Wednesday, April 28, 2010

A Bit More On Safety Nets And Immigration

Yesterday, FLG argued that immigration and generous social safety nets cannot exist simultaneously because:
if you put out a big sign that says, Wealth Redistribution Here, the people who show up will be more interested in having wealth redistributed to them than our current situation where we have a big sign that says, Opportunity To Work Hard And Get Wealthy Here. Now, a reasonable argument can be made that our current sign is false advertising, but changing the sign to the other one wouldn't be an improvement.

Ryan Avent says it's not so much the adverse selection problem, a fancy way of saying what FLG said above, but political issues:
The easiest interpretation of Mr Krugman's statement concerns the politics.
Basically, strong social safety nets are difficult to establish and maintain in highly diverse societies, because there will be opposition redistribution, real or perceived, from one group to another. We just had an excellent example of this, when the recent health care overhaul was nearly derailed over the issue of whether or not undocumented immigrants would be covered. The more it appears that one group (class, race, ethnicity) is paying to support another group, the more intense will be the opposition to extensions of the social safety net.

Put bluntly -- the political problem argument rests on the assumptions that we're racists. Sad thing about that -- looking at the data when it comes to things like this, well, it seems people are racist when it comes to social safety nets for people who aren't like them.

However, I took Krugman's argument to be one of adverse selection. That it was simply economically infeasible even if people weren't averse to redistribution to other groups.

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