A decade ago, Nobel prize-winning economist Milton Friedman
admonished the Wall Street Journal for its idée
fixe on open-border immigration policy. "It's just obvious you
can't have free immigration and a welfare state," he warned. This
remark adds insight to the current debate over immigration in the
U.S. Senate.
To be fully understood, Friedman's comment should be viewed as
applying not merely to means-tested welfare programs such as food
stamps, Medicaid, and public housing, but to the entire
redistributive transfer state. In the "transfer state," government
taxes the upper middle class and shifts some $1.5 trillion in
economic resources to lower-income groups through a vast variety
benefits and subsidies. Across the globe, this sort of economic
redistribution is the largest, if not the predominant, function of
government in advanced societies.
The transfer state redistributes funds from those with
high-skill and high-income levels to those with lower skill levels.
Low-skill immigrants become natural recipients in this process. On
average, low-skill immigrant families receive $30,160 per year in
government benefits and services while paying $10,573 in taxes,
creating a net fiscal deficit of $19,587 that has to be paid by
higher-income taxpayers.
There is a rough one-to-one fiscal balance between low-skill
immigrant families and upper-middle-class families. It takes the
entire net tax payments (taxes paid minus benefits received) of one
college-educated family to pay for the net benefits received by one
low-skill immigrant family. Even Julian Simon, the godfather of
open-border advocates, acknowledged that imposing such a burden on
taxpayers was unreasonable, stating, "immigrants who would be a
direct economic burden upon citizens through the public coffers
should have no claim to be admitted" into the nation.
There is also a political dimension to the transfer state.
Elections in modern societies are, to a considerable degree,
referenda on the magnitude of future income redistribution. An
immigration policy which grants citizenship to vast numbers of
low-skill, low-income immigrants not only creates new beneficiaries
for government transfers, but new voters likely to support even
greater transfers in the future.
The grant of citizenship is a transfer of political power.
Access to the U.S. ballot box also provides access to the American
taxpayer's bank account. This is particularly problematic with
regard to low-skill immigrants. Within an active redistributionist
state, as Friedman understood, unlimited immigration can threaten
limited government.
Many libertarians respond to this dilemma by asserting that the
real problem is not open borders but the welfare state itself. The
answer: dismantle the welfare state. The libertarian Cato Institute
pursues a variant of this policy under the slogan, "build a wall
around the welfare state, not around the nation." Borders should be
open, but immigrants should be barred from accessing welfare and
other benefits.
But in practice, pursuit of these dual libertarian goals of
opening borders and ending the redistributionist welfare state
often leads to contradictions. The current Senate "comprehensive"
immigration-reform bill, supported by the Cato Institute, actively
demolishes existing walls between illegal immigrants and government
benefits, granting some 12 million illegal immigrants (60 percent
of whom are high-school dropouts) access to Social Security,
Medicare, and, over time, to 60 federal means-tested welfare
programs.
It also substantially increases the future flow of low-skill
immigrants and gives them access to welfare and transfer programs.
Far from building a "wall around welfare," this legislation levels
existing walls, builds a highway to Fort Knox, and shovels billions
in taxpayer funds into the pockets of immigrants who entered this
country illegally.
In a recent debate with Dan Griswold of the Cato Institute, I
pointed out this paradox. Griswold replied that the key was to
grant amnesty and open borders now and work on "building a wall
around welfare" at some point in the future. The weakness of this
response should concern all those interested in limiting the size
of government.
While most open-border libertarians proclaim a desire to
dismantle both borders and the welfare state, in practice what they
offer is open borders today and a vague (and almost certainly
illusory) promise to end the welfare state in the indefinite
future. As Milton Friedman understood, open-border enthusiasts have
the sequence wrong: Opening borders with the redistributionist
state still intact will result in a larger and more confiscatory
government. In response to libertarians who propose to open borders
and dismantle the welfare state, practical conservatives should
answer: "Go ahead. Dismantle the welfare state. As soon as you've
got that finished, let us know, and then we'll talk about open
borders."
Open-border enthusiasts sometimes claim that the 1996 welfare
reform defanged the welfare system, eliminating the costs that
low-skill immigrants impose on taxpayers. As one of the architects
of that reform, I would warn that this view shows a serious lack of
understanding of the limited scope of the 1996 welfare law, and,
more importantly, a lack of appreciation of the magnitude of the
redistributionist state.
Sen. Ted Kennedy understands that a steady stream of low-skill
immigrants will help him build a much larger, tax-fueled
government. It is a pity that so many foes of big government fail
to appreciate this point.
Robert Rector is a
senior research fellow at The Heritage Foundation.