Mar 28, 2022

Alex Nowrasteh on Population Growth, Immigration, and the Economic Implications for the US

Enacting policy reforms to boost immigration may be the best solution to combat falling birthrates and other worrying demographic trends that are plaguing the United States.
David Beckworth Senior Research Fellow , Alex Nowrasteh

Hosted by David Beckworth of the Mercatus Center, Macro Musings is a new podcast which pulls back the curtain on the important macroeconomic issues of the past, present, and future.

Alex Nowrasteh is the director of Economic and Social Policy Studies at the Cato Institute where he writes widely on US immigration policy. He also has several books on the topic, including his recently co-authored book, *Wretched Refuse? The Political Economy of Immigration and Institutions.* Alex joins Macro Musings to talk about immigration in the United States and its implications for economic growth and policy. Specifically, David and Alex also discuss the current trends in population growth and immigration, the consequences of falling birthrates, Alex’s rebuttals to the most common arguments against immigration, and more.

Read the full episode transcript:

Note: While transcripts are lightly edited, they are not rigorously proofed  for accuracy. If you notice an error, please reach out to macromusings@mercatus.gmu.edu.

David Beckworth: Alex, welcome to the show.

Alex Nowrasteh: Thanks so much for having me.

Beckworth: Well, it's great to have you on. I've had some of your colleagues in the past and George Selgin, obviously. Probably he could be labeled the co-host of Macro Musings. He's been on enough times. I've had Scott on, Scott Lincicome has been on the show a few times. It's great to get you on because I've been following your work on immigration and, I guess, trade policy as well. What do you cover in your area there at Cato? Maybe we should spell that out.

Nowrasteh: I manage a lot of economists here who work on welfare policy, entitlements, healthcare, budgets, taxes, technology, and immigration, but this is a relatively recent shift for me. Until recently I worked just entirely as a policy analyst working on immigration.

Beckworth: Okay, so you are the immigration expert at Cato. One question I had, Alex, is how did you become an immigration expert? Why pick that area? What pushed you there?

Nowrasteh: I started an internship at the Competitive Enterprise Institute, which is a small DC free market think tank and that was in 2007, and I surveyed the issue areas around, and I figured I want to work on something that will be bigger in the future than it is currently, so I could get in on the ground floor. I have an econ background and I decided that immigration looks like a topic that will be bigger in the future. There's not a lot of competition to begin with and it's a topic that touches on every aspect of social science. You can talk about wages, and then when you get bored about wages, you can talk about the fiscal impact of immigration.

Nowrasteh: When you get bored with that, you can talk about assimilation and cultural assimilation. When that's boring, you can talk about crime or terrorism, and then when that gets boring, you can go back to talking about wages again. It touches on everything, so it's always interesting. Then, in addition to that, it's one of the most important issues for economic growth in the long run, both in the United States and globally. Immigration liberalization will do and has done tremendous work in lifting millions, tens of millions, hundreds of millions of people out of poverty over the centuries.

Nowrasteh: It's only bad policy that prevents more immigration from doing that in the future. Then, I'd say lastly, as a patriotic American, it allows me to take a look at American history and study something about my country that is pretty rare in world history. Pretty rare today, which is to be a country that's not based on an ethnic or racial or religious identity, but one based on a common civic conception that welcomes people of identity, that welcomes people from around the world. That's something I'm extremely proud of as an American and is one of the secrets, I think, to our long-run economic and political success.

It's one of the most important issues for economic growth in the long run, both in the United States and globally. Immigration liberalization will do and has done tremendous work in lifting millions, tens of millions, hundreds of millions of people out of poverty over the centuries. It's only bad policy that prevents more immigration from doing that in the future.

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Beckworth: Yeah, we are blessed to be a country of immigrants. Immigrants tend to be risk-loving. You may think of people who would come over here in the first place, right? They're willing to take risk, give up what they had back home. By definition, we're getting a lot of good, well-educated, risk-loving individuals coming to the US. I think we do understate the importance of that and we'll talk about this more as we go on the show. But I just want to mention, population growth and immigration, this, to me, is a hobby horse. It's an issue I like to talk about.

Beckworth: I've had some people on the show discuss it before, but population growth in particular and immigration, of course, is a key part of that. I guess, Alex, I got red-pilled, so to speak, by Julian Simon on this. I'm reading his book, *The Ultimate Resource*, about how ... are people stomachs or are they brains, as Alex Tabarrok would say? If you view people as a brain, as ultimately a producer, a creator, an innovator, the more people you have, the better, and we'll get into this later. But Julian Simon, Alex Tabarrok, Paul Romer's work really have created an interest in me on this issue, so I'm delighted to have you on. I thought we would get started though today by taking stock of where we are on two fronts, population and immigration, the trends, latest numbers. Can you walk us through those? Where are we as a country in terms of population growth and then also immigration?

Population Growth and Immigration: Current Trends

Nowrasteh: Population growth over the last decade is the lowest that it's been in American history. Total population increased by 7.4% only during that time period, so now we're slightly above 330 million people in the United States, but only a 7.4% increase during that time period. What bodes very negatively for the future is that the population under the age of 18 actually declined by 1.4%.

Beckworth: Wow.

Nowrasteh: That's devastating for future population growth in the United States. What's been true for decades and will be increasingly true going forward because of the falling US birth rate, which now stands at about 1.6, 1.7 total fertility rate, which is the number of births per woman, 2.1 or so is replacement rate of fertility, and we're well below that. I would predict it's going to go even lower in the next couple years, so almost all the population growth in the future, well, more than a hundred percent of it is going to come from immigration.

Nowrasteh: The depressing part about that is that legal immigration and illegal immigration over the last several years to the United States has plummeted. If you take a look at immigration trends prior to 2015, if those trends continued today, there would be between about two and a half and five million more immigrants in the United States today than there currently are, and those trends obviously broke. They broke, in part, for some economic reasons. Other countries of the world are developing so there's less of a reason to come here in many cases. But also because changes in US policy that have made it more difficult for people to come to the United States during the end of the Obama administration and especially throughout the Trump administration, culminating in basically a total shutdown of legal immigration in early to mid-2020 in response to COVID, that we still have not fully recovered from.

What bodes very negatively for the future is that the population under the age of 18 actually declined by 1.4%...That's devastating for future population growth in the United States.

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Beckworth: So, population is declining. Immigration trends are down as well. Is that true both for legal and illegal? What about people crossing the borders? Because the headlines you see, say on Fox News, there's this big push at the border, but I know it's a more complicated story because you got to look at net flows, people coming into the country, people leaving the country. My understanding is on, at least on illegal immigration, that it's actually been trending down on net for a few years. Is that right?

Nowrasteh: It was trending down from about the time of the Great Recession to about a year ago or a year and a half ago. It peaked around 12 million in 2007, 2008, and then due to the Great Recession and stuff prior to the Great Recession, decline in housing prices and fall off in home construction. Basically, the illegal immigrant population leveled at about 12 million and then declined steadily to about 10 to 11 million around 2016 or so, and basically stayed there until recently. This last year, last 18 months or so, there has been a big increase in the illegal immigrant flows along the Southwest border.

Nowrasteh: Some of it has to do with changes in the Biden administration's immigration enforcement policy, but most of it just has to do with the fact that there's 10 to 11 million job openings in the United States and there's a lot of folks in countries south of the border, but also around the world that have been devastated by COVID. A lot of job opportunities here due to the aging population, but also really bad welfare policy during COVID, bad unemployment insurance policy that pushed a lot of people out of the market, so a huge demand. That's the major reason why people are coming illegally now, which we haven't seen in over a decade.

Beckworth: Oh, that's interesting. So, the opportunities are ripe here and immigrants are responding to that.

Nowrasteh: One of the things, just to put in here, is the legal immigration system in the US is so restrictive. It is so difficult or mainly impossible for the vast majority of these people to come legally that they really have no option but to come illegally. We have just a handful of guest worker visas available for temporary low-skilled workers, and only a few occupations in this country. The number of green cards that we issue annually to people overseas is only an average of about 40,000 a month prior to COVID. To give you an idea about this, we haven't even recovered yet to those pre-COVID numbers, of the number of green cards we issue. I said it was at 40,000 a month prior to COVID, in May of 2020, it was only 697.

Beckworth: Wow.

Nowrasteh: An over 98% decline month over month, and it's only back up now to the mid-30 thousands.

The legal immigration system in the US is so restrictive. It is so difficult or mainly impossible for the vast majority of these people to come legally that they really have no option but to come illegally.

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Beckworth: Okay, so we are struggling to get bodies in this country, either through birth or through immigration. You mentioned just a minute ago, I want to come back to this point. You mentioned our future population growth will come from immigration, largely from immigration, and that's because these trends towards lower and lower fertility rates, they're hard to reverse. I guess, my question is, is there no hope for pronatalist policies or do they not work very well?

Falling Birthrates and Pronatalist Policies

Nowrasteh: They don't work very well. Now, the thing is, there's a lot of research out there about pronatalist policies, focusing primarily on subsidies, birth subsidies from others and they do have some effect. They are quite expensive though, and the effect is usually disappointing. But if you were to give people large sums of money for each birth, you would probably see an effect but of course, the major thing that's happening, and this is a good thing, is that women today have control over their fertility and they have education. They have higher labor force productivity and higher wages.

Nowrasteh: It's a fact that women do bear most of the costs of having children, of course, obviously, and raising them. The opportunity cost of them having kids today is just a lot higher than it used to because it's going to hurt their careers. It's going to lower their productivity and wages. They might have to take time out of the workforce. They might have to choose careers where they make lower wages to have more contact with their family and to raise kids. So, it's just more expensive in that way to have kids than it used to. As somebody with three kids myself... So, I love kids and I want to have as many as possible with my wife, but it really is, it's costly in that monetary sense, for my wife.

Nowrasteh: She's had to make career decisions that have cost her a lot of income, and that's to say nothing about all the other non-pecuniary costs of children, right? You can't go out to see your friends. There's so much entertainment opportunities, but you can't go out to the movies. You can't go see your friends. You can't go out to the bars or the restaurant so much, you can't travel. It's hard to travel with kids. There's all these other non-pecuniary costs that are much higher than they used to be in the past. So, I'm pretty pessimistic about the ability of pronatalist policies to reverse that trend, unless there's a rapid breakthrough in technology like artificial wombs or a massive change, potentially, actually, in immigration policy that would crash or massively decrease the cost of childcare.

Nowrasteh: There is some interesting research by Patricia Cortes and another economist named Tessada, where they take a look at cities that have large numbers of lower-skilled immigrant workers. What they find is that has lowered the price of childcare and has resulted in more American women going back into the workforce after having children. Now that's good for economics, obviously, good for the economy, but it has ambiguous fertility effects. Because if a woman goes back into the workforce and can because of that, then that means she might have a kid, whereas, she might not have if she didn't have that option. But it also means that they're more likely to return to the workforce, in which case they might not have more. It's like ambiguous fertility effects from this. But I think the best thing we could try to do probably, if we were really concerned about this, is to increase low-skilled immigration, especially for nannies and foreign domestic workers to take that burden off of American parents so that they can outsource home maintenance and some childcare.

Beckworth: Okay. First off, I want to say thank you for being an American patriot, having three children, thinking about the future of America. I have three as well, so I often joke I'm a true US economic patriot due to my part to help the future US supply of labor. I'm with you there. But the answer you gave is preferences, it's a function of economic development. As countries get richer, women, they have other opportunities, opportunity cost goes up and there's something we can maybe do on the margins, but no big, big shifts is what you're saying. One thing that's interesting, Alex, and I completely agree with all that though is, since the Great Recession though it seems like that trend has accelerated down. There was a recent article in the Journal of Economic Perspectives that's titled, *The Puzzle of Falling US Birth Rates Since the Great Recession.*

I think the best thing we could try to do probably, if we were really concerned about this, is to increase low-skilled immigration, especially for nannies and foreign domestic workers to take that burden off of American parents so that they can outsource home maintenance and some childcare.

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Beckworth: They document… that pace has just picked up. It's not clear why. They even say that they're not even sure, they have mechanical answers why. They can say, "Well, it's due to this, this or this." But why the deeper structural reasons, why the pace has picked up? They're not sure. But at the end of the day, it means fewer children being born and it's going to be a drain on population growth or a weight on population growth. Let's step back from the US and look at the world now. We're going to focus on the US on the show, but just briefly, let's talk about the world, because you mentioned that earlier. We see similar demographic challenges across the world. Is that right? Like Asia, and Europe, and Japan.

Demographic Trends Across the Globe

Nowrasteh: Yeah, that's right. Just to give you an example, world total fertility rate in 2019 was about 2.4 children per woman. In 1964, it was five.

Beckworth: Wow.

Nowrasteh: We've halved, and the trend is accelerating in a lot of parts of the world. You take a look at a place like Iran. In 1979, their total fertility rate was six and now it's below two, so just massive, huge changes in fertility. In Mexico, it fell from over six in the 1970s to now it's about two. That's just a massive decline in fertility around the world, and partly it's due to economic development. The number one thing we know about fertility around the world is if women are literate, which means they have a higher opportunity cost of having children, that really crashes fertility rates, because they have higher productivity.

Nowrasteh: In a way this is, of course, this decline is negatively correlated with economic growth. Women have more options, there's more economic growth. These are good things, but the cost, I think, seems to be declining fertility around the world. These increasingly high fertility rate countries are concentrated in countries that are not doing so well. Countries in Sub-Saharan Africa that are not growing, but East Asian fertility is now the lowest, basically the lowest in the world. It's rivaling Europe in terms of low fertility. South Korea, it's about 1.1 or so, I think, last I checked. In Singapore, it's about one or a little bit below one. These are just devastatingly low fertility rates. Japan's population is actually declining because of demographic momentum. It takes some time for falling birth rates to result in falling population, but Japan's is actually starting to decline. Yeah, I just looked it up right now and South Korea's total fertility rate in 2019 was 0.9.

Beckworth: Wow.

This decline is negatively correlated with economic growth. Women have more options, there's more economic growth. These are good things, but the cost, I think, seems to be declining fertility around the world.

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Nowrasteh: That's just devastating. How much longer is economic growth in that country going to be sustained when labor, which is one of the four factors of production, starts to shrink?

Beckworth: Right, right. You mentioned Mexico. I just want to quickly go back to Mexico. I remember someone saying, "Look, they had a baby boom just like we did." That was part of the reason there were so many Mexicans going across the border a decade and before then, but now that baby boom has turned to a bust. You mentioned it went from 6% down to 2%, so it explains the overall trend there as well. It is interesting to look at Japan. Japan is the avant garde of demographics for the world, so that could be us in the future. You made another interesting point that declining fertility is great for women. It's a sign that they're able to engage in the economy.

Beckworth: It's actually good for economic growth. There's more people in the labor force, more minds, more innovation, but there might be a long term trade off. The short term we're doing better, long term, there might be fewer people to work in the labor force. I want to also mention China because China had that one child policy and I read something really interesting. Most of the declines you mentioned is due to just economic development, more empowerment of women, something that would happen anywhere, and probably in China, this would've happened at some level, too. But in China they had the one child policy as well, which really... it is a huge drag already and even more so going forward.

Beckworth: But I was reading a book recently by Andrew McAfee. You may have seen it, *More from Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources and What Happens Next.* He goes through how the US economy is dematerializing, and in the sense we're producing more stuff with fewer physical inputs. We have a smaller footprint. We are actually doing better. But one of the things he highlights is this debate in the '60s and '70s among environmentalists and people like Julian Simon, I mentioned Julian Simon earlier, and folks like Paul Ehrlich, who said there's going to be ... there's a population time bomb.

Beckworth: He mentions also a book by some MIT modelers around that time, and they were all very dire and saying, “we've got to get population growth down.” What was really fascinating is that one of the leaders in China read those books in the '60s and implemented the one child policy because of what these American academics were saying about, we need to get population growth down. This to me, in just kind of an interesting way, is a neat illustration of how the pen is mightier than the sword. American academics have helped shape the future of China, so you think of, from a grand strategy perspective, who's going to be the dominant power in the future.

Beckworth: These academics may have done more harm to China than Pentagon and in the military and our best minds on that front. It's interesting to see how ideas matter in this conversation. All right. We've outlined that population growth is at historical lows in the US, fertility rates are down, it's also happening around the world. But let's step back and ask, why does this matter? We've touched on it, but why should we care so much? Why not just have a smaller footprint for humanity? There's lots of progressive people out there who would actually say we need to have fewer children. What's the case for a greater population in the country and therefore for immigration?

The Case for Population Growth and Immigration

Nowrasteh: Well, the economic case is extremely strong for a higher population. People, they at one point, of course, obviously increase factors of production of labor. When labor increases, you have more workers who are making things, you have more entrepreneurs, you have more scientists, more creators, and on that, more people create more opportunities, more job opportunities. There's not a lump of labor fallacy. There's not a limited amount of work that can be done, but the extent of work depends upon the size of the economy and the demand for these things. A larger population is great for that. It's great for economic growth.

Nowrasteh: One of the things we definitely see is that populations that are growing more rapidly in places, you have more economic growth and it's endogenous, frequently in a way, but more people means more ideas and more production. This increases the standards of living and innovation for everybody in these different societies, and it's strongly correlated around the world. I'd say, even causally related that more population growth leads just to more economic growth and we see that everywhere. Just think about it mechanically in terms of like a plague, which we have recently gone through, right? The United States is not richer because we have more people here, because people make things and they increase production.

When labor increases, you have more workers who are making things, you have more entrepreneurs, you have more scientists, more creators, and on that, more people create more opportunities, more job opportunities...A larger population is great for that. It's great for economic growth.

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Nowrasteh: We've lost almost a million people in the United States so far, and five or six million people around the world estimated. Those are people who are not making things, who are not inventing, who are not here anymore and we're a much poorer society as a result of that, to say nothing about the human tragedy, of course. To give you an example, the United States, if we had no immigration since 1800, there'd be about 95 million to a hundred million people living here. I don't know a single person who can say with a straight face that this would be a wealthy and more prosperous place if there were only 95 million to a hundred million people here. If there were 240 million fewer of us here, this would be a much worse place in every sense of the word and a lot of that is due to economies of scale.

Nowrasteh: More people, if you remember your basic Adam Smith, right? Division of labor produces specialization, which makes all workers more productive and raises wages, and the extent of the division of labor and specialization is limited by the size of the market. So, the more workers that we have, the more individuals that we have, the more entrepreneurs, the more specialization we have, the more productive all these individual workers can be, to say nothing about the extra inventions and the great minds, and the entrepreneurs who create these new innovations that make us wealthy.

Beckworth: Those are all great points. If I could summarize, there's a supply side to your argument and then demand side. The demand side is, you get more people wanting cures for cancer, wanting more innovations. Having China join the global economy meant there's a billion more people who want to find a cure for cancer. They're willing to pay the money, willing to support the R&D, which is a great thing. I will benefit from that cure as well as someone in China. I like your point about increased labor specialization. Productivity can also increase on the demand side just because people are able to focus on their little niches.

Beckworth: Come up with new ways to do things, even if they're not a genius, just the fact that they're specializing in their area. But the supply side, I think is an important one, too, that you touched on and this is where I think Julian Simon, Paul Romer come in. There is a distribution of abilities and you got to have more and more people to get the people on the tails of those distributions. How many Albert Einsteins, how many geniuses out there are there? If we have more people, more of them around ... I want to go back to the climate change issue. Some of the climate change advocates want a lower population.

Beckworth: They're viewing people as a stomach, as a consumer, right? But maybe one of those babies born will find the fix for climate change. Maybe they'll finally get fusion to work or some other alternative energy source. So, you need population to have the innovation as well as the increased specialization from the demand side, so I completely agree with you. Also, just a practical point, I had Matt Yglesias on the show and he has that book *One Billion Americans*, which is very shocking probably to the average person on the street. They would say, "What? One billion Americans?" But he makes a great point in his book that if you look around the world and see our influence, it's waning in many places. Movies from Hollywood now are more sensitive to what China wants because it's a bigger market for movies than the US. Hollywood, other corporate executives, NBA players. It's shocking to see this, but you also understand the incentives they're facing. If we want our values to shape the world, we've got to have more people, have a bigger market here, just in a very practical level.

Nowrasteh: Yeah. That's right. This is where I think immigration comes in a big way, right? The reason why we want more people in the US and other wealthy countries is because they're more productive in the US than they are in their home countries. That's why they come in the first place. Economics, overwhelmingly, is the reason why people immigrate to new countries. In the US, that's because of our better institutions. We have more economic freedom, more protection for private property, better contract rights, more security as a result, and entrepreneurs can make investments in capital and in new businesses, which makes everybody wealthier and better off in the first place.

Nowrasteh: Other countries don't have this or they have it to a much lesser extent than the United States. By workers coming here from other parts of the world, their wages rise tremendously because they're more productive here. It's not like a redistribution necessarily of wealth from poorer countries to the United States, but it's an increase in the total amount of wealth that is able to be made globally, merely by having people move here. It's a tremendous increase. The median immigrant to the US, and this accounts for the cost of living, increases their wages by a factor of four, which means that they produce four times as much as they did in their home countries.

Nowrasteh: For some countries like Yemen, it's about 15 times more than they would. For countries like Mexico, which we think of as a poor middle income country, it's almost three times more, and that's just tremendous. I've had numerous jobs in my life, I've never had it from one job to the next where I earned three times more, from one job to the next. But Mexicans, just by being on the other side of that line, by crossing that line, can get a three-fold increase in their income, taking account of the cost of living, higher cost of living here in the United States. That's just the testament to the success of American economic institutions and it shows what the deadweight loss is of immigration restrictions.

Nowrasteh: We are leaving, because of these vast wage differences across countries due to productivity, that's due to these different institutions, we are leaving tens of trillions of dollars every year on the table that we could be gobbling up. It's money that would increase the size of the US economy, that would accrue to mostly the immigrants, but also to Americans, native-born Americans today, and that would do more to offset our relative cultural decline compared to other places and relative economic decline to other places than any other single policy change imaginable.

Because of these vast wage differences across countries due to productivity, that's due to these different institutions, we are leaving tens of trillions of dollars every year on the table that we could be gobbling up. It's money that would increase the size of the US economy, that would accrue to mostly the immigrants, but also to Americans, native-born Americans today, and that would do more to offset our relative cultural decline compared to other places and relative economic decline to other places than any other single policy change imaginable.

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Beckworth: It would be the easiest, technically, in terms of improving the standard of living in the US. Politically, it's very tough, but from a technical perspective, it'd be the easiest button to press and suddenly you would see big changes.

Nowrasteh: All we'd have to do is delete large portions of our Title 8 of the US Code, which is where the immigration laws are, and fire 40,000 bureaucrats in the United States. It would not just be easy, we would have to do less. The US government could do less and save an enormous amount of money on enforcement in the meantime. There aren't many policies where that's the case.

Beckworth: Okay. It seems like a no brainer. We'll come back later to objections to this. I want to bring up the counter arguments, and you have a nice book that looks at 15 objections, common objections to immigration. But before we do that, Alex, I want to go back to what you've just mentioned, that's immigration law that currently exists. Walk us through that. What is an overview of how immigration policy works in the US?

An Overview on US Immigration Policy

Nowrasteh: Unlike every other legal system or every other portion of American law, in every other portion of American law, everything is allowed except that which is specifically prohibited. You can start a business, right? Anybody can start a business, but maybe you can't start one unless you have a specific license in this specific area, right? There's exceptions to the you can do whatever you want rule. Immigration is the opposite. All immigration is illegal, except that which the government specifically says is legal, and that means you have to fit into a specific small government design category to get a visa or a green card.

Nowrasteh: The difference between the two, a green card leads to lawful permanent residency, where you can work and live legally in the United States so long as you don't break another law and eventually become a citizen if you want. We issue about a million of those per year, mostly to family members. There are a whole hosts of other visas, about 40 visas, that allow you to temporarily either come to the US or to temporarily work and reside here for short periods of time. All in all, these amount to about two to two and a half million pre-COVID, people coming into the US each year, most of whom have to leave within a short period of time. The US immigration law, compared to other aspects of law, is one of the most complex and costly to navigate. Law professors have frequently said that US immigration law is second in complexity only to the income tax.

Beckworth: Wow.

Nowrasteh: Which is saying something.

Beckworth: What an honor.

Nowrasteh: Yeah, what an honor. It's something where Congress decides exactly how many skilled workers are able to come in on different visas. The H-1B visa, for instance, it's a temporary skilled visa for migrants to work in high skilled occupations. It's limited to 85,000 per year. Why 85,000 per year is a mystery. They picked that number. They assumed that that was the good number, and you have to pay them at least $60,000 per year. They can't move between employers without getting prior government permission. If they quit their job, they become an illegal immigrant and they're immediately deportable. That gives you an idea about this type of visa.

Nowrasteh: On the green card side, the US government sets aside 140,000 green cards a year for skilled workers, but more than half of those actually go to their immediate family members. The real number is more like 65,000, 65-70,000 per year for the actual workers themselves. Compared to other OECD countries, the inflow of immigration to the United States, as a percentage of our population, is in the bottom quartile compared to other OECD countries. We allow in immigrants equal to about three-tenths of 1% of the US population annually, legal immigrants. Australia, it's about 1% of the population annually by comparison. In Canada, it's about 1%. In Switzerland, it's about 1.6% annually. We like to pat ourselves in the back as being this pro-immigrant country and we certainly have a proud history of that, I think. But in recent decades, immigration is far more restricted to the United States than it was, either in America's past and compared to other OECD countries that we don't commonly think of as immigrant societies.

Compared to other OECD countries, the inflow of immigration to the United States, as a percentage of our population, is in the bottom quartile...We like to pat ourselves in the back as being this pro-immigrant country and we certainly have a proud history of that, I think. But in recent decades, immigration is far more restricted to the United States than it was, either in America's past and compared to other OECD countries that we don't commonly think of as immigrant societies.

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Beckworth: Okay. Wow.

Nowrasteh: It's depressing.

Beckworth: Yeah, it's depressing. It's a doozy for sure. The system is based around families, it sounds like, so a lot of people coming over, a lot of legal immigrants coming over are relatives of someone else who may be here already. I guess, my question to you is, do you think that's the best way to design the system? I can imagine, where we want engineers and scientists to come over and maybe knowing that their families can come with them makes them more likely to show up. But then at the same time, you're leaving out fewer scientists because the family members came over. How would you come down on this policy?

Nowrasteh: I don't have a big problem with family-based immigration because ... and about 70% to 80%, depending on how you count of American immigrants through the green card system are family-based, because a lot of them also are workers. They just come in through the family system, so they're married to high skilled workers. What we know through assortative mating is that high skilled people tend to marry other high skilled people, and that goes for the same overseas, right?

Nowrasteh: Just because somebody is a spouse or an adult child of a legal immigrant coming in and they come in on a family category, they're also a lot of times workers. This isn't actually that different from other countries. Actually, every country in the world with the exception of Japan, a majority of immigrants who go there go through the family-based systems, even in Canada and Australia. One of the things that I want to say ... So, I would love to increase, if we have to have a limited number of immigrants, numerically limited, then I would certainly like to redistribute them differently than what we have now.

Nowrasteh: I'd probably do it through either an auction or a tariff system where I just charge some prices and see what the market selects, if we have to have a million people a year. But the US immigration system, in terms of the individuals it selects, actually does pretty well and that's because the US government basically outsources the selection of immigrants to American companies and families. On the employment-based system, it's American firms deciding who they want to sponsor and they're better judges of who's going to be a more productive employee or worker than the US government is, whereas in Canada, the numbers are higher for skilled workers who go there.

Nowrasteh: But they don't do as well because it's a government designed point system where they say, you have to get 66 points to go into Canada. You get 10 points if you speak English, five points if you speak French, 10 points if you're related to a Canadian, 10 points if you have this degree, five points if you have this other degree, et cetera. It's basically the government designing a system that says who they think is best. Every immigration system does that to an extent, but the US outsources most of that to employers and as a result, individually, they do very well. I would like to tinker around the edges a little bit, right? I'd like to say, okay, this 140,000 number, let's make it so that's 140,000 workers and their families are exempt from that. Then, let's double or triple that number and then I think you'll get many more immigrants, obviously, but the quality impact compared to copying a point system in another country, individually, it's just much higher here than in other places.

Beckworth: Okay. So, there's a benefit to having a family system and to having businesses determine who comes in. Once again, state where we are in terms of legal, overall legal immigration, and then maybe tell us where you think it should be in terms of numbers.

Nowrasteh: This is where I put on my radical libertarian hat. But I think that the numbers should be limited by the market. How many people do American firms want to hire? They should be able to come in, excluding people who are security threats and criminals and suspected terrorists, and even people who have serious communicable diseases. But other than that, we should let the market determine the flow of people across borders in the same way that we let the market determine the flow of people from Virginia to Tennessee and back. We recognize that that's efficient.

Nowrasteh: We recognize that leads to the best outcomes, and I think if economics is our sole consideration, that's what we should do. At least the numbers should be higher, but there's no theoretical reason to limit the labor flows or the flows of people across borders for economic reasons. Maybe other justifications that people are worried about, maybe people are worried about culture, maybe people are worried about other impacts on the United States, and we can talk about those. But from an economic perspective, there is no good reason to put artificial numerical quotas or caps on the flows of people across borders.

We should let the market determine the flow of people across borders in the same way that we let the market determine the flow of people from Virginia to Tennessee and back. We recognize that that's efficient. We recognize that leads to the best outcomes, and I think if economics is our sole consideration, that's what we should do...But from an economic perspective, there is no good reason to put artificial numerical quotas or caps on the flows of people across borders.

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Beckworth: Okay. That's a nice segue into your book on the most common objections to immigration. I want to bring one up that’s not listed in the 15 items, but one that's more general and that is, the people in DC and other places that take the other side of this topic than you. I know there's a center, for example, in DC, a think tank that's very anti-immigration or very restrictive on it. I suspect that these same people are very pro-America, right? They're very pro, let's make America great again type vibe to them. Do they not see the importance of having a big population to make America great? Don't they see that if we want to be this great American empire or nation, whatever it is they have in mind, you need the bodies to fill the country and do the things that are required for that type of role. How have you seen them respond to that counterpoint?

Responding to Population Growth Objections

Nowrasteh: This is actually the key difference in the way that we view the world. These organizations you're talking about, like the Center for Immigration Studies, which is an anti-legal immigration organization and think tank in DC, was founded by a man named John Tanton, who is famous for pushing Paul Ehrlich's book, that population is negative for the United States and negative for the world. He spent a lot of his time opening up abortion clinics in the Midwest and across the world. He also says that the optimum US population is about a hundred million, largely for reasons of trying to protect the natural environment. So, that is the motivating and foundational ideology of these organizations. They think it is in the best interest of the United States that the US be smaller.

Beckworth: Wow. So, CIS is that way, too? They have that ideology behind them.

Nowrasteh: That's their ideology behind them. Some people there will say that they don't believe that anymore. You look at their board, you look at their writing, you look at the publications, they talk about how immigration is bad for the environment and how immigration is causing population growth. You take a look at the quality and quantity of their work, and it pushes continuously in this John Tanton direction of trying to get a smaller population. One of these other groups, it's literal name is Numbers USA, and the numbers they're concerned about is people. They're scary. Their logo is a graph with the numbers going up and the number is the US population. Then, the red shaded part in this graph, which is supposed to be the scary part, is the population increase caused by immigration. Then, the good part of the graph is what would happen without it, which is the declining population. It's an ideology that, if my conservative friends knew more about, I think they would be aghast.

Beckworth: Yes.

Nowrasteh: But these are groups and individuals invited to speak at conservative events, who worked in the Trump administration, who have been working for decades to cut legal immigration, to end it in most cases, for the purpose of reducing US population in the long run. That is their animating ideology. That is their goal.

Beckworth: Wow. That is quite surprising to me. I guess, I misread them. I viewed them much more as a conservative nationalist type, we want to keep America the way it is. Immigrants are going to change that, but it's completely different. They really see people as stomachs, not brains, as Alex Tabarrok would say. They want to reduce the human footprint on the planet. That is really something. I did not realize that's the driving motivation.

Nowrasteh: It really is. Yeah, and there are lots of other people who are opposed to immigration, who don't share that ideology, just to be clear. There are other people, mainly conservatives and nationalists, who do want a growing US population. They just think that immigration is bad for the United States because it weakens social cohesion, social bonds. They think diversity is a weakness and will undermine us. They think that immigrants are unproductive, are not patriotic, will be a drain on government resources. That they're criminals, that they're terrorists, that they're spies, and that they don't assimilate to American culture and will ultimately undermine us in the long run. Those are most of them, but the major big think tanks and organizations that work on immigration, that are anti-immigration, are animated by this population reduction ideology.

Beckworth: Okay. Well, you touched on all the 15 points there, they object you in that, that list you just gave. But I guess I'm surprised still, so let's just take the conservative nationalists, the people, make America great again view. It strikes me though that if they really looked at the numbers, if they looked at what we talked about earlier, the declining fertility rates, the declining birth rates, and they read that and they say, "Hey, this is not something we can fix. Definitely not overnight. The literature says the pronatalist policies really don't work that well. They're very expensive." It seems to me they should draw the inevitable conclusion. We need to draw upon immigration, not the hope of increased birth rates. Have you ever engaged with any of them and made this point and said, "Hey, what do you make of these observable facts?"

Nowrasteh: Yeah. I have engaged with them and they have two or three primary responses. One is, a lot of them are concerned about population decline, not all of them, but a lot of them. Their answer, of course, is they want pronatalist policies combined with policies that reduce female labor force participation. They, I think, do understand the literature in that sense, right? It's a horrible thing to think about. I certainly don't support it. I am concerned about the birth rate, but I don't think ... Having government policies that force women out of the workforce is certainly not an acceptable policy to achieve that, but they want to do that. You see that, I think, in a lot of the national conservatives, especially a lot of the Catholic integralists who support Adrian Vermeule and others, who's a law professor at Harvard who supports women not being into the workforce and basically having children. They do support those types of policies. On the other sense, they do understand that immigration would increase population growth and fertility, but they see that as a bad thing because they think that that will basically replace current Americans in the long run.

Nowrasteh: If immigrants come in and have more kids, they think that the future demographics to this country are going to be much more the descendants of immigrants than Americans, and they use this mystical nationalist, magical nonsense argument. Like, "Well, that means it's not really us. It's not really our babies. It's not really our civilization." Steve King, a former Congressman from Iowa, a Republican said, "You can't build our civilization with other people's babies." He got dinged, I think, rightly for that ethnocentric and racially-tinged commentary there. But I think there was a very real sense among nationalists that being American is like an ethnicity, and if we have other immigrants who come in of other ethnicities, that just makes us less American.

Nowrasteh: The one worst thing than a declining America would be an America that's less American. This ideology goes back to the early 20th century. Calvin Coolidge, when he signed a law restricting immigration said, "This will make America more American." Part of this idea is like, foreigners just... they can't become American. Their kids will never be as American as the children of other Americans. It's really this weirdo nationalistic ideology that, in my mind, has no real place in the United States, historically. It's something that I always argued against with my liberal friends. I used to be a little bit more of a conservative. I'd be like, "No, no. America is a broad, big tent country. It's ideological in terms of being a member. It's not based in ethnicity and anybody can become American." Apparently, a large number of nationalists in this country disagree with that.

Beckworth: Well, they got their facts wrong on the assimilation concern. I guess it's still striking to me that they still are wanting to go down this path even if it means they're ruin, ultimately. If they don't allow immigration in, the country will ultimately decline. I guess, they're not being consistent. They're not wrestling with this fact. Let's move on to your book. It's called, *The Most Common Arguments Against Immigration and Why They're Wrong.* You have 15 objections in there. I don't know if we have time to go through all of them, but let me start with one. I think it's probably very common, number one you have in your book. I don't know. Did you write these in order of popularity or any rhyme or reason to the ordering, Alex?

Nowrasteh: Mainly in terms of what I thought conservatives are most concerned about at the time that I wrote it.

Beckworth: Okay. Number one would be number one, then. It'd be one of the most common points you would encounter in this conversation. Number one says, immigrants will take American jobs, lower wages. Walk us through why that is a concern that's misplaced.

*The Most Common Arguments Against Immigration and Why They’re Wrong*

Nowrasteh: Yeah. The concern is, of course, more workers will result in lower wages, and the idea is, of course, an increase in supply will lower prices, but that's not really what we see for numerous reasons. First, in order for that to happen, immigrants would have to directly compete with native-born American workers. They would have to be substitutes. What we see is, immigrants have radically different skills than native-born Americans. They have different language skills, they have different education, so there's not much competition to begin with. Secondly, they're actually, instead of being substitutable, a lot of them are complementary.

Nowrasteh: When workers are complementary, that means that more immigrant workers raises the wages of American workers. A good example of this is like in a restaurant, what happens is immigrants come in, they get jobs in restaurants. They don't have the best language skills, so they work in jobs that don't require communication, like the dishwasher, the cook, the busboys. What that does is pushes up lower-skilled American workers into being the waiter, the waitress, the hostesses, so they both specialize by their different skills and because there's more workers on the lower end, there can be more of these firms. As a result, there's more demand for labor.

Nowrasteh: So, that increases the wages or at least compensates with some of the wages for American workers. Immigrants are twice as entrepreneurial as native-born Americans, twice as likely to start a business, so they at least employ themselves. Immigrants, of course, are people, too. They buy things, so they increase the supply side of the economy, but also the demand side. Then, just from a mechanical economic standpoint, right? If we think about production functions, output equals technology times labor, times capital in there. The increase in immigration increases labor. In the first phase, that might lower wages a little bit, which means that the return from capital is relatively higher.

Nowrasteh: The profits from capital are higher, so investors invest in creating more capital, which then lowers that price, but increases the productivity of workers and makes wages go back up again. All of these things combined, immigration does increase the supply of workers, but also increases demand for those workers and the result, the net effect is, again and again, when we take a look at the evidence, is that immigrants either have no effect, basically, on the wages of native-born Americans or they actually slightly increase their wages because you have a bigger economy and more division of labor.

Immigration does increase the supply of workers, but also increases demand for those workers and the result, the net effect is, again and again, when we take a look at the evidence, is that immigrants either have no effect, basically, on the wages of native-born Americans or they actually slightly increase their wages because you have a bigger economy and more division of labor.

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Beckworth: All right. Let's go on to another objection. Immigrants abuse the welfare state, and I hear that one a lot.

Nowrasteh: Yeah. It's certainly something that, as a libertarian, it's something that I am concerned about. I don't want a welfare state, at a very minimum, I want to pare it back. But when you take a look at the facts of welfare, it just doesn't add up. First, immigrants don't have access legally to welfare when they first come to the United States. Illegal immigrants are ineligible entirely for welfare. Legal immigrants are ineligible for the first five years. There are some small exceptions to this but when you take a look at the evidence, immigrants consume, individually, 28% less welfare than native-born Americans and that's not controlling for anything else.

Nowrasteh: That's not controlling for education. That's not controlling for labor force participation. That's not controlling for anything, but across the board, 28% less welfare than native-born Americans. I think we hear this Milton Friedman quote all the time where he says, "You can't have free immigration or you can't have open borders in a welfare state." Immigrants pay more into the welfare state. They pay more in taxes. The fiscal research on this is pretty clear. They pay more in taxes than they consume in benefits, so it might actually be that you can't have a welfare state without liberalized immigration because of the aging demographics of the United States. Actually, in a weird way, to subsidize the state that we have you probably have to increase legal immigration. It's not a good reason to do it, but that is what you'd likely have to do. It's the exact opposite, I think, of the stereotype that we hear.

Beckworth: Well, that answers another question on there and that is immigrants increase the government's cost and deficits. Let's walk through a concrete example of this. You're saying that immigrants actually, on net, generate revenue for society or income for society, government in particular. Let's say you're an immigrant, someone from Mexico who's up here maybe illegally, they're working and they get injured and they go to an ER room. You often hear this kind of story. Now, who has to pay for it? The county has to pay for it, the hospital has to pay for it. Tell me the rest of the story and why that's incomplete, just looking at that particular picture.

Nowrasteh: That's basically, what you just hit on, is one of the only programs that illegal immigrants have access to is emergency Medicaid and hospitals, and that accounts for somewhere around $2 billion to $4 billion a year, estimated in government costs. To give you an idea, all Medicaid in the United States costs about $620 billion, so you're basically talking about less than 1% of Medicaid expenditures going to something like that. I support reducing that, but on the other hand you have an illegal Mexican immigrant who comes to the United States. Let's say this person has 10 years of education, so they're a high school dropout.

Nowrasteh: That's 10 years of education not paid by US taxpayers. They come in at the age of 18, they start working immediately. They pay taxes because of the way the tax deductions work for employers hiring people, so they may use somebody else's Social Security Number that they either stole or bought or borrowed from somebody else. It's called identity loans. Frequently, people will lend their Social Security Number to other people to work legally. They'll pay taxes on the books, not a lot of taxes usually because they're lower-skilled workers, but they certainly pay in the Social Security and the Medicare systems for that.

It might actually be that you can't have a welfare state without liberalized immigration because of the aging demographics of the United States. Actually, in a weird way, to subsidize the state that we have you probably have to increase legal immigration. It's not a good reason to do it, but that is what you'd likely have to do. It's the exact opposite, I think, of the stereotype that we hear.

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Nowrasteh: Because they don't have access to virtually any means tested welfare benefits, they don't get the benefits of that, and because they're not trying to make up for their education contributions, they immediately are a positive for the United States, especially compared to a native-born American who has the same level of education. That person has already incurred 10 years at public school and probably welfare consumption when they're young. Just by skipping that first part of consuming schools, they are a net positive. By not being able and by working illegally, they're not going to have access to means tested welfare benefits.

Nowrasteh: They're not going to have access to Social Security or Medicare and somewhere around 30% of them retire in their home country. We basically get them during their working years, a lot of them go back home, they pay taxes, and they certainly pay indirect taxes like excise taxes and property taxes and other taxes like that. They pay income taxes to the extent they owe them and they pay FICA, Medicare, or Social Security taxes, and they don't have access to benefits. That's in the worst case scenarios there.

Beckworth: Wow, that's a pretty thorough debunking of that claim. That's a great point. They are paying a lot of taxes. They're paying Social Security, Medicare, they're paying property taxes, either directly or indirectly, they're paying sales tax and they're not getting any benefits. The only benefit they can get is the ER, so that's what people see, what people focus on, and they're ignoring all these other tax-paying rules that these immigrants are paying…

Nowrasteh: Yeah, and there's some exceptions on the benefit level. Some states can give, if they want to, welfare to illegal immigrants, but it has to come out of state funds. It can't come out of the federal government. California gives some Medicaid to some illegal immigrants and illegal immigrants also have access to a program called WIC, it's a Women, Infants, and Children program. The per capita consumption now of WIC for all immigrants in the United States is about $20 per person per year, so WIC is the smallest welfare program out there and they do have access to some school lunches also, but you're talking about the cheapest welfare programs that exist, right?

Beckworth: Right. Right.

Nowrasteh: If the welfare programs that illegal immigrants had access to were the American welfare state, nobody would be studying it or worrying about it because it's so small, it's tiny. It's basically like money that you can find in the sofa cushions at the Department of Defense.

Beckworth: A drop in the bucket. The other great point you bring up is they bring in all this human capital with them but we didn't have to pay for it. We didn't pay for their education, their ability to work, their ability to relate socially, to read, to process stuff. So, definitely a net gain. Okay. Let's go on to the next objection. Again, we don't have time to go through all 15 of them, but these are some of the big ones. Next one is, today's immigrants don't assimilate into society like the regular population. How do you respond to that?

Nowrasteh: All the evidence that we can find, taking a look at English language assimilation, how patriotic immigrants are, how much they say they love the United States in terms of their education, their income, their rate of volunteering, their voting patterns, shows that immigrants assimilate by the second to third generation. The first generation are the immigrants, the second is their children, the third is their US-born grandchildren. Basically, by that point, they are indistinguishable from other Americans who have been here from a longer period of time and by some measures of this, this is actually a faster pace of integration and assimilation than immigrants from Europe over a hundred years ago.

Nowrasteh: So, it's going great, to put it bluntly. The evidence just does not support that and you see a lot of conservatives actually bring this up recently because there was a big swing in Hispanic voters toward Trump in the 2020 election about almost ... high thirties, about 38%, 39% of them voted for Trump. This was something that I was promised would never happen. Anti-immigration people told me Hispanic immigrants and their kids will never vote a Republican. It's just not what they believe in for all these reasons.  Now, these same people are showing, as an example, of how great President Trump was, that he convinced about 38%, 39% of Hispanics to vote for him. It's happening, guys, right before our eyes. Immigrant assimilation, politically, culturally, economically, is happening in front of our eyes.

If the welfare programs that illegal immigrants had access to were the American welfare state, nobody would be studying it or worrying about it because it's so small, it's tiny. It's basically like money that you can find in the sofa cushions at the Department of Defense.

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Beckworth: Well, Alex, we are running out of time here, but I want to end on one more objection, this will be our final one, and that is the objection that immigrants will bring increased crime, particularly illegal immigrants will bring increased crime. So, how do you respond to that?

Nowrasteh: There is one state in the country that counts crime by immigration status, only one, and that's the great State of Texas, and so we can take a look at criminality by immigration status. What we find there, taking a look at the data, is that illegal immigrant criminal conviction rates is half that of native-born Americans, half that of native Americans. This works for other crimes as well. You take a look at homicide. The illegal immigrant conviction rate is substantially lower for homicide than it is for native-born Americans. You take a look at it for property crimes and other violent crimes, it's about half that of native-born Americans.

Nowrasteh: Legal immigrants have an even lower criminal conviction rate than illegal immigrants but it just, I think, goes to show you that the people who self-select to come to the United States are making a long term investment in themselves and their families, and they are just not likely to run afoul of the law if they can help it. They'll break immigration laws if they have to, but they don't want to break these other laws because that's the best route to them losing hold of the American dream.

Beckworth: That's why it's important whenever we see a news story on TV about an immigrant committing a violent crime, to keep this bigger picture in mind, that the overall numbers suggest that their crime rates are actually lower than the native population. Okay, with that our time is up. Our guest today has been Alex Nowrasteh. Alex, thank you so much for coming on the show.

Nowrasteh: Thanks for having me. This was a blast.

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