Milton Friedman, Immigration, and the Welfare State

Bryan Caplan digs up that much-deployed, ill-considered, VDare-riffic Milton Friedman immigration quotation: "You cannot simultaneously have free immigration and a welfare state." As it turns out, the quotation is even worse in context. When Friedman is offered the alternative of a status for immigrants that specifically excludes them from eligibility for welfare, he says:

I haven't really ever thought of that system. It's a new question. I very rarely get a new question, but I must admit that's a new question for me. And I haven't really thought about it a great deal, but my initial reaction is that it's a very undesirable proposal.

Caplan, appalled, notes how odd it is that the 87-year old policy virtuoso had never once considered the relationship between mobility rights and welfare eligibility. It shows: The most obvious problem with Phyllis Schlafly's favorite Friedman soundbite is that it is false. Residency and work rights are entirely logically and practically separable from citizenship and eligibility for subsidies or transfer payments.The interviewer knows this, and immediately offers Friedman a scenario in which immigrants would have access to labor markets but not unemployment checks.

Welfare eligibility is already limited by a set of criteria; it is possible to add citizenship to the list, while extending residency and work rights indefinitely. Whether this is desirable is up for debate; whether it is possible is not. Somehow, the 1996 welfare reform bill disqualified undocumented workers from nearly all means-tested government programs. But they continued to live and work here in the millions.

After having his prior comment decisively negated by the possbility raised in the follow-up, Friedman retreats to a nebulous invocation of nation-level equality. It's odd to see Friedman opting for increased equality within a particular nation state over mobility rights and global equality. As Caplan writes, this is totally out of character: "Normally, Friedman was eager to embrace any marginal measure in the direction of liberty. But on immigration, he bizarrely turned his wish for a "free society" into an argument against a compelling libertarian improvement over the status quo."

Friedman made a mistake, but it's not nearly as important a mistake as restrictionists might like. Schlafly wants the quote to mean that we cannot have any more immigration than we already have. But Friedman's slip-up neither says nor implies that you cannot have a greater rate of immigration and a welfare state. The United States does not have an especially high rate of immigrants as a percentage of our population; it's barely ahead of Sweden and Germany and considerably behind Canada, New Zealand, Australia, and Switzerland. All the countries with more impressive rates of immigration, I'm guessing, are more generous in terms of welfare payments than is the United States. And they're all extremely successful economies. It's clearly possible to have a larger welfare state, a considerably higher rate of immigration, and a healthy economic climate.

On the other hand, we have little reason to believe that immigration itself encourages the growth of redistribution schemes. Quite the opposite; a number of recent studies support the idea that ethnic heterogeneity somewhat undermines support for transfers. In this very different sense, Milton Friedman might have been on to something: If you want to decrease the size of transfer payments, you should take Friedman to heart—and support much, much higher rates of permanent immigration.

Update: And here is David Friedman exploring that very argument. Also here, courtesy of commenter MikeP.

Lant Pritchett responds to the offending Friedman quote here, and my article on Singaporean guest workers is here.