"Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens....Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." ~ John Maynard Keynes
Private Domains and Immigration
In attempting to make a libertarian case for state-imposed immigration restrictions, Hans-Hermann Hoppe has employed the case of a hereditary monarchy, examining its typical immigration policy. He concludes that such a policy is superior to that typically pursued by democracies. Furthermore, he believes that libertarians should try to move the immigration policy of democracies toward one that a hereditary monarchy would be likely to pursue.
It will be worth our while to see Hoppe's argument in some detail before we proceed to analyze it. He begins by considering a private domain, entirely owned by one ruler:
"Let us assume that the government is privately owned. The ruler literally owns the entire country within state borders. He owns part of the territory outright (his property title is unrestricted), and he is partial owner of the rest (as landlord or residual claimant of all of his citizen-tenants real estate holdings, albeit restricted by some kind of pre-existing rental contract). He can sell and bequeath his property, and he can calculate and 'realize' the monetary value of his capital (his country).
"Traditional monarchies ' and kings ' are the closest historical examples of this form of government.
"What will a king's typical immigration' policy be? Because he owns the entire country's capital value, he will, assuming no more than his self-interest, tend to choose migration policies that preserve or enhance rather than diminish the value of his kingdom . . . .
"[A]s far as immigration policy is concerned, a king would want to keep the mob, as well as all people of inferior productive capabilities, out. People of the latter category would only be admitted temporarily, if at all, as seasonal workers without citizenship, and they would be barred from permanent property ownership . . . . A king would only permit the permanent immigration of superior or at least above-average people; i.e., those, whose residence in his kingdom would increase his own property value . . . .
"In brief, while through his immigration policies a king might not entirely avoid all cases of forced exclusion or forced integration, such policies would by and large do the same as what private property owners would do, if they could decide who to admit and who to exclude. That is, the king would be highly selective and very much concerned about improving the quality of the resident human capital so as to drive property values up, not down."
For Hoppe, the above analysis implies that the preferred immigration policy for a democracy is "that all immigrants must demonstrate through tests not only (English) language proficiency, but all-around superior (above-average) intellectual performance and character structure as well as a compatible system of values -- with the predictable result of a systematic pro-European immigration bias."
Hoppe hopes that a democratic government, for instance that of the US, will act like an entrepreneur running the firm "USA Inc." when deciding immigration policy. That's all well and good, but there is a major problem for his case: his analysis of how entrepreneurs behave in their efforts to assemble the factors of production is severely flawed.
First of all, entrepreneurs don't attempt to acquire superior or above-average factors of production -- they attempt to acquire the most profitable factors of production. Only an extremely foolish entrepreneur would, upon determining his business will need 1000 computers, tell his purchasing manager to acquire the 1000 best computers, or even 1000 above-average computers. A wise entrepreneur will attempt to acquire the 1000 computers where the difference between the cost of the computer and the projected value of the product it can produce is the greatest.
Similarly, no sensible entrepreneur, on determining he needs 1000 people to staff his company, tells his HR person to hire 1000 superior people. HR should hire the 1000 people for whom there is the greatest difference between the cost of employing the person and the projected value of that person's output. No company needs to hire a person from MIT as its janitor or a person with an IQ of 150 to answer the phone. It is true that some companies, such as a small, creative programming shop, might indeed want to hire mostly people who have, for instance, quite high IQs. But a company supplying maintenance services to area office buildings would probably have very little interest in the SAT scores of applicants.
Similarly, if I am a hereditary monarch "staffing" my country, I don't want the "best" people, I want the people who will profit the country the most. And this has significant implications for the real world. Imagine that tomorrow I awake to find that I am really the hereditary ruler of my town, which is suddenly recognized as the sovereign kingdom of Weston, Connecticut -- and everyone else realizes this as well. What sort of immigration policy do I want to implement?
I look around my town. The average house price is roughly $800,000 and the median family income is about $140,000. As I examine my kingdom, I realize we are pretty well full up on financial analysts, stock traders, CEOs, TV personalities, successful writers, aging rock stars, and so on. What we need are people to mow our lawns, baby sit our kids, do odd carpentry jobs, dig ditches, wait tables at local restaurants, cook our meals, clean our houses, build stone walls... you get the idea. We need complementary factors of production, not more of the same factors of production.
And, interestingly enough, in the real world, this is just what we do get. Illegal immigrants are a hot item around here. When someone in Weston sees a Jamaican working in his neighbor's yard, or a Brazilian babysitting for his neighbor's kids, do they complain about the "foreign invasion"? No! They ask their neighbor if the immigrant has any free time, or any friends. Sometimes, they simply bid them away from their neighbor. Illegal nannies, with no green cards, "fresh off the boat," make about $12 per hour in Weston -- double the minimum wage, and tax free to boot.
At many times and places in the past we can find similar situations. The citizens of Athens did not try to hire other citizens to clean their homes and harvest their olives. The people most fit for such jobs, so they thought, were "barbarians," in other words, non-Greeks.
Medieval nobles did not attempt to persuade other dukes and earls to come live on their lands. What they needed were peasants and craftsmen. The head of an upper class, nineteenth-century British household did not try to find other members of the gentry to serve as scullery maids and gardeners; he hired lower class folk who would do the work he needed done at the lowest possible cost. Sometimes, he might even employ Irishmen!
Southern slave owners did not attempt to buy the slaves most culturally compatible with themselves; they sought slaves who they felt could best endure the harsh conditions of agricultural work in the Deep South in the summer.
It is as though Hoppe has forgotten the law of comparative advantage when it comes to analyzing immigration. He contends that kings would like to keep "people of inferior productive capabilities" out of their kingdoms. This implies that, if the whole world were privatized, such people would have to leave the planet! But as Mises and many previous economists noted, the great binding force holding human society together is that all people who are able to produce at all, whatever their capabilities may be, always can find a comparative advantage that enables profitable trade with others. Mises found the principle so important that he preferred to call it "the law of association." It is true that anti-social people, whom we might refer to as the "counter-productive," are unwelcome in all societies. That is why we have law and law enforcement. Otherwise, all people cooperate in creating the "Great Society" based on trade and the division of labor.
Here, Hoppe might protest that he recognizes quite well the advantages offered by free trade. But, he asserts, such trade can take place at a distance:
"Note that none of this, not even the most exclusive form of segregationism, has anything to do with a rejection of free trade and the adoption of protectionism. From the fact that one does not want to associate with or live in the neighborhood of Blacks, Turks, Catholics or Hindus, etc., it does not follow that one does not want to trade with them from a distance."
Certainly, at times the law of comparative advantage will operate such that people are best off trading at a distance, or, at least, can successfully trade at a distance. But if a Vietnamese lady would very much prefer doing my wife's nails to working in a rice paddy, and my wife would very much prefer that lady do her nails instead of some gum-chewing airhead from the local high school, they will have a rather difficult time realizing these gains from trade if the Vietnamese lady cannot enter the US.
A block from where I live there is a nice Mexican restaurant. When I need a break from working in my dank basement hideaway, I wander down the road with a book or two, a pen, and a pad of paper. I spread out my work across the bar there, and enjoy a margarita and some guacamole, chips, and salsa while I read and edit. The restaurant's workers, almost every one of them from Mexico, greet me warmly, turn off the bar TV for me while I work, and humor me in my halting attempts to speak Spanish with them.
Not only is it hard for me to see in what sense these fellows represent an "invading army," as some anti-immigrant writers refer to them, it is also difficult for me to imagine how we could conduct this profitable trade at a distance. Flying to Veracruz when I need a break is definitely not within my budget, and besides it would make my breaks much longer.
Hoppe might attempt to answer this objection with his assertion that people with "inferior productive capabilities" would be "be admitted temporarily, if at all, as seasonal workers" by a proprietary sovereign. Perhaps my local Mexican restaurant could open six months a year.
But this is merely an arbitrary assumption on his part, without foundation in economics or history. Sometimes, it might appear most profitable to the ruler to have the workers come and go. Other times, having them continuously close at hand might seem to be the best strategy. Southern US slave owners did not admit Africans only as migratory workers, shipping them back to Africa each winter; they bought them and had them live on their own property, indeed, often in their own houses. Certainly, the residents of Weston, Inc. do not desire that their nanny should have to leave the country every year for several months.
And Hoppe's assertion that such workers would be "barred from permanent property ownership" strikes me as particularly bizarre. On the one hand, he asserts that these immigrants are violating residents' private property rights, since the government's non-discrimination laws force residents to admit them onto their land. On the other hand, should these immigrants try to buy property from residents who presumably are attempting to sell it to them voluntarily, Hoppe would have the government forbid the sale!
Here, one would think, is the answer to Hoppe's query to immigrants of "Who here invited you onto their land?"
"Why," they reply, "the current owner did! Indeed, he invited us to make the land ours."
In such a case, aren't we witnessing Hoppe's ideal anarcho-capitalist "immigration" scenario: people are allowed to go wherever voluntary exchange and voluntary agreements, based on private property rights, allow them to go? What possible libertarian objection could he raise to my selling my property to a tribe from New Guinea, newly wealthy from their appearance on a Discovery Channel special?
When we examine Hoppe's criterion of "English language proficiency," again we find that it may be a consideration for an entrepreneur who is building his workforce, or it may not. If I am hiring people to staff my customer support lines, I certainly will expect that they can speak English fairly well. On the other hand, if I need carpenters, I might be quite happy with an entire crew that speaks only Lithuanian, as long as I can find a bilingual foreman.
Similarly, how important a "compatible system of values" is to a privately owned territory is entirely a matter of entrepreneurial judgment. Certainly, a minimum level of compatibility is needed -- the ruler of Weston, Inc. surely would want only people within his borders who understood that trade is superior to theft as the basis of a social system.
Beyond that minimum, however, it is hard to see where a hard and fast line might be drawn between "sufficiently compatible" and "not compatible enough." Indeed, the world's great trading cities most often have been culturally quite diverse. Venice, the dominant trading city of the Renaissance, housed significant numbers of Jews, Greeks, Germans, Turks, Slavs, and Armenians. The cities that succeeded it as trading centers, Amsterdam, London, New York, Singapore, and Hong Kong, were or are also known for their mixed populations. A little contemplation reveals that there is a logical reason for this pattern: the culturally foreign residents of a trading city have a "foot in both worlds," and therefore provide a bridge between the city and the places with which it trades. If the entrepreneur running Weston, Inc. viewed it as a potential trading center, he would want to make sure that immigrants had a system of values that, while somewhat compatible with the native system, was not too compatible.
Even within a company, we can see similar patterns emerge. Engineers and marketing/sales people often can be as culturally distinct as people from different countries. (See the comic strip Dilbert for an illustration.) Yet, if a technology company is to succeed, it must find some way to blend these two cultures, and not give in to the temptation to exclusively hire workers from one or the other.
Superior "character structure" is another Hoppean criterion for acceptable immigrants. As I pointed out above, no legitimate company wants to hire thieves (or murderers, rapists, etc.), and no territory ruled by law wants to admit them. But beyond that bare minimum, I see little evidence that character plays a large role in the hiring decisions of most companies. The typical Wall Street trader has a "character structure" similar to a high school junior who is well into the wee hours of a keg party when he finds a cute cheerleader sloppy drunk in a dark bedroom. According to a friend of mine, who is an experienced trader, there are firms who routinely hire twenty-something cokeheads, since they find they will get a couple of years of stellar performance out of them before they burn out. (I also wonder what sort of "tests" Hoppe plans to have the government use to demonstrate "character structure"?)
None of the above should be taken to mean that I regard our current immigration situation as optimal. The welfare state and the existence of "civil rights" laws clearly have altered patterns of immigration to the US from what they would be in a libertarian society. Nor do I support coerced integration. If the "Red-Headed League" wants to buy or homestead a tract of land and allow only redheads onto it, they will hear no objections from me.
However, giving more power to the state, based on an arbitrary set of ideals as to who should be allowed to come to the US (or any other country), ideals that are divorced from any actual entrepreneurial judgment, is not the answer to these problems. True freedom is the only answer.