“Quoting the most-revered champion of free-market economics since Adam Smith has become a little like quoting the Bible: There are sometimes multiple and conflicting interpretations.” – Stephen Moore
Issues and public discussions of them ebb and flow depending on the news cycle. Immigration – legal, but mostly illegal – has returned due to Donald Trump’s crude remarks about Mexican immigrants and the fatal shooting in San Francisco by an illegal immigrant.
With it, and as with every issue, we can expect the return of certain memes, quotes and arguments. One such go-to quote is from Milton Friedman. It goes like this:
“It’s just obvious that you can’t have free immigration and a welfare state.”
Or like this:
“[I]t is one thing to have free immigration to jobs. It is another thing to have free immigration to welfare. And you cannot have both.”
Friedman said both, but many people who quote him misconstrue, ignore or are unaware of his point on this issue. Let’s examine what he said in context. Giving a lecture that is easy to find on Youtube, Friedman asked rhetorically why people would say that turn-of-the-century immigration to the United States is a good thing, but that same type of free immigration today isn’t.
Why is it that free immigration was a good thing before 1914 and free immigration is a bad thing today? …. There’s a sense in which free immigration, in the same sense as we had it before 1914 is not possible today. Why not?
Because it is one thing to have free immigration to jobs. It is another thing to have free immigration to welfare. And you cannot have both. If you have a welfare state, if you have a state in which every resident is promises a certain minimal level of income, or a minimum level of subsistence, regardless of whether he works or not, produces it or not. Then it really is an impossible thing.
So far so good, but this is where Friedman begins to depart from many of the people who like to quote him. He goes on:
[N]obody would come unless he, or his family, thought he would do better here than he would elsewhere. And, the new immigrants provided additional resources, provided additional possibilities for the people already here. So everybody can mutually benefit.
Friedman here is applying classical economic theory to labor: exchanges in the free market occur when both parties believe they can benefit. Welfare distorts that principle, because immigrants are not necessarily required to consider what they can contribute in exchange for their needs.
But here’s the kicker, which I’ll let Friedman deliver in his own words:
Look, for example, at the obvious, immediate, practical example of illegal Mexican immigration. Now, that Mexican immigration, over the border, is a good thing. It’s a good thing for the illegal immigrants. It’s a good thing for the United States. It’s a good thing for the citizens of the country. But, it’s only good so long as its illegal.
That’s an interesting paradox to think about. Make it legal and it’s no good. Why? Because as long as it’s illegal the people who come in do not qualify for welfare, they don’t qualify for social security, they don’t qualify for the other myriad of benefits that we pour out from our left pocket to our right pocket. So long as they don’t qualify they migrate to jobs. They take jobs that most residents of this country are unwilling to take. They provide employers with the kind of workers that they cannot get. They’re hard workers, they’re good workers, and they are clearly better off.
Most people use Friedman’s quote free immigration and the welfare state to argue for stopping illegal immigration, when, according to his argument, illegal immigration is not the problem.
He suggests that illegal immigration, economically, is good. Economically, then, it makes sense from a Friedmanite perspective to leave the borders open and not to grant amnesty.
He doesn’t support illegal immigration, however. The proper understanding of Friedman’s position is to recognize that he doesn’t oppose immigration, he opposes the welfare state.
The proper use of the quote – “It’s just obvious that you can’t have free immigration and a welfare state” – is to assume that the free flow of labor is a good thing economically and that a welfare state is not. In other words, it should be used to support shrinking the welfare state, not immigration.
Unfortunately, this interpretation is often lost on conservatives. Jim DeMint and Robert Rector from Heritage, after essentially getting Friedman’s argument about legal immigration right…
[A]fter amnesty, current unlawful immigrants would receive $9.4 trillion in government benefits and services and pay more than $3 trillion in taxes over their lifetimes. That leaves a net fiscal deficit (benefits minus taxes) of $6.3 trillion.
…go on to propose a solution that is nonsensical based on Friedman’s logic, at least in the current welfare state status quo:
We should move to streamline our legal immigration system, encourage patriotic assimilation to unite new immigrants with America’s vibrant civil society, fulfill promises to secure our borders and strengthen workplace enforcement.
This would bring more people who could legally receive welfare, while restricting the flow of people who legally cannot and are less likely to receive it.
Of course, the United State must maintain its territorial sovereignty and secure its borders for reasons such as drug trafficking, violence, terrorism threats and the need to simply know who is here. So what is the answer? It is quite simple. To Rector and DeMint’s solution must be added “reform and shrink the welfare state.”
As Stephen Moore wrote in the Wall Street Journal:
Republicans and conservatives might want to coalesce around a position of tight welfare and generous immigration rules. That is something Milton Friedman would no doubt regard as the ideal outcome. As another late great economist—William Niskanen, a member of President Reagan’s Council of Economic Advisers and chairman of the Cato Institute—once put it: “Better to build a wall around the welfare state than the country.”