One of the invaluable advantages of democracy is that it allows individuals to seek the best possible circumstances for their material well-being and social advance- ment. Individuals are free to work in their home country or to move to other countries, where better chances may exist for them to realise their life objectives.
The movement of people under terms acceptable to the countries of departure and destination defines ‘official’ immigration or ‘just’ immigration. During the last several decades, however, waves of people and families mostly from poor countries with authoritarian regimes moved illicitly to democracies, causing some measure of instability. These flows constitute ‘unofficial’ or ‘illegal’ immigration. International terrorism created also instability and insecurity in democracies, regardless of the motivations of the perpetrators. In this section, we shall summarise what we know about these phenomena and what can be done, if anything at all.
6.5.1 Immigration
Moving to foreign lands to live and work carries a high cost for immigrants. This cost is markedly lower for those who decide to immigrate by choice than necessity.
Therefore, it is appropriate to distinguish between two types of immigration, that is,
theelectiveand theinducedorforced. If one decides to emigrate in search of better conditions, this is an example of elective immigration. Conversely, if one emigrates to avoid persecution for his political beliefs, this is an example of induced immi- gration. A review of the study by Hatton and Williamson (2009) indicates that the majority of immigration is elective.
For discussion purposes, suppose that there are two countries, each with indus- trial sectors that produce two goods by means of two technologies with constant returns to scale and two productive factors. Moreover, let the economies in both countries rely on voluntary transactions, implying that the two goods and the two productive factors are traded freely in fully competitive markets, both within these countries and between them. Finally, let us assume that one of the countries is abundant in labour, whereas the other has abundant capital. Under these assumptions Heckscher (1919) and Ohlin (1933) proved the following fundamental theorem:
If: (1) countries A and B have the same technological know-how; (2) their production technologies are characterized by constant returns to scale; (3) country A is abundant in one productive factor and country B is abundant in another one; (4) full competition reigns in all markets, and (5) each country produces both goods (i.e. there is no complete specializa- tion), then through international trade the prices of productive factors in terms of purchas- ing power become equal in both countries.
This proposition, known as the Price Equalization Theorem, suggests that if the five assumptions hold, immigration of workers and capital flows from one country to another become unnecessary. The movement of goods through international trade equalises the value of the marginal product of each productive factor in all its international uses and thereby eliminates all incentives for the productive factors to leave their home countries.
If the Price Equalization Theorem held, international trade would be expected to grow and the demand for immigration to decline. Yet the very opposite trend has been observed. The available data show that the tremendous increase of interna- tional trade in recent decades was accompanied by large waves of immigration and that presently the demand for immigration is more robust than ever before. By implication, we are still ways off from the convergence described by the theorem and the question is why.16The answer is that the predicted convergence does take place, but so far it is not observed for at least three reasons: First, because after the collapse of the communist regimes in Central and Eastern Europe and the gradual spread of democracy, there emerged a very large stock of people who wished to immigrate in search of better living standards and work conditions, and second, because globalisation does not seem to dissipate quickly enough to underdeveloped areas of the world. This lag widens the prosperity gap between rich and poor countries, thus strengthening the demand for immigration, and third, because the countries that receive the largest volume of immigrants are governed by democratic
16The survey of the relevant literature by Mosk (2005) showed that the direction of causality, that is, whether international trade is leading to the reduction of immigration or conversely, has been the subject of intensive econometric research, but without definite conclusion, at least not yet.
governments and, depending on the prevailing economic conditions, they are obliged by the reactions of their citizens to adopt restrictive policies so as to regulate the side effects of large-scale immigration.17Hence, from the point of view of the international community, there are two lines of action. These are (a) to strengthen the economic development in the immigrants’ home countries by inducing them to engage more actively in the process of globalisation and (b) to reach an international agreement, which would determine in a fair way the distribution of benefits between the countries of origin and the countries of destination of immigrants.
The benefits from immigration can be very significant. According to Goldin and Reinert (2006, 152), a moderate increase in immigration flows could increase global income by as much as 150 billion US dollars per annum. Therefore, it would behove the international community to agree on a global immigration pact that would improve the prospects for the largest possible number of immigrants.
Following Rawls’ proposition, efforts by democracies in this direction should respect the preferences and the rights of their citizens. That is why it is worth stressing that, according to the findings by Facchini and Mayda (2008), less than 10 % of the people in host countries are in favour of non-restrictive immigration policies, whereas their large majority in countries such as Britain, Germany and the USA demand deep reductions in the intake of immigrants. Key reasons for these attitudes are that in the host countries immigration reduces real wages, increases producer surplus (profit) and widens the wage differentials between skilled and unskilled workers.18The evidence is that in dynamic economies with reinvestment of profits and expanding competitive advantages, these adverse effects are insignif- icant relative to the benefits of the host countries from immigration. Nevertheless, given that the above negative attitudes of citizens reflect the preferences of the average voter, it should not surprise us that all host countries have adopted restrictive immigration policies.
6.5.2 Illegal Immigration
Whenever a market is restricted by administrative procedures and controls,paral- lel,greyor blackmarkets emerge to satisfy the excess demand or supply. In an
17Putnam (2007) finds that increasing immigration and especially illegal immigration lowers the social capital in the host countries, because it raises ethnic diversity, crime, etc. and weakens the social and political cohesion among citizens.
18An additional adverse effect may be that the citizens in the host countries who benefit from immigration may be different from those who lose. Freeman (2006) has proposed the imposition of a tax on immigrants, the revenues from which could be used to defray the costs of residents who are negatively affected by immigration. Remember from the first chapter that ancient Athenians had introduced a tax calledmetoikion. This was a direct annual per capita fee levied onmeticsfor their use of public goods and services (infrastructure, institutions, etc.) that the city–state of Athens provided to them.
analogous way, the restrictions by democracies on immigration have dichotomised the markets for immigration into formal/official and informal/unofficial. The offi- cial market determines the equilibrium between supply and demand for all potential immigrants who meet the requirements set by the countries of origin and destina- tion, whereas those who do not fulfil one or more of these requirements pass through the unofficial market. In the past, the official market for immigration was the dominant channel. Because of the large increase in the demand for immigration more recently and the inability of democracies to increase their admission rates, illegal immigration has grown tremendously, and all indications are that in the coming years the problem will worsen.19
We are concerned with illegal immigration because its existence affirms that contemporary democracy fails to address the problem on three levels. The first, and most fundamental, is that of sovereignty. In Chaps.2 and 3, we noted that the proponents of democracy with a free market economy considered the foremost responsibility of the state to be the preservation of law and order from all threats, regardless of origin. Illegal immigration is a breach of the legal frontiers of a country and establishes the state’s obligation to search, apprehend and deport all illegal immigrants. This of course is easier said than done; many illegal immigrants are destitute, and the state cannot behave inhumanely against defenceless and weak people. To avoid resorting to coercive practices, the state should instead adopt an immigration policy that prevents the transformation of immigration into a self- reinforcing process, where a swelling influx of illegal immigrants occurs due to encouraging signals in the countries of origin. The difference in policy can be seen when comparing Israel, where there are no illegal immigrants, and Greece, where illegal immigration is rampant.
The second level is that the state fails to ensure equal rights between citizens and illegal immigrants. To corroborate this claim, consider the following. In Greece several studies have shown that the underground economy may be as much or even greater than 30 % of the actual economy. No doubt the informal economy has always been sizable. But due to the excessive swelling of illegal immigration in the last two decades, the problem has worsened precipitously. Greeks are now divided into two categories: Those who pay their income taxes and the others, including illegal immigrants, who evade. By condoning this situation, the Greek state fails in one of its primary tasks, which is to maintain the equality of citizens in front of the law. Related to this is also the failure of the state to provide citizens with equitable access to the public goods they pay for through taxes. The reason is that, since illegal immigrants and their families use the country’s hospitals, primary and secondary schools, public transportation and other infrastructures free of charge, the state lacks the resources to adequately cover the total demand, leading to scarcities and deterioration in the quality of public services.
19The reasons for this prediction have been analysed in many investigations into the determinants of immigration. To ascertain it, see Martin et al. (2006).
Finally, the third level involves the state’s failure to compensate for the social inequality caused by illegal immigrants. Illegal immigrants tend to concentrate in urban centres and to stay with people from their home or adjacent countries. In the neighbourhoods where they reside the rates of violence and crime increase, the prices of homes and shops decline, and the indigenous inhabitants see the value of their property to decrease. Not surprisingly, the World Migration Report (2010, 30) warns that illegal immigration is very dangerous both to the host country and the illegal immigrants. Graham and Poku (2000) describe how the insecurity that illegal immigrants create in host countries increases the cost of living and slows down state investment in infrastructural facilities. The illegal immigrants, who receive reduced wages and no social security, produce super normal returns for the well-to-do classes that employ them.20 Inequality increases and reinforces the negative reflexes of citizens not only against illegal immigrants, but immigrants in general.
In light of the above, our view is that democracies need to adopt a generous immigration policy towards those who seek to leave their homelands in search of better luck. But they need to buttress these policies with stern conditions because illegal immigration undermines the credibility of democracy and aggravates inequality.
6.5.3 Terrorism
Violence to achieve political objectives has been used by individuals, groups or even states since ancient times. In recent decades, this phenomenon became exceedingly acute after the dissolution of the Soviet Union and the emergence of the USA as the only superpower in the early 1990s. As such, the USA was considered the source of all evils in the world and became the target of terrorist attacks. On September 11, 2001, terrorists struck the Twin Towers in New York, causing the deaths of over 3,000 innocent civilians and loss of property estimated at over 80 billion US dollars.
This attack raised the stakes immensely, and not only because terrorists armed with weapons and other means of mass destruction might cause serious loss of life and property anywhere. Additionally, the act of 9/11 terrorists changed fundamen- tally the relationship between the state and its citizens, since from that date democracies have favoured policies against terrorism that limit civil liberties.
In particular, the unexpected attack of 9/11 prompted the USA and other Western democracies to adopt a two-pronged defence strategy. They put pressure on the centres that abet international terrorism, and they increased security measures at home. Abroad, they intervened in Iraq and Afghanistan in order to
20For example, as found by Sarris and Zografakis (1999), the first wave of immigration in Greece in the 1990s reduced significantly the income of unskilled workers and those who had low incomes. This cohort of workers accounted for 37 % of the country’s population.
stop these countries from offering their lands for terrorist training, they targeted and are trying to isolate North Korea and Iran as countries that promote terrorism, and try to resolve major international conflicts, such as those in Palestine and Somalia by mediation. For the time being, these policies have proved successful, because they have managed to contain international terrorism quantitatively and qualitatively.
However, given that democracies are most potent when they defend their values, in our view, they will be most effective in the international arena by falling back to advisory and intermediary roles. The rationale for this suggestion is that the adoption and implementation of policies for the protection from terrorism create conditions that reduce significantly individual liberties, in addition to requiring sizable public expenditures. For an example, consider the new ministry for internal security that was established in the USA. It was endowed with such powers that the country may have lost its character as the beacon of freedom and generated unprecedented levels of costs for internal security purposes.21 American citizens from certain ethnic groups are now considered suspect until proven otherwise, which is a fundamental departure from the right of every citizen, regardless of origin, colour or religion, to be considered innocent until proven guilty after due judicial process. This trend must be reversed, because when citizens come to be afraid of their government, democracy has given way to tyranny.