Hive Mind and Open Borders

Garett Jones' new working paper on "Measuring the Sacrifice of Open Borders" has already received much attention. Before I respond to it, though, let me recount The Story So Far.

1. About a decade ago, researchers such as Michael Clemens started using standard trade models to estimate the economic effects of open borders. All such estimates were enormous, giving rise to slogans like "Open Borders: "The Efficient, Egalitarian, Libertarian, Utilitarian Way to Double World GDP."

2. In 2015, my colleague Garett Jones published Hive Mind: How Your Nation 's IQ Matters So Much More Than Your Own, arguing that national IQ has a large causal effect on national outcomes. It's a great book; here's my review with further commentary.

3. Although Hive Mind makes many optimistic observations about immigration, readers routinely interpret the book as an attack on low-skilled immigration. Open borders wouldn't enrich the world; instead, it would impoverish the world by breaking the countries that work.

4. Garett subsequently wrote a presentation sympathetic to the latter interpretation, entitled "Are the Global Benefits of Open Borders a Fallacy of Composition?" (though he still primarily relied on "Deep Roots" models rather than national IQ).

5. Caplan and Weinersmith's new Open Borders: The Science and Ethics of Immigration used Hive Mind 's preferred estimates to run a little thought experiment: What would happen if everyone on Earth moved to the U.S., bringing our national IQ down to the global average? The result: Global output still roughly doubles. Here's the key page, featuring me as a virtue-signaling knight debating a Jonesian alien:

6. Last week, Garett published a new working paper critiquing my thought experiment. He confirms all my math: In a fully Jonesian framework, open borders is still a fantastic opportunity for mankind. GDP per capita falls by about 50% in rich countries, but total production rises by 81%.

7. So what's the rumpus? Garett argues that more than 100% of the gains will go to immigrants! So even though open borders nearly doubles the production of mankind, it reduces living standards of the current inhabitants of rich countries by a massive 40%. In short, we have a classic NIMBY ( "Not In My Backyard") picture; open borders is great for humanity, but nevertheless awful for us.

8. How is this possible? Drawing on earlier work, Garett insists that the personal payoff for IQ is modest. 1 IQ point raises earnings by about 1%. Since current U.S. IQ is about 11 points above the world average, the current citizens of rich countries will end up earning roughly 60% of what they now earn. In other words, Garett's concern is that under open borders, income will be too equal for current residents of high-IQ countries to maintain their standard of living.

9. "Measuring the Sacrifice of Open Borders" doesn't openly declare the sacrifice excessive, but if this isn't a Straussian passage, what is?

But using Caplan's base year estimate of U.S. income per capita of $58,000 per person, that would suggest the mean per-capita income of ex-ante Americans would fall from $58,000 to $33,000. It's about 14% higher than the Open Borders America average of $29,000, but quite a decline from the world before Open Borders. Is a 43% drop in income a large sacrifice for the cause of Open Borders? I'll leave that for each reader to answer personally.

So is Garett right?

1. To begin, reflect on how implausible Garett's scenario is. In his story, the production of mankind virtually doubles , yet the average person in rich countries receives less than none of the gain. Why is this implausible? Because throughout history, large increases in production have invariably been broadly beneficial. The Industrial Revolution didn 't just benefit factory owners; it benefited everyone who consumed the mountains of new products. The internet didn't just benefit programmers and tech entrepreneurs; it benefited everyone who surfs the web. Vaccines didn't just benefit medical researchers; they benefited everyone who would have died without them. While progress always harms someone, the idea that global GDP could rise by 81% without trickling down to the current residents of the First World is bizarre.

2. Bizarreness aside, what should we think about Garett's "favorite estimate" that 1 extra IQ point raises wages by a mere 1%? The natural question is: controlling for what? As Garett himself has emphasized in the past, you should beware of "Everest regressions." As the quip goes:

Controlling for barometric pressure, Mount Everest has the same altitude as the Dead Sea.

Thus, if IQ causes higher earnings both directly and by raising education, controlling for education masks much of the true effect of IQ.* When I simply regress log income on AFQT percentile with no controls, I get a coefficient of .011, which implies that being 11 IQ points (or 27 percentiles) above your national average raises earnings by .3 log-points. This is hardly the only way to run the estimates, but it 's reasonable, and implies much larger private benefits of IQ - and much smaller native losses - than Garett's preferred figure. My underlying suspicion, to be frank, is that (unlike Garett himself) most economists are IQ-phobic and have therefore searched mightily for ways to downplay the personal payoff for IQ.

3. The deeper question, though, is: Should we expect the modest private benefit of IQ we see in current U.S. data to persist under open borders?

The right answer is, "Clearly not."

Under open borders, the high-IQ share of the population shrinks. Due to this fall in relative supply of high-IQ workers, we should expect the market reward for IQ to rise. By how much? Consider South Africa. 80% of its citizens are black, 9% white, 9% mixed, and 2% Asian. White IQs far exceed black IQs. If Garett 's results for the private benefits of IQ were constant, we'd still expect tiny racial earnings gaps. Yet almost three decades after the end of apartheid, white earnings in South Africa far exceed black earnings; the average white makes about 500% more than the average black, and 250% more than the national average. If you do the math, a private payoff in this ballpark implies that open borders is no "sacrifice" for natives. Instead, like every other previous massive increase in human productivity, open borders is a widely-shared bonanza. Just as my new book says.

4. I fear that most pro-immigration readers will casually believe me, and most anti-immigration readers will casually believe Garett. Before you make up your mind on the Big Picture, though, you really should reflect on the underlying building blocks of our arguments. Would IQ have a big effect on personal economic success under open borders? Would there be high inequality under open borders? If you answered Yes to both questions, you should be on my side. If you answered No to both, you should be on Garett 's side. Despite mood affiliation, that's the truth.

5. As I explain at length in Open Borders , there are strong reasons to believe that open borders would sharply raise the IQs of the children of immigrants without depressing the IQs of the children of natives. So even if the market payoff for IQ were unrelated to its supply, Garett 's estimated effects on natives are way too pessimistic, because national IQ will fall much less than naive demographic arithmetic implies.

6. As I told Garett during our 2016 debate on this topic, his case against open borders is still implicitly a case for radical liberalization of immigration. He has every reason to support open borders with China, Japan, Korea, Canada, Australia, New Zealand, and Europe.* His own models predict that this would be fantastic for natives and immigrants alike. Why Garett chooses to market himself as an immigration skeptic remains a mystery to me - and why so many immigration skeptics accept him as one of their own is a riddle, wrapped in a mystery, inside an enigma.

• And if Jones bases his case on "Deep Roots" rather than national IQ, he should also support open borders with India, Pakistan, Bangladesh, and the Middle East, all heirs of civilizations of great antiquity.

The post Hive Mind and Open Borders appeared first on Econlib.

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