The Political Economy of Migration

Economists have long settled the issue of the economic determinants and consequences of migration (Mises [1919] 2006, [1949] 1998). Labor and capital will tend to move to the countries where wages and returns on investment, respectively, are highest, leading to an overall increase in productivity and the optimal use of natural resources. Although this analysis is correct, it must be extended in order to deal with the problems of migration in the actual world. Among Austrian economists, Hans-Hermann Hoppe (2001a, 2001b) has pointed the way to the correct solution, but although we agree with his overall argument, there are still important details missing. In the present article, we will attempt a thorough analysis of the drivers of migration, what we call the political economy of migration. We will first briefly restate the Misesian analysis of migration and show how, in a world of free trade and capital mobility, there is very little economic benefit to migration. We will then look at which factors in the interventionist economies of the developed world drive immigration. Capitalists with fixed investments are one group, and the state and its beneficiaries are another, but both are interested in the inflow of economically productive laborers. A third group within the state apparatus, what we may call the welfare bureaucracy, has a clear interest in unrestricted immigration of unproductive individuals, as this increases its own power and incomes. This bureaucracy has also been a clear driver in producing an “immigration ideology” justifying policies that increase their own position at the expense of other parts of the ruling class and at the general social cost of both more parasitic behavior in the form of increased welfare payments from taxpayers to newly arrived beneficiaries and more antisocial behavior.