An Economist’s Case for Open Borders

(Courtesy of Branko Milanovic)

Last April, an economist named Branko Milanovic published a proposal to reduce global economic inequality in the Financial Times. The best way to help the world’s poor, he wrote, is to encourage movement of labor and get countries to open up their borders. But of course, that’s easier said than done: many citizens of rich host countries balk at the idea of increased migration. When they imagine foreigners settling down within their borders, they fear that their jobs, their benefits, and their idea of national (and, let’s face it, ethnic) unity will be threatened. The campaigning around the British initiative to leave the EU and Donald Trump’s victory in the U.S. presidential election will endure as the consequences of this talk in action.

Milanovic’s suggestion is as follows: what if we make some concessions to these concerns and fears, and formally reduce the rights and benefits foreigners are entitled to, so long as they are welcome to come, work, and get a shot at improving their economic situation, at least for a limited time?

“We should stop thinking of migration as a voyage of reinvention in which an African, say, ‘becomes’ a European, and start viewing it simply as a way of finding a better job in a foreign country,” Milanovic wrote. “Moving from a Nigerian village to work in London should not be seen as any different from working in Lagos while one’s family stays in the countryside. Nor should this lead to the expectation of any special citizenship benefits. There is no reason why one may not work in country A and be a citizen of country B.”

It’s rare to see income inequality on a global scale—rather than nationally confined tensions between the 99 and 1 percent—discussed in a mainstream financial paper. It’s a necessary and timely conversation, with major implications for how we think about the future of work. Milanovic’s proposal, if implemented fully, is nevertheless flawed. Establishing different classes of citizens in an effort to boost labor mobility might create an improvement, purely in economic terms, on a global scale. But politically, it challenges the entire democratic concept of citizenship and belonging.

Blogging at Crooked Timber, philosophy professor Chris Bertram compared the proposal to advocating for apartheid. “It was certainly problematic that Branko Milanovic was willing to contemplate putting into place, on a pretty open-ended long-term basis, a situation where people could be resident and subject to laws but have a subordinate political status,” he explained to me over Skype some months later. (Bertram added that he regretted the apartheid reference because it did not encourage a “productive debate.”) “It’s not clear whether immigrants would be placed in this status permanently, what status their children would have. Would they have a chance to be part of the political community?”

But Milanovic’s proposal presents a broader conundrum that we must contend with today, when the merits of globalization are being debated in protectionist, xenophobic overtones. What are our responsibilities when it comes to reducing not just national inequality—which can (theoretically) be achieved by voting for redistributive policies within one country—but massive inequality on a global scale? In the absence of world government, what’s at stake politically when we aim to reduce inequality solely through economic means? And to what extent can we give up basic political ideals, like democracy and equal representation, if the goal is to make significant economic improvements in the lives of working people?

 

Milanovic was struck by the negative response his proposal received, as he told me last August in his modest CUNY office wearing jeans and Nike sneakers. He seemed receptive to the critiques, noting, in particular, “if there was no way for people to become citizens, there would be political implications for democracy.”

Still, he stood by his point that allowing immigrants to have less could, overall, get them more in the long run. He opened up a graph on his computer that illustrated his theory by charting a projection of the inverse relationship between the allocation of full citizenship rights to newly landed foreigners, and the number of immigrants a country is likely to admit. “This is the tradeoff: if you have full citizen rights given on arrival, then no [country] would have them because the native population would have incentive to shut down immigration,” he said. “On the other hand, today you have 13 percent of the world population that wants to leave their country, according to Gallup. If we let them all move but give them nothing, that would be the other extreme.”

“My point is simply this: I want to show through this slope there will be some positive flow if you don’t give a full citizenship premium.” The result would help poorer workers from around the world go abroad to improve their situation, and at the same time—at least hypothetically—appease citizens who oppose or fear immigration. “It has been documented that an increase in migration contributes to the increase of global GDP and incomes of migrants,” Milanovic writes in his latest book, citing further evidence that “the negative economic effects on some groups in both the country of origin and the country of reception are minimal.”

Phrased differently, Milanovic’s proposal is almost banal. Tiers of belonging already exist in many nations; categories in the United States range from short-term visas for seasonal work to longer-term permits to permanent residency, and, at some point, full citizenship. No country currently hands out full citizenship rights to foreigners on arrival. Immigrants often have trouble organizing, unionizing, or even switching jobs; Milanovic rightly calls this status quo a “fiction of equal treatment.” But seldom are there strict bars on someone ever being able to enjoy full political and civil rights.

The Gulf monarchies are an exception, and present an example of such a system in action: there is virtually no way for a non-native person living and working in the UAE, Kuwait, or Saudi Arabia to gain full citizenship, and most foreign workers enter those countries with the knowledge that they will, some day, leave. Those countries also happen to be highly undemocratic, and yet workers from poorer countries are still keen to go to them, Milanovic argues, because even if they’re working exhausting hours in objectionable conditions, the situation is still, at least economically, an improvement on what was on offer back home.

“It could be argued that the Gulf countries . . . are actually contributing effectively to the reduction in world poverty and inequality,” he writes in Global Inequality: A New Approach for the Age of Globalization (from which the op-ed was adapted). “I use this example not to show that I personally approve of how, say, Qatar treats its foreign workers (scores of whom have died at construction sites), but to show that even such admittedly very harsh treatment has another side: improving economic conditions for the majority of such foreign workers and their families at home, and reducing global poverty.”

 

Milanovic has done a fair amount of moving around himself: the sixty-two-year-old economist was born in Paris and studied in Florida and the former Yugoslavia before settling in the United States. He’s spent much of his career thinking about economic disparities, but from a primarily data-driven perspective rather than a political one.

Prior to his work at CUNY, Milanovic built a reputation studying inequality in transition economies—mainly in post-communist states—at the World Bank’s research unit, a sort of think-tank within the lender, where he worked for twenty-two years. There, he expanded his work to include global income inequality, but also equality of opportunity.

The topic wasn’t always an easy sell. Milanovic found this to be the case under socialism, where inequality was widespread, but “an uncomfortable thought for the rulers of the countries that had built their ideological appeal around the idea of having ushered in the era of classless and equal society.” It was also the case in the United States. “I was once told by the head of a prestigious think tank in Washington, D.C., that the think tank’s board was very unlikely to fund any work that had income or wealth inequality in its title,” he recalls in The Haves and Have-Nots, his first book for a wider audience, published in 2010. “Yes, they would finance anything to do with poverty alleviation, but inequality was an altogether different matter.”

Still, he persevered and, according to his colleagues, helped put inequality on the agenda at the World Bank. “Branko has dedicated his entire professional career to the subject, well before it was a hot topic, so that’s to his credit,” recalls economist Roy van der Weide, a former colleague at the World Bank who befriended Milanovic over coffee (“we are both introverts and do our own thing, but both had twice-a-day espressos at the local cafe and developed a friendship talking about inequality”). “He’s one of my favorite co-authors—he’s one of the most intellectual people I know, and it’s extremely fun to go through thought experiments with him.”

Milanovic left the World Bank in 2013 to take a job at the CUNY Graduate Center in New York, which gives him more freedom to ask difficult—and ultimately, political—questions. He also works with the Luxembourg Income Study, which collects, harmonizes, and stores income data for all rich and some middle-income countries—a different set of data from what is collected by the World Bank, which tends to focus on the poor nations that it lends to.

For Milanovic, though, the study of inequality occurring in, and between, rich and poor countries is of one discipline: he believes that we ought to think of it not just as a national phenomenon, but an international one. This has huge implications for how we talk about the future of labor under globalization, since currently, capital can move more freely than workers can.

In his latest book, Milanovic describes the nature of economic inequality, the factors that have historically driven it down—mainly wars and plagues, in addition to some redistributive policies like tax hikes and social welfare—and presents his latest findings: over the past three decades, income equality within nations has risen, and the incomes of citizens of fast-growing Asian economies like China and India and the Western lower-middle class are converging. The book’s most widely circulated finding is a simple chart—backed by reams of household data—that’s become known in economic circles as the “elephant graph.” Since it went viral on Twitter, Milanovic’s elephant has been credited with explaining everything from Trump to Brexit. Paul Krugman blogged about it under the header “Recent History in One Chart”; analysts at Bank of America Merrill Lynch sent it around to clients, warning that the days of heady globalization may be waning.

The chart’s curve mimics the downward-then-upward slope of an elephant’s trunk, mapping how people on different percentiles of the global income distribution have fared since 1988. The biggest winners are the middle class in China and India, and the very rich, who have pocketed the biggest share of gains (“what is but a rounding error for the incomes at the top is equivalent to the entire annual income of the poor!”). And it’s not too bad for pretty much every other group, whose incomes grew, if modestly. But the outlook is grim for those between the 75th and 90th percentile who experienced stagnant earnings. This percentile represents the bottom 10 percent of the population in the world’s wealthiest countries, and happens to be the very voters to whom politicians like Donald Trump and initiatives like Brexit direct their anti-immigrant, anti-globalization message. So it makes sense that these messages hit a nerve.

Milanovic’s migration proposal is a diplomatic kind of workaround that attempts to respect the wishes of voters who feel screwed without sacrificing the gains that relatively poorer individuals have seen from globalization and an overall move towards more equal incomes between people in nations worldwide.

It’s hard to say if this will be successful; racism and xenophobia can exist with or without real or perceived economic hardship, and it’s unlikely to go away with the promise of foreigners coming for “just” a few months or years. It’s also worth noting that it’s not just globalization that has produced this effect; rather, that these income distributions have correlated with rapid technological change and neoliberal economic policies as well. Still, it simply isn’t true, as politicians both on the right and the left have claimed, that globalization is necessarily bad for working people. It’s a mixed bag that benefits some more than others—and what’s more, its downsides can be significantly reduced through investments in social services.

“It is this fundamentally ambivalent nature of globalization that I hope to bring out in this book,” Milanovic writes. “The reader needs to be constantly aware that globalization is a force for both good and bad.”

 

Acting to reduce inequality on a global scale is difficult because it’s harder to see and to weigh its effects, but mainly because we’re inclined to respond more to the familiar than to the faraway or foreign. What’s more, in economic development, the focus tends (often rightly) to be on ending poverty or helping people attain economic sufficiency, rather than addressing the structural reasons why some have more than others, and the ethical implications thereof.

Inequality on a global scale is also notoriously hard to quantify, which leads to further disagreements. Early in his career, Milanovic and his colleagues found that global data on incomes was incomplete, flawed, difficult to compare, and hard to come by: representative and random surveys of households, he writes today, are crucial, but these surveys aren’t consistently conducted across the board, or at matching intervals. Tax data is useful to a point, but it leaves out the poor and often misrepresents the super rich (hello, Donald Trump!); censuses, though more widespread, are no good because they include nothing on income or consumption.

Now that he has more to work with, Milanovic emphasizes the limits of comparing countries’ average incomes to arrive at relative measures of how global inequality is evolving, because the average does not take into account the disparities between citizens of that country.

For his last book, Milanovic drew on 600 household surveys from 120 countries covering more than 90 percent of the global population and 95 percent of global GDP. He notes in his introduction that he intends to speak of the world “as one,” and later is critical of the outdated “methodological nationalism” that shapes the thinking of many researchers and academics. “Equality of opportunity cannot be a goal restricted to the level of the nation-state,” he writes. “We must pursue it globally.”

This is the key to understanding Milanovic’s migration idea: one’s citizenship, a good that is rarely earned and seldom acquired, is by far the single most important factor in determining how well off a person will be (most people are citizens of the place where they live). “The very existence of a large citizenship premium indicates that there is currently no such thing as global equality of opportunity: a lot of our income depends on the accident of birth,” he writes. In a subsequent blog post, he points out—depressingly—that when you combine things like family background and income, virtually everything is pre-determined.

This is the basis for Milanovic’s critique of John Rawls and his followers, who, he argues, “believe that global equality of opportunity is not a significant issue and that every argument for it conflicts with the right of national self-determination.” Add to that the global nature of trade and commerce, the interdependence of national economies, and the fact that half of all people identify not as citizens of the country they live in or were born in, but as a citizen of the world, and a cosmopolitan approach to inequality is not just a logical step forward but an imperative one.

It isn’t feasible to assign everyone a new nationality; if we did, the results would likely be as unfair and arbitrary as our current birthright system. But freedom of movement and, crucially, the ability to work in another country, can help those with certain citizenships make up some of the disadvantages they were born into. Milanovic contends that many already take enormous risks and work under dreadful conditions when they migrate; a formalized system that limited the rights and benefits available to migrants might make liberals feel slimy, but it won’t stop people from coming, and it won’t prevent them from making significant economic gains, either. “Their very willingness to migrate reveals their belief that migration would increase their welfare.”

Should this experiment ever become policy, it’s probably more actionable than other proposals such as Thomas Piketty’s global wealth tax or legal scholar Ayelet Shachar’s idea that a “good” citizenship should be viewed, and levied, like an inheritance, since it transfers so many benefits blindly—both compelling ideas in theory, but incredibly difficult to carry out in the absence of an international taxation authority.

That said, there are problems with Milanovic’s idea on a practical level, too. Guestworker programs, such as the one that Germany ran through the 1990s, aren’t exactly uncontentious to begin with—from the perspective of nationals, they still let in “others,” and for workers, things can get messy when their terms are up. What if they raise families, put down roots, or feel a part of their new community? What if they don’t want to move back? Many of the Turkish workers who moved to Germany as gastarbeiters felt at home in their new surroundings, even though natives might have considered them unwelcome outsiders, and even though the German government did little to aid their integration. In a situation like this, whose feelings matter more?

 

Perhaps the most surprising thing about Milanovic’s migration proposal is that it comes from an economist whose thinking on inequality is as cosmopolitan as it is progressive. He is not a classic neoliberal economist, or a cutthroat utilitarian, or a Peter Thiel type who thinks little of democracy, but a data nerd who cites Marx and sometimes even sounds like him when decrying the structural factors that determine so much about us before we are even born.

He also takes egalitarianism seriously on a personal level. “Branko would always opt for traveling economy class where the default is to travel business (or even first in the earlier days),” Roy van der Weide wrote in an email. “Last summer when he was staying at a hotel in Greece that I had recommended, he emailed me: ‘I am a man of the people and most people here are not of the people.’”

Maybe the emergence of Milanovic’s thinking around migration is a sign of how little hope there seems to be in actually promoting multiculturalism today, how far we’ve sunk as a global society (if there ever was such a thing), and how far we have left to go. Allowing for second- and third-class citizenship of this sort is ultimately a tradeoff: it involves buttressing ethno-national divisions to temporarily open territorial ones, and explicitly creates another class of worker who does not, and maybe never will, have the rights of native-born citizens.

The result of November’s presidential election in the United States is a testament to how large numbers of the electorate are ready to reject anyone they consider “other.”

So at the present moment, increased immigration is next to impossible in many Western democracies, even though study upon study, including new data from the IMF, shows that immigration is good for the very national economies whose citizens are virulently against it. Creating new legal categories of people might make the presence of immigrants more palatable—but in the long run, it won’t solve, and might even exacerbate, the xenophobia that makes such a change necessary in the first place.


Atossa Araxia Abrahamian is on the editorial board of Dissent. She is the author of The Cosmopolites: The Coming of the Global Citizen (Columbia Global Reports, 2015).

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