capital the richer country would fall towards the level of the poorer country. Instead, Ricardo's claim is that men of property create less wealth than they otherwise would because of the presence of various factors reducing the mobility of capital.
So there are two factors: Size of the pie and division of the pie. Anonymous is concerned that free flow of capital would hurt labor's rents in richer countries. Ricardo, on the other hand, is concerned that transaction costs on the flow of capital reduce the size of the pie.
12 September 2012 at 17:19
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One of the most mistaken arguments that I hear repeated comes from libertarians (mostly) - and I used to believe it myself.
It is that an open-border, unrestricted immigration and migration policy would be optimal so long as there is no welfare state to distort the market.
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This argument seems to derive from drawing an analogy between immigration-migration and free trade: since libertarians are convinced by Ricardo's 'law' of comparative advantage (that trade increases efficiency, and benefits both sides on average), they wish to apply the same principle to people as they do to economic goods.
So unrestricted movement of humans is seen as 'free trade' in humans.
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The main, deepest, arguments about this is the same as applies to free trade: that economic theory is an extremely simplified, partial, biased account of reality - like a toy model of balls and sliding rods representing a vastly complex dynamic reality. Of course simplification is a necessary aspect of all science. But it does entail that the applicability of any economic principle can never be assumed to be general, but must always be demonstrated in specific instances.
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But the specific argument against the equation of open borders with free trade is that it only works if you are genuinely prepared to treat humans exactly like economic goods.
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If too many economic goods are imported, and are not wanted, they may be dumped or allowed to rot - the libertarian argument applies the same logic to people.
If the existence of a welfare state is supposed to make a difference to the viability of free trade, then it means that libertarians are proposing that if unrestricted human movement across borders leads to a gross excess of humans in one place, far in excess of economic need, then they will be allowed to starve to death.
Indeed, the libertarian argument entails that - assuming the population of the host nation do not want, as individuals, to support the economically-surplus population, they will be made to starve to death whether they like it or not.
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In fact, most libertarians don't mean exactly this - they assume that the lack of a welfare state would stop the migrant populations from moving in the first place - and that they would stay-put and starve to death in the counties of their origin.
So the problem would, libertarians tend to say, never arise - or rapidly be self-correcting.
But this is to introduce further, and implausible, assumptions about human motivation.
If borders are open, there is no compelling reason why poor people would not move en masse to rich places, welfare state or not; and no reason to assume that the amount of such movement would be titrated against the supply of welfare state, charity or any other form of resource transfer.
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So, whether they recognize it or not, libertarians linkage of open borders with elimination of the welfare state entails accepting that the host population enforces starvation-to-death upon economically surplus migrants - which is indeed, to treat people as economic goods.
Yet, libertarians mostly would not accept that open-ended numbers of excess migrants be corralled and starved to death (in situations where the host population do not choose to support them, and where the arrivals are disruptive to the libertarian host society).
Therefore the argument made in favour of open borders and unrestricted human moment on condition of the elimination of ther welfare state is dishonest - since most libertarians will not (or would not) accept the logical consequences of their policy that humans be treated en masse in a fashion precisely analogous to economic goods.
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NOTE:
The Leftist argument in favour of open-borders is different from the libertarian in that it either ignores the effects of welfare states on human motivation or approves it. Unlike libertarianism, which is a hobby of intellectuals, Leftism is of course mainstream and almost universal in modern politics (including the media, education, public administration and the law).
Modern mainstream politics is in favour of unrestricted immigration and open borders - and can only excuse the universal disregard of this moral imperative as an unprincipled exception (i.e. as a pragmatic immorality).
Thus principled Leftists press continually for open borders and unrestricted movement of humans across the world, on egalitarian and moral (rather than economic) grounds: as a mechanism of re-distributing and equalizing resources between the wealthy and poor peoples of the world.
This method precisely depends-upon an open-ended commitment to the continuation and expansion welfare state of each developed country, so that US or UK or Swedish or Australian welfare becomes - in effect - a universal entitlement. By this Leftist account, economically surplus migrants must (as a matter of moral principle) be supported by the host nation for as long as they need support - and up to the same standard of living as the host nation - by coercive extraction of resources from the host population (i.e. taxes) without limit.
So the essence of the difference between libertarianism and Leftism in their favouring of open borders is that libertarians would enforce the starving to death of economically surplus immigrant populations; while Leftists would enforce the starving to death of the economically productive host populations. Both are of course wrong; but Leftism is worse because more dishonest, and more rapidly and completely destructive.
Or, consistent and principled libertarians are evil for treating people as economic goods, Leftists are evil for their aggressive totalitarian commitment to destroy all societal order based on natural law.
"Libertarians, Open Borders and the Welfare State"
4 Comments -
Ricardo himself acknowledged that his theory of the mutual advantage of trade would would not be true if there were large-scale cross-border movements of capital, or by implication, migrations of people. In that case, he pointed out, the living standards of the richer country would fall towards the level of the poorer country. Here's the relevant passage:
"If capital freely flowed towards those countries where it could be most profitably employed, there could be no difference in the rate of profit, and no other difference in the real or labour price of commodities, than the additional quantity of labour required to convey them to the various markets where they were to be sold.
"Experience, however, shews, that the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination which every man has to quit the country of his birth and connexions, and intrust himself with all his habits fixed, to a strange government and new laws, check the emigration of capital. These feelings, which I should be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations."
17 May 2012 at 08:00
@Anon - interesting quote. Of course modern commmunications are crucial - in the past people who left to emigrate were often never heard from again, whereas now they can easily tell the folks back home about how things are going. I suppose also that throughout history migrants were treated as second class citizens of low status for quite a while; whereas now the natives are second class relative to recent arrivals.
17 May 2012 at 11:26
they will be allowed to starve to death.
they will be made to starve to death
enforces starvation-to-death
corralled and starved to death
disruptive to the libertarian host society
treated en masse in a fashion precisely analogous to economic goods.
This is just weird. Is it "allowed" or "enforced"? What's the "disruption"? What do you mean by "treating" someone as an economic good?
Let's consider the marginal migrant, that is, the first guy who can't find productive employment in the new country. Why does he come? Most people don't, even when they can. Why doesn't he go back? Many migrants do so right now, as when the economy heads south.
If he still comes, then, presumably things are even worse where he's from. If he stays home and starves to death, he's being "allowed" to starve to death in that case. If he's kept home, when someone would take him in, then he's being "made" to starve to death. If he shows up in some place, can't work, and no one helps him, then he starves, but how is he "made" to starve, let alone "corralled" anywhere? Are you talking about stopping him from stealing food from others?
If we are in some kind of Malthusian limit state, there's going to be starvation somewhere. (Typically, Libertarians model migration as going from low-productivity areas to high-productivity areas, so the quantity of goods (e.g. food) goes up, rather than divvying up a fixed amount separated by national borders.)
22 May 2012 at 19:25
Upon re-reading the comments here, I noticed this: Anonymous' quote from Ricardo does not support his claim that Ricardo believed that with the free movement of capital the richer country would fall towards the level of the poorer country. Instead, Ricardo's claim is that men of property create less wealth than they otherwise would because of the presence of various factors reducing the mobility of capital.
So there are two factors: Size of the pie and division of the pie. Anonymous is concerned that free flow of capital would hurt labor's rents in richer countries. Ricardo, on the other hand, is concerned that transaction costs on the flow of capital reduce the size of the pie.
12 September 2012 at 17:19