When economists evaluate a public policy like trade or immigration, they tend to count the benefits and costs to all individuals equally regardless of where they live. But this isn’t always how politics works. Usually, national governments weigh the welfare of their citizens more heavily—usually much more heavily—than the welfare of foreigners.
Immigration is the most salient current issue where the welfare of citizens is counted much more than the welfare of foreigners. Some people argue that immigration hurts U.S. citizens because low-skilled immigrants reduce the wages of low-skilled Americans. Other people argue that immigrants add to the U.S. economy through their entrepreneurship and their willingness to work at very tough jobs.
On net, careful studies indicate that immigration has some positive and some negative effects, but the U.S. economy is so large that overall immigration is not such a big issue—economists who support and oppose immigration agree on this conclusion. People debate the pluses and minuses of additional immigration, and often this is an emotional issue, but again, no matter what your view, the net cost or benefit is likely small relative to the entire U.S. economy.5
So let’s assume that immigration is either a small benefit or a small cost to U.S. citizens. Everyone agrees, however, that immigration is a huge benefit to the immigrants. The typical Mexican immigrant today comes from a small village in Chiapas, Guerrero, Oaxaca, or some other very poor part of Mexico. People in those villages usually earn no more than a dollar or two a day. If they come to the United States, they can earn $10 an hour or more. Of course, they send a lot of this money home to their families. Remittances, most of which come from the United States, are Mexico’s number one leading “import” industry. Remittances often make the difference between hunger and plenty, or between a collapsing village and a revitalized one. Immigration matters a great deal to the many thousands of Mexicans who cross the border every year and to those who would come if it were easier to do so.
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So, if the United States is making decisions about its immigration policy, how much should it weigh the benefits accruing to Mexicans from immigration? We’re talking not just about the Mexicans who arrive in this country (some of whom may become citizens), but also the Mexicans back home receiving the remittances. Economics tends to be cosmopolitan in its implications as it treats all people equally, no matter where those people live. If the gains to foreigners are counted as much as the gains to nationals, then Mexican immigration into the United States will look especially beneficial. But again, not everyone buys the presumption that foreigners should count for as much as the welfare of U.S. citizens. A presidential candidate who held that assumption as a campaign platform would be unlikely to win election.
Foreign aid is another policy issue where we must ask whether our government should be looking after American citizens or people in other countries. In reality, the amount of money the American government spends on foreign aid is very low. The exact sum is difficult to determine, because in the government budget, “foreign aid” and “military assistance” are not completely distinct categories. But, by standard accounts, formal measures of foreign aid amount to less than $30 billion per year, or less than 1% of the federal budget.6 Of course, simply sending money to other countries does not always make them better off; some foreign aid is captured by corrupt elites or used for bad ends. Still you could say the same about some of the money the U.S. government spends at home! The point is this: It remains within the voters’ power to have the federal government spend less money on American citizens and more money on needy people overseas. If you are worried about corruption, why not just drop some dollar bills from a helicopter flying over a poor country?
Whether we should do this will depend, in part, on your views as to “who counts?” and “how much?”