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Sorry, Trump: Ending Borders Could Jump-Start The World Economy

Imagine a world with literally no borders. It's a world where the economy is a lot stronger.

Sorry, Trump: Ending Borders Could Jump-Start The World Economy

Photo: Flickr user Bruno Sanchez-Andrade Nuño

Forget, for a moment, about Donald Trump and his calls for a Mexico border wall and a ban on Muslims coming to this country. Imagine, instead, the opposite: We welcome any and all immigrants who want to come here, with no restrictions on visas and passports. Imagine, too, that all other nations do the same, that everyone can move wherever they like. There are no borders. Anyone can move, live, and work wherever they want.

Practically and politically, it's a crazy idea, of course. But, according to several respectable economists, it's also an idea with tremendous economic merit. Opening all national borders, they estimate, could boost global wealth by between 67% and 172%.

Flickr user el-toro

"Research on this question has been distinguished by its rarity and obscurity, but the few estimates we have should make economists’ jaws hit their desks," writes development economist Michael Clemens, of the Center for Global Development, reviewing the research. "When it comes to policies that restrict emigration, there appear to be trillion-dollar bills on the sidewalk."

Allowing the free movement of people would, in a sense, complete the job of globalization, which saw the liberalization of trade and capital. But the benefits could be much greater. The International Monetary Fund says doing away with remaining cross-border capital controls—where countries, like China, won't allow money to leave their borders—would see gains of $65 billion. Harvard economist Lant Pritchett says doing the same for workers would boost global GDP by a staggering $65 trillion.

Flickr user Casey Renner

Why the big numbers? It comes down to the efficiency of the market. National borders, while maintaining sovereignty and identity, are a distortion of commercial activity. Millions of people want to move from poorer countries to richer ones, but we don't let them. At the same time, the lack of cheap labor those immigrants could provide dampens the growth of rich countries. The most productive market is where everyone does what they're capable of doing. When a PhD chemist does gardening work rather than hiring an immigrant to do it, it prevents her from doing PhD-order things, and it prevents immigrants from earning wages higher than they could get at home, where there aren't PhD chemists with the money to hire them to garden.

"Borders are the single biggest cause of discrimination in all of world history," says the Dutch journalist Rutger Bregman in his new book, Utopia for Realists (which we also covered here). And you can see his point. We complain about inequality among Americans, but inequality between people of different countries is far greater, and national borders can stop people from earning what they're worth.

"In developed countries, employees are expected to be flexible," Bregman writes. "If you want a job, you have to follow the money. But when ultra-flexible labor heads our way from the world’s developing countries, we suddenly see them as economic freeloaders. Those seeking asylum are only allowed to stay if they have reason to fear persecution at home based on their religion or birth."

We don't know how many people would want to move if borders were open, which explains the range of economic estimates. Not everyone is flexible and ambitious; some people would probably choose the familiarity of home over going abroad. Nor do we know how opening borders would affect different income groups, though Nathan Smith, an independent researcher and blogger at the site Open Borders, thinks most of us would benefit. "Very few Americans think that open borders would be in their economic interests. But, for most of them, I think it would," he says. "That is, assuming our institutions hold together. That's the big unknown."


Flickr user Tony Webster

Smith says opening borders would see a burst of entrepreneurial activity because immigrants could take advantage of low interest rates and a better business environment than at home. If, for example, immigrants borrow money in the U.S. at 3%, they will gain more proportionally when they make 10% business profit than if that business was in a higher rate country where they have to pay more money back. That boosts GDP because more money is circulating in the economy.

More immigration would probably raise land prices (favoring people who own land). But it would also probably impoverish the current residents who didn't own real estate (as rents would go up) and increase labor competition among those with few skills, both immigrant and current resident. In effect, we would be doing a huge favor to people of other countries at the expense of our own people, even if the overall economic benefits would outweigh the negatives. Smith suggests taxing immigrants as a way of compensating for the losses of people living here (though that would obviously dull the incentive of coming here).

Opening all our borders is certainly impractical—even more so because, for these benefits to actually accrue, every country would have to do it at once (when, in 2008, Ecuador unilaterally started "a campaign to dismantle that 20th-century invention of passports and visas," it saw more immigrants than it could handle and soon reinstated visa requirements). You only have to look at Europe's current immigration crisis to see what happens when thousands of people try to enter rich countries by any means necessary.

But that's not to say that a little more immigration would be a bad idea. If the developed world expanded its labor force by as little as 1%, it would do more for the world's poor than all foreign aid, debt relief, and trade liberalization rounds combined, according to one estimate.

Trump may want to build more walls, but generally tearing them down is better for most of us.

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