Open Borders VI: Not For The Many, But For The Few

The argument that open borders make everyone better off is based on a number of unrealistic assumptions. Even if it did grow the GDP of every country this would not mean that everyone in those countries are better off.

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This is the sixth and final article in a series on open borders. An ‘open borders’ migration policy is one where a country exercises border control only insofar as is needed to catch criminals.

In the first three articles I argued that open borders migration policies were incompatible with democratic socialism, with the kind of democracy which makes government legitimate, and with the flourishing of civil society. In the previous two I debunked two arguments in favour of open borders: that migration is a human right which borders violate, and that encouraging migration from poor to rich countries is a good way to make poor people richer by conferring upon them the comparative advantage of living in a wealthier nation.

This article will debunk another popular argument for open borders: that they will make everyone richer; that they bring about an ‘absolute advantage’. This argument falls down in two ways. Firstly, the connection between open borders and international economic growth only holds true under certain ideal conditions. These conditions don’t hold today, and they never did. Secondly, even if open borders did make everyone richer, policy isn’t just about generating ‘wealth’. The risks and side-effects of any particular economic ‘get-rich-quick’ scheme are just as important as how rich it gets you.

The argument that open borders between countries make all the mutually ‘open’ countries richer is owed to David Ricardo. To make the argument as quickly as possible, let’s consider a comically idealised case.

Suppose there are only two countries: Leatherstan and Shirtania. Since Leatherstan and Shirtania are both full of humans, and humans want to wear shoes and shirts wherever they live, the subjects of both Leatherstan and Shirtania alike want shoes and shirts. Now, Leatherstan has no cotton trees, but many herds of cattle, due to some idiosyncrasy of its climate, or history. Shirtania has no herds, but many orchards of cotton trees. Leatherstan exploits her natural resources to make more shoes than her own denizens need, and so sells the surplus to Shirtania. Conversely, Shirtania exploits her natural resources to make more shirts than her own denizens need, and so sells the surplus shirts to Leatherstan.
The amount of shirts and shoes each country can make is determined not only by natural resources, but also by the talents (more realistically, the training) of its denizens. The more expert cobblers you have, the more valuable your final shoe output. Some humans are more talented at making shirts (and spinning raw cotton), and some humans are more talented at cobbling shoes (and skinning dead cows). Before opening the borders between Leatherstan and Shirtania, these groups of humans are spread evenly across the two countries, since climactic and historical idiosyncrasies do not (one would think) determine distributions of talents. But if Shirtania’s would-be cobblers and skinners could move to settle in Leatherstan, then Leatherstan’s output would increase; and if Leatherstan’s would-be tailors and spinners could move to settle in Shirtania, then Shirtania’s output would increase. Both would have a greater surplus to export. Everyone could have more shirts and shoes, which is nice. All else remaining equal, everyone could have more of what they want. Having what you want is called ‘wealth’; open borders have made everyone wealthier.

There are lots of ways in which the real world differs from our idealized case.

When we are in primary school, we are taught by loving teachers that wherever there is difference, there is equality. Everyone has a special talent that others in the community lack, which ensures that they are equally valuable. This is false. If humans are equally valuable, it is not because they are equally talented but, to cut a long story short, because of magic.

Likewise, the shapes of nations have not been determined by a process which ensures that each has a surplus of one or more resources. These shapes are determined by a combination of long-term inter-racial animus, geography, and the historical contingencies of weapons development and political accident.

Similarly, the distribution of ‘talents’, which make some people better suited to exploit certain resources than other people, is not uniform across nation-states. In the parable above we supposed the talents were innate skills. In the real world, the role played by ‘talents’ in preparing populations to exploit natural resources is played by a combination of education and training systems, cultural traditions, and political structures.

An old-fashioned expression for the conditions necessary to exploit a resource is a ‘means of production’. Theorists like Ricardo suppose that the means of production are ultimately homogeneous: rather than thinking about a means of production suited to exploit cotton, the mill; another suited to exploit leather, the tannery; and another suited to exploit maritime chokepoints, the port; we should just think of the means of production in general. This is because, they suppose, mills, tanneries and ports can all be bought and sold.

Since there is (classical economists imagine) nothing about any country’s history or geography which makes its denizens more or less able to buy, sell or hold money, it becomes easy to imagine that the means of the production are, in effect, uniformly distributed across countries.

This is an illusion. The interchangeability of different means of producing different things is not absolute, because not all really can be bought or sold; and not all countries really do make their denizens equally able to buy, sell or hold these different means. Under political conditions with which we’re familiar with, money can buy you a tannery; but in another country tanneries might be nationalized. Money can’t normally buy you a port. In the US it can buy you a university, but in the UK all but one are nationalized. Money can’t buy you peace, or a corruption-free justice system. Both are, in their own ways, means of production.

In other words, the ‘talents’ are not uniformly distributed across the world. They never were, and there is no reason to think they ever will be. They emerge, change, or collapse due to a mess of causes in which economics only plays a partial role.

So means of production are required to help humans exploit resources. But those means are not distributed uniformly. So labour cannot tidily, profitably specialize by moving around the world to match up means and resources, as in our parable.

To take things even further away from the ideal case, unlike the denizens of Leatherstan and Shirtania, people do not all have uniform desires. So there is even more ‘inequality’, or just diversity, of distribution of demand for different goods. This means that different resources, different means of production, and the people who use the latter to exploit the former, will command different prices from and in different places.

Generally speaking, the economic effects of migration between nations will be arbitrary and difficult to predict, depending on how things stand when the migration ‘starts’.

Report_on_Immigration

Migration: it’s a messy business, not a computer program. (Imma Moles, CC BY-SA 3.0)

Now for the second horn of the argument: even if open borders were likely to lead to everyone growing wealthier, this would not be a powerful argument in and of itself. This is because of the discrepancy between how wealth is described in principle, and what it means in practice. In our parable, ‘wealth’ just means ‘having more of what you want’. That makes it sound like it’s the only thing that matters.

What it means in reality, however, is having more money. More precisely, more ‘gross domestic product’ for every nation. But a higher gross domestic product – a ‘larger economy’ – is not the same as everyone having more money, let alone everyone having more of what they want.

Whose hands the money ends up in depends on how it was made, how its makers get paid, and how it is taxed. That a nation (or nations plural) has more money in aggregate does not mean that everyone has more money.

Whether or not it gets anyone more of what they want depends on what those who have it, do with it. Including what government does with it. Just getting the money is not enough.

Moreover, the parable masks the distinction between what people ‘want’, as expressed in their buying choices, and what they really really want, as expressed by what they would say they care about most if you asked them. We know quite well that these two come apart easily, and we always have.

We should take the gap between ‘growing the economy’, and everyone actually getting more of what they really want, seriously. That gap is occupied by political decisions, not economic processes.

And when those we trust to make those decisions place their minds in the vice of theories like the one described above, they can make the gap between makin’ money and getting what we want even bigger, by buying into the illusion that everyone and everywhere is interchangeable, and buying into the conflation of growth and the achievement of the common good.

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Hugh Burling is a PhD candidate at the University of Cambridge. You can read his latest article here.

Enjoyed this article? Subscribe to the Quad. Featured photo by Elliot Killingbeck, used under a Creative Commons Share-alike 3.0 Unported licence.

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