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The Dark Side of Competitive Government?

April 29, 2010

Lawrence Auster, the curmudgeonly traditionalist conservative blogger (who you should probably be reading – he’s very intelligent, a great writer, and you will disagree with him 90% of the time) has a spring in his step after reading an AP story about immigrants who are planning to leave Arizona due to the new immigration law:

Most of the illegals interviewed by the AP are planning to go to other states in the U.S., such as California, Texas, and Utah. Excellent. The Arizona law, if it survives court challenges and goes into effect, will create a competitive market among states based on enforcement of the nation’s immigration laws. Those states that don’t pass a law similar to Arizona’s will end up with all the illegals, which will lead most of the illegal alien-attracting states to pass such a law…

(bold mine)

The implications of changes in immigration levels in other states, I fear, may work out exactly as Mr. Auster predicts. The problem is heightened by the fact that many states are facing massive budget crises, that probably aren’t going to get any better anytime soon – Megan McArdle wrote an excellent post arguing that the sovereign debt crisis will be the next one to blow up. So what if all the predictions of conservatives are correct about the detrimental effect of immigration on state budgets, and 2-3 years from now Arizona’s budget is in fantastic shape, and the surrounding states are even deeper in debt? A few things can happen. One is that states could realize that maybe, just maybe, it’s their social democratic policies that are the problem, and not immigrants.  (I know, I’m hilarious.)  So then these states are left in a situation where they can either a) go bankrupt or b) throw all out all the immigrants. And really, a) will almost certainly lead to b), as a group of legislators that would choose bankruptcy over immigrant-bashing will soon be a replaced by a group of legislators happy to take the other side.

There is a silver lining – any situation in which a large number of states were to put in place Arizona-like laws would lead Congress to undertake immigration reform with urgency. The federal government (especially a democrat-led federal government) and the state government have very different incentives with regard to immigration – the Democrats get votes, better relations with Mexico, and increased revenue from immigration, whereas the states are generally bearing the costs. So, we would expect to see massive guest-worker programs, and also a massive expansion of H1-B visas and the like, in order to circumvent the enforcement of the law. Which might actually leave us with a non-insane immigration policy, where it’s very simple to get into the country legally.

But I don’t necessarily see a reason to be too optimistic. Betting on the rationality of Congress is, as always, a good way to end up in the poorhouse. Because while states may be able to compete on the basis of law enforcement, there’s no competition with regard to the law itself – and it’s that competition that would actually put pressure on governments to act rationally.


  1. April 30, 2010 2:55 am

    The issues are internally linked – Milton Friedman’s “You cannot simultaneously have free immigration and a welfare state.” While I would far prefer a return to the old days of free immigration and no welfare state, I think making it easier to immigrate, while keeping the welfare status quo could run a truck through public finances.

    Now, of course, perhaps we might /want/ to accelerate the bankruptcy of the monopoly American state…

  2. kurt9 permalink
    April 29, 2010 10:03 pm

    Yes, I agree that Larry Auster is worth reading even though I disagree with him about 95% of the time.

    A surprising number of atheist/secular types have high regard for his blog, even though he is one of the more rabid Christian militants on the net.

  3. Will Chamberlain permalink
    April 29, 2010 6:34 pm

    ” The public sector costs and benefits of immigrants vary by level of government. To the federal government immigrants represent a net gain. Their state-level impact varies by state. At the local level the costs of immigrants—and of the native-born—exceed taxes paid. The major “cost” of immigrants is education of immigrant children…Overall, annual taxes paid by immigrants to all levels of governments more than offset the costs of services received, generating a net annual surplus of $25 billion to $30 billion.”

    This would seem to support the thesis. Immigration is great for the economy as a whole and for the federal government, not so hot for state governments.

    The full report is here:

    Click to access 305184_immigration_immigrants.pdf

  4. Nacim permalink
    April 29, 2010 6:05 pm

    Woah woah woah. Hold up. Before you go down this dismal prediction path, is there ANY evidence that illegal immigration actually costs the local governments (or the local economy) more than they contribute?


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