Hoppe_07-1995
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Free Immigration or Forced Integration?

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 effecting 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 high-wage area will lower nominal wage rates. However, it will not lower real wage rates if the population is below its optimum size (and surely the United States, as a whole, is well below its optimum size). To the contrary, if this is the case, the produced output will increase and real incomes will actually rise. Thus, restrictions on immigration will do greater harm to the protected domestic workers as consumers than whatever such restrictions might gain them as producers. Moreover, immigration restrictions will increase the "flight" of capital abroad (the export of capital which otherwise might have stayed), 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.

As stated above, the argument in favor of free immigration is irrefutable and correct. It would be as foolish to attack it as to deny that free trade leads to higher living standards than protectionism does. It would also be wrongheaded to attack the case for free immigration by pointing out that because of the existence...

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