||[Dec. 9th, 2006|03:27 pm]
On Free Immigration and Forced Integration|
By Hans-Hermann Hoppe
The classical argument in favor of free immigration runs as follows: Other things being equal, businesses go to low-wage areas, and labor moves to high-wage areas, thus affecting a tendency toward the equalization of wage rates (for the same kind of labor) as well as the optimal localization of capital. An influx of migrants into a given-sized high-wage area will lower nominal wage rates. However, it will not lower real wage rates if the population is below its optimum size. To the contrary, if this is the case, the produced output will increase over-proportionally, and real incomes will actually rise. Thus, restrictions on immigration will harm the protected domestic workers qua consumers more than they gain qua producers. Moreover, immigration restrictions will increase the "flight" of capital abroad (the export of capital which otherwise might have stayed), still causing an equalization of wage rates (although somewhat more slowly), but leading to a less than optimal allocation of capital, thereby harming world living standards all-around.
The problem with the above argument is that it suffers from two interrelated shortcomings which invalidate its unconditional pro-immigration conclusion and/or which render the argument applicable only to a highly unrealistic – long bygone – situation in human history.