Immigration won't get you a libertarian utopia

Here’s an interesting argument: immigration destroys social solidarity, and that’s a good thing. It’s good because social solidarity supports welfare institutions, which are dyfunctional and undermine the dynamic market economy.

Richard Hanania has said this.¹ So have Alex Nowrasteh and Benjamin Powell of the AEI, suggesting in their book Wretched Refuse? that maybe “immigrants reduce the native-born inclination to destroy institutions.”

There’s a lot one could say about this. For starters, it seems to be playing a pretty dangerous game. In its simplest form, it’s pushing a kind of right-wing Great Replacement. The Great Replacement conspiracy theory claims that liberal politicians (or Jews) are introducing immigration to make policy more left wing; this argument says we should use immigration to make policy more right wing. The idea of democracy is that a country’s policy is ultimately decided on by its people, the demos. Changing policy by changing the demos looks like doing an end run around the whole concept. Even a milder form of the argument, like “we advocate immigration for its economic benefits, but purely as a side effect, we also welcome its benign political results,” seems likely to alienate the many voters who aren’t libertarians and like the welfare state.

But more fundamentally, I think it is just very unlikely to work.

For it to work, two things would have to happen:

1. Immigration makes society more diverse. This weakens ties of class solidarity. As a result voters are less willing to support welfare institutions that benefit the poor….

2. Instead, they become more willing to support dynamic, libertarian, market-based institutions.

Point 1 is quite plausible and there is some good evidence for it. Most famously there’s this 2001 paper by the sadly deceased Alberto Alesina and co-authors, which argues that the US has lower welfare spending than most European countries because politicians used racial hatred to oppose welfare that might benefit black people.²

Point 2, though, is pretty optimistic. Here’s an alternative that seems much more likely:

2. Instead, diversity strengthens ties of ethnic solidarity. Voters become more willing to support institutions that split the pie in favour of their own ethnic group.

Why is this likely? Because lots of evidence from history shows that ethnic solidarity is more common and more robust than class solidarity. In World War One, to socialists’ dismay, the working class supported their respective nations instead of coming out in international solidarity against the war. In Africa and India, ethnic ties have proved more robust and politically relevant than class.

As a result, ethnic pie-splitting is common round the world. It’s at least as bad as class-based welfare for growth, probably much worse, and it is very hard to get rid of.

It’s bad and hard to get rid of because ethnicity is much more fixed than class membership. You can change your class by getting rich (or poor). Even in subtle, hidebound class systems which detect and discriminate against the new rich themselves, it is fairly easy for their children to acquire a new class identity. Ethnicity is not fixed — ethnic identities do change over time, both at individual level and at group level — but it is usually very hard to change, and it gets handed down from parents to children.

This means that while classes may fight to preserve their privileges in any political system, ethnicities almost surely will fight. If you are poor, you can cooperate politically to demand more redistribution, but you can also try to avoid the problem by getting rich. Ethnic minorities at a disadvantage have no alternative but politics.

Take the example of positive discrimination, known in the US as “affirmative action”. A recent Supreme Court decision declared affirmative action illegal. Are black or Hispanic staff, students and parents going to shrug their shoulders and welcome race-blind admissions? No. Nobody welcomes anything that substantially cuts their kids’ chances of going to college. Maybe you believe there is an objective standard of fairness which should govern admissions criteria. Okay, sure! But actual humans’ views about fairness will covary predictably with their own group’s interests. So, expect fights over admissions to go on for a long time in political and legal venues. (Here’s Stanford faculty reacting to the decision: some oppose it, some are neutral or non-committal, none support it. Here’s some changes in student ethnicity at top US universities: MIT and Brown saw big drops in black and Hispanic entrants; Yale and Princeton did not. This article also details the alternative ways different universities have tried to preserve diversity after the ruling.)

Hanania disagrees with this:

From my perspective, class based politics is much worse. Affirmative action is a tax that market economies can afford to pay, while trade unionism, anti-competitive regulations, and redistributionist policies are fundamentally larger threats to systems that produce wealth.

This doesn’t seem to fit his actual practice — he’s written a whole book on the legal roots of wokeness in affirmative action law, which suggests he thinks it matters. In any case, I think there is good evidence that ethnically-based politics is much worse than class-based politics. Places with class-based politics include Western Europe, which is, sure, poorer than the US and has now got low growth, but which also had a pretty good second half of the 20th century, either despite or because of its social democratic institutions. Places with ethnically-based politics include sub-Saharan Africa, which partly because of those politics did not have a good second half of the 20th century.

Hanania looks at a big table of country GDP against IQ and suggests that many outperformers are highly ethnically diverse. But that’s not what you get when you crunch the data. From a recent paper:

Easterly and Levine (1997) show that Africa’s low level of economic development is associated with its high degree of ethnic heterogeneity. Alesina et al. (2003) and Alesina and La Ferrara (2005), also using cross-country data, similarly show a consistent negative effect of ethnic fractionalization on growth.

(The authors add that at city level, or at small enough geographical scale, ethnic diversity is associated with higher growth. That would fit the story that diversity is good economically but bad politically, and national policies are what matter for GDP.)

Even if Hanania is right, that might be because of the special and unusual characteristics of the US. The US starts off as a deeply polarized country, with a white majority and a much poorer and initally enslaved black minority. Immigration makes it more heterogenous — there are more different ethnic groups — but less polarized. A two-ethnicity country is a chess board where everything is structured by one overarching opposition. In a country with many ethnic groups, no single group is likely to dominate the rest. But this is US-specific. In many places, immigration increases both polarization and heterogeneity.

Wretched Refuse?

Nowrasteh and Powell go into much more detail than Hanania. They argue:

Natives may favor anti-market institutions when their co-nationals or co-ethnics are the intended beneficiaries, but they might become more pro-market when the beneficiaries of dirigisme would include outsiders like immigrants.

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