Three Lessons on Institutions and Incentives (Part 7): Breaking the mold

This role of entrepreneurs also depends on an abstract characteristic of technological knowledge: it works in a manner contrary to that of most goods, since it is more productive to the extent that it is more widespread in the population. This characteristic of the abstract nature of technological knowledge is related to the phenomenon of the combination of skills (matching of skills): the negative side of creative destruction lies in substitution phenomena (a computer program of inventory management increases the productivity of work saving the salaries of the army of employees who used to carry them with pencil and paper), but the positive side comes from the phenomena of complementarity.

As William Easterly exemplifies, the cardiac surgeon will be more productive in a first world hospital, where he will have specialized nurses, other qualified doctors like him, a sophisticated system of hospital administration, and so on, being the only cardiac surgeon in a hospital. city ​​of the third world, where it does not have professionalized nurses, nor the help of other medical colleagues, working in a hospital in which he himself has to deal with administrative issues. If there were only substitution relations, it would be convenient for a doctor to practice his profession in the most remote place possible. However, as relations of complementarity of knowledge exponentially increase the productivity of the professionals involved, the doctor will find it more convenient to practice in a health center that has the largest number of doctors and paramedics possible.

The latter does lead to the phenomenon of “traps”: any rational agent, who maximizes the utility of their choices will be discouraged to deepen their studies if they perceive that they can not give any use to their education. There are the cases in which a person discovers that in his country there is no technology or the necessary number of professionals to develop a specific activity, or that, existing, you will find prohibited the exercise of their profession based on restrictions regarding their race, caste, social class, sex, etc. Since, rationally, a person who is included in a particular group under which he will be found forbidden or will be hindered the exercise of his profession, he will find as the most rational of their alternatives to abandon their studies, so that their chances of progress will no longer be limited only by legal or social barriers, but because of their lack of suitability for high-paying functions. Such are the so-called “poverty traps.”

There are also wealth traps. There are those cases in which the individual knows that he is within a favored group or in which he knows a large number of professionals and, therefore, invests time and money in his education because he knows that he has high chances of success, which will then be confirmed. Obviously, such phenomena of divergence generates another problem, addressed both by Easterly and by Daron Acemoglu & James Robinson, which is that of polarized societies.

Easterly affirms that it is the exchange of goods and services, through the mutual benefits that they report to the parties that participate in it, the main source of wealth generation. Where individuals are allowed to exchange, in a stable institutional framework with a stable currency, is where prosperity flourishes. However, Easterly recognizes that bad luck can devastate nations, as are the cases of geological and climatic phenomena such as earthquakes, tsunamis or mudslides, as well as recognizing that the situations of individuals involved in a poverty trap can only be resolved through an active public policy that not only provides education, but also establishes the conditions so that the recipients of that educational system can count on certain expectations that they will be able to apply that knowledge acquired through education and that, consequently, it is reasonable to study.

Just as the bad star can affect the economic performance of the countries, so can a favorable conjuncture, such as the case of a transitory improvement in terms of exchange of a given country. But this favorable circumstance can become a counter-march. Easterly explains that, for a simple statistical matter, it is very difficult for both a nation and an individual to always remain on the crest of the wave, over the years everything tends to return to the average. The problem occurs when a country -or a person, too- got used to a certain level of spending in the boom years and intends to maintain it through debt or emisionism. We come to the cases in which, according to Easterly, the government can “kill the growth.” Public debt and inflation generate capital consumption and, consequently, poverty.

Another way that governments have to discourage growth is through corruption. Not only because it means a transfer of resources from productive activities to unproductive activities, but because it also means a bad signal for citizens. However, in cases of corruption, as noted above, wealth at least changes hands. There is another case, even more pernicious, in which the government’s actions, whether motivated by corruption or inspired by good intentions, destroy wealth, without even redistributing it: this is the case of inconsistent public policies derived from highly polarized societies.

Public policies that aim to favor a given industry, but at the same time need to agree on measures with other sectors of the economy, whose purpose is to compensate for the losses generated by those policies, can lead to a tangle of inconsistent regulations that, instead of transfer riches from one sector to another, directly destroy them. For example: exchange controls harm the export sector, since they generate black markets. The exporters will have costs that will be partly quoted according to the black market prices (which are higher) and they will have to liquidate the value of their exports at the official exchange rate, which will be lower. Regulations of this kind may not involve acts of corruption, but they do destroy wealth, which there is no way to recover.

Easterly lists numerous examples of everything that needs to be done to destroy growth. However, there is something that deserves to be especially highlighted: the progress or stagnation of nations does not depend on educational, cultural or geographic factors, but rather on the incentive framework that predominates. This incentive framework will always be abstract, that is, it can be applied at any time and place.

[Editor’s note: Here is Part 6, and here is the entire, Longform Essay.]

Three Lessons on Institutions and Incentives (Part 4): Institutions and the Rule of Law

Daron Acemoglu & James Robinson call the set of regulations that obstruct innovation “extractive institutions.” Of course, here again, extractive institutions are less harmful than the total absence of institutions. Not every change in the status quo can be interpreted as “creative destruction” or “entrepreneurship.” As Friedrich Hayek pointed out in Law, Legislation and Freedom, so that the most mutually compatible plans can be carried out, it is necessary that a well-defined set of expectations be systematically frustrated: the usurpations, the frauds, collusions, the paramilitary bands, etc., etc. The main thing is to have institutions that guarantee a minimum of order. Now, many times the institutions manage to be put into effect as a result of having the consensus of a certain number of interests that see in the law an opportunity to extract benefits. It is the distinction between Acemoglu & Robinson between the already mentioned “extractive institutions” and “inclusive institutions.” The latter are constituted by that set of rules that formally are equal for all and that materially protect private property, the value of money, competition understood as freedom of entry to markets, among other values ​​of modern capitalism.

The distinction between extractive and inclusive institutions can find its parallelism in the expressions of “Rule by Law” and “Rule of Law.” The first consists on the accommodation of general and abstract normative statements with a second intention: to benefit a group at the expense of society as a whole. It is common to hear the criticism that the law has a false neutrality and that therefore any defense of the “Rule of Law” must be ideological (in the Marxist sense of the term). However, what distinguishes the concept of “Rule of Law” from “Rule by Law” is that, for the first of the terms, the consequences are unlikely to be predicted in terms of their particular and even more individual, while the second has an intentionality, declared or hidden.

To give an example, the procedural due process has such a degree of abstraction that it can hardly be predicted who will benefit from those proceedings. However, a law that prohibits the importation of a product of domestic manufacture clearly aims to redistribute resources from consumers to the local producers (although this type of regulation usually also generates consequences that are very difficult to foresee and often contrary to its original intentional).

Critics of the Rule of Law state that it is not neutral, because it protects exclusively the interests of the proprietors. However, such criticism loses sight of the fact that in the Modernity, any inhabitant, even those who are not citizens, can have access to the right to property, regardless of whether or not they belong to a certain caste, class, or social class. This, unlike the legal and political systems of the so-called Ancien Régime, which limited access to private property in perpetuity and irrevocably to a certain group of people, or even more, to a certain clan or group of families. It does not matter if, in Modernity, a person does not own any particular good, as long as he can count on the expectation of being able to become one at some time. In this sense, private property understood in the modern sense as that right that any inhabitant can enjoy from having stability in their possessions to the point of only being stripped of it by their own consent or by following the procedural due process.

This unlike laws protecting infant industries, professions or trades, or promotion of certain activities that are deemed as socially necessary or valuable, which establish a regime of transfers of resources from one sector of society to another. As the School of Public Choice indicates, such laws encourage “lobbying” and reduce the efficiency in the allocation of resources. In such institutional arrangements, individuals and businesses do not prosper through the discipline of serving the consumer, but through political agreements. Economic agents continue to maximize, but at the expense of regulations that deliberately establish certain winners (the owners of protected activities) and certain losers (consumers and potential producers who are denied access to protected activities). Under these circumstances, the citizenry begins to perceive an arbitrary sense in the norms and have no moral issues with challenging them (any contraband, without commercial purposes, is a clear example of this). Obviously, when non-compliance with standards becomes so extensive, regulations become ineffective. Moreover, as James M. Buchanan put it in his brief essay “A policy in the interests of producers,” the stagnation generated by protectionism means that the winners of such a system – the protected producers – turn out to be less rich than they would be in an open and competitive institutional framework.

Sometimes protectionism seeks its foundation in a mistaken theory of “original accumulation.” (Joseph Schumpeter ruled out the validity of such proposals by pointing out that, although those could have had some basis until the 19th century, the development of capital markets made this theory completely obsolete.)

However, neither Douglass North, nor William Easterly, nor Acemoglu & Robinson, deal with the problem of original accumulation. They prefer to encompass such phenomena within the set of erroneous theories that serve to justify policies arising from political agreements in polarized societies. This means that a certain institutional arrangement, an economic growth policy, a stabilization program, a constitutional reform, foreign policy and so on, in a polarized society is not inspired by abstract and formal principles but in concrete goals that benefit certain sectors of society above others.

The examples of polarized societies, to which Easterly and Acemoglu & Robinson turn, come mostly from African countries since these are mostly created in the process of decolonization and comprise different ethnic groups and languages ​​within themselves, so polarization is much more evident: certain policies benefit a certain ethnic group over another. Easterly specifically cites the case of an African nation in which an ethnic group that represents 10% of the population lives in the region where a certain commodity is produced and whose export generates large revenues and, in the meantime, the government is elected, with some exceptions, by 90% of the remaining population, which imposes export rights on the said commodity, whose collection is destined to industrialization plans that systematically fail.

It is often tempting to explain the failure of such industrialization plans for the corruption evidenced in their execution. In fact, corruption cases are verified, but public policy would also fail even if those involved were incorruptible. Many times bad policies destroy much more wealth than political corruption. Corruption implies a transfer of resources and, therefore, an inefficient allocation of resources, while bad public policies result in the destruction of wealth.

However, examples of polarized societies in African countries can generate confusion around the main message of The Elusive Quest for Growth and Why Nations Fail. The economic performance of nations has nothing to do with geography, culture, or lack of preparation of the ruling elites to draw the plans of government. Easterly holds the main responsibility for the rise and fall of nations in incentives, while Acemoglu & Robinson point to the institutions that establish such incentive schemes. Regarding the opinion of Douglass C. North, although his line of research can lend itself to a “culturalist” interpretation, he himself recognizes the disruptive change of formal institutions as a determining factor of economic performance.

In summary, the three works discussed here have as a common denominator the role of incentives as a determinant of the economic performance of countries, above culture (which North would call “informal institutions”), geography, or the level of education of its elites. However, the case of polarized societies is presented as a critical point of such approaches.

José Luis de Imaz in Los que mandan (The ones who command) had defined politics as the activity consisting of articulating diverse interests according to a coherent plan of government. The definition of Imaz deserves to be put back into use, since it addresses the problem of polarization and also because its double edge allows to tie the loose ends left by the visions that we can group, with greater or lesser precision, under the “neo- institutionalist” (clearly the case of North, although it would be pending to discuss the label for Easterly and Acemoglu & Robinson).

Notwithstanding, that polarization is manifest in tribal or caste societies does not mean that it is not present in other societal forms. In the United States, the north and south; in Europe, the separatist movements; in Argentina, the interior and Buenos Aires. With greater or lesser intensity, manifestly or latently, politics is always structured on a space of tension of interests in competition for resources. Those who frequent the work of Carl Schmitt often claim that trade and law are “civilized” means for the exchange and dispute of such resources, politics and war are on the other side of the same question in terms of intensity of the conflict.

However, the term institutions – which define incentives – does not refer only to deliberate political agreements in pursuit of a specific purpose, such as a given public policy. The concept of institution also concerns a series of abstract and general principles whose final result at a particular level no one can foresee, because their level of abstraction imposes an insurmountable limit for the knowledge of its concrete consequences.

[Editor’s note: Here is Part 3; Here is the entire, Longform Essay]

Three Lessons on Institutions and Incentives (Part 1): Introduction

There are books that are aimed at a spectrum of readers that are counted within the “well-informed public.” They are not books confined to academic circles, they are not for mass consumption, but they do concern problems that involve entire countries and are written in a register that involves certain intellectual training. In this genre, there are three works that have much to say about the relationship between institutions and incentives. The first of them dates from 1990 and was published by a Nobel Prize winner in Economics, Douglass C. North: Institutions, Institutional Change and Economic Performance, which elaborates the distinction between formal and informal institutions and incremental and disruptive institutional change, ending with a historical analysis that seeks to explain the differences in economic performance between the United States and Latin America. It is an academic book that can be approached by the said well-informed public.

Eleven years later, in 2001, William Easterly published The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics. It is proposed as a political essay in which an economist interprets his own professional experience as a member of international teams for the development of Third World countries. To do this, drawing on the theoretical notions of other leading economists, such as Paul Romer (who later, in 2018, received the Nobel Prize in Economics), he makes an assessment on the development plans for the Third World that were implemented since the end of World War II. The central thesis of Easterly stresses that, in order to have an empirical relevance, every theory of development -or of the absence of it- must carry the following behavioral postulate: “people respond to incentives.” If this reality is not taken into account, there is no public policy that can be successful. The main lessons that can be drawn come from the theoretical instruments deployed to explain the political dynamics of most of these countries, particularly in regard to the phenomenon of polarized societies.

The third book to consider is also the more recent publication. Why Nations Fail, by Daron Acemoglu & James A. Robinson, was published in 2012 and reached the global debate on the realm of the well-informed public. The proportions achieved by the population of academics and professionals, in addition to the extension of the internet, allowed the aforementioned book to generate varied opinions along both traditional and digital media throughout the world. Acemoglu & Robinson dedicate their pages to those countries that were successful, as well as those that were not, but also here, in the case of this book, the most juicy lessons truly comes from the conceptual structure that articulates the whole book. Among such notions, we find those of inclusive and extractive institutions, which in turn are divided into political and economic institutions. The worst of the institutions are preferable to the total lack of institutions. Thus, a country organized around a closed political and economic system will be preferable to a failed state. However, once a certain degree of centralization and institutionality has been achieved, it is preferable to move towards a pluralist democracy and a competitive economy. The challenge is how to accomplish such transitions.

Since there are still four years left until the year 2023 – following the periodicity of the selected works – we are still in time to make a brief synthesis of the ideas that can be applied to the analysis of the impact of the institutions on economic and political incentives.

[Editor’s note: this is the first part of a rich series on institutions and incentives. You can find the full, Longform Essay here.]

RE: Economists’ Statement on Carbon Dividends

I just got an email asking me to sign on to an open letter arguing for some carbon tax policies. I’m seeing some push back from (smart, economically literate) Facebook friends, but I think it’s a viable step in the right direction.

Here’s the statement paraphrased:

We think global warming is an important and urgent issue and we recommend these five things:

1. A carbon tax is the best, most cost-efficient way to do as much about carbon as needs to be done. [For a given level of carbon reduction, I agree. How much carbon reduction should happen (and how much at government behest) I am deeply agnostic about.]

2. We think this should be phased in over time and should be revenue neutral. [Yes on both points, but the rest of the statement makes it seem like they’re talking about a pretty short time horizon. I’m not sure how fast is too fast, but I’m sure there’s such thing.]

3. A carbon tax is more efficient than a set of specific regulations. [Certainly!] It’s also less likely to be subject to changing political winds. [Is it though?]

4. We should also apply a carbon tax to imported goods. This would reward energy-efficient American firms and prod other countries to follow suit. [Hmmmm… I can’t really disagree with the general principle, but this sounds like it will require bureaucratic oversight that will be subject to regulatory capture. On the other hand, we’ve already got that.]

5. We should give the revenue collected back to U.S. citizens, to offset increases in energy prices. [Okay, but if it’s going to be revenue neutral and come with a transfer scheme, that’s going to take some detangling!]

I buy into the notion that carbon emissions create large scale externalities that will probably be more bad than good on balance. Not universally bad, mind you. And not something that humanity won’t ultimately adapt to. But I think the people who will face the brunt of the bad outcomes will be the world’s poor (who we should help migrate to better climates!).

I don’t think we can just impose “the right” carbon tax and have everything come out just right. Even though I routinely draw out the case with a supply and demand graph in class, the truth is that nobody has access to those curves in real life. But a small tax can serve to reduce the inefficiency of pollution even if we don’t get it exactly right.

The revenue neutral part is important–we’re currently taxing lots of things we actually want more of (like investment). So if we can cut those taxes by taxing things we want less of (pollution), we’re reducing two sources of inefficiency in the current setup. Of course you and I have bolder views about what policy should look like in 100 years, but restricted to a 10 year window, a revenue neutral carbon tax looks pretty good to me.

The letter dramatically over-simplifies things. Climate change is probably a problem, but probably not as big a problem as proffered by proponents of proposals to prepare for apocalypse. It’s not clear to me that we have a good idea of a) all of the effects (good and bad), b) how people will adapt, and c) how people will adapt to a changing policy regimen.

Figuring out how to handle the tax on imports will be difficult and rife with rent seeking. Unmentioned is the impact on exports. If all our trading partners follow a similar policy, there’s no problem, but in the mean time there’s a tension that will probably be resolved with some unfortunate bit of rent seeking.

I’m sure most reasonable people would agree that instantaneous change would probably be unduly costly, but it’s not clear what the right speed of implementation is.

There are some miscellaneous rhetorical points I have issue with, but I suspect those are in there to throw a bone to people who aren’t me.

I hope that 10 years from now this open letter looks a bit silly. But I also hope that 10 years from now pollution taxes start to replace more inefficient taxes. On balance, I’m happy to see the letter prodding us in that direction.

Selective Moral Argumentation

There are two competing approaches to moral theory. Consequentialism posits that actions and policies should be judged by their consequences: an action (or policy) is good if its predictable consequences are good. Deontologist perspectives, on the other hand, claim that actions should be judged according to their own worth, irrespective of consequences.

Note that the differences between these approaches lies not in the specific policies advocated but in their modes of arguing. Consider the death penalty. Consequentialists are generally against killing people because it’s not a good idea, but will support the death penalty if it can be shown that it is a cost-effective way of reducing crime. The deontologist opposition against the death penalty is absolute, but a deontologist may also support the death penalty because criminals deserve it, even if that’s not an efficient way to reduce crime.

I used to believe that specific individuals are either consequentialists or deontologists, i.e. some people are very sensitive to consequentialist reasoning while others were immune to it, and vice versa. At the very least, I expected individuals to combine both approaches in a consistent way (for example, by being consequentialists only two-thirds of the time). But now I think this is putting the cart before the horses: what happens in practice is that an individual first decides which policy she wants to defend, and then employs the mode of argument that is more favorable to the policy in question.

Throughout the 1960s and 1970s, right-wing military dictatorships were pretty common in Latin America. These governments often committed heinous crimes. When, years or even decades after the fact, the issue of punishing those responsible came to the fore, right-wingers opposed the move from a consequentialist perspective –social peace is worth preserving, isn’t it?–, while left-wingers took the deontologist stance –surely those who committed crimes against humanity should be harshly punished. But when the discussion turned about pardoning left-wing guerrillas, as in the 2016 peace referendum in Colombia, the tables turned: now the right found intolerable that criminals would be pardoned for the sake of social peace. (It is worth noting that in Argentina, where several former military commanders, including some with atrocious human rights records, contested and won elections after the return to democracy, the right never raised deontologist objections against them.)

I see the same pattern in Mexico today. During the electoral campaign last year, then candidate Andrés Manuel López Obrador was harshly criticized for raising the possibility of an amnesty for members of drug cartels in order to pacify the country. To be sure, there are many ways in which such a strategy could go wrong; but the criticism focused on the moral horror of pardoning drug dealers. Predictably, now that the government of López Obrador cut fuel supplies in order to prevent gasoline theft –something against which his predecessors had done nothing–, his opponents have found the virtues of consequentialism: the policy is creating (serious) fuel shortages. As you may guess, the government highlights the importance of combating criminals, without paying much attention to the consequences.

All of this reinforces the point repeatedly made by Cowen and Hanson: politics is not about policy, but about the relative status of different social groups. That said, the fact that we (unconsciously?) pick our preferred policies/stances first and decide how to defend them afterwards only begs the question: what determines whether we end up positioning ourselves in one side of the political spectrum or another? And given that we sometimes (but rarely) switch sides, what are the motivations behind these changes?

Legal Immigration Into the United States (Part 18): Reforms I Would Favor

Now, here is what I, personally, a US citizen and an appreciative immigrant, as well as a small government conservative, would like to see happen: As I pointed out before, most liberals and quite a few conservatives perceive allowing all immigration as a sort of altruistic gesture. That includes those who do not overtly call for open borders but whose concrete proposals (“Abolish ICE.”) would result in a soft state that would provide the equivalent of open borders. As far as I can tell – with the major exception of Tabarrok, discussed above – many pure libertarians whisper that they are all for open borders, but they only whisper it. I speculate that they are forced to take this principled but unreasonable position to avoid having to defend the nation-state as a necessary institutional arrangement to control immigration.  Frankly, I wish they would come out of the closet and I hope this essay will shame some into doing so.

The most urgent thing to my mind is to separate conceptually and bureaucratically with the utmost vigor, immigration intended to benefit us, American citizens and lawfully admitted immigrants, and beyond us, to promote a version of the American polity close to the Founders’ vision, on the one hand, from immigration intended to help someone else, or something else, on the other. The US can afford both but the amalgam of the two leads to bad policies. (See, for example the story “The Refugee Detectives: Inside Germany’s High-Stake Operation to Sort People Fleeing Death…” by Graeme Wood in The Atlantic, April 2018.)

Next, I think conservatives should favor, for now, an upper numerical limit to immigration, one pegged perhaps to the growth of our domestic population. Though my heart is not in it, it seems to me that this is a prudent recommendation in view of the threatening prospect of a Democratic one-party governance.

The first category of immigrants would be admitted on some sort of merit basis, as I said, perhaps a version of the system I discuss above. The second category would include all refugees and asylum seekers, and, to a limited extent, their relatives. Given a strictly altruistic intent in accepting such people, Congress and the President jointly would be in a better position than they are today to apply any strictures at all, including philosophical and even religious tests of compatibility with central features of American legal and philosophical tradition – if any. (Of course, in spite of the courts’ interventions in the matter, I have not found the part of the Constitution that forbids the Federal Government from barring anyone it wants, including on religious grounds. Rational arguments can be made against such decisions but they are not anchored in the Constitution, I believe. (See constitutional lawyers David B. Rivkin and Lee A. Casey’s analysis: “The Judicial ‘Resistance’ is Futile” in the Wall Street Journal of 2/7/18.)

I think thus both that we could admit many more people seeking shelter from war and other catastrophes than we do, and that we should vet them extensively and deeply. We could also rehabilitate the notion of provisional admission. Many of the large number of current Syrian refugees would not doubt like to go home if it were possible. Such refugees could be given, say, a five-year renewable visa. As I pointed out above, some beliefs system are but little compatible with peaceful assimilation into American society. This can be said aloud without proffering superfluous insults toward any group.  National hypocrisy does not make sense because it rarely fools anyone. In general, I think all American society has been too shy in this connection, too submissive to political correctness. So, think of this example: French constitutions, most of the fifteen of them anyway, proclaim the primacy of something called “the general interest,” a wide open door to authoritarian collectivism if there ever was one. There is no reason to not query French would-be immigrants on this account. I would gladly take points off for answers expressing a submissiveness to this viewpoint. (Yes, I am one of those who suspect that the French Revolution is one of the mothers of democracy but also, of Communism and of Fascism.)

Similarly Muslim religious authorities as well as would-be Muslim immigrants could be challenged like this: Just tell us publicly if Islamic dogma welcomes separation of religion and government. State, also in public, loudly and clearly that apostasy does not deserve death, that it deserves no punishment at all. Admission decisions would be a function of the answers given. Sure, people would be coached and many would cheat but, they would be on record. The most sincere would not accept going on record against their doctrine. Sorry to be so cynical but I don’t fear the least sincere!

The underlying reasoning for such policies of exclusion is this: First, I repeat that there is no ethical system that obligates American society to commit suicide, fast or slowly; second, probabilistic calculations of danger and of usefulness both are the only practicable ones in the matter of admitting different groups and categories. (I don’t avoid jumping from planes with a parachute because those who do die every time they try but because they die more often than those who don’t.) Based on recent experience (twenty years+), Muslims are more likely to commit terrorist acts than Lutherans. (It’s also true that there is a very low probability for both groups.) Based on common sense and the news, most Mexicans must have acquired a high tolerance for political corruption. Based on longer experience, many Western Europeans have extensive and expensive expectations regarding the availability of tax supported welfare benefits. Based – perhaps- on one thousand years of observation, the Chinese tend to favor collective discipline over individual rights more than Americans do. (See my: “Muslim Refugees in perspective.”)

Pronouncing aloud these probabilistic statements does not shut off the possibility of ignoring them because immigrants from the same groups bring with them many improvements to American society, of course. I could easily allow a handful of well chosen French chefs to come in despite of their deep belief in the existence of a common public interest. I even have a list ready. Admitting facts is not the same as making decisions. I can also imagine a permanent invitation to anyone to challenge publicly such generalizations. It would have at least the merit of clearing the air.

Last and very importantly: Invalidating the generalizations I make above, to an unknown extent, is the likelihood that immigrants are not a true sample of their population of origin: Chinese immigrants may tend to have an anarchist streak; that may be the very reason they want to live in the US. Mexicans may seek to move to the US precisely to flee corruption for which they have a low tolerance, etc. The French individuals wishing to come to the US may be trying to escape the shadow of authoritarianism they perceive in French political thought, etc.

[Editor’s note: in case you missed it, here is Part 17]

Legal Immigration Into the United States (Part 17): Merit-Based Immigration and Other Solutions

The long-established numerical prominence of immigration into the US via family relations makes it difficult to distinguish conceptually between legal immigration responding to matters of the heart and immigration that corresponds to hard economic, and possibly, demographic facts. The one motive has tainted the other and vice-versa. The current public discussions (2016-2018) suggest that many native-born Americans think of immigration as a matter of charity, or of solidarity with the poor of this world, as in the inscription at the foot of the Statue of Liberty: “Give me your tired, your poor, your huddled masses yearning to breathe free,….”  Many Americans accordingly perceive as hard-hearted those who wish to limit or reduce immigration. Inevitably, as whenever the subject of hard-heartedness emerges as a topic in politics, a Right/Left divide appears, always to the detriment of the former.

It seems to me that conservatives are not speaking clearly from the side of the divide where they are stuck. They have tacitly agreed to appear as a less generous version of liberals instead of  carriers of an altogether different social project. Whatever the case may be, the politically most urgent thing to do from a rational standpoint is to try and divide for good in public opinion, immigration for the heart and immigration for the head, immigration for the sake of generosity and immigration for the benefit of American society. Incidentally, and for the record, here is a digression: I repeat that I believe that American society has a big capacity to admit immigrants under the first guise without endangering itself. That can only happen once the vagueness about controlling our national boundaries has dissipated. Such a strategy requires that the Federal Government have the unambiguous power to select and vet refugees and to pace their admission to the country.

“Merit” Defined

In reaction to the reality and also, of to abuses associated with the current policy, a deliberate, and more realistic doctrine of immigration has emerged on the right of the political spectrum. It asks for admission based on merit, partly in imitation of Australia’s and Canada’s. Canada’s so-called “Express Entry System” is set to admit more than 300,000 immigrants on the basis of  formally scored merit in 2118. That’s for a population of only about 37 million. The central idea is to replace the current de facto policy favoring family relations as a ground for admission, resulting in seemingly endless “chain migration,” with something like a point system. The system would attempt scoring an immigrant’s potential usefulness to American society. In its simplest form, it would look something like this: high school graduate, 1 point; able to speak English, 1 point; literate in English, 1 more point; college graduate, 2 points (not cumulative with the single point for being a high school graduate); STEM major, 2 points; certified welder, 2 points; balalaika instructor, 2 points. Rocket scientist with positive record, 5 points.  Certified welder, 10 points.

The sum of points would determine the order of admission of candidates to immigration into the US for a set period, preferable a short period because America’s needs may change fast. With the instances I give, this would be a fair but harsh system: Most current immigrants would probably obtain a score near zero, relegating them to eternal wait for admission.

There are two major problems with this kind of policy. First, it would place the Federal Government perilously close to articulating a national industrial policy. Deciding to give several point to software designers and none to those with experience running neighborhood grocery stores, for example, is to make predictions about the American economy of tomorrow. From a conservative standpoint, it’s a slippery slope, from a libertarian standpoint, it’s a free fall. Of course, we know how well national industrial policies work in other countries, France for example. (For 25 years, as a French-speaking professor on the spot, visiting French delegations to my business school would take me aside; they would buy me an expensive lunch and demand that I give away the secret of Silicon Valley. First, create a first rate university, I would answer meanly…)

Second, the conceit that a merit-based system of admission, any merit-based system, is an automatic substitute for the family reunion-dominated current policy is on a loose footing. Suppose, a Chinese woman receives top points in the new system as a world-class nuclear scientist whose poetry was nominated for a Nobel in literature. She walks right to the head of the line, of course. But she is married and she and her husband have three children. Can we really expect her to move to the US and leave her family behind? Do we even want her to, if we expect her to remain? Does anyone? Then, the woman and her husband both turn out to be busy as bees and hard workers, major contributors to the US economy, and to American society in general. (They are both also engaged in lively volunteering.) So, they need help with child care. The husband’s old but still healthy mother is eager and willing to come to live with the couple. She is the best possible baby-sitter for the family. The problem is that the old lady will not leave her even older husband behind. (And, again, would we want her here if she were the kind to leave him?)

Here you go, making ordinary, humane, rational decisions, the merit-based admission of one turns into admission of seven! And, I forgot to tell you: Two of the kids become little hoodlums, as happens in the best families in the second generation. They require multiple interventions from social services. They will both cost society a great deal in the end. In this moderate scenario, the attempt to rationalize immigration into a more selfish policy benefiting Americans has resulted in a (limited) reconstitution of the despised chain immigration, with some of the usual pitfalls.

The arguments can nevertheless be made that in the scenario above, the new merit-based policy has resulted in the admission of upper-middle class individuals rather than in that of the rural, poorly educated immigrants that the old policy tended to select for. This can easily be counted as a benefit but the whole story is probably more complicated. In the exact case described above, the US did replace lower-class individuals with upper-middle class people but also with people possibly of more alien political culture, with consequences for their eventual assimilation. I mean that all Mexicans tend to be experts in Americana and that our political institutions are familiar to them because theirs are copy-cat copies of ours. I surmise further that Mexicans are unlikely from their experience to expect the government to be mostly benevolent. Moreover, it seems to me the children of semi-literate Mexicans whose native language is fairly well related to English and uses the same alphabet, are more likely to master English well than even accomplished Chinese. This is a guess but a well-educated teacher’s guess. (I don’t think this  holds true for the grand-children, incidentally.) Of course, if my argument is persuasive, there would be a temptation to down-score candidates just for being Chinese, pretty much the stuff for which Harvard University is on trial as I write (October 2018).

I described elsewhere how the fact of having relatives established in the country facilitates installation and economic integration, even as it may retard assimilation. Note that a point system does not have to forego the advantages associated with family relationships. Such a system can easily accommodate family and other relationships, like this: adult, self-sufficient offspring legally in the US: 3 points; any other relation in the US: 1 point; married to a US resident with a welder certification: 15 points, etc.

[Editor’s note: in case you missed it, here is Part 16]