Thursday, March 7, 2013

Raleigh's Folly

I have a hard time getting too far down on North Carolina. My gracious patron along with my cherished friend and other co-blogger here at EE both sport some tar on their heels. So it's with some misgivings that I condemn my neighbors to the south for a bill that, if passed, will kneecap exactly the sorts of people who can extract the most consumer surplus from education assistance: immigrants.

As a quick reminder for those of you who haven't opened an economics textbook in a while, there's a special kind of externality called a fiscal externality. The difference between a fiscal externality and its garden-variety cousin is that a fiscal externality arises because of government policy. Because we pay for your health care, you are obliged to eat healthy, buy insurance, and refrain from smoking. Because we tax income, you're a drag on "society" by remaining unemployed. Contrast this with the Art-Betty-Carl potato chip example, where the source of Carl's woes is just that he happened to be in the wrong place (next to Betty's luxurious curls) at the wrong time (when she had her feed satchel strapped on).

The externality argument for refusing to subsidize undocumented students the same as everyone else is that since the students in question don't pay taxes, they shouldn't be eligible for preferential treatment. There's also the matter of fairness: why should folks who hopped the border be treated the same as those who spent all the time, treasure, and effort to come to the United States through state-sanctioned channels? To do so is an offense to fairness and a spit in the eye to democracy. I suppose there's a gentrification bit to it too: stop subsidizing immigrants and maybe they'll skulk off to greener pastures. I won't argue against this, since I don't want to accuse the NC legislature of parochial nationalism, since I see that as a greater offense than naked racism. It would be uncharitable to assume the worst of our honorable elected officials.

I'd like the authors of this bill to consider two likely alternative scenarios. In the first, Carlos is treated like any other student, obtaining aid under the same criteria as jus soli nationals. In the second, he is barred from secondary education in the US. Under which of these scenarios is Carlos more likely to impose a fiscal externality on the state of North Carolina? Which Carlos is more likely to find a job, buy a house, participate in the above-ground economy? Which Carlos is more likely to end up a criminal? Which Carlos is more likely to assimilate? Which Carlos has dignity?

If there's a problem with fiscal externalities, perhaps it's more wise to re-evaluate the original policy rather than carve out exceptions that immiserate marginal students.

We often say here to avoid letting your deontology get in the way of abhorrent consequences. Doing so occasionally requires an ability to see past the tip of one's nose.

Immigration: not euvoluntary.
Education: not euvoluntary.
Politics: DEFINITELY not euvoluntary
Put 'em all together, what do you get? One bitter sandwich.

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Do you have suggestions on where we could find more examples of this phenomenon?