What Open Borders Mean for an Economy
We live in an era of strange dispositions of economic thought, especially regarding immigration. This may be fueled by the fact that it is an election year, and certain political ideologues feel compelled to spew whatever misinformed silliness first comes to their vitriolic minds. However, debate about the purpose of borders in an economic model has always been debated. While some fear any form of immigration, there is an exact opposite part of the spectrum that puts forwards the idea of eliminating a controlled border entirely, and instead allowing free migration between countries. This debate can largely be viewed as a human rights issue; as many believe that a world with less cages of barbed wire might be a better one. What exactly does this mean for an economy, though? Read more to find out…
The primary fear that people have about any notion of open borders and fluid immigration policy is that there will be an influx of cheap labor that will cause the price of labor to drop. These sorts of fears don’t exist across all income gaps, but actually do present a true threat to unskilled native labor forces that already exist within a nation. In the case of the United States and Mexico, there would almost certainly be cases that would be found where low-income workers would be competitively edged out by probably younger and cheaper labor from immigrants. Another major fear of fluid immigration is the cultural implications that come when two very different groups of people will inevitably inhabit the same area.
Despite the many negative reactions towards fluid immigration (and the valid claims about the competition for unskilled labor), there are many ways that a more open immigration process can actually stimulate the economy, on the whole. You see, in the same way that tourism is able to stimulate the economy of an area, so too can immigration. The difference between the two is that many major immigration exports come from cheaper countries, which means that these immigrants may have less to spend. However, the wages in a country like the United States are likely to be exponentially higher than many countries where low-income immigrant come from. This means that more workers receiving these wages will drive up the amount of spending in an economy, which causes the velocity of currency to accelerate, thus raising GDP. This kind of increase creates more businesses, many even started by immigrants, and jobs. However, the trouble is that there is an acclimation period for this to happen, and many people have a hard time looking past the short term effects of the added competition to unskilled labor that could displace low-income native workers.