Ending Global Apartheid
Economist Lant Pritchett defends immigration, the least-popular--and most-proven--idea for helping the world's poor.
Imagine an economic distortion so massive that its effects dwarf those of all existing tariffs, quotas, and subsidies. This distortion is relatively new and inarguably regressive; created by policy makers in wealthy countries such as the United States, Sweden, and Japan, it keeps people in Indonesia, Bangladesh, and Guatemala earning fractions of what they otherwise might for the same work. Some of the poorest people in the world are hit hardest, and the policy further impoverishes the poor while reducing economic opportunities for the rich.
Here in the United States we call this distortion "border control." Lant Pritchett, a former World Bank economist, has focused his considerable intellectual firepower on diminishing its economic influence, pushing for more cross-border mobility and a freer world market in labor. Pritchett thinks the citizens of wealthy countries can be convinced of the benefits that even the privileged would enjoy in a more open regime. But he is primarily interested in the huge potential benefits for the world's would-be migrants, people now stuck in economically unviable countries, often in preindustrial economies, fenced in and shut out.
Born in Utah and raised in Idaho, the 48-year-old Pritchett is the son of a Mormon bishop and a graduate of Brigham Young University. He left Boise for Argentina at the age of 19 to serve a mission for the Church of Jesus Christ of Latter Day Saints, the first of many explorations of entrenched poverty and its causes. After picking up a Ph.D. at MIT, he stamped his passport in 40 more countries, often as a research economist with the World Bank. Today he's back in Cambridge co-editing the Journal of Development Economics and teaching at Harvard, where he conducts a class on development with his friend and mentor, former Treasury Secretary Lawrence Summers.
Pritchett is the author of a powerful new book that catalogues the staggering gains to be had from a liberalized immigration regime. Let Their People Come (Center for Global Development) relates, simply and unrelentingly, the voluminous data on global migration. If the 30 affluent countries making up the Organization for Economic Cooperation and Development (OECD) were to allow just a 3 percent rise in the size of their labor forces through loosened immigration restrictions, claims a 2005 World Bank report, the gains to citizens of poor countries would amount to about $300 billion. That's $230 billion more than the developed world currently allocates to foreign aid for poor countries. And foreign aid is a transfer: The $70 billion that rich countries give leaves those countries $70 billion poorer. According to the World Bank study, wealthy nations that let in 3 percent more workers would gain $51 billion by boosting returns to capital and reducing the cost of production.
The aggregate gains from a regime of completely open borders are so large as to seem unreal, but immigration policy is perhaps best understood at the level of the individual. According to World Bank economists Martin Rama and Raquel Artecona, data from the 1990s show that a Vietnamese laborer who moves to Japan will make nine times what she would at home, adjusted for purchasing power. A Guatemalan will find wages for the same work increase sixfold in the United States; a Kenyan who moves to the U.K., sevenfold. "These wage gaps create pressure for migration," Pritchett writes, "because they are not primarily explained by differences in the characteristics of people. Wage rates are predominantly characteristics of places." The biggest single determinant of how well off you will be is not the college you get into, the color of your skin, your gender, or your work ethic; it's the country listed on your passport.
Pritchett's thesis is the kind of thing that sends conservatives and liberals alike running to reinforce the barricades, and he isn't one to shy from controversy. He compares the world's system of mobility restrictions to South African apartheid, a system that provoked Western opprobrium precisely because a privileged class allocated mobility rights unjustly. Apartheid, like fettered labor markets, was a system that "sharply limited the mobility of people, that kept people in disadvantaged regions with no economic opportunities, that destined millions to lives without hope, and that split workers and their families—merely because of the conditions of their birth." The analogy to labor markets, Pritchett points out, is almost exact, with the notable exception that labor restrictions uphold much larger inequalities than apartheid ever did.
If there is one group of people he does not have to convince, it is those unfortunate enough to have been born in economically stagnant countries. Pritchett estimates that labor flows would be at least five times greater if people were free to move. What's keeping so many would-be migrants in place? "Men with guns," Pritchett says. His message is less a call to arms than a call to lay them down, less a provocation than a vision of a richer, better, freer world.
Senior Editor Kerry Howley interviewed Pritchett (whose book can be downloaded at cgdev.org) in August. Comments may be sent to email@example.com.
Reason: You worked for the World Bank while writing this book. The World Bank provides assistance to nation-states, and here you are saying that many, if not most, of the extremely poor would be better off just leaving. Shouldn't someone focused on development encourage people to stay and make their country economically viable?
Lant Pritchett: There are two elements to that. I'm reasonably convinced that the argument that more foreign aid is a way of preventing more people from coming because it will make people better off isn't consistent with the empirical work that's been done. If we succeed in making Africa richer, there is going to be more pressure in outward migration rather than less. A lot of people in Africa are not creating pressure for immigration because they are just too poor. The idea that aid and migration are substitutes is just not consistent with the experience of the world.
The second thing is, we shouldn't create hostages. We shouldn't keep people locked in place within some arbitrary post-colonial boundaries just so we can continue with the bold experiment of trying to make nation-states develop. People should be free to move.
Reason: And if we got rid of those boundaries, what would the world look like?
Pritchett: The key to predicting that is price differentials [differences in prices charged for the same product in different places]. If you look at what has happened with enormously successful trade liberalization in the past 40 or 50 years, price differentials have fallen a lot. The only remaining enormously egregious price differential in the world is in the price of labor.
But I think the question of what would happen if world barriers to labor were erased tomorrow isn't that interesting because it's not going to happen. And to some extent it's good that it won't happen immediately. If the world were thrown open to labor mobility today, I suspect it would cause massive disruption of a kind that nobody really wants.
Reason: You consider barriers to the movement of people more problematic than remaining barriers to the movement of goods.
Pritchett: At this stage we have more or less eliminated most of the barriers to goods. Quantitative restrictions are almost eliminated around the world. Relative to when I started working as a trade economist in the early 1980s, the world is completely liberalized. So the incremental gains from anything that could happen as a result of WTO [World Trade Organization] negotiations are just infinitesimal. If we did everything, all the remaining goods liberalization, the monetary gains would be between half and two-thirds of the gains from just allowing 3 percent more workers into the OECD. Given the current enormous wage differentials, a minor relaxation of people mobility easily swamps all remaining liberalization on the goods side. There are almost no tariffs left over, say, 20 to 25 percent, and yet wages for unskilled labor differ not by percents but by an order of magnitude—workers in some poor countries make 8 cents an hour, not 8 dollars an hour.
My main point is that we're giving all this intellectual and political and analytical attention to mopping up that last little bit of trade liberalization. Which is a good thing; I'm all for it—but let's get our eyes on the next big prize.
Reason: Why has it been so hard to refocus?
Pritchett: To some extent it's the March of Dimes phenomenon. March of Dimes cured polio. They found a polio vaccine. Once the organization that was set up to find a polio vaccine found a polio vaccine, what did they do? They raised money to cure other diseases. You keep doing what you're good at. So we have this enormous machinery around goods liberalization. It's going to continue doing what it's doing. And they dominate the agenda. So people who are concerned about poor people still have the issue completely framed by this obsolete machinery.
GATT [the General Agreement on Tariffs and Trade] frames the debate because GATT has been an enormous success. People concerned about cotton subsidies say, "Let's make the Doha round of WTO negotiations more favorable to the poor." But they're still buying into the whole agenda framed by GATT and the WTO, which has the persistence of a successful organization. They found the polio vaccine; they just can't quit.
Reason: You're offering strategies for poverty alleviation, but the left seems largely hostile to this agenda.
Pritchett: The left is right to be deeply ambivalent about this. They're wrong about where they end up. They're legitimately concerned about the increase in inequality inside the Organization for Economic Cooperation and Development, and particularly the United States, which is an enormous social and economic issue. They worry that if we let in more workers it will be bad for those who are doing the worst in America. They fear that if poor people come to the United States, they might cause deeper inequality here.
Being against migration to the United States is wrong for two reasons. One, I don't think it gets the scale of the poverty in the United States vs. poverty in the rest of the world right. Second, if you are really concerned about inequality in the United States, there are many things you can do that would be better than blocking other people from coming to our country. I don't want to say that people who are concerned about inequality in the U.S. aren't right to be concerned about inequality in the U.S. But I think taking that concern and using it to keep people from coming to the United States is victimizing the world's true victims in favor of people who happen to live closer to you.
Reason: It seems strange to worry more about inequality within the arbitrary boundaries of a nation-state than about much larger global inequalities.
Pritchett: Exactly. I've never understood a view of the world in which the place in which a person was born becomes the key factor in whether you care about them.
Reason: Is there a legitimate concern about brain drain? About skimming the best and brightest from developing countries, leaving them worse off?
Pritchett: Again, I think there are some elements of legitimate concern about that, particularly since the political economy of immigration will lead rich countries to do more and more skimming rather than less and less. But that said, it's the same path you take toward free trade. Rather than say you're against free trade, let's put the emphasis on fair trade. When it comes to brain drain, let's get more unskilled migration rather than saying let's stop all migration that could cause brain drain.
That's the turn that the more sophisticated NGOs [nongovernmental organizations] have taken on trade, where they really have moved from a free trade to a fair trade agenda, which has its downside but is enormously positive relative to an anti-trade agenda. But they haven't taken that same turn at all on the immigration issue. We say, look, let's have migration that's the best possible for everyone. Profitable, welfare-improving trade is usually driven by differences. And there's nowhere the differences are larger than in the endowments of unskilled labor.
Reason: Why have attitudes about free markets in labor not evolved alongside attitudes about free markets in goods?
Pritchett: I would push back on the premise. The average citizen, if asked, is against free trade, particularly in Europe. The proportion of people against free trade is almost as high as the proportion of people against migration.
The comparison isn't quite fair: One issue is usually phrased incrementally—should we have more immigration?—vs. overall free trade. That raises an important political economy question. What the world managed to do on free trade is build in mechanisms that created political coalitions and a momentum toward freer trade. That worked in spite of the fact that if you ask the citizens on the street, their reaction might not have been pro–free trade. That is political genius. And we really do have the founding fathers of the post–World War II system to thank for having created mechanisms that have led to this enormous progress that domestic politics doesn't necessarily favor.
Reason: Milton Friedman has pointed out that open borders are incompatible with the welfare state.
Pritchett: I would have thought Milton Friedman would have taken that as an argument for open borders.
The free mobility of labor is incompatible with the welfare state if every person who is physically present in a location to perform an economic service automatically comes into the same set of welfare benefits as a local. That needn't be the case.
This is what liberal democracies find hard. But it's not impossible. You have to confront the injustice of the world and say this person is better off even without the welfare benefits, and this process is good for the world.
Reason: You then create a division between first- and second-class citizens. Isn't that worrisome?
Pritchett: The world now is divided into first-class citizens of the world and fifth-class citizens of the world. The idea that we wouldn't help a peasant trying to eke out a living on a side of a mountain in Nepal by letting him work in the United States, just because we have to, if he comes to the United States, endow him with all the rights of U.S. citizens—I think that moral calculus is backward.
So the first answer is: Milton Friedman is wrong. It's not incompatible with a welfare state; it's incompatible with a welfare state that doesn't differentiate between people within its territory. Singapore manages to maintain an enormously high level of benefits for its citizens with massive mobility. Kuwait has one of the highest immigrant populations in the world, and you can't ask for a more cradle-to-grave welfare state than what Kuwait gives its citizens. So it's obviously possible to maintain whatever level of welfare state you want and have whatever level of labor mobility you want, as long as you're willing to separate the issues.
Reason: The political scientist Robert Putnam has done research showing that diversity correlates with diminished feelings of trust within a community. It seems plausible that higher levels of immigration could erode support for a welfare state.
Pritchett: Again, this depends on how migration is structured. No one looks at the H1-B holders, or the au pairs, both of which are temporary mobility labor schemes, and says, "Gee, this undermines the welfare state." I think it is an issue only if you insist that mobility across the border for people who provide an economic service automatically endows them with a full set of political rights.
The world would be a much better place if that were not true. One of the awkward paradoxes of the world is that Bangladeshis and Pakistanis and Nepalis are enormously better off precisely because the Persian Gulf states don't endow them with political rights. Because if you said to Kuwaitis, every Bangladeshi who comes in is going to acquire the full entitlements of Kuwaitis, I'm sure the Kuwaitis would cut the flow of Bangladeshis to zero. The Bangladeshis have been made enormously better off by the ability to work in Kuwait.
No one responds to Putnam's research by saying we should make America less diverse. The logical consequence of that line of thinking is, let's resegregate America; let's re-create nondiverse communities. I think Lester Maddox used to say something like that in the '50s.
Reason: I take it that you believe property rights are foundational to wealth creation. Do citizens "own" their countries? And if you think just anyone should be able to come over the borders, are you denying citizens their property rights in their country?
Pritchett: I agree that citizens have a property right to their country. But the beautiful thing about institutions that create property rights is that they're a free good. If we allow in another 10 million, 20 million, 30 million people, then what has created American wealth—its economic institutions that allow entrepreneurship, that allow free markets, that allow people to innovate, that allow people opportunity—none of that is eroded by letting in more people.
America isn't Kuwait. The wealth of Kuwait is that they're sitting on this pool of oil. The wealth of America is that we have developed fantastically successful economic institutions. Those institutions are not zero sum. No one has suggested we should have limited America's natural population growth because with 300 million people there are fewer benefits of our institutions of property rights to go around. It's the same thing with migration.
Reason: You argue that it's not morally permissible to discriminate on the basis of nationality. But at what point do you have to stop letting people in because the sheer numbers threaten institutions of wealth creation? What's the limit?
Pritchett: To say it's not morally permissible doesn't create black and white. Right now all kinds of things that cause much smaller differences in human welfare get much more attention. If we say we are going to discriminate against ethnic Indians in Mexico vs. other citizens of Mexico, there would be a hue and cry across the world. But if we say we're going to discriminate in favor of people of Mexican descent born in the United States vs. people of Mexican descent born in Mexico, this creates absolutely no moral outrage.
Another example: The differences in well-being between people born in poor countries and people born in rich countries are orders of magnitude larger than differences between the genders within those countries. But books written about gender probably outnumber books written about this point by 100 to 1.
That said, citizens do have a right to control their country in favor of its existing citizens. So let's create a mechanism in which citizens can feel perfectly confident that their legitimate rights and concerns are protected, which at the same time leads to more benefits for more people in the world. I am never talking about open borders. Open borders in the current environment is a nonstarter. It might take us 50 years to get to anything like that. What I am saying is: Let's figure out ways of protecting the concerns people have about their country while at the same time allowing for more migration.
Think of free trade. I think now, in this liberalized environment, if you look at the kind of compromises made early on in the '50s and '60s, unwinding the prewar restrictions, you'd think they were going so slowly; they weren't bold. The free trade ideology didn't necessarily win the day, but in the long run it did.
Reason: So you do see progress.
Pritchett: I think so. The future is incredibly difficult to predict, and certain attitudinal things shift overnight. Just prior to World War I, every single European country had a monarch. Twenty years later, the very idea of monarchy was regarded as ridiculous. No one in 1910 would have predicted that. I don't rule out the possibility of a very rapid shift in the attitude toward this issue. It's possible that 20 years from now people will look back and say, "Well, that was just a ridiculous idea that we had to shut down labor mobility." Not only will labor mobility seem politically acceptable; it will become so triumphant that the opposite is unthinkable. This can happen very fast when it does happen. I'm 48 years old, and I lived through America's attitudinal shift toward the environment. And it happened overnight.
Reason: What role does technology play in all this? Does a strong regulatory state with a well-maintained, centralized database enable more immigration because people feel safer? Or would that technology just allow rich countries to more effectively keep people out?
Pritchett: It's hard to tell how much of the backlash against illegal immigration is against immigration and how much is against illegality. There is a legitimate concern that the law should be obeyed. Massive gaps between de jure and de facto are socially dangerous. So I'm pro-immigration, but I am not pro-illegality. I think you should do something about reconciling the legal situation for the people inside our country. I'm dubious about the "live in the shadows because the regulatory regime is unjust" strategy.
Reason: You worry that it gives immigration a bad name.
Pritchett: Exactly. During Prohibition, alcohol sales became associated with organized crime. But there was nothing intrinsic about having a drink that linked you to organized crime. I would much rather repeal Prohibition than allow bootleggers to flourish, because Prohibition is a dumb idea.
Reason: The electronic employer verification program has the potential to enforce immigration allowances that are egregiously low.
Pritchett: That doesn't worry me.
Reason: It doesn't?
Pritchett: I think I have more of the opposite worry, which is the general taint of illegality around the natural process of people moving across borders for economic opportunity. If we could eliminate that, that would be a big win.
Reason: What role do international institutions have to play in knocking down barriers to labor, if any?
Pritchett: I think they're going to have a very modest role, at best. In part it's embedded in the term international, if by international you mean cooperative agreements among nation-states. I don't think any country is going to enter into a binding international agreement that gives up control over its borders, and I don't think international organizations are going to play a role in free labor in the exact same way that GATT played a role in free trade.
Reason: It's taken as obvious that our duties to our neighbors come before our responsibilities to far-off populations, but that raises the question of who our neighbors are. What will it take to expand that moral community beyond the nation-state?
Pritchett: That doesn't have to happen. We don't have to come up with some sort of completely cosmopolitan, completely globalist morality to move ahead on labor migration. I think it's going to happen in the other way. I think we're going to move ahead on migration; people are going to become more and more exposed to the fact that people from other places in the world are, in very deep ways, human beings exactly like us; and eventually, in an unpredictable way, the attitude toward this will shift.
The thrust of my book is, let's look for politically acceptable mechanisms with which to make incremental changes that are feasible now. If we wait for the grand shift to happen, we'll be waiting forever.
Reason: You are probably often accused of thinking too much like an economist. What if the numbers don't capture the cultural damage caused by immigration: the loss of what it means to be an American, the loss of the sense of community. How do you address that?
Pritchett: The narrow answer is that what it means to be an American is to be open to migration. Being an American is an open idea, not a closed idea. It's not a blood relationship. The idea of being American is an idea of being open to people from other places coming and making a contribution. I think we've lost sight of that.
The broad answer is that there have to be political mechanisms to address these things. I'm not proposing some economic theocrat be put in charge of immigration policy and superimpose people's legitimate concerns about community and culture on top of it. I just think all those concerns can be addressed if we're more creative about the kind of policies we're willing to consider. For instance, the issue of temporary vs. permanent mobility: If you have to say that every person who comes across the border has a right to stay forever, you can't separate the economic question of who should be physically present in our nationally controlled territory to provide economic services from the question of who can determine our future culture. I want those questions separated. If you separate those questions, we can create more economic benefits.
Reason: What's the ideal size for a guest worker program?
Pritchett: There is definitely not an "ideal size." Maybe I'm too unprincipled, but if we can establish that this is a good thing for poor people, I'd be happy with a small one.
What complicates the American situation is that we already have more people present in the country illegally than would be admitted by the most massive guest worker program that anyone would dare propose. So you can't say we'll repatriate every single illegal immigrant and replace them with a guest worker. That's not even feasible. We have an unusual situation—that we have pushed the problem into the shadows. I'd be happy to get the mechanics of a guest worker program established, so it's accepted this is something we can do, and then work toward a bigger one.
Reason: Will American voters ever have the stomach to do what it takes to keep temporary workers temporary? If you become pregnant as a guest worker in Singapore, you're sent out of the country. Is that going to be possible in a more democratic, egalitarian society like the U.S. or Sweden?
Pritchett: Given the things that democratic egalitarian societies have been willing to stomach, in both recent and current history, I find it difficult to believe that the hardest of all moral things they would have to do is get tough enough to have a guest worker program. Not to criticize America—which I love; I'm an American—but to say that a country that had Jim Crow laws in my lifetime doesn't have the stomach to have a guest worker program? It seems pretty inconceivable to me.
You'd be doing something tough that is in the interest of enormously greater global justice. We have found the stomach to do morally reprehensible things without any greater interest of global justice. We're willing to put millions and millions of young African Americans behind bars for drug offenses.
You can't enforce the border at the border. You have to enforce the border behind the border. And you can't enforce the border behind the border unless citizens believe the enforcement's fair. If people become convinced that sending pregnant temporary workers home is a necessary part of a fair and legitimate system of migration, we'll be willing to do it. If we don't think the system we've created is fair and legitimate, we won't be willing to enforce it. The conundrum we've backed ourselves into is that we have a system that no one thinks is fair or legitimate.