One of the most persistent divides between traditional conservatives and their libertarian/anarcho-capitalist counterparts involves a fundamental philosophical disagreement about immigration. While most conservatives view immigration primarily through the lens of preserving American culture by only accepting those immigrants who are assimilable and will tangibly benefit our society in the future, a view expressed repeatedly during debates over illegal immigration in this country, many libertarians view the subject in an altogether different light. For them, the question is not so much whether a particular cohort of immigrants will be an asset to the United States but whether we have any right to prevent them from settling in this country in the first place, which many answer in the negative.

Libertarians extol the primacy of individual rights, which in this case entails the right to emigrate from your country of birth whenever you so desire-something that I don’t think any conservative would take issue with-and to immigrate to whatever country you want to live and/or work in for an extended period of time, which is where the divide between the two camps emerges. Libertarians view the issue as one of freedom of association-and by extension, contract-wherein willing employers, such as large agribusinesses and meatpacking plants, seek out willing employees coming from nations with under-performing economies that can’t meet the personal and financial needs of their citizens. They believe that the nexus between trade and unfettered migration is inextricable, if not completely self-evident, and that the two can not be severed if a nation hopes to grow its economy. While this may well be true as a matter of law, there are numerous holes in this thesis intellectually, which opponents of open borders-even anarcho-capitalists such as Hans-Hermann Hoppe-have exposed through well-researched arguments of their own.

However, underlying the debate over whether immigration and settlement is a natural right is the assumption that all libertarians/anarcho-capitalists agree on the immigration issue, which is not as much of  a given as it would seem on the surface of things. One of the things that I’ve attempted to do with American Rattlesnake is debunk commonly held assumptions about immigration issues, and the assumption that libertarians all subscribe to Gary Johnson’s point of view is one that needs to be reexamined. There are many libertarians and  anarcho-capitalists who recognize both the practical difficulties and existential problems inherent in society based upon unfettered immigration, especially one with the vast social welfare apparatus of the United States. One of the chief exponents of the view that welfare programs need to be curtailed in order to solve the immigration problem is Gary Johnson’s opponent in the Republican presidential race, Congressman Ron Paul. Paul has repeatedly emphasized the need to do away with the generous, taxpayer subsidized social welfare programs that-while not serving as the initial magnet-provide incentives for illegal aliens to extend their stay in this country indefinitely. The population density of legal immigrants is also heavily correlated with the availability of welfare benefits. Even acclaimed economist Milton Friedman, who held a rather benign view of immigration in general, emphasized the incompatibility of a welfare state with unfettered immigration.

The same opinion is held by many libertarians today, including self-professed constitutionalist Andrew Napolitano, who views Arizona’s landmark immigration law primarily through the prism of the Constitution’s supremacy clause and potential violations of the 4th Amendment via racial or ethnic profiling by law enforcement officers. I’m not sure that the Constitutional objection to statewide laws is dispositive, because-as Andrew McCarthy has pointed out repeatedly in National Review-there is no precedent for prohibiting states from enforcing laws that are consistent with federal statutes. Furthermore, if we look to the broader issue of legal immigration, there’s nothing to suggest that the men who drafted the United States Constitution supported the sort of unfettered immigration we have endured since passage of the Hart-Celler Act fundamentally altered this nation’s demographic destiny. This is a concept that is seldom grasped by arm-chair commentators on immigration these days, whose default option is to repeat the platitudinous-not to mention, factually incorrect-bromide that we are a “nation of immigrants.” What they neglect to mention is that most this nation’s founding fathers would have been implacably opposed to the present lassez-faire system of immigration, a fact that Thomas Woods-as anti-statist an individual as you’ll find among academics-expertly limns in this Human Events column published during the height of the amnesty debate in Washington D.C.

Yet, even if we were to concede that there’s no firm historical or Constitutional foundation for this nation’s current open borders policies, can it not be argued that there is a compelling moral case for the views espoused by those at the Wall Street Journal editorial board, Cato Institute, Reasonoids, and other trendy, beltway cosmotarians? You would definitely think so if you took their arguments at face value. The notion that we have no moral basis for barring certain immigrants from entry into the United States is certainly widespread in certain libertarian circles, but I don’t believe that makes the idea, ipso facto, libertarian. Julian Simon, in a 1998 essay published in the Journal of Libertarian Studies, articulated the perspective felt by many that individual autonomy takes precedence over other “public” goods, including our national borders. In an anarcho-capitalist reality, nation-states would not exist, therefore deciding who should or should not be admitted to your nation would be a moot point.

But while it might seem logical that freedom of movement, freedom of association, and freedom of contract-and at its most essential level, the individual him or herself-are all prioritized over the wishes and feelings of citizens who have a vested interested in preserving the character of their nation, there are those that don’t think these competing values are necessarily mutually exclusive. In a persuasive essay written for Lew Rockwell several years ago, N. Stephan Kinsella made a very compelling argument that while the disposition of property in our society is unjust-insofar as the state has no right to expropriate land that rightfully belongs to individuals-so long as that property is entrusted to the state it has a responsibility to act as caretaker for the rightful owners. In this case, it has the responsibility to prevent the ingress of people that citizens do not want to welcome into their country. While those who are opposed to communitarianism in even its most minimal form might reject Kinsella’s public pool analogy, I think he makes a convincing case that some prophylactic measures need to be enforced to prevent the exploitation of your property-even if it’s already been subjected to theft by the state.

There are many cogent arguments against the current trendy libertarian support for open borders, several of them outlined by the first presidential nominee of the Libertarian Party, John Hospers, in paper published by the Journal of Libertarian Studies over a decade ago entitled A Libertarian Argument Against Open Borders. The concluding paragraph of the essay is especially perceptive in its analysis of the problem:

Occasionally, we hear the phrase “limousine liberals” used to describe the members of the liberal establishment who send their children to expensive private schools while consigning all the others to the public school system, which educates these children so little that by the time they finish the eighth grade they can barely read and write or do simple arithmetic, or make correct change in a drug store. It would be equally appropriate, however, to describe some other people as ”limousine libertarians” —those who pontificate about open borders while remaining detached from the scenes that their “idealism” generates. They would do well to reflect, in their ivory towers, on whether the freedom they profess for those who are immigrants, if it occurs at all, is to be brought about at the expense of the freedom of those who are not.

This passage describes, in a nut shell, the quintessence of cosmotarianism, and why most Americans-and even some in the libertarian movement-continue to reject it. I could post the most meticulously researched George Borjas journal article, the most statistically devastating backgrounder from the Center for Immigration Studies, or the most irrefutable essay by Mahattan Institute scholar Heather Mac Donald. And although all of these sources are invaluable in the fight to define the terms of this debate, they wouldn’t hold a candle to the self-evident fact that none of the greatest exponents and defenders of open borders, be it Tamar Jacoby, or Jason Riley, or Nick Gillespie, abide by their own exhortations. None of these individuals partake of the glorious mosaic which their unyielding ideology has done so much to create.

You won’t find many Reason Magazine editors or Cato Institute scholars living in Bergenfield, New Jersey, Maywood, California, or Eagle Pass, Texas. Why, you might ask? Because they would rather pass off the tremendous costs of their bankrupt philosophy onto ordinary Americans than to admit that they might just be wrong. These people are insulated from unfettered immigration’s worst effects, including chronic unemployment, violent crime, and environmentally devasting pollution from Arizona to California and throughout the country. They have the luxury of ignoring the impact of this country’s changing demographic profile while promoting the patently absurd notion that our open borders are a boon to all but the small percentage of high school dropouts.

What’s more, they make the equally ludicrous assertion-outlined in the Caplan speech above-that importing millions of unskilled, uneducated immigrants, who will be dependent upon costly government services, from quasi-socialist nations will expand this nation’s economic liberty. Forget the fact that we now enjoy less economic freedom than our northern neighbors, a development concurrent with the greatest expansion of immigration in this country’s history, the entire premise underlying this concept is flawed. You do not build a prosperous, 21st century, post-industrial society around foreigners from countries with low human capital. And the amount of time, energy and economic resources that need to be shifted in order to improve the educational prospects and earning potential of these immigrants, e.g. the billions funneled into ESL programs each year, is so cost prohibitive that it outweighs whatever benefits can be gleaned from such an arrangement.

Another seeming inconsistency in the archetypal libertarian solution to our immigration problem is the reluctance of most libertarians to support any sort of relief for American taxpayers who are tasked with paying for millions of illegal aliens and immigrants who are dependent upon costly social services. Particularly, public schooling and emergency health care. Invoking Friedman’s argument once again, we find that while many libertarians will concede that dependency upon welfare programs is a bad thing they will do nothing to limit access to these programs by illegal aliens or permanent residents. To the contrary, if any such bill-which is immigration neutral-is proffered, they will stalwartly oppose it. Just ask new Libertarian presidential candidate Gary Johnson, who supports the DREAM Act, despite the fact that taxpayers would be subsidizing the in-state tuition discounts of its recipients. Paleolibertarian writer Ilana Mercer deftly skewers  purported libertarians who routinely call for the abolition of the welfare state while adding a proviso that excludes immigrants and illegal aliens from the fiscal demands of their libertopia.

True believers in liberty, like Mercer and the late Murray N. Rothbard, recognize the inherent contradiction in persuading your fellow Americans to reject the embrace of the state while simultaneously welcoming millions of non-Americans into the country who prefer a larger and more intrusive government in almost every respect into our society. They realize that the banal platitudes used to support unfettered immigration are grossly inaccurate, if not transparent lies. They also realize that the interests of the National Association of Manufacturers, the Chamber of Commerce, the Farm Bureau, and the hospitality industry do not necessarily coincide with the interests of the free market, and that to a large extent our current immigration policy is another form of corporate welfare, which putative libertarians would be quick to denounce in any other context. The time-saving, productivity-increasing technological innovations that would normally be welcomed by these same individuals are rejected by those who apparently think pre-industrial stoop labor is the best method of improving  our agricultural production. Finally, they recognize that the  utopian, globalist conception of freedom-where people living in Gabon or the Hadhramaut have just as much say in how we are governed as American citizens living in New York-contravenes the distinctively American, Constitutional, federalist, representative republic designed by this nation’s founding fathers.

In short, the issue before the house is not whether it is an abandonment of principle for libertarians to embrace sensible immigration restrictions, it’s why institutional libertarians representing organizations like the Cato Institute and the Reason Foundation have stifled an honest, open intellectual debate about this subject. Even as the negative repercussions of our government’s devotion to open borders become harder to ignore for all but the most oblivious, the gatekeepers of respectable opinion on this subject continue to narrow the parameters of discussion to their own narrow, ahistorical perspective. I don’t expect that to change any time in the near future, but those of us who want an intellectually honest debate about the most important issue of our time can at least begin to clarify its terms, if for no other reason than to educate those novices interested in how mass immigration has impacted our society who are asking themselves how they should view these changes from a liberty-oriented perspective.

Such was the title of a debate held at the Asia Society, sponsored by Thomson Reuters, which I attended several weeks ago. Coming at a time of agonizing societal fissures arising from debates over austerity, stimulus, and the wisdom of government intervention into the economy, this event pitting the backers of a Hayekian view of economics against those who espoused a Keynesian model seemed incredibly timely. After explaining to the audience the general structure of the debate and how it would be judged-spectators were given gadgets similar to those distributed at IQ2 debates, which they were to use to vote for the side they agreed with at the beginning and conclusion of the debate-Harold Evans and Nicholas Wapshott, author of Keynes Hayek: The Clash That Defined Modern Economics, limned the underlying philosophical division that gave rise to this debate. 

As the introductory remarks made clear, the 80 year-old clash between Keynes and Hayek was “one of the most vituperative divisions in economics,” and the fact that this debate still carried resonance many years after the deaths of both men demonstrated the pertinacity of both schools, which reflected in some measure the confidence that both men had that their views reflected the definitive understanding of how economics works at an empirical level. Despite the deep esteem in which Hayek held the world-renowned English economist as a young man in post-war, inflation-wracked Austria-Keynes was celebrated throughout the territory  of vanquished Central Powers for his anti-Versailles manifesto, The Economic Consequences of the Peace-he would eventually become the chief intellectual antagonist of Keynes among neo-classical, liberal economists. 

Although attempting to synopsize either man’s complex body of work into a few sentences is impossible, it’s generally understood that where the two men differed was in their philosophies about economic growth. Whereas Hayek was adamantly opposed to the easy money policy pursued by some central banks and felt that inflation was the primary scourge of humanity, Keynes believed that deflation and mass unemployment were more pressing concerns. He felt that there were moments in history where a misallocation between supply and demand because of microeconomic actions led to recession and unemployment. Therefore, the government needed to spur demand in certain sectors of the economy whose stagnancy could not be sufficiently addressed by the free market.

This point was emphasized by one of the Keynesians in particular, Steven Rattner, who most of you might remember as President Obama’s car czar. Others might remember him chiefly for the 10 million dollar settlement he was forced into by Andrew Cuomo after a lengthy SEC investigation involving his private equity firm, Quadrangle. Either way, he maintained that, despite his abiding faith in capitalism, there were moments in history when the government needed to rescue the free market from itself. His chief example of such a case was the large federal bailout of failing Detroit auto-makers Chrysler and General Motors, which he supervised. Rattner asserted that the domestic auto industry would have collapsed, had it not been for the direct intervention of Congress and the White House in 2008 and 2009. The capital markets were simply not willing to lend to GM or Chrysler, with the result being that both companies faced imminent bankruptcy-and their suppliers a similarly parlous fate-if the government did not step in to save both corporations with a desperately needed line of credit. In this case, one extended at the expense of American taxpayers. 

It should be noted that the federal government’s response to what Rattner described as a “market failure,” but which his Hayekian opponents-during the question and answer period-labeled a “market verdict,” has come in for criticism from both the left and the right. This critique of the actions by Washington D.C., at least from a Hayekian perspective, is remarkably similar to the criticism leveled against the New Deal policies Keynes played a large role in shaping during the Roosevelt administration. Namely, that the government does not have enough knowledge, and certainly hasn’t the right tools, to redress structural, macroeconomic problems such as unemployment and deflation. Even if there is a place for government intervention-and James K. Galbraith, the lead debater for the Keynesians, was quick to specify all the areas in which Hayek believed the government should play some role-it must recognize the inherent danger of trying to manipulate economic outcomes. 

The two most critical areas where that danger manifests itself are fiscal stimulus in the form of deficit spending, which inevitably leads to a greater debt to GDP ratio, and the inflation that results from monetary easing. These were also the two areas that came in for the most criticism from the Hayekian side. In particular, Manhattan Institute economist Diana Furchgott-Roth, who pointed out that our current debt to GDP ratio was higher than at any time in this nation’s history since the Second World War. She also took aim at a report co-authored by former Obama administration officials Christina Romer and Jared Bernstein, which attempted to predict future  unemployment rates both with and without the American Recovery and Reinvestment Act, otherwise known as the Stimulus Bill. Romer-then in charge of President Obama’s Council of Economic Advisors-famously predicted that without the stimulus plan the unemployment rate could rise as high as 8.8%. Of course, our currently unemployment rate, stimulus included, well exceeds that figure. 

Sylvia Nasar, a business journalist who teaches business journalism at Columbia University, countered that monetary policy is more effective in dealing with problems like persistent unemployment, citing the work of Milton Friedman, probably the most emblematic monetarist of the latter half of the 20th Century. She also invoked the examples of pre-WWII Sweden and Japan, neither of which experienced the deep economic depressions of Western Europe and North America, yet both of which  ”ignored Hayek’s advice” with regard to monetary policy. Nasar insisted that there was a deep correlation between monetary stimulus and economic recovery, using the two examples above as evidence that determined policy had prevailed against “nature’s cure” in the realm of ideas. This raised yet another point of contention during the debate, which was the Keynesians’ accusation that their Hayekian opponents were complacent do-nothings who had no concrete plan to address pressing macroeconomic dilemmas such as unemployment. 

Lawrence H. White, an economics professor at George Mason University, vigorously disputed this assertion, noting that Hayek advocated constancy in the money supply when advising central banks, and advocated the maintenance of nominal spending in order to avoid deflationary spirals. Even so, White reiterated the Hayekian critique of fiscal stimulus, reasserting a classical liberal maxim that we “don’t undertake public works whose costs exceed their benefits.” This jab was aimed at the public infrastructure investment envisioned by the Obama stimulus package, which Diana Furchtgott-Roth described as a thinly-veiled payoff to President Obama’s supporters among organized labor. In a swipe at an iconic passage from Keynes’s General Theory of Employment, Interest, and Money, White summed up his contempt for this sort of public investment for the sake of stimulating the economy by asserting that “we can’t restore prosperity by having the government build pyramids.” This, in turn, prompted a retort by one of the Keynesians that the construction of the Giza pyramids was an abundant source of jobs for Egyptian laborers. Hence, a boost for the economy of Egypt.

In addition to the standard Hayekian critique that this sort of fiscal stimulus debases the currency, and therefore impoverishes the standard of living, White also tackled what most feel is the proximate cause of the 2008 economic crisis. Namely, the burst of the housing bubble. He claimed that “we had permanently reduced our living standards by over-investing in real estate during the economic boom.” John Cassidy, a staff writer for The New Yorker and perhaps the most solidly anti-Hayek speaker on the Keynesian side, also identified the cause of America’s economic as being the collapse of the housing market, but assigned blame to the private sector. He dismissed the Austrian diagnosis of the causes of the collapse, asserting that the Community Reinvestment Act had little to with the skyrocketing foreclosure rate, and the culpability of GSEs like Fannie Mae and Freddie Mac was minimal when compared to the exposure of private sub-prime lenders who engaged in reckless lending and catastrophically bad or ill-timed investments. Cassidy went even further than most of his colleagues on the Keynesian side, asserting that “Hayekianism is not even a distinct policy doctrine,” and that Hayek himself “gave up the debate with Keynes about macroeconomics.” Cassidy wrapped up his remarks by quoting current chairman of the House Budget Committee Paul Ryan, who at a congressional hearing during the 2001 recession encouraged deeper tax cuts that would “juice the economy.” Cassidy, echoing the sentiment of other Keynesians, such as Ezra Klein, claimed that this statement demonstrated the resonance of stimulus spending, even among those who would reject the label of Keynesianism. 

For his part, Stephen Moore agreed that tax cuts were an integral component of economic growth. However, he rejected the notion that Keynesianism was responsible for the economic growth the United States experienced during the 1980s. Using September 1983 as a benchmark, since it was the same point in the Reagan presidency as we are experiencing in the Obama presidency, he contrasted that month’s employment figures, which saw the creation of over 1.1 million jobs and a third quarter growth rate of 8.4%, with the anemic growth our economy is currently experiencing. Moore also pointed out that the Paul Volcker-led Federal Reserve had applied precisely the Hayekian remedies that the other side decried, yet his constriction of the money supply not only slayed the inflationary dragon but seemed to disprove the Keynesian assumption-voiced by Keynes followers like Sylvia Nasar-that monetary easing was inextricably linked with economic growth and robust employment. At the same time that Moore praised the policy prescriptions adopted by President Reagan, he faulted his inability to encumber spending by Congress. Of course, John Cassidy took a contrary view, asserting that David Stockmam’s failure to rein in discretionary spending as Chairman of the Office of Management and Budget was a boon to the U.S. economy. He also claimed that the tepidity of the current economic recovery should be attributed to the decline in spending at the state and local level, which is commensurate with the rise in spending at a federal level.

Perhaps the most intriguing statement made during the course of the hour and a half-long debate was the claim by James K. Galbraith that “the United States is not in a debt trap; debt levels, by historical standards, are not that large.” While this might seem like an implausible claim when viewed in the context of a national debt that eclipses 14 trillion dollars, and a government whose payment obligations range from 100 to 200 trillion dollars, it is not an entirely aberrant perspective. In fact, there is a rather popular book whose author attacks the very notion of retiring the national debt. 

What was surprising about this debate was the willingness among some of the Hayekians to countenance government intervention into the economy, although perhaps it shouldn’t have been considering the political views of Hayek himself, who supported numerous interventionist policies during his lifetime. To the chagrin of my anarcho-capitalist friends in the audience, Edmund Phelps-a 2006 Nobel laureate in Economics-repeatedly emphasized areas in which he supported government intervention into the economy, at one point during his closing statement even rejecting the label of “Hayekian.” During his opening remarks, he made the point that the depressions experienced by Keynes were monetary in origin-signaled by rapid deflation-and that, as a response, monetary policy had to be altered. Since the economy in our current financial crisis initially faced what was essentially a liquidity problem, “the Keynesians were right to urge the Fed to increase demand for money.” Phelps contended, however, that since today what we are facing is a “structural slump” Keynes’s theory of employment was not applicable. In addition to supporting the first round of quantitative easing undertaken by the Federal Reserve, in his closing remarks Phelps seemed to imply that portions of the jobs’ plan put forth by President Obama were worthy of consideration. 

I’m not sure if it was this nuance that led to the ultimate result, but at the conclusion of the debate a slim majority, 52% of the audience, professed themselves to be “pro-Keynes.” It should be noted, however, that this was only an increase of 5% from the outset of the evening’s debate, whereas the “pro-Hayek” side of the ledger gained the support of an additional 9% of the crowd, from a starting point of 33%. The Hayekian interpretation of this result is that the anti-Keynes forces were more persuasive in making their arguments, although strategic voting might have also played a role. In either case, I think the debate over whose ideas are more sound will persist for some time. Perhaps it will even be expanded to include an even more consistently anti-state Austrian viewpoint that will satisfy my disenchanted anarcho-capitalist friends. 

Mises vs. Fisher anyone?