If there’s one Milton Friedman quote that’s repeated far too often it’s the following: “You cannot simultaneously have free immigration and a welfare state”. The income of relatively rich people in many poor countries pales in comparison to what the poor, unemployed, sick, young and elderly in rich countries get from welfare and social security transfers. Hence, the argument goes, opening borders and eliminating immigration restrictions would cause massive flows of people to those rich countries. Perhaps some of these people would come in the hope of finding a good job, but at the same time they have the certainty that, if they fail, they will enjoy generous social protection. And all the rest will come just for the benefits.
The problem, some say, is that rich countries can’t afford large increases in the numbers of welfare beneficiaries, and that they therefore must limit immigration. Open borders are only feasible when global poverty has been solved and income levels are more or less comparable across countries. Or, when rich countries would decide, unrealistically, to eliminate their welfare systems or at least coldheartedly decide to exclude all immigrants from welfare.
However, immigrants in the U.S. use welfare at lower rates than natives and have higher rates of labor force participation. In the U.K., immigrants represent about 13% of all workers, but only 7% percent of unemployment benefits (source).
Anyway, even if we assume that open borders will be a net negative for western welfare systems, there’s no need to limit the options to the stark choice between welfare and open borders. We could, for example, give immigrants access to labor markets but only limited access to unemployment benefits, or we could delay their benefits, demanding that they first contribute to the system during a number of years (something which might actually strengthen the system). However, we’d have to be careful and not create inequality, discrimination and a class society.
Or we could decide to grant immigrants full access to welfare because we believe that global inequality should be reduced. Access to welfare would then be a kind a development aid.
And, finally, it’s possible to view matters from an entirely different angle. Large chunks of welfare transfers go to the elderly. Given the demographic evolutions in many rich countries, it may be that immigration will be the only way for aging countries to sustain their welfare states.