Milton Friedman on the Core of the Problem

Below we want present two short video excerpts from a presentation by the late Milton Friedman, in which he is talking about the thorny issue of immigration, including “illegal” immigration – with a hat tip to Mish, who pointed the existence of these video documents out to us.

Friedman goes to the core of the problem. Long-time readers may recall an article by our friend and regular contributor Keith Weiner, which we published a while ago: Immigration for Republicans. Judging from the comments section, this is quite an emotional topic that tends to provoke intense reactions. As it turns out, Keith was making arguments that are very similar to Milton Friedman’s.


milton-friedman-1Chicago School economist Milton Friedman

Photo credit: The Friedman Foundation for Educational Choice


Milton Friedman rightly asks, why is there actually a problem at all? Would anyone consider the wave of immigration to the US from Europe during the 19th century a bad thing nowadays? Of course not; in fact, most people would end up denouncing their own forebears if they did that. Were these immigrants rich? No, most of them were dirt-poor. They spoke little if any English, and were primarily what in today’s terminology would be called “economic refugees”. In other words, in none of their most important and obvious characteristics were they any different from modern-day immigrants.

Friedman rightly concludes that the main reason immigration is viewed with so much suspicion today and that there indeed exists a problem, isn’t necessarily the fact that many people positively need to have someone they can hate. Foreigners are of course always a welcome target for such unspecified hate. As the super-human protagonist of Olaf Stapledon’s novel “Odd John” remarks to a friend when characterizing the to him vastly inferior race of homo sapiens (in terms of intellectual capacity and emotional maturity, humankind is viewed by Odd John roughly as we would view chimpanzees):


“[…] there’s this almost universal need to hate something, rationally or irrationally, to find something to unload your own sins on to, and then smash it. In perfectly healthy minds (even of your species) this need to hate plays a small part. But nearly all minds are damnably unhealthy, and so they must have something to hate. Mostly, they just hate their neighbors, or their wives or husbands, or parents or children. But they get a much more exalted sort of excitement by hating foreigners. A nation, after all, is just a society for hating foreigners, a sort of super-hate-club.”


odd johnThe cover of Olaf Stapledon’s novel “Odd John” – one of the first, and quite possibly still the best, novels about a super-human mutant

Image credit: Gollancz


Friedman rightly notes that the the problem consists primarily of the existence of the welfare state. In this sense, he argues, the best immigrants are actually illegal ones, because they cannot claim any welfare state goodies. Hence it is clear that they will have to make a positive contribution to society, in practice mainly by offering to perform the kinds of labor natives tend to scoff at. The law of comparative advantage ensures that all of society will benefit from this. This was also the situation 19th century immigrants found themselves in: they couldn’t rely on a welfare state, because it didn’t exist. Instead the vast majority of them worked extremely hard to get ahead. For the most part they succeeded and all of society benefited from their success.

In the first video Friedman explains his view, the second video shows an excerpt from a Q&A that followed on his remarks (a young man tries to approach the issue from a leftist perspective, to amusing effect).


Milton Friedman on the dynamics of illegal immigration


Milton Friedman on illegal immigration, part 2: a brief Q&A


European Welfare States and the Refugee Crisis

When German chancellor Bismarck introduced the world’s first welfare state in the 1870s, his foremost concern was the preservation of social harmony – somewhat reminiscent of the concerns motivating the Communist Party of China today. Germany’s ruling class tried to blunt the danger that social upheaval posed to its own station in society. The failed revolution of 1848 was a stark reminder that the old order was on the verge of experiencing abrupt change. For obvious reasons, the ruling class tends to detest and resist such change.


otto-von-bismarck-portraitGerman chancellor Otto von Bismarck, favoring the camera with his typical stern gaze. He is considered the inventor of the modern welfare state.

Photo credit: Bundesarchiv


If one considers the wave of asylum seekers invading Europe today, if it weren’t so sad, it would almost be comical that the people most likely to be rejected are precisely the people who are most likely to make a positive contribution to society: economic refugees, who have set out to make a better life for themselves, because they are hampered at home by institutional constraints imposed by the ruling classes in their countries of origin.

If political and economic freedom were firmly established all over the world, there would likely be very little migration. Political and economic freedom already imply that wars would be a far less frequent occurrence, so there would be no reason for people to flee from armed conflicts. And obviously, if people had the opportunity for economic advancement in the region they have grown up in, there would be far fewer economic reasons for leaving as well (there may still be differences that could motivate some people to move, but one must not forget that leaving all one’s friends and relatives behind is a fairly difficult decision for most).

Meanwhile, members of today’s European ruling elite are faced with a problem not dissimilar to that Bismarck pondered – only, the problem is in some ways even more difficult. On the one hand, they feel they cannot deny welfare state benefits to migrants, as they fear that the streets of Europe’s cities would soon swarm with homeless beggars and criminals. People have to eat and live somewhere after all, and statistics prove beyond a doubt that modern-day refugees are exceedingly unlikely to find work in the over-regulated labor markets of Europe (See also “Europe’s Refugee Crisis” for some color on this). Simply put, socialistic “pro labor” legislation has priced most of them out of the labor market.

On the other hand, the perceived need to extend welfare state benefits to all comers has the distinct disadvantage of attracting all sorts of people whose main goal is simply to obtain said benefits. Social studies conducted in Germany (these studies are considered politically incorrect, because they reveal many uncomfortable truths) have revealed that the children of immigrant households living on welfare are extremely unlikely to develop any sense of responsibility. They tend to be the worst pupils and when asked what they want to do with their lives, one usually just gets a shrug. Why even think about that? Isn’t the government paying for everything anyway? Note that there are remarkable exceptions, largely based on the culture immigrants hail from. For instance, the best performing immigrants in Germany come from Vietnam.

Moreover, the natives are getting restless, because they know that they are forced to pay for all of this through their nose, even as the services they themselves receive from the State steadily decline in both quantity and quality. As a result, nationalistic parties – often of the extremist kind – are enjoying a vast surge in electoral support (i.e., there is significant blowback). We reiterate that such problems wouldn’t exist in a free society of property owners based on strictly enforced property laws. Everyone could decide for himself whether to offer work or otherwise extend help to immigrants. This is obviously quite different from forcing others to pay for said help at the point of a gun, while at the same time making it almost impossible for poor and uneducated migrants to find work.

In short, there is no easy solution to the problem in sight, as the only workable solution would be the adoption of unhampered free market capitalism – a notion that is repulsive to the nomenklatura, as it would have to relinquish its power in the process.



There are many things we disagree on with Milton Friedman (such as e.g. his advocacy of positivism in economic science or his acceptance of state-administered fiat money, to name two examples), but this isn’t one of them. Rather, we think he was hitting the nail right on the head.




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2 Responses to “Immigration Revisited”

  • zerobs:

    Would anyone consider the wave of immigration to the US from Europe during the 19th century a bad thing nowadays?

    I find this strange coming from Friedman. It was his “Capitalism And Freedom” which pointed out that FDR’s policies were essentially the full platform of the American Socialist Worker’s Party – a party whose roots are 19th century German immigrants.

    There’s also the strange fact that immigrants, once they become citizens, tend to vote for the expansion of the welfare state and the restriction of economic freedom and property rights.

  • VB:

    I disagree with many things in this article.

    While it is true that when the economy turns down, people have a natural need to hate something – usually foreigners, but it could be also minorities or they might just want to separate “their own part of the country” because they think that the would do better alone – there many other claims that are simply false.

    It is disingenuous to compare the first wave of immigrants to America with the current wave of illegal immigrants. Back then America was empty and unsettled. The immigrants had plenty of room to set up and lead productive lives. The natives may have had a different view on the subject, but they were quickly exterminated.

    Nowadays a large influx of immigrants simply makes the life worse for everyone. The country is already settled and full. Adding more people will increase the pool of labor, lowering the wages for the existing citizens. While the country, as a whole, might be able to produce more, the benefits are likely to be reaped by the rich employers, thus further increasing the inequality.

    And that’s just considering the well-behaved immigrants, who only want to work and lead a honest life. Do you know that 90% of the rapes in Finland are committed by by non-Finns? Do you know that there are areas in Sweden, almost exclusively populated by immigrants, where the crime rate is so high that the natives don’t dare going there? Do you know that there are villages in Germany where the German children in the schools are so few (like 2-3 per class) that the others mock them as “pork-eaters”?

    I agree that accepting good, intelligent and hard-working people can increase the wealth of the society. But this has nothing to do with huge waves of illegal immigration! The country could set up a set of rules, requiring a minimum level of IQ, lack of criminal record, etc. and admit “good” immigrants in the country legally. In fact, the USA already has something like that. I’ve spent 10 years in Iceland and it has something like that too – in order to get a working visa, my boss had to demonstrate to the government that I had skills no local had.

    The current wave of immigration to Europe will have horrendous long-time consequences. These are people with a different culture, a different religion and a different way of thinking. They have different norms of social behavior. Without passing a judgement whether it is “good” or “bad”, you must admit that it is at least “different” from the European one. They don’t integrate well. Having them in Europe will change – possibly destroy – the current European culture, long-term. Near-term, it would mean crime, wage deflation, rising inequality.

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