Immigration and the Economic Freedom of Natives
The case for a liberal immigration system.
By Ilya Somin
Immigration restrictions severely undermine the economic freedom of receiving-country citizens, as well as that of potential migrants.
This impact affects both the ‘negative’ economic freedom valued by libertarians, classical liberals and many conservatives, and the ‘positive’ freedom most valued by many on the political left.
Immigration restrictions harm negative economic freedom by depriving UK citizens of the opportunity to engage in valuable transactions with migrants, such as employing them, renting property to them, buying goods and services they produce, working for businesses established by immigrants, and more.
Restrictions harm natives’ positive freedom by depriving citizens of the production and innovation created by migrants, and especially their contributions to advances in technology and health care.
These effects are exacerbated by the fact that immigrants disproportionately contribute to entrepreneurship and scientific innovation.
When it comes to both positive and negative freedom, the effects of immigration restrictions are enormous – undermining both to a greater extent than virtually any other government policies adopted by liberal democracies such as the UK and US.
Some argue that immigration actually threatens the economic freedom of natives. These concerns are largely overblown. Where valid, they can be addressed by ‘keyhole solutions’ less onerous than large-scale migration restrictions.
Foreword
By Dr Kristian Niemietz
Opinion surveys show that from the end of the 1990s until just after the 2016 EU Referendum, immigration was consistently ranked as one of the most important political challenges facing the UK. Shortly after the EU referendum, though, the topic suddenly fell off a cliff, in terms of its salience. It had ceased to be a high-priority issue.
This prompted some commentators – prematurely, as we now know – to reach the following conclusion:
The public, they argued, were never really all that bothered about immigration. They just wanted a sense of control over it. That meant, first and foremost, an immigration policy that was decided in London, not Brussels, and by elected representatives, not technocrats. Where immigration policy was decided, and by whom, mattered far more to them than what that policy was. According to this argument, the public would be more accepting of immigration under the new, post-Brexit immigration system even if that system ended up allowing more people into the country than the old one.
It is fair to say that commentary of that nature has not aged well. As a political high-salience issue, immigration is now back with a vengeance; indeed, on some days, it feels as if we talk about little else anymore.
This is not entirely surprising. It is, in part, simply a reflection of the increase in headline numbers. In 2022, net migration surged to about 764,000 people, which was by far the highest level ever recorded. Another 685,000 people followed in 2023.
But the type of immigration is just as important, if not a lot more so, than the raw numbers. In the previous decades, channel boat crossings were a relatively minor issue, whereas in this decade, they have come to dominate the migration debate. Issues around failed integration and community tensions have also come to the fore.
And something else is new in the immigration debate. While immigration has always been a political hot potato, it was, until very recently, not a subject that specifically divided classical liberals. Of course, classical liberals have always had different views on what the ideal immigration system would be, or, if the ideal system was deemed unattainable, what a more pragmatic second-best solution should look like. The IEA’s publications on the subject over the years reflect that diversity. But despite those differences, classical liberals used to be, almost across the board, in favour of relaxing immigration controls. For example, in his book Vienna & Chicago: Friends or Foes? A Tale of Two Schools of Free-Market Economics (2005), Mark Skousen names immigration policy as an area of agreement between the two schools, and while he mentions exceptions, tellingly, he relegates those to a footnote.
The liberal case for relaxing immigration controls was, in part, a matter of principle, and in part, an economic argument.
On the former: liberals believe that consenting adults should be free to live their lives as they please, provided they are not harming anyone. Why should this principle suddenly stop applying at the border? If we abhor the idea of government officials telling us what we are allowed to eat, drink, or smoke, or which opinions we are allowed to read or express – how can we accept the same government officials telling us where we are allowed to live?
On the latter: liberals believe in the free movement of goods, services and capital. The free movement of labour is a logical correlate of that. Immigration restrictions, in this perspective, are just another form of protectionism, which liberals would not accept in other spheres of economic life.
Yet over the past two years or so, immigration has become an issue that divides classical liberals no less than any other ideological camp. Classical liberals who favour tighter immigration controls used to be hard to find. They no longer are: one can now find proponents of tighter immigration controls even on the liberal side. They argue that liberalism works best in high-trust societies with a high degree of social cohesion, and that mass immigration undermines those foundations. They argue that liberalism is not just a set of formal rules and institutions, but also a delicate cultural equilibrium, which can be disturbed by the arrival of large numbers of people from far less liberal cultures.
Whatever one makes of those concerns, or whatever conclusions one may draw from them – one cannot (or at least, should not) dismiss them as ‘bigoted’, ‘far-right’, ‘xenophobic’, or ‘racist’. (And indeed, the author of this paper, Prof Ilya Somin, does not do any of that.) Liberals can disagree with each other on immigration policy, and still be liberals.
Nonetheless: while it is understandable that the record-high immigration numbers of 2022 and 2023 have produced a political backlash, and that, in this context, even some liberals have started to question their previous pro-open-borders stance, there is a danger of the pendulum swinging too far into the restrictionist direction. The liberal case for a permissive immigration system may need updating, but it has not suddenly disappeared.
It is against this backdrop that we have asked Prof Ilya Somin, who represents the more uncompromising, pro-open-borders end of the spectrum of classical liberal opinion on this subject, to provide a corrective to where the debate is presently going.
The spectrum of liberal opinion on the subject has widened, and the debate has become more divisive, but, as mentioned, the IEA has long provided a platform to liberals with quite different views on immigration policy.
For example, in 2011, we published The Challenge of Immigration: A Radical Solution by Prof Gary Becker, who proposed replacing the entire immigration bureaucracy with a market in visas: a visa auction, where visas go to the highest bidders. Under this system, immigrants would pay off their visa costs over time, much like a student loan.
In 2016, we published Free to Move: The costs and consequences of restrictions on migration by Philippe Legrain, who argued that, in an ideal world, the freedom of movement rules of the European Economic Area would be extended to most of the world. As a more realistic second-best solution, Legrain recommended the Swedish work visa system, where anyone with a job offer can get a time-limited renewable work visa.
My own IEA Discussion Paper Immigration: Picking the low-hanging fruits (2019) started from the observation that while ‘immigration’ is unpopular with voters in the abstract, surveys show that large groups of migrants are, in fact, popular. Most people welcome highly skilled migrants, as well as migrants from countries perceived to be culturally similar to the UK, and up to a point, international students. The paper recommended selectively removing obstacles which limit the popular kind of migration.
Prof Somin’s paper fits seamlessly into that workstream. His angle is a rather different one, because his objective is not to come up with a specific immigration policy. It is to highlight an underappreciated downside of immigration restrictions. We usually think of these restrictions as curtailing the freedom and economic welfare of would-be migrants, which they do, but no less importantly, they curtail the economic freedom of the native population as well. They impede large numbers of mutually beneficial transactions between consenting adults. Thus, we should not just think of them as restrictions which ‘we’, collectively, impose on outsiders. We should also think of them as restrictions which some of us impose on the rest of us (and sometimes, restrictions which we impose on ourselves, perhaps without fully realising it).
Prof Somin is by no means oblivious to the challenges of large-scale migration. Where he differs from proponents of immigration controls, including those on the liberal side, is that he thinks these challenges can be addressed through ‘keyhole surgery’, that is, more targeted policy measures. He sees immigration restrictions as a more brutal and invasive procedure, which he would rather avoid.
To repeat, there is plenty of room for legitimate disagreement on this issue, including among classical liberals. We do not expect all readers to fully go along with Prof Somin’s conclusions. But while a liberal can advocate some restrictions on immigration, they should do so reluctantly, and after some agonising. They should not reach that conclusion without having considered, and grudgingly rejected, milder measures first.
The views expressed in this paper are, as in all IEA publications, those of the author alone and not those of the Institute (which has no corporate view), its managing trustees, Academic Advisory Council members or senior staff.