In my immigration debate last May with Garett Jones, he presented a memorable and compelling slogan, which he attributed to Papa John’s: “My theory of why institutions differ is called the Papa John’s theory of institutions. Better ingredients make better pizza. Choose your ingredients wisely.” By implication, to get the best pizza, you should only choose the best ingredients. Indeed, the original draft of the Papa John’s slogan was “The Better the Ingredients, the Better the Pizza,” and its founder John Schnatter once actually said, “We would make the best pizza with the best ingredients even though it cost us more.”
While humanitarians might demur, how could anyone disagree with this as the most prudent way to advance a nation’s welfare? My answer: Anyone who grasps Econ 1 should abjure these slogans as utter nonsense.
Let’s start with Papa John’s itself. Do they use “the best ingredients”? The Pizza Hut v. Papa John’s (2000) lawsuit rather conclusively demonstrated that Papa John’s ingredients were not even better than its competitors’, much less “the best.” Specifically:
Tomato sauce: Papa John’s advertised that its sauce came directly from processed fresh tomatoes, while competitors used tomato paste mixed with water. Although this accurately reflected differences in manufacturing, the trial court found no measurable difference in the finished sauces that justified the implication of superior quality.
Pizza dough: Papa John’s emphasized that it used unfrozen, slowly fermented dough, whereas much of Pizza Hut’s dough was frozen. The trial court found no convincing scientific evidence that Papa John’s method produced superior pizza crust.
Water: Papa John’s advertised its use of filtered water, contrasting it with Pizza Hut’s tap water. The court rejected the implication that municipal water was inferior.
Taste tests: Papa John’s advertised victories over Pizza Hut, but the trial court found that its presentation misleadingly exaggerated the results.
How then has Papa John’s made its way in the pizza marketplace? The usual way: Offering an attractive package of price, quality, and convenience. Almost no one sincerely thinks that Papa John’s pizza is supremely delicious; the trial court explicitly ruled that this slogan was mere “puffery” that consumers should not take as a literal statement of fact. They eat it in mass quantities because, like almost every other mass-market product, it’s good enough.
Why, though, doesn’t any major pizza producer sincerely embrace the slogan that Papa John’s itself fails to follow? Simple: They’d lose a pile of money. While a few pizza parlors try to carve out a tiny niche of ultra-premium pizza, the vast majority of consumers happily sacrifice quality for price. I don’t want to pay $200 per pizza. Do you?
The same goes for the labor market. Firms might claim they only want to hire the best workers, but no firm sincerely acts on this puffery. The highest-tech firms in the world still hire all sorts of employees who are decidedly mid-skilled or low-skilled: secretaries, accountants, handymen, security guards, plumbers, janitors, gardeners, and beyond. And the are wise to do so: For the vast majority of jobs, the best of the best is absurd overkill. Adequate will do. Who needs a janitor with a 130 IQ?
The extension to immigration is straightforward. Limiting yourself to the “best people” may sound good, but it’s economically illiterate nonsense. Sophistry on stilts. Speaking purely prudentially, you want everyone who is better than nothing. Mathematically: E(X)>0. As I wrote in my open letter to Elon Musk:
You could reply: “Fine, but only very high-skilled immigrants have E(X)>0.” But look at your own companies. You don’t just hire top engineers and programmers. You hire receptionists, assembly-line workers, janitors, gardeners, and construction workers. With good reason: Otherwise, your top engineers and programmers would have to waste their precious time answering Tesla’s phones, assembling its cars, cleaning its toilets, mowing its lawns, and pouring its concrete.
Moreover:
This isn’t just true on the job; it’s true inside the household. Your top engineers and programmers are only able to work 80-hour weeks because they can hire nannies and maids, ride in Ubers, and order food delivery. High-skill productivity depends on an abundance of complementary low-skill productivity.
And:
The vast majority of humans who are “hard-working, honest, and love America” are not top engineers and programmers - or even in the top half of GRE scores. Especially globally, these stars are vastly outnumbered by ordinary, humble people with E(X)>0. Your company needs them — and your country needs them.
Just as it is economically illiterate to insist that pizza parlors produce only top-notch pizzas, it is economically illiterate to insist that countries admit only top-notch immigrants. The path of wisdom, rather, is to make the humblest pizzas and admit the humblest immigrants, so long as they have positive net value. Even the dried-out airport pizzas. Even the illiterate Afghan goat-herders. Just because you don’t see their value doesn’t mean that they aren’t worthwhile to someone. A hungry traveler whose flight got cancelled wants that dried-out pizza. An Afghan restaurant wants that monolingual Dari-speaker dishwasher.
You can always claim, of course, that low-skilled immigrants (or any immigrants) have negative externalities awful enough to swamp their labor market contributions. But our ability to catastrophize does not make catastrophe credible. As a rule, employers avoid hiring workers who generate negative externalities, because ground zero for those externalities is the workplace itself. If a certain kind of applicant is crime-prone, unpleasant, lazy, insubordinate, or just plain freaky, employers take that into account in their hiring decisions. And while it is logically possible to be a model worker but a terrible citizen, this configuration is highly implausible. The burden of proof justly lies on the accuser.
Addendum: At our Austin debate, Garett wished for an influx of immigrant brainpower sufficient to raise our national IQ by 3-6 points. Even if they made up 20% of the population, the immigrants would have to have an average IQ between 116 (for 3 points) to 134 (for six points). At our recent follow-up debate in Wyoming, I had the opportunity to ask Garett why the cutoff should be so high. Why not, per his own work, at least gladly welcome everyone who raises average IQ, which in the U.S. stands at 98?
He offered two candid answers.
With family unification policies, an immigrant with an IQ of 98 could still lead to the chain migration of many immigrants whose immigrants are less than 98.
Due to chronic deficits, the average American is a net fiscal burden, so you have to be far above average to be a fiscal positive.
I appreciate the responses, yet I’m unimpressed. Reply:
For countries with average IQs over 98, you should expect (via mean regression) the chain migrants to actually be smarter than the original migrant.
Furthermore, due to high correlations of both blood and marriage relatives, you this is a second-order issue even for migrants where the average IQ is less than ours.
Chronic deficits show that the average American is a fiscal burden, but not the marginal American! Does anyone seriously expect crashing fertility to make the U.S. debt crisis less severe?! No, because so much government spending in non-rival.
In any case, this is an excellent illustration of the fact that a person’s fiscal contribution to the government drastically understates his overall contribution to society. A person can easily pay zero taxes yet still generate piles of consumer surplus for his customers and producer surplus for his employers.
At the meta-level: Even if American voters and politicians stubbornly insist on making otherwise productive people into net negatives, it is perverse to get angry at immigrants or their defenders. If you’re going to be angry at anyone, get angry at normies. Though it’s probably best not to get angry at all.
>And while it is logically possible to be a model worker but a terrible citizen, this configuration is highly implausible. The burden of proof justly lies on the accuser.
Not only is this not implausible, Caplan's research shows that it's true of MOST people. Most people are terrible citizens! The average voter produces enormous negative externalities by voting!
"The best" is an informal way of describing it. Obviously Papa John's is not even close to the best pizza. But you can still have a quality-oriented strategy without selling a $200 pizza.
To pick a more practical example, if you talk to, say, the people running HR at a top tier tech company. You might have a rough goal like "When we open up the office in Brazil, in year one we want to hire 50 of the best local software engineers." But when you drill down more specifically, you're going to make practical decisions which could still be "best-oriented", like, our aim is to hire people at the 90th percentile in the market. Therefore we need to be prepared to pay what the 90th percentile is making in the market. Etc. You aren't literally targeting the very best 50 people because you don't even know who they are, the goal is too hard, etc.
You don't want to hire "everyone who is better than nothing" because you can't measure the intangible downsides of hiring too many people. How do you know at what point you've overhired and your company culture is going to degrade?
In particular one problem with low skilled immigration is that if it lowers support for immigration, you're going to end up with a backlash that causes lower net immigration. As a matter of common sense, it seems pretty clear to me that this does happen.
A much better principle is that you should admit immigrants that are "better than average" in some sense. Smart, hard-working. People who have proved their dedication via learning English. That sort of thing. Be intelligent about it and pick some procedure for admitting people that you expect to bring up the average "goodness per capita" of America.