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How are Immigrants Shaping Culture?

Updated: Jul 7

EconBuff #52 with Ben Powell





Dr. Ben Powell talks with me about immigration. Dr. Powell unpacks the question of “what happens if immigrants move to America and then erode the institution?”. Dr. Powell argues that immigrants actually increase economic freedoms in their host country. We explore the idea that economics is downstream of culture. Dr. Powell argues that the immigrants that move to a nation do so because they appreciate and want the values of the nation they to which they move. Dr. Powell discusses the emergent nature of culture and argues that while immigrants will shape culture, they will not reduce economic freedoms. We discuss the people left behind by immigrants and issues like “Brain Drain”. I ask Dr. Powell about assimilation and then we debate the scale of the illegal immigration issue. Finally, I ask Dr. Powell if his views have changed in light of events since 2020 and any concerns he has about mass migration.


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Transcript


Lee Stitzel: Hello and welcome to the Econ Buff podcast. I'm your host, Lee Stitzel. With me today is Dr. Benjamin Powell. Dr. Powell is the executive director of the Free Market Institute and professor of economics in the area of energy, commerce, and business economics at the Rawls College of Business at Texas Tech. Ben is also a senior fellow with the Independent Institute. He's the author of many books. The two that are most relevant for us today are Wretched Refuse: The Political Economy of Immigration and Institutions with—I'm not going to try to say that last name, you can correct me here in a moment—and the co-editor of several other books including The Economics of Immigration: Market-Based Approaches, Social Science and Public Policy, and Economic Freedom and Prosperity. Ben, welcome.

Benjamin Powell: Thank you, Lee. It's good to be with you. Alex Nowrasteh is my co-author on that book, but he's not responsible for any dumb stuff I say on your podcast today.

Lee Stitzel: My sincerest apologies to Alex for not even giving that a try. I'll put a link in the description on the podcast and then you can read it for yourself at home.

Benjamin Powell: Great. Great immigration policy analyst at the Cato Institute. You can look them up there.

Lee Stitzel: There you go. Okay, so our topic today is immigration. I just want to start off with that book that you mentioned there and sort of ask you: How does the book Wretched Refuse challenge popular perceptions regarding the impact of immigration on the economy?

Benjamin Powell: Well, I don't know if Wretched Refuse is really directed at popular misconceptions as much as the first book on immigration was. So Wretched Refuse, I think, tackles what I view as the most important objection to large-scale increases in mass migration to the United States. And that objection is economically informed, but I think not well empirically based.

Whereas most of the time people talk about "they steal our jobs," "they hurt our wages," "they're a big drain on the welfare state"—these are other things that we can talk about as we go on—Wretched Refuse instead says: What if they kill the goose that lays the golden egg?

So in the United States—and I'll argue a particular version of this right now, but the case is broader—in the United States, I think a large part of our prosperity is due to the economic freedoms that we have here, our free enterprise system. What if—and the institutional basis for that is not just our constitutional government, but the hearts and minds and beliefs of the population—well, a lot of immigrants are fleeing not market economies, but socialist economies, kleptocracies, some power—say—hole economies. And the bad institutions in their countries of origin have to be at least in part based on the beliefs and ideas of people there.

So the objection goes: What if they move en masse to the United States, bring those beliefs with them, and erode our institutions? Then the type of economic gains economists usually say we get from immigration go away, or maybe even become negative.

So I think that's the best type of objection to immigration, but I don't think it's right. The objection is—just to make it like a very intuitive way for people—Cubans en masse migrated to Florida fleeing Cuban socialism. What if the Cubans who moved to Florida all wanted to recreate Cuban socialism in Florida? Not only would they not get richer by moving to the United States, they'd make Floridians poorer too.

Now, of course, I know of no better anti-socialist voting group in the United States than Cuban immigrants in Florida, but that's the intuition behind this objection. And what Wretched Refuse does is it tries to give that objection a fair hearing and say: Let's measure it. Let's measure it across large numbers of countries, immigrant stocks and flows, what it does to our economic freedoms, our corruption. And then let's look at mass migrations in individual countries—how does that affect it?

And ultimately we found that for the most part, immigration does not do that and is more likely to actually enhance economic freedoms in destination countries than take away from them.

Lee Stitzel: So that's actually part of what would be most interesting to me to talk about. One of the things I think as economists, we like to look at things and then we say, "Oh, you know, marginal product of labor and bring them into free economies" and that kind of thing. That would be a real textbook treatment of that sort of thing. But we live in this world, especially kind of post-2020, with the kind of different tensions that we see. And I think people do step back and get at what you're talking about and say, "Right, but economics sort of ends up downstream of culture."

And we just, right before this podcast, had the excellent opportunity to hear your "Socialism Sucks" presentation. And in that, you talk about the way that democratic freedoms and political freedoms go hand-in-hand with economic freedoms. So I think those two things end up sort of related. So kind of walk us through what you were talking about there related to how these people end up fleeing places for both political and economic reasons and then end up coming here.

Benjamin Powell: That's a really reasonable fear. Like, we live in Texas—what is our favorite thing to complain about? Californians coming here and bringing their California to Texas. You know, that's a great example, Lee.

So let's start with that one specifically because it illustrates—now it's obviously not international migration, but it's interstate migration from states that are much more left-leaning to states that are much more right-leaning. And it's not that interstate migrants or international migrants won't bring culture. So Californians might bring avocado toast and they might not be standing in line at Evie Mae's Barbecue, my favorite joint just outside of Lubbock, Texas, although up in your neighborhood here in Tyler, Tyler's Barbecue is pretty good that I've been to.

So they do bring cultural values. The question is: Do they bring political values that undermine the existing political values in the state? And in Texas's case, it's always about will they turn it purple from a red state to a purple state as all this blue comes in?

Except funny thing is—and I don't really believe in Democrat-Republican red-blue as a good way to distinguish things, but we have data on it at least—it turns out non-native born Texans vote for Cruz and Trump at a higher rate than native-born Texans do. It also turns out that non-native born Texans own guns at a higher rate than native-born Texans do.

What this tells me is it's selection bias of who chooses to move to Texas. If you just don't like the high cost of living in California, there are 48 other states to choose from that are not named Texas. Texas is kind of a thing. If you choose Texas, it's probably that you've pre-assimilated a little bit and actually like its values.

I can say it's been 11 years that I've lived in Texas now, and I came from Massachusetts. I run the Free Market Institute at Texas Tech University. I guarantee you that is not representative of the average political culture in Massachusetts. And for that matter, my wife used to work at the NRA. So this is pre-assimilation selection.

Now that's interstate migration. I think there's an element of that going on in international migration. Some of it's stronger in some bilateral flows than others. There is evidence—empirical evidence—that immigrants tend to be attracted to more economically free countries. Part of that is a yearning to be free, if we could use classic American phrases here. But part of that is also that freedom produces prosperity, and people move to where there's jobs—also something that's happening here in Texas from New York, Illinois, California, and such.

But especially in today's interconnected global world, pre-assimilation is easier than it was in the 19th century. Being exposed to lots of American culture via music, television, other values while still abroad happens easier now. And I think there's a selection bias of who moves. Who moves here aren't people who are enemies of the freedoms we have in the United States. Instead, on average, they're drawn to them.

Lee Stitzel: So in that, you mentioned you sort of view their political culture as being separate from their culture in a meaningful sense. I mean, those two things seem kind of intertwined. How do you say, "Well, these—they're going to come from culture, they're going to have culture," and then, "But you're right, we're going to sort of peel off the ones that are going to have the most proclivity towards similar political values as America"? Is that kind of the point that you're getting at?

Benjamin Powell: Yeah, so culture is always a spontaneous order, right? It's evolving everywhere and always. There's never going to be a static American culture or Texas culture. It's always going to be changing over time. And as different immigrant groups come—be it interstate or international—different elements will be mixed in and blended.

And this is what we—in fact, things that we think of as cultural goods from individual countries today are the product of prior international trade and migration, right? Like, you know, Italian spaghetti—those noodles weren't native to Italy. This is trade with the Orient that brings these ideas in. So like what we think of as quintessential cultural goods are a product of a long process of historical mixing, and inevitably you're going to get more of that.

My general point on this is: It's not that culture won't change—it will change, and it will change regardless of immigration. The question is: Will the parts of the culture change that are responsible for our high productivity? And I think the answer is no, in particular looking at economic freedoms and corruption.

So we can separate these out because I think the mechanism is a little bit different. Part of it's pre-assimilation anyway, but corruption—people who are fleeing corrupt countries and coming to a less corrupt United States: one, they tend to be not the beneficiaries of corruption in their origin countries, otherwise they would have been happy to stay, so they are more the oppressed; but two, there's a cost and benefit to using corruption. When it pays in your home country and doesn't pay in the United States, you quickly update.

I remember a young woman from Russia who I knew years ago who came into class one day all flustered. She got pulled over by a police officer and held a $20 out the window when he came to the car door. You can imagine what that police officer's reaction was. And her reaction was, "What? Not enough?" Pulls out a second $20. I guarantee she never made that mistake again after that, right?

So I think the corruption thing tends to sort itself out and you get a null effect. The economic freedom I think is more of a draw of pre-assimilation, but also even immigrants who have more non-freedom values than native-born Americans—first of all, they don't have the right to vote right away. There's a time of assimilation before they get that. Second, even once they get the right to vote, they don't exercise it as much as other groups do. So on the margin, they don't push the political needle that much.

And by the way, a good friend of mine, Bryan Caplan, who has an excellent book on immigration—I think it's called Open Borders: The Science and Ethics of Immigration—he has a big chapter in that talking about keyhole solutions. If we did start to find that immigrants were likely to do that, what other ways could we change it without just saying "close the border"?

Could you extend how long before citizenship and the right to vote? Could you do pre-assimilation tests for visas? Instead of saying nobody can come, say pass this really hard high school civics test about what makes America great before you can come in. All of these things would be smaller ways to deal with a potential externality.

It's also the case you could look at which immigrant groups—so it seems like lots of times people see an objection to immigration and just jump to "therefore close the border" versus like, "Well, maybe it's one flow from one particular country in Latin America that's getting too large and is eroding freedoms in the United States." Okay, quantitatively limit that one, while meanwhile remaining completely open to immigration from other countries to come Ellis Island-style legal checkpoint, but let them in in greater numbers.

I think there's lots of different ways to address concerns with immigration that don't involve the type of mass restrictions we have on immigration now.

Lee Stitzel: So if you're going to go about limiting immigration, you're going to do that through a political process. I think lots of people that are going to be involved in that are going to go back to things like taking our jobs or having impacts on culture that they don't like. Like you said there, culture is going to change—this is obviously true because culture is emergent as you pointed out, it's going to change no matter what. But the path that it's going to change on is going to be quite different depending on who's in the country and how they're living. Do you think those kind of things are valid for why you might limit immigration from a certain place or to certain people?

Benjamin Powell: Well, listen, economics only establishes trade-offs. It doesn't give you value judgments. So I've spoken to somebody before who said, "I just don't want to have to push 1 to get English instead of having a choice to be Spanish." I said, "If that's your ethical norm, economics has nothing to say to you. I think it's really weird that you'd say leave a bunch of people trapped in poverty and make us poor for you to not have to push 1 for English." But there's a keyhole solution even there. If the concern is that there's too many Spanish speakers, there's a world of people who speak Swahili and a whole bunch of other languages who aren't hearing anywhere near large enough numbers to get an option on the keypad.

So there's lots of ways one could deal with this. You mentioned jobs there—I'm not sure what the context was that you wanted to do on that one, Lee.

Lee Stitzel: Yeah, so I mean, I think there—that's when I think of what are the objections to immigration: the jobs, which you've mentioned, and things like what's happening culturally and like what do different cities look like. You know, even here in Amarillo, I mean, you go out in public and you're going to see really wide range of people from different cultures, and I don't just mean the color of people's skin, but the way that they dress and behave and this kind of thing. So you're fundamentally even at a city level going to have really big changes in the local culture because of that.

Benjamin Powell: Yeah, and listen, observed inequality will go up. So when people move from abroad to the United States, they massively increase their income. For the average Mexican, it's about a 150% increase. For a Haitian, it's a 1,000% increase moving to the United States. These are massive gains.

I can think of actually no greater poverty reduction or output-expanding project than allowing people to move, because people—even low-skilled people—have human capital. It's just they live in parts of the planet where they have lousy economic institutions that don't allow them to make best use of those. That means when they move here, global inequality goes down, but your localized observance of inequality—precisely because you're not walking around poorer places in Mexico or Haiti on a daily basis—will increase. And that is certainly among the costs, at least in the short run, of this until they economically assimilate further and move up the income chain.

Economics again is about trade-offs, not solutions. But when economists talk about a world of—I'll say unquantized—global income, if they don't do something that erodes the institutions that make us more productive, on average we double global income, double output. Man, I can come up with a lot of problems that could come with mass migration, but I have a hard time thinking of problems that you can't solve if you made the world twice as rich as what it is today.

Lee Stitzel: So my first thought about that is obviously that's true for the individual that come here. What's your impression on the cost for those that sort of are left behind, if you will, that stay? Is that the kind of thing that something like remittances is going to deal with? How do you—can you walk us through that a little?

Benjamin Powell: Yeah, so people will talk about brain drain, like, "Oh, what if the smartest people all leave?" Well, listen, the smartest people in what value they create in their destination country is not the loss of value they would have created in their origin country, precisely because they can't be very productive in their origin country. Like a whole bunch of your productivity is related to the place you are on the globe.

Anybody who's listening to this today in the United States or some other rich country, imagine if we plucked you up and dropped you in Haiti. Think about how much income you'd be able to create. That's a measure of your output for others—it's going to be atrocious. It's the same for them in reverse when they come here.

But in terms of wealth of the origin country, I guess there's kind of two thoughts. One is I don't care at all about what the wealth of a particular piece of land on the globe is. I'm not running around worrying that Antarctica doesn't have enough GDP. But if we're talking about the humanity who's left behind on a particular piece of the earth, I think the evidence on this is that the brain drain thing doesn't really hurt them that much. And in fact, there's even some brain gain that offsets it—people who accumulate human capital in their origin country in anticipation of being able to move and cash in on it when they go somewhere else.

But the big thing is remittances. Remittances are more than a half trillion dollars a year right now annually. They go from people to people instead of to corrupt governments like official development aid through the World Bank, the IMF, USAID does. So it's not funding Swiss bank accounts and white elephant political projects for leaders. It's got the incentives to take it away when people don't use it well. And it's roughly—I don't know the latest statistics this year, but in general about five times the amount of the official aid that goes government or intergovernmental organization to governments.

So a large chunk of the increased income of the people who move ends up back home to help people there. So I wouldn't lose sleep over the welfare of people left behind from those who move.

Lee Stitzel: So the other thing you said is, you know, it's going to depend on how it is that they impact our political freedoms here as well, right? We've actually seen some recent cases like we had riots in Ireland, and there's a lot of political unrest going on in France where people sort of—they end up being upset a lot of times is related to crime, right? Being upset with immigrants coming into the country and then a perceived failure of the system in that regard. Can you comment on that?

Benjamin Powell: Yeah, so there's a whole bunch of differences between countries and different migrant flows. I don't want to overgeneralize, but I do want to say I think a big part of the problem goes away with economic integration.

So the U.S. has a much more flexible labor market that includes immigrants more easily than a place like, say, France, where minimum wages relative to productivity are high and where it's impossible to fire workers or very costly. Actually, when I tell my students this, Lee, I'll say: Imagine if before you go on a date, you had to promise to marry somebody with no possibility of divorce. How selective are you going to be when you ask for the date? Welcome to being a French employer when you hire somebody.

But as a result, then who do they pick? They pick older workers with proven records who are known. So that's one reason why you have really high youth unemployment in France and other parts of Europe. Also why it's harder to integrate immigrants who are larger unknowns—employers don't want to take a chance.

Well, when you don't economically integrate, what do you do? You enclave and protect each other. What does that do? Create resentment for the society that hosts you that then feeds back on you, and you get in this vicious cycle. And in Europe, the high minimum wages, the hardness of the labor market to dismiss people, but also sometimes the refugee status that doesn't allow people to work all makes this worse.

Now there's other differences, particularly between some Muslim and Christian areas of Europe that have long historical difficulties that are not the same as in the United States. But the labor market difference I think is important, and it also feeds back to us today in the United States where I think our big problem with illegal immigration is that we don't have enough legal immigration.

For most of the—when people say, "Hey, do it legally like our ancestors did," everybody's ancestors could come legally unless you had particular contagious diseases in the 19th century. For most of the world today, they cannot come to the United States legally absent getting insanely lucky in a lottery. For most poor people in most parts of the world, it's simply not a legal option.

But we can integrate legal immigrants into our economic system more easily than illegal immigrants. So I think the greater integration with them there, which would ease the cultural and other differences more than what we see with current illegal migration, would be a big driver in it.

Lee Stitzel: What would you say to somebody who would say, "Well, there's all this illegal immigration, and you look at the numbers and they seem enormous—hundreds of thousands, I think it's hundreds of thousands a month, right? And say this can't be a sustainable pattern," like given what you're talking about with legal versus illegal immigration?

Benjamin Powell: Yeah, well, it has been a sustainable pattern, and it has been because for over 20 years we've been talking about comprehensive immigration reform that no political party has an incentive to do. Even relatively trivial things that could be changed on the margin—I thought during Trump's administration that he was actually sympathetic to DREAMers, people brought illegally to the United States as children, and I thought he would end up trading money for the border wall in exchange for a legalization path for them. But even on something—and the DREAMers have something like 80% approval rating among general Americans of wanting them to be legalized—even on that, could not get a compromise and get anything done.

This was true during Obama's administration. It was true during Bush 2's administration, who was a more pro-immigrant type president back then, a Republican Party coming from Texas. They don't seem to want a political solution to it. Instead, they want political points scored back and forth between Team Red and Team Blue.

Lee Stitzel: So given the high-profile nature of immigration and the point scoring that's going on, how would you characterize the nature of the issue? Is this a big issue at all, or do you just kind of wish people would stop talking about it?

Benjamin Powell: No, I think it's a big issue. I mean, I think that the policy barriers that we have to greater legal migration are one of the big reasons that many people are left—listen, poverty—who's responsible for the poverty of people in much of this world? Their own governments that give them rules of the game that are really hard to create value for others, and the governments in places where it is easy to create value for others who prevent them from coming there and creating value for us.

When immigrants come here legally and we make them work to support themselves, Americans gain too. So we're making ourselves poor and leaving them trapped in poverty. I think that's a mistake. I don't expect a political solution to it anytime soon, but the result though is that if you don't have legal paths to the United States, people will take illegal paths to get here.

And yes, you can put up more enforcement against it, but there's still going—when you're talking 1,000% income differentials, people are still going to be drawn. And when people—by the way, I think it's a mistake when people talk about open borders. I don't like it when people use that as the word for advocacy or to describe what's going on right now. It is not an open border right now. When people pay $9,000 to $10,000 for a coyote, that tells me the border is mostly closed, because otherwise you'd walk across it for free.

Instead, people take a lot of risks and try to get in here illegally, and the United States government puts resources up enforcing against it. I think this would all be better addressed if we created greater legal flows so that they could come through checkpoints. And even if there was a backlog—maybe not my favorite policy or whatever—but if there's only going to be—if we go back to 1910 levels of immigration as a percent of the population and say we're going to give that many permits every year, and that will—random, you know, pick how you want to allocate them, but so that basically people have a shot at legal migration, it would probably drastically decrease the number of people who come to the United States illegally because they'd have a legitimate hope at legal migration. Right now they don't.

Lee Stitzel: So you mentioned earlier you could think of several issues with mass migration, sort of negatives, if you will. And then you mentioned, you know, classic Thomas Sowell there—they're no trade-offs, there are no solutions, only trade-offs, right? So in your opinion then, you I think you've done a good job laying out we think the benefits would be—the growth and the benefits that people would have from immigrants moving to the United States, those sort of economic benefits that we've talked about. In your view, what are—I don't know—two of the bigger concerns that you would have with a mass migration that would be part of that trade-off?

Benjamin Powell: Transition costs of adjusting. So we—and part of it's actually domestic regulation on markets then. So a lot of new people in our housing stock is one of the things that's highly regulated—not at the federal level so much as state and local level—that prevents it from being flexible.

I mean, I live in Lubbock, and it's great—they let you "build, baby, build" here in Lubbock. As more population comes in, we build more things. But a lot of places in the country don't do that. So you'll get overcrowding and slumming of things that are substandard, and we don't even allow building for low-income people. And I don't mean price-controlled—I mean lower-quality dwellings that can house people who are poor in large numbers.

So similar to what we see from illegal immigration today in various transit-type locations, housing some of that with mass legal migration would be an issue. I think that puts pressure on you to liberalize your housing market so you can be more flexible and adjust, but even with flexibility in that, there's, you know, time to production, and there'll be transition costs of people coming through.

Lee Stitzel: So you've been very generous with your time. We're coming up here on 30 minutes, so I want to bring this in for a landing. So I want to ask you one last question. Since you published the book in 2020, have there been things that have changed in your view? If so, what? If not, why not?

Benjamin Powell: I would say that what is—from a very U.S.-centric position—what's changed is the numbers at the southern border in the U.S. coming illegally have clearly increased, and the composition has continued to change based on the oppression in the origin countries. In particular, I think it was in the fall we hit the first time ever that Venezuelans were the number one nationality apprehended at the U.S. border coming in illegally, of course fleeing the failed socialist state of Venezuela.

That's all changed. I don't think the social science since I've done the book has changed, or many of the big ideas have. I haven't written—I don't think maybe I wrote one piece on immigration since then. Generally when I do books, it's to wrap up a series of research that I've been doing across papers. And I kind of—you know, each one—for you non-academics, we write boring research articles that very few people read sometimes, but each one of them can only make one narrow point. And when you make one narrow point about seven, eight different times that all relate to the same topic, a book is your chance to pull it together and say, "All right, there's—" and this is true at the end of Wretched Refuse. The last chapter says there is no QED here. It says, "Here's one big objection to immigration. I've looked at it along with Alex Nowrasteh to the best of our ability. We don't find that it's empirically true, and thus we think that more open immigration policy to the rest of the world, absent evidence to the contrary that we've given here, would be the correct path forward." And I think that's still the correct path forward.

Lee Stitzel: My guest today has been Ben Powell. Ben, thanks for joining us on the Econ Buff.

Benjamin Powell: All right, thanks. Cheers.

Lee Stitzel: Thank you for listening to this episode of the Econ Buff, where we find applications of economic thought in a variety of topics and fields. If you enjoyed today's discussion, be sure to check out our previous episodes on YouTube, Spotify, and Amazon Podcast under the title Econ Buff Podcast, and be sure to like and subscribe. For updates and information, visit our website at econbuffpodcast.wixsite.com. If you have any questions, comments, or suggestions, we'd love to hear from you. Drop us an email at econbuffpodcast@yahoo.com.

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