Governments Do the Bad Things That Sound Good
An excerpt from Chapter 6 of *Unbeatable*
Like Selfish Reasons to Have More Kids and The Case Against Education, Unbeatable ends with a series of dialogues between myself and imagined critics. Here’s an excerpt from a conversation between myself and these three composite characters:
Eduardo Borges, professor of economics at the University of California, San Diego
Hildegard Lorenz, professor of economics at the London School of Economics
Sam Remington, founder of the Effective Altruism Amiable Rationalist blog
[from Chapter 6: Four Candid Conversations]
Hildegard: [diplomatic] As an economic theorist, I often need to remind myself that people care about more than material wealth. Academic economists are “Anywheres,” people who feel comfortable all over the world. Most people, though, are “Somewheres,” people who feel deeply culturally rooted wherever they grew up. Even if Bryan is right about the narrowly economic benefits of mass migration, he’s missing the cultural costs.
Bryan: [eager] These “cultural costs” would have to be astronomical to outweigh the tens of trillions of dollars of gains we’re forfeiting every year. And they’re clearly not. If natives really cared so much about their cultures, they would be migrating en masse to low-immigration areas of their countries. They aren’t.
Eduardo: Why should the natives have to move?
Bryan: I’m not saying they “have to move.” I’m saying that if their attachment to their culture were strong, they would move. Since they almost never do, we should infer that their cultural attachment is weak. SDB, SDB, SDB: “My culture means everything to me” sounds far better than, “I’d pay $20 extra a month to live in an immigrant-free neighborhood.”[i]
Sam: [losing patience] We’re not going to resolve this issue today, so perhaps we should move on?
Bryan: [overly excited] Wait, I’ve got one last challenge for my fellow economists! Please, what exactly is the market failure that immigration restrictions are designed to correct?
Hildegard: Negative externalities, I guess. Fiscal, cultural, political. Crime, maybe.
Eduardo: Not to mention distribution. Even if immigration enriches the world and the average native, many natives aren’t average.
Bryan: If the problem is negative externalities, then the usual Pigovian logic applies: Governments should measure these negative externalities — remembering to subtract any positive externalities — then impose an immigration tax of equal magnitude. Anyone who pays the tax gets in. If the problem is distribution, similarly, why not tax immigrants enough to compensate the natives who lose — then roll out the welcome mat?
Eduardo: You’re talking about creating a two-tier society. No wonder you keep gushing about the United Arab Emirates.
Bryan: I keep “gushing” because it’s living proof that “trillion dollar bills on the sidewalk” is not silly blackboard economics. Emirates is a cruise ship the size of a country, where the world’s poorest and richest come together for the betterment of both. The West is demonstrably missing a golden opportunity to enrich their citizens and humanity by tens of trillions of dollars.
Eduardo: [frustrated] Tens of trillions? Too bad. The principles of democratic equality are priceless.
Bryan: Priceless to who? India’s a democracy, yet millions of Indians happily move to the Gulf monarchies for better jobs. The labor markets of Dubai deliver on Indian politicians’ eighty years of broken promises of prosperity. Plenty of foreign-born economists at U.S. universities get green cards to work, and never bother applying for citizenship. If U.A.E. offered to double your salary, Eduardo, would you turn them down flat?
Sam: [conciliatory] Immigration restrictions are only the first of your so-called “Biggest Losers.” Housing regulation is next on the list. We don’t need government to curtail all the negative externalities of construction?
Bryan: Construction has ample negative externalities — along with ample positive externalities. Textbook econ urges policy-makers to respond to the net externality: all the positives minus all of the negatives.
Hildegard: Who would suggest otherwise?
Bryan: Great question. There’s no doubt that regulation sharply reduces construction relative to laissez-faire.[ii] Regulators are acting as if they know that the net externalities of construction are hugely negative. Yet we have overwhelming evidence that net externalities are hugely positive.
Eduardo: Why, because you need a permanent building boom to house all the immigrants you want to wave in?
Bryan: I like the way you think, but that’s a separate issue. We know that the net externalities of construction are hugely positive because people have a straightforward way to dial traffic, parking, noise, exhaust, and visual externalities down to zero — and save piles of money. Move to the middle of nowhere, problem solved.
Eduardo: Why should people have to move to the middle of nowhere to have a decent life?
Bryan: I never said they should move. My claim is that they could, but they don’t. Instead, people pay big premia to live near other people in order to experience the combined package of all the good and bad effects of neighbors. Which teaches a deep lesson: The positive externalities of denser living must greatly outweigh their negative externalities.
[i] For elaboration, see Caplan 2021c.
[ii] Glaeser and Gyourko 2018; Gyourko et al. 2021.
The first point seems incredibly poorly thought through.
People very clearly do move away from high-immigration neighbourhoods! This is well documented in the UK and France at the population level.
White Britons tend to move to majority-white (95%+) areas in their 30s when having kids.
We also see macro-level shifts in the classic “white flight” cases: Bradford, Saint-Denis, Southall, Blackburn, Tower Hamlets. Entire neighbourhoods that were 99% White in the 1950s are now over 90% minority.
And the answer to the question “Why don’t people move across the country?” is already in the preceding paragraph. “Somewheres” are defined by attachment to place, not race or nation or ethnicity. If you’re from south London and you’re uneasy about the pace or nature of demographic change, your options typically look like:
1) Stay put - keep your attachment to place, with less attachment to the area’s shifting ethnic profile. Quite common until the demographic shift gets extreme; 2) Move nearby to somewhere whiter but still kinda "your area" (Essex is the classic example for Londoners) - also common. 3) Move across the country to somewhere 99+% white (e.g. Cumbria) - this is less common because you have no attachments there!
Bryan's pro-immigration stance has a lot to recommend it, but his revealed-preference test cuts both ways. He argues that if natives truly disliked the cultural change brought by immigration, they would simply move to low-immigration areas, and the fact that they don’t proves the costs aren’t high. But that assumes the only relevant change is immigration-driven cultural shift. For many people, moving itself (leaving family networks, lifelong routines, and a place they’re deeply rooted) is an even bigger cultural upheaval. So their inaction doesn’t show that immigration-driven cultural change is trivial; it may just show that they’re choosing the smaller of two unwelcome changes. Staying put can be a sign of constraint, not indifference. I can imagine a decent response to this based on what he's said and written elsewhere, but in the dialog in this chapter its absence is kind of glaring.