An astonishing 27%  of Swedish residents are first or second generation immigrants. They come to Sweden seeking a better quality of life, courtesy of Sweden's generous immigration system. But the Swedish economy has left immigrants behind. The unemployment rate for immigrants is at 16% compared to a total national unemployment rate that hovers around 8% . Immigrants live in crime-filled, segregated neighborhoods and voice feelings of alienation from Swedish society. Over the last six nights, the tension and frustration in immigrant neighborhoods culminated in a series of riots in the streets of Sweden's cities.
How did Sweden get to such a troubled place? It wasn't despite good intention, but because of it. Labor in Western economies is expensive - labor regulations, minimum wages, and employer mandates (such as Obamacare in the USA) drive up the cost of hiring. In response to the high cost of labor, employers in these wealthy economies have become masters of automation technology. Education becomes a necessary piece of the middle-class lifestyle. Knowledge workers find ever more generous wages as labor productivity is boosted by capital investment while low-skill workers have a hard time finding jobs. Allowing massive low-skilled immigration into such an economy risks importing an underclass with all the social problems and spontaneous urban bonfires that involves.
Walter Russel Mead makes a policy suggestion to the Swedes - give up the Swedish way of life:
Sweden’s famously progressive redistributionist model, with its high taxes and high rates of spending, seems to be failing its immigrants. Unemployment among the foreign-born is persistently high and upward social mobility remains elusive. A recent study pointed out that up to a third of the youth in Sweden’s poorest regions are neither employed nor studying. Entire communities are stagnating rather than integrating.I bet Texas-style neoliberal labor reform isn't what progressive Swedes were thinking when they developed such an open immigration policy in the first place. But Mead is right that lowering the cost of labor regulations would help existing immigrants find a niche in the Swedish economy. Welfare states depend on high average labor productivity. High levels of low-skill immigration don't mix.
High immigration societies need to be high opportunity societies. Immigrants and refugees come in search of a better life, but blue model societies like Sweden are more focused on providing welfare rather than opportunities for growth. The blue model social worker mind sees ‘excluded youth’ and thinks about programs: more midnight basketball, more food stamps, and the like.
But what might be needed instead are things like less restrictive zoning laws to promote the kinds of construction jobs that young immigrants can get without a lot of paper qualifications. Less regulation and protection (though not zero!) means more opportunity. And creating opportunity ends up being the ultimate welfare program.
Sweden's experience is relevant in America where wholesale restructuring of immigration policy is being considered in the national legislature. As Yuval Levin points out, the recession economy has been brutal for low-skill workers seeking jobs, while high-skill workers are doing fine.
The unemployment rates don't tell the full story of the suffering of the American worker. Americans' participation in the labor force is the lowest it has been since 1979 . People who have given up looking for work aren't included in the unemployment rate calculation.
American labor markets have a feature that Sweden's don't - a large black market in low-skill labor that allows employers to hire illegal immigrants at cheap wage rates. This is why pundits on the left brush off concerns that "hard-working immigrants" will be a burden on the welfare state - anecdotally, it seems that a vast majority of illegal immigrants do work and thrive in the American economy.
But we need to remember that illegal immigrants found jobs on the black market where the costs of minimum wages, labor regulations, and employer mandates don't exist. The black market is a free market. If the 11 million illegal American residents are welcomed into the more expensive and regulated legal labor market they will find an uninviting economy every bit as hostile to low-skill workers as Sweden's.
I live in an weird libertarianish ideological neighborhood that includes influential open borders absolutists like Bryan Caplan. One of his more famous essays is "Tell Me the Difference Between Jim Crow and Immigration Restrictions" - clearly not a guy with a taste for nuance. His case is laid out succinctly in "Open Borders in 4 Easy Steps":
Immigration laws deny very basic human rights: The right to accept a job offer from a willing employer and the right to rent an apartment from a willing landlord. The predictable result for people born on the wrong side of the border is severe poverty and worse. This creates a strong moral presumption against immigration restrictions.It is important to keep in mind the vast benefits that immigration can bring to immigrants and the country that welcomes them. But importing immigrants into a troubled underclass is incompatible with good governance and maintaining a high quality of life for all who live in America. Instead, we should recognize that immigrants and current residents are best served by increasing the high-skill immigrants who will thrive in the modern American economy. One way to do this is by using universities as immigration portholes - "stapling a green card" to every degree earned and increasing the number of student visas. This will feed the American R&D industry with the high-skilled grads it needs, prevent social problems down the line, and give opportunity for millions of the world's poor.
I am not clairvoyant enough to be certain of the effects of the new immigration bill on American society. But I worry that a poorly designed policy crafted under the influence of ideological blinders and emotional rhetoric will create a country with higher inequality, government dependency, and dysfunction. Ultimately, it will no longer be the kind of country that people want to immigrate to. My concerns are well-stated by Ross Douthat :
What immigration reform’s conservative skeptics would prefer, rather than a society that welcomes as many immigrants as want to come and also expands the welfare state apace, is a society that maintains America’s historical balance between (at least relatively) limited government and (at least relatively) egalitarian arrangements of wealth, property and opportunity. If you don’t care about the first issue, then it makes sense to be an open-borders liberal; if you don’t care about the second, then it makes sense to be an open-borders conservative. But if you think that both matter, and that America’s historical balance between liberty and opportunity is a precious and fragile historical achievement, then it isn’t really much of a puzzle why you might favor admitting new Americans — especially those whose existing skill sets are a poor fit with the economy that we seem to be moving toward — at a somewhat slower pace (and in a somewhat different mix) than the Senate legislation contemplates.Good governance dictates that countries allow immigrants who are likely to thrive in their new home. We shouldn't let the noise of political debate drown out that basic principle.