Firms and Cities Have Open Borders
Originally published on Overcoming Bias
Outline
- Cities don't usually limit who can move there
- If you can find someone to give you housing and a job, you can usually move to a city
- Cities don't add much in the way of requirements over landlords and employers
- Large firms also don't tend to limit who can work for them
- Each particular unit might care who joins it
- Firm overall tends to defer to "local" decisions
- Firms which have commitments to helping workers change teams impose more control
- Given the obvious analogies to cities and firms, why do nation-states have such tight borders?
- Analogy is strongest when people who enter nations only do so with jobs and housing waiting for them
- Also, the nation has to have relatively few obligations to the people entering
- Do firms and cities have open borders because national boundaries do the filtering for them?
- Nations don't do very much filtering on the metrics that firms and cities tend to be interested in
- Wide variation between people already inside a nation-state
- Multinationals have employees in many nations, but still tend to defer to local decisions on who to hire
- Firms and cities exist in environments that are more competitive than the environments that nation-states exist in
- Entities that exist in competitive environments tend not to create entity-wide limits on who can enter them
- If nations behave differently than firms, it's because either
- There are larger important effects that matter at the national level that don't matter at the city or firm level
- Nations are failing to adopt policies that they would be forced to adopt if they faced more competition
- Robin Hanson thinks the problem is that nations are failing to adopt more open immigration policies because of lack of competition
- Is there a market failure that makes open borders lamentable?
- If not, we should be disappointed that nations don't have the same open borders that firms and cities do
My thoughts
- Firms don't have open borders
- Firms commonly interview candidates before admitting them in
- The purpose of this interview is to both assess a candidate's qualifications and also whether they would reinforce or dilute the culture of the firm
- Managers at firms often have limited headcount (analogous to immigration quotas) which forces them to turn away even qualified applicants who would be a good fit
- To the extent that cities and firms have open borders, it's because they're forced to by the federal government
- Employment law limits the ways in which firms may choose to select workers (i.e. can't select based upon race, gender, sexual orientation, religion, etc.)
- Federal laws also limit the ability of cities to exclude people
- Laws against "redlining"
- Prohibiting "sundown laws"
- Laws prohibiting restrictions on who may or may not buy property in the city
- Even still, cities use zoning law to do their best to exclude the wrong sorts of people
- In other countries, such as China, cities have a much greater ability to exclude people -- "hukou"
- Firms can relatively easily fire people in the US
- Revoking a visa is much more difficult by comparison
- Revoking someone's citizenship is practically impossible
- In states where it's much more difficult to fire people, firms are much more careful about hiring, to the point where unemployment and underemployment is significantly higher as a result
- It seems to me that the entire premise of the post is mistaken
- Nation-state governments exclude less than firms
- Firms and cities would exclude even more than they already do if they were allowed to by nation-state governments
