Wednesday, May 26, 2010

Social Welfare without Liberal Immigration Policy: an unsustainable proposal

Why 100% coverage healthcare or education is not sustainable: it incentivizes limiting population growth, which long term hamstrings the economic growth that is supposed to fund such coverage in the first place.

I don't think its a coincidence that 1st world countries are precisely the ones that have the lowest birth rates, despite the fact that from a resources perspective it makes very little sense - how are America and Europe so well fed but having so few babies? Such a situation would have been absurd at any other point in human history, or natural history for that matter. Why are some of the healthiest, wealthiest groups of people in the world behaving reproductively like they're experiencing famine?

Through very liberal social welfare, countries make each citizen an expensive liability as each must be provided the same high level of health and social services, without inequality or discrimination for any reason. The net effect is not an increase in Democracy, equality, or the human condition as the liberals who envisioned such policies might have hoped when they passed their "forward thinking" and "progressive" reforms. Instead, the net effect is to motivate those countries to make becoming a new citizen extremely difficult. After all, if each new citizen costs the state an average of say $20k a year, members of the country will be a lost less willing to accept new immigrants than if the cost per citizen were $5k a year - this is simple economics.

And in fact, as a proof of simple economics, increasingly difficult barriers to immigration into wealthy countries is precisely what we have seen happen - the richer and richer the first world becomes, the stricter and stricter immigration laws they pass. This is not just in the United States, either - witness the extreme xenophobia and bias against immigrants that pervades Europe. Most people who live in China are apparently not even real Chinese citizens, which is apparently a right only conferred on those lucky enough to be born Han Chinese. It is doubtful that this is due to direct racism so much as it is straightforward economic reality: as an increasingly wealth socialist state, the cost of guaranteeing "bare minimums" for its citizens is increasing right in step, making the Glorious Revolution far more stingy when it comes to handing out membership cards.

New citizens are fundamentally a risky economic investment for a state - they require large upfront investments of capital in the form of social programs and guarantees promised, but in turn pay relatively little in taxes during their initial period within a country due to lower earnings when compared to existing citizens (being that the new citizens are either young, new immigrants, or both). Given all the various ways that a new citizen can fail, its not entirely clear that the state will always receive a payout on each new citizen. Like any other economic agent considering an investment, a country will weigh the perceived risks and rewards when determining the price to set for each new citizen.

Fundamentally, the maximum potential output of a country is directly proportional to the amount of labor available within the country. No more work can be done than there are men and women to do it. Although a country's actual productivity may vary with time (as most biological and natural systems are apt to do) and perhaps even grow with increases to efficiency through technology or process improvement, long term productivity cannot be sustained without a corresponding increase in population. Can you begin to see the contradiction?

By continuously increasing the costs of investing in each and every new citizen, a country will slow population growth both via birth and immigration. This in turn fundamentally caps the total possible production of a country, which in turn caps the total amount of taxes said country can possibly derive. However, when the generous social welfare programs were implemented, the accounting assumed economic growth rates to continue indefinitely. But without the increasing population necessary to support such economic growth, such programs become unsustainable. Considering that the expensive programs themselves are the precisely the things causing the slower population growth, I must conclude that no existing social welfare policy today is long term sustainable.

So what's the fix? Simple - make immigration super easy through the proper channels (think like how getting a driver's license is "super easy" at the DMV). This will allow the state to tax immigrants properly. Meanwhile, explicitly do not allow new immigrants access to certain rights that other citizens may receive - essentially, lower the cost of benefits provided to new citizens during some initial period of their citizenship. Certain human guarantees of course would be provided - we cannot skirt the fact that new citizens do require some initial capital investment from the state - but fundamentally, benefits would be provided somewhat in proportion to net investment into the system, thus making immigration a much more economically justifiable "pay-as-you-go" system. Note that many immigrants already accept such deals when they immigrate illegally - if people are willing to come, work in America, pay taxes, and otherwise build their lives in America without expecting any protection from the government, why shouldn't we allow them to do so? By reducing the economic burden of new immigrants, we can ensure that investment in new citizens remains high

However, whenever anyone mentions loosening immigration laws, the first thing that people bitch about is that they'll lose their jobs ("Dey terk er jerbs!"). We don't want dirty foreigners coming and stealing our precious fast food, janitorial, lawn care, meat processing, or migrant harvesting jobs from good, hard working Americans, right? I vomit a bit whenever I hear supposed "Americans" saying that bullshit. Aren't Americans supposed to be scrappy, resourceful fighters who can overcome a challenge better than anyone else in the world? Our country didn't get where it did today by backing down from difficulties and hardships. As scary as it might sound, the government does not guarantee you a job - that's the whole reason it has things like unemployment benefits. To me, the image of a true American is one who gets a pinkslip and turns it into an opportunity. To me, the real American is the one who proudly collects their unemployment check, righteous in the knowledge that they didnot selfishly beg the Government to prop up whatever whatever outdated and economically nonviable corporation that had been forced by reality to cut costs to more sustainable levels. A real American would look the terrifying specter of unemployment directly in the face and realize that the only thing we have to fear is fear itself. Otherwise goddammit, if we can't do that then what right do we have to call ourselves Americans?

We cannot let short term fear and protectionism guide economic policy in a way that is clear to fail. We must ensure that the American population continues to grow, and the best way to do that is to allow immigration to occur as freely and sustainably as possible. Whatever the short term repercussions this might have, America's glorious history of free immigration and strong economic growth is a testament to not only the long term viability of such a policy, but its necessity if we are to remain the number one world economic power.

1 comment:

  1. I understand that it is not economically viable to offer all potential immigrants full citizenship immediately.

    The solution you propose, however, sounds simply like offering a green card to everyone who asks for one. This only makes sense if we assume that everyone who comes in will actually be a productive member of society (with a job or a business) until such time that they become a citizen and can partake of all the lovely health care, employment benefits, and such. If I wanted to immigrate to the United States and knew that I were guaranteed citizenship in a couple of years, I would gladly come to the US to sit on my butt for a few years and mooch off of members of my ethnic community until I could start collecting the welfare I would soon be guaranteed.

    I suppose we could put a system of accountability in place such that if a new immigrant were not productive, he or she could be asked to leave. But this sytem of "produce or gtfo" seems a bit too draconian and un-American to me. It's one thing to deny an unproductive person admittance in the first place, but quite another to let them in, monitor them, judge them, and then kick them out (probably disrupting communities and families). So that wouldn't work.

    Interesting idea, but I can't get behind it.

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