North of the Border

Paul Krugman is conflicted on immigration. In fact, I would say that he is confused--and probably wrong:

North of the Border - New York Times: by PAUL KRUGMAN: I'm instinctively, emotionally pro-immigration. But a review of serious, nonpartisan research reveals some uncomfortable facts about the economics of modern immigration, and immigration from Mexico in particular. If people like me are going to respond effectively to anti-immigrant demagogues, we have to acknowledge those facts.

First, the net benefits to the U.S. economy from immigration, aside from the large gains to the immigrants themselves, are small. Realistic estimates suggest that immigration since 1980 has raised the total income of native-born Americans by no more than a fraction of 1 percent.

Second, while immigration may have raised overall income slightly, many of the worst-off native-born Americans are hurt by immigration -- especially immigration from Mexico.... George Borjas and Lawrence Katz... estimate that U.S. high school dropouts would earn as much as 8 percent more if it weren't for Mexican immigration. That's why it's intellectually dishonest to say, as President Bush does, that immigrants do "jobs that Americans will not do." The willingness of Americans to do a job depends on how much that job pays -- and the reason some jobs pay too little to attract native-born Americans is competition from poorly paid immigrants....

Mexican immigration, says the Borjas-Katz study, has played only a "modest role" in growing U.S. inequality. And the political threat that low-skill immigration poses to the welfare state is more serious than the fiscal threat: the disastrous Medicare drug bill alone does far more to undermine the finances of our social insurance system than the whole burden of dealing with illegal immigrants. But modest problems are still real problems, and immigration is becoming a major political issue. What are we going to do about it?

Realistically, we'll need to reduce the inflow of low-skill immigrants. Mainly that means better controls on illegal immigration.... We need to do something about immigration, and soon. But I'd rather see Congress fail to agree on anything this year than have it rush into ill-considered legislation that betrays our moral and democratic principles.

I think that we should focus on: "the net benefits... from immigration, aside from the large gains to the immigrants themselves, are small." Particularly, we should focus on the "large gains to the immigrants themselves." The net benefits from immigration including the large gains to the immigrants themselves are enormous. We shouldn't forget that.

We should be taking steps to equalize America's income distribution: more progressive tax brackets, more public provision of services, a more generous Earned Income Tax Credit, a higher minimum wage, a greater focus on education. But tight restrictions on immigration are a really lousy anti-poverty policy: one with enormous excess burdens measured in money, and truly mammoth excess burdens measured in utility.