Bryan Caplan underestimates the arguments for immigration

In my very positive opinion 2019 review from Bryan Caplan’s book Open Borders: The Science and Ethics of ImmigrationI wrote:

While few people would accuse Caplan of underestimating the benefits of immigration, I am one of those few. Immigrants are starting businesses at a rate that is twice that of native Americans. The main beneficiaries of such immigrant workers therefore include American workers. Yet I found no mention of that fact anywhere in his book. Of course, it’s possible that this overstates the benefits for native Americans; think of the Korean dry cleaners where largely other family members work. Yet it is likely that most of these employers employ non-family, non-immigrant workers.

It turns out that even I underestimated the case for immigration. That’s why I say that interview by my Hoover colleague and fellow economist Steven Davis. He interviewed Rebecca Diamond, professor of economics at Stanford University. Here’s the takeaway:

Immigrants are directly responsible for a quarter of the economic value generated by U.S. patents. They account for well over a third of that value, when we take into account the collaborative benefits that immigrant inventors provide to Native American inventors. Immigrant inventors also play an important role in the two-way flow of scientific and technical knowledge between the United States and other countries. Stemming the flow of immigrant inventors would hinder America’s innovation enterprise and slow the development and spread of scientific knowledge.

Now you might say, “But if the US government hadn’t let a lot of those people in, wouldn’t they have patented them elsewhere? In that case we would still have won.” (Recall that according to Nobel Prize-winning economist Willam D. Nordhaus, 97.8 percent of the profit from innovation goes to consumersnot the innovators.)

The answer is “No.” Some of them are said to have patented them elsewhere. But some of them wouldn’t have done that. For all its imperfections and government barriers, America still has one of the most vital dynamic economies in the world. Potential inventors here have others nearby to collaborate with: think Silicon Valley. So if the government had prevented a substantial number of them from immigrating, it would have prevented a significant amount of innovation, and American consumers, along with other consumers, would have been deprived of the benefits from innovation.

Here is the link to the underlying study.