Julian Simon And Me

Republished on VDARE.com on May 09, 2006

Forbes,        April 20, 1998

THIS MAGAZINE'S editor-in-chief        wrote one of the many respectful obituaries for        Julian Simon, the University of Maryland business        school professor and  libertarian theorist who died        recently at the tragically early  age of 65. These        tributes were striking evidence of the  extraordinary        intellectual revolution of our time—and its         imperfections.

At the end of the 1970s Simon made        a        now-famous bet with environmentalist Paul Ehrlich,        author of The Population Bomb, that the real price of        various key commodities would be lower in ten years'        time. Ehrlich had to pay up.

Simon won this bet because he had        grasped a  single great truth: The price mechanism works.        Rising prices  choke off demand, encourage more        economical use and, ultimately,  call forth new supply.        Ehrlich lost the bet because, like many  scientists and        lawyers, he simply had no concept of these  tradeoffs.        And, to be fair, neither did many people in that  decade        of economic controls and gas rationing by shortage.         When, as a young financial journalist, I challenged the         assumption that consumers would go on greedily guzzling        gas at  absolutely any price, I was hooted down by an        entire editorial  meeting as a hopeless ideologue. This        would not happen now.  (Well, not for that reason.)

It was as a fellow libertarian        ideologue  that I first met Simon—at a 1990 Manhattan        Institute seminar for  his new book, The Economic Consequences of Immigration. He greeted me warmly, quizzed me about my rumored        deviationism  on the immigration issue and inscribed my        copy flatteringly. We  proceeded to have, alas, a        distinctly acrimonious public  relationship, especially        after the 1995 appearance of my own book          Alien        Nation: Common Sense About America's Immigration Disaster—which        came to conclusions        quite contrary to his.

On immigration, Simon had again        grasped a  single great truth: You can't reason        simplistically from  increasing immigration to native        dispossession. As he put it: "Immigrants not only take        jobs, they make jobs."

In his book, however, Simon made        important  but little-noted qualifications. He        acknowledged that, while  immigration may increase        aggregate output, specific groups of  workers may very        well be displaced, e.g., low-skilled blacks. And  any        increased output may not even go to them but to others,         e.g., upper-income whites. Simon also noted—proudly, he         invented the concept—the "negative human capital        externalities" of immigration. Mass unskilled        immigration could eventually  overwhelm the higher skills        of natives, he admitted—the  macroeconomic equivalent of        getting a cab driver in Manhattan who  can't speak        English. This was why Simon, contrary to a  widespread        impression, did not advocate opening the borders.

The critical qualification to        Simon's truth,  however: To show nice things can happen        is not to prove nasty  things can't happen—and aren't        happening.

Thus the 1965 immigration act,        which  restarted mass immigration after a 40-year lull,        accidentally  instituted a perverse selection process. It        effectively favored  lower-skilled immigrants.        Researchers began reporting the  consequences about ten        years ago. Their findings were confirmed  recently by the        National Academy of Sciences' survey The New  Americans:        Post-1965 immigration has brought essentially no  proven        aggregate economic benefit to native-born Americans; it         is imposing an annual average net fiscal cost (through         transfer payments) of about $200 per native-born         household—$1,200 in California.

Simon, who did little primary        immigration research himself, simply ignored this.

In retrospect, Simon's truth about         environmentalism is similarly incomplete. Population        might grow  safely forever. But it might not. Disasters        do occur. More  fundamentally: Even if the U.S. could be        turned into a  continent-size Calcutta—do Americans want        that?

We are all free marketeers now. But        the free  market is not all things. It must function in a        framework of  institutions and values. That framework        needs attention, too.

Julian Simon was a light cavalryman        of the  intellect. He was brilliant at swooping on key        positions far in  an enemy's rear. He was not designed to        hold those positions  against sustained counterattack.        But then, that was not his role.

I last saw him at a        Hoover Institution immigration debate. Before it        started, partly to lull him, I mentioned my Charticle (Forbes,         May 20, 1996) showing that recent slow GDP growth rates         were actually the long-run historic norm. Disturbing        news for  libertarian ideologues who like to blame the        slowdown on  encroaching government. As one ideologue to        another, was there an  answer?

"There is," he said.        "I'll tell you        later." But he had to catch a plane.

Right or wrong, it would        have been interesting. I wish he were still here to tell        me.