Buying Genocide, Part 3


Nazis as Socialists: How Accurate a Description?

An economic historian, Andrei Znamenski, wrote a nice analysis of the question of whether the National Socialists were really socialists. He begins by noting a fascinating historical fact: in the West outside of Germany, people to this day call the NSDAP “Nazis,” whereas the Germans still call them National Socialists. The full name of the party was of course the National Socialist German Workers Party, but Germans use — and used — just the first two words. Znamenski points out that Hitler and his followers never liked the term “Nazi”; they used “National Socialist” or the initials ND or NSDP. And in the years after the discovery of the Holocaust, “Nazi” — like “fascist” — became a generic term of abuse against political opponents. So we now have expressions like “condo-Nazi” and “femi-Nazi.” But as Znamenski notes, this is odd. Historians and other intellectuals never use “Commies” when writing about the Soviet Union under Stalin — they call people “Soviets” and so on. In fact, Znamenski observes, the Left in the West has systematically refused to recognize the egalitarian and socialist aspects of National Socialism. It has instead pushed two versions of the “Hitler Myth.”

One version — the one the communist and socialist Left most embraced — is that Hitler, while manipulating ordinary Germans, especially the bourgeoisie, was a puppet of the large industrial capitalists. That is, this Leftist myth has it that Nazism in particular and fascism in general “were the last-ditch effort of decaying monopoly capitalism that used them [i.e., dictators like Hitler and Mussolini] in their desperate desire to save the [capitalist] system from its final and unavoidable collapse” (550).

The Left in the West has systematically refused to recognize the egalitarian and socialist aspects of National Socialism.

This idea is belied by the facts. Early on (1925–1933), two-thirds of Nazi Party members were workers, farmers, and professionals. By the mid-1930s, industrial workers — who earlier supported by huge margins the Social Democratic and Communist Parties — were drawn over to the National Socialists, primarily because of the Party’s program of full employment. By the mid-1930s, nearly half of the SS were people of working-class background. By contrast, the industrialists overwhelmingly favored the conservative and ultra-conservative parties — the German National People’s Party, the German People’s Party, and the Catholic Center.

The second version of the Hitler Myth — the one most embraced by the progressive liberal and non-communist Left — was that Hitler was a demonic, uniquely charismatic dictator “who took advantage of the German people’s sadomasochistic and authoritative nature — enabled in this by the Great Depression.” Znamenski cites as an example a recent BBC documentary written by Laurence Rees, The Dark Charisma of Adolf Hitler.

By the mid-1930s, nearly half of the SS were people of working-class background.

Znamenski doesn’t reply directly to this myth, so I will. I would suggest that it is in fact a pseudo-explanation. To say that Hitler was “charismatic” is merely to say that he was able to make his message resonate with many people. But the issues remain: what was the message? Why was it ultimately more appealing than the communist, mainstream socialist, progressive and conservative ideologies? Saying that Hitler (or Churchill, FDR, JFK, or Reagan) was charismatic is like saying that silent movie star Clara Bow was the “It” girl — the word names rather than explains an historical fact.

Yet, as Znamenski argues, the work of Götz Aly and others enables us to see that Hitler’s regime was indeed both nationalistic and socialistic:

Their goal was to empower all people of “Aryan stock” at the expense of non-Germans. Whereas Stalin cannibalized his own population, expropriating and phasing out segments of society on the basis of their social and class origin, Hitler rejected class warfare and acted as a “benign” dictator toward the German people. His bio-politics aspired to mold the members of the Aryan “tribe” into an all-inclusive “people’s community” (Volksgemeinschaft) by uplifting them not through attacks on “class” aliens but on ethnic and racial “others.” Hence the ideological emphasis of Hitler’s regime on the expropriation of resources belonging to non-Germans and the exploitation of their slave labor. (545).

He might have added the exploitation of their bodies — the hair, the gold teeth, and even the ashes of bones used as fertilizer. National Socialism was similar to the international variety: anti-bourgeois, aiming for a classless system, but dissimilar primarily in privileging one ethnic group at the expense of others.

Znamenski adds a number of important points, including the fact that Hitler espoused socialist views before he adopted virulent anti-Semitic ones. Underscoring Aly’s analysis of the regime’s purchase of popular support, Znamenski quotes Albert Speer, the regime’s preferred architect and minister of war production:

It remains one of the oddities of this war that Hitler demanded far less from his people than Churchill and Roosevelt did from their respective nations. The German leaders were not disposed to make sacrifices themselves or ask sacrifices of the people. They tried to keep the morale of the people in the best possible state by concessions. (546)

It is worth noting that the top income tax rate in Germany throughout the war was a mere 13.7%, compared to 23.7% in Great Britain, and a whopping 94% in the United States.

One last, provocative point that Znamenski makes is that as the Nazis gained power, their socialist opponents started aping the nationalist aspect of National Socialism. In Germany, a group of communists formed their own splinter party — National Bolshevism — which (among other things) espoused militarism and anti-Semitism. They had posters with both the red star and the swastika and their street fighters were called “beefsteak” (brown on the outside, red on the inside).

He might have added the exploitation of their bodies — the hair, the gold teeth, and even the ashes of bones used as fertilizer.

Even more interesting is the response of Stalin to Hitler, a man whom Stalin trusted and admired at some level, but also feared. During the ferocious war with Nazi Germany, a war costing the lives of upwards of 22 million Russians, Stalin started openly appealing to Russian patriotism (as opposed to class warfare) and even loosened restrictions on the Russian Orthodox Church. After the war, Stalin aped Hitler ever more closely, In January 1953, an aging Stalin had the state propaganda organ Pravda put out the story that a group of Kremlin doctors, almost all of them Jewish, had poisoned two of Stalin’s closest aides and taken part in a “vast plot conducted by Western imperialists and Zionists to kill the top Soviet political and military leadership.” This was the Doctors’ Plot, and Stalin intended to have a show trial to set up a national campaign to rid the Soviet Union of “cosmopolitan” and “Zionist” elements. In short, Stalin was going to go after Russia’s (then) 2 million Jews. They would be sent to Stalin’s own concentration camp system, under the pretext of protecting them. No doubt the Jews would have been sent to the industrial camps to be used as slaves to support the Soviet regime. Stalin’s own profound anti-Semitism was a partial motive for his actions, but one suspects that he figured out that he could help pay for his war against the West by stealing whatever Jewish assets were left, just as this strategy worked for the Nazis (at least for a while). Only Stalin’s death a few months later stopped this plan from being implemented.

As fine as Znamenski’s analysis is, however, it requires considerable qualification.

First, there was a salient difference between Nazism and socialism (as that was typically defined), concerning ownership of private property. Specifically, even “democratic” socialist regimes traditionally advocated the nationalization (the socialization or social ownership of) major industries. For instance, Britain after WWII nationalized the coal, electricity, railway, and healthcare industries. And the communists essentially tried to own all industries, virtually socializing all sources of production, even family farms.

In Germany, a group of communists formed their own splinter party — National Bolshevism — which espoused militarism and anti-Semitism.

However, the Nazis seemed ambivalent about socialist economics. While their early party platform advocated nationalization of major industries, when in power Hitler actually privatized a number of companies. These included four major banks; the German railway, then the second largest socialized company in the world; the largest German steel company; several shipbuilding companies; and the company that controlled all the metal production in Upper Silesia.

Hitler’s own description of his economic views is at least unclear, if not downright oxymoronic. He said at one point, “We are socialists; we are enemies of today’s capitalistic system.” However, he also held that socialism of the Nazi sort “has nothing to do with Marxian socialism . . . Marxism is anti-property; true socialism is not.” And he said in private, “I absolutely insist on protecting private property . . . we must encourage private initiative.” Again, Hitler said, “Socialism! That is an unfortunate word altogether . . . What does socialism really mean? If people have something to eat and their pleasures, then they have their socialism.” He also said, “The basic feature of our economic theory is that we have no theory at all.”

One revealing thing that Hitler (after achieving power) said in this regard was, “There is no license anymore, no private sphere where the individual belongs to himself. That is socialism, not such trivial matters as the possibility of privately owning the means of production. Such things mean nothing if I subject people to a kind of discipline they can’t escape . . . what need have we to socialize banks and factories? We socialize human beings.”

Stalin figured out that he could help pay for his war against the West by stealing whatever Jewish assets were left, just as this strategy worked for the Nazis (at least for a while)

This has puzzled some commentators, so much that some say the Nazi regime didn’t really have an economic ideology. But it did, of course: it had its own form of corporatism (or “corporativism”). Corporatism permits private businesses but organizes them by industrial sector and tightly controls them (as well as the workers) so that economic production satisfies the state’s needs and purposes. From the corporatist perspective, what was needed was not the elimination of private enterprise but its total control by the State for the good of the people generally.

So under corporatism the State is the chief institution. No wonder the Italian fascists summarized this view as: “Everything for the state; nothing outside the state; nothing against the state.” It is worth noting that this vision (of the various institutions in society not competing and clashing, but of cooperating — under the direction of the state) is a vison shared by more than fascists and National Socialists: it is attractive to many Catholic social philosophers (who have advocated a “Catholic corporatism”), many American soi-disant progressives, and the present-day leadership of both China and Russia.

Under corporatism, people are allowed to keep their private property, including their businesses, even large ones, but only if these are controlled by and run for the benefit of the state. Neosocialism, of which fascism and National Socialism were varieties, can be defined as the state pursuit of socialist social goals (such as equality and “fraternity”) through a corporatist rather than a socialist economy.That is, a neosocialist state will pursue wealth equality, say, or fraternity (e.g., Volksgemeinschaft), not by nationalizing industries sector by sector but by controlling and coordinating the private companies to further these goals, including taxing businesses and redistributing the wealth.

From the corporatist perspective, what was needed was not the elimination of private enterprise but its total control by the State for the good of the people generally.

The concept of Volksgemeinschaft informed the National Socialist form of corporatism. The state would not directly own, but would certainly direct all major industries, and control and coordinate labor, industry, farming, the educational system, and the media for the benefit of the Volk, through its embodiment as the state, which was in turn embodied in the Führer.

The Nazi regime pursued classical corporatist economic policies, including central planning, massive controls, autarkic and one-sided trade policies, and massive spending programs. The regime replaced the trade unions with a unified German Labor Front, under regime control, which banned strikes, lockouts, and summary terminations. The regime replaced all the chambers of commerce with a unified Chamber of Economics, which then was folded into the Labor Front. The combined Labor Front and Chamber of Economics was run by a board of trustees, all appointed by the regime. Small businesses were monitored by shop councils and Courts of Honor that cooperated with small business owners to set working standards and wages — under the supervision of the regime.

The first economic program the regime formulated was a massive infrastructure program, which led to a 300% increase in the number of construction workers. The regime controlled the number of car models made, and (when war broke out) restricted their use. The regime of course rapidly increased military spending, which hit 10% of GDP in 1936, vastly more than that of any other European nation. And while there were regime members who favored free market policies, the faction that favored autarkic policies and a military economy won out — Hitler envisioning a struggle to the death between National Socialism and “Judeo-Bolshevism.” Germany’s trade policy was reconfigured to favor trade with southern and southeastern Europe, aiming to make southern Europe and the Balkans dependent upon the regime, supplying it with raw materials in exchange for German manufactured goods. The regime fostered the creation of monopolies and oligopolies, the better to control them. Naturally, the degree of state control over the economy only increased with the outbreak and then escalation of the war.

The state would not directly own, but would certainly direct all major industries for the benefit of the Volk, through its embodiment as the state.

The clear Nazi aim was to provide a high standard of living for citizens of the country — an aim that was never urgent for Stalin. But consider another major difference between Stalin and Hitler. Lenin had achieved power by armed revolt and Stalin by systematically eliminating his rivals in the party dictatorship. At no point did Lenin, Stalin, or any of the Bolsheviks ever have to face genuine elections with actual opposition parties, parties with competing ideologies, as the Nazis originally did. This may be part of the reason why Stalin could (in Znamenski’s nice phrase) “cannibalize” his own population, selecting various groups on the basis of alleged class affiliation for use in the Soviet’s own vast concentration camp system. However, the Nazis retained to the end the sense that they needed to keep their base — German workers, farmers, small businesses, bureaucrats, big businesses, the military command — at least materially provided for until the end. And as I explain below, there was a deeper motive for the National Socialist transfer of wealth to German citizens.

In the end, the regime collapsed, because as the conquests were halted and then rolled back — and the number of Jews (and others) whose assets and labor it could completely seize diminished — it ran out of money, men, and machines to continue fighting.

The regime fostered the creation of monopolies and oligopolies, the better to control them.

In fine, the Nazi regime was truly socialist. And it died as all socialist schemes must, for precisely the reason Baroness Thatcher identified so clearly: it ran out of other people’s assets to steal.

Nazi Anti-Semitism: Was it Unique?

In the last section I focused on the socialist aspect of National Socialism. Let us turn now to the nationalistic side.

It is a question often asked: How could the Germans — arguably the most culturally advanced people in the world at the time — descend into the barbarism of totalitarianism and genocide? I suggest that a great part of the answer lies precisely in that advanced culture.

Let me start by talking about an influential German sociologist who helped shape National Socialist ideology: Ferdinand Tonnies (1855–1936), a star in the German academic world. Tonnies distinguished between Gemeinschaft (roughly “organic community”) and Gesellschaft (roughly, “associational society”). Gemeinschaft is the sort of emotionally tight community that (allegedly) characterizes the family and long-standing ethnically homogeneous neighborhoods. In such communities, Tonnies held, individuals have mutually recognized roles to play in set relationships defined by Wesenwille (“natural will”), which consists of naturally occurring emotions. People behave towards one another in accordance with traditional social rules developed by a shared organic history.

In the end, the regime died as all socialist schemes must, for precisely the reason Margaret Thatcher identified so clearly: it ran out of other people’s assets to steal.

In contrast, Tonnies said, Gesellschaft is the sort of loosely structured and diverse organizations such as governmental bureaucracies and large industrial companies. Such organizations are characterized by Kurwille (“rational will”), relationships based solely on rational self-interest. The growth of Gesellschaft (during the industrial revolution) undermined the ties of family and neighborhood, resulting in an impersonal society and widespread alienation, the feeling of being separated from one’s work and society generally. This is a line of thought that traces back to Marx at least.

Now, Tonnies held that all societies contain both sorts of organizations, though a given society may have a dominance of either Gemeinschaft or Gesellschaft. His view was not that societies should aim at one or the other type of association, but rather (in the words of the New World Encyclopedia), “More important for the developed of a successful society is the effort to harmonize the two aspects, and thus to ensure that both individual goals and the needs of the society as a whole are satisfied, while maintaining the element of care and concern for each person as members of one human family.”

In much sociological literature, then as now, so-called observational science is mixed with ethical value judgments. The fact-value distinction — or in Humean terms, the is-ought distinction — is routinely disregarded by sociologists in particular, and social scientists in general.[1] Whatever Tonnies meant about balancing the two types of association, by his very description, Gemeinschaft is more appealing, especially to people of a romantic bent. Isn’t familial concern a better basis for society than cold, selfish calculation? So, while Tonnies opposed the Nazis, leading them to strip him of his emeritus position in 1933, the National Socialists seized on his concept of Gemeinschaft and made it the center of their worldview. More precisely, the Party’s sociological ideology was centered on turning Germany into a Volksgemeinschaft — in this case, an extended Aryan clan.

German socialism is informed by the national spirit, the antithesis of the German spirit is the Jewish spirit, and the main goal of the German people and National Socialism is to eliminate that Jewish spirit.

We can now turn to Werner Sombart. Znamenski mentions the key influence that Sombart (1863–1941) played in the development of national socialist ideology but doesn’t spell out this influence. Sombart started as a Marxist, but moved away from Marxism to develop his own rightist critique of (modern) capitalism. He laid his views out in his magnum opus, The Modern Capitalism: Historical and Systematic Presentation of the Overall European Economic Life from its Beginnings to the Present Day[2] — first published in two volumes in 1902, then expanded in 1916, and growing to three volumes by 1927 — as well as The Jews and Modern Capitalism — published in 1911.

Sombart held that capitalism developed in three stages: early capitalism (prior to the industrial revolution); high capitalism (beginning in 1760 or so); and late capitalism (beginning with World War I). In Sombart’s analysis, early capitalism — medieval commerce — was a stable, coherent, supportive system, in which guilds and merchants cooperated, with wages held constant at a “just” level, markets shared equitably by the players, profits and wages guaranteed but held to reasonable levels, and markets with production levels limited and protected from competition with those in other places. But, he argued, because Jewish traders and manufacturers were excluded from the guilds, the Jews developed a hatred for the system, deliberately destroyed it and replaced it by modern predatory capitalism, with its unlimited competition.

In a book he wrote at the outset of WWI, Sombart advocated the theory that the war was the unavoidable clash “between the English commercial civilization and the heroic culture of Germany.” The English, under the influence of their commercial mindset, with its utilitarian emphasis on the happiness of individual people, had lost their warlike instincts. He held that the highest ideal was the “German idea of the State. . . . The State is neither founded nor formed by individuals, nor is its purpose to serve any interests of individuals. It is a Volksgemeinschaft in which the individual has no rights but only duties.”

Considering that this is precisely how Hitler consummated his power after gaining office, Schmitt’s work is prophetic, to say the least.

By 1917 Sombart was a full professor at one of the top universities in Germany, and was more renowned as a sociologist than even his longtime friend Max Weber. By the early 1930s, he had moved into the National Socialism orbit.[3] In a 1934 book called German Socialism, he claimed that German socialism puts the “welfare of the whole over the welfare of the individual.” This new socialism requires “a planned economy in accordance with state regulations.” Moreover, German socialism is informed by the Volkgeist (national spirit), the antithesis of the German spirit is the Jewish spirit, and the main goal of the German people and National Socialism is to eliminate that Jewish spirit.

Besides Sombart, there were a number of other academic or intellectual stars whose views informed the development of the National Socialist ideology in the 1920s. These thinkers, whom Jeffrey Herf has called “reactionary modernists,” tried to combine progressive feelings toward modern technology with regressive feelings toward modern democratic government and free market economics. They included sociologist Hans Freyer (1887–1969), philosopher Martin Heidegger (1889–1976), writer Ernst Jünger (1895–1998), legal scholar Carl Schmitt (1888–1985), and historian Oswald Spengler (1880–1936). While these thinkers differed in their receptivity to the National Socialist party — most joining the party enthusiastically, but one of them (Spengler) being critical of it — they were all “nationalists who turned the romantic anti-capitalism of the German Right away from backward-looking pastoralism, pointing instead to the outlines of a beautifully new order replacing the formless chaos due to capitalism in a united, technologically advanced nation” (264).

How enthusiastic Sombart and Heidegger were about technological advance is open to dispute, but that these thinkers contributed ideas that informed National Socialism is not. Freyer held that the highest stage of society is the state in which individuals merge into a collective unity. Jünger wrote that the Jews had to be either completely assimilated or forced to immigrate to Palestine. Spengler argued for a Prussian Socialism, meaning a German nationalistic non-Marxist socialism.

This is, of course, a standard fascist trope — suggesting there is such a thing as “the Will of the People” in a collective sense.

Especially useful to the National Socialists in developing their views about government and law was the work of Carl Schmitt. During the 1920s, he wrote a string of influential essays and books with ideas that the National Socialists found useful. For example, in 1921, he published the essay On Dictatorship, in which he argued that one of the most effective components of the new (Weimar) constitution was the power given to the president to declare a state of emergency, which he characterizes as dictatorial. Considering that this is precisely how Hitler consummated his power after gaining office, Schmitt’s work is prophetic, to say the least. And Schmitt urged that dictatorship means simply power achieved by other than the slow means permitted by republican democracy.

Just a year later (1922), Schmitt published another controversial essay — Political Theology — in which he advanced the thesis that political theory investigates the state in precisely the way theology investigates God. In 1923 — a decade before he joined the Nazi Party — he published a critique of the legitimacy of parliamentary government entitled The Crisis of Parliamentary Democracy. In this work he attacked the practices of representative liberal politics in ways that ironically anticipate by a half-century Public Choice Theory, arguing that actual party politics are far from the ideal of dispassionate rational actors debating policy prescriptions with the goal of reaching the best answer for society, but are instead the trading of favors in back rooms. He also questioned the idea that a majority vote represents the will of the people. As an author of the excellent Stanford Encyclopedia of Philosophy entry on Schmitt puts it:

If a majority can overrule a minority, and identify its will with the will of the people, why should it not be possible for the will of a minority to express the will of the people? What if a group of democratic rebels want to establish a democracy in a society where most people are opposed to the principle of democracy? Would they not be justified, from a democratic point of view, to abandon majority rule, to identify their own will as the will of the people, and to subject their compatriots to a re-education dictatorship? Schmitt suggests that such a dictatorship would still have to be considered democratic, since it still appeals to the idea that political rule ought to be base or the will of the people.

This is, of course, a standard fascist trope — suggesting there is such a thing as “the Will of the People” in a collective sense. His was a sophisticated defense and explication of the fascist notion that the dictator can better represent the Will of the People than even — the majority of the people!

The last major work that Schmitt brought out during the period during which the National Socialists were solidifying their general ideology and electoral platforms (the early- to mid-1920s) was The Concept of the Political (1927; with views elaborated in Constitutional Theory, 1928). In this work, he advances the theory that “the political” is what is central to politics, not mere party politics. The political, he held, is always and everywhere constituted by the existential delineation of friend from enemy. Not even friend from other, please note, but friend from enemy. The enemy can be anybody felt by the dominant political group to be different and alien “in an especially intense way.” And the difference that sets the enemy apart need not be nationality — it can be any difference (racial, religious, or ideological) so long as it is felt deeply enough to become a violent struggle with the other.[4]

The notion that the state’s political unity necessarily requires the delineation of an enemy that threatens the people’s interests and wellbeing is tailor-made as a justification for the singularly virulent National Socialist anti-Semitism.

Looking at the work of Tonnies and Sombart in relation to the development of National Socialist ideology, I think we are in a position at least partially to answer the question raised by the work of Goldhagen: whether the reason for Hitler’s support was that the German culture had a uniquely virulent form of anti-Semitism — eliminationist anti-Semitism — that accounted for the German public support of the Holocaust.

The notion that the state’s political unity necessarily requires the delineation of an enemy is tailor-made for National Socialist anti-Semitism.

The idea that there is a unique form of anti-Semitism indigenous in German culture seems dubious on its face. The standard form of anti-Semitism is one common in Europe, but also in North and South America, and the Middle East. It is what I call lumpen anti-Semitism — the anti-Semitism of the average, not particularly well-educated Christian. Among many Christians, it takes the form of hating Jews, allegedly because they “killed Christ,” but also generally from “prophet rejection resentment,” the idea that Jews are people who reject the view of Jesus as Messiah, and even more as the son of God. Lumpen anti-Semitism is quite common among Muslims as well, because Jews also reject Muhammad as a prophet. Pogroms aimed at Jews were recurrent in European history. Note, however, that lumpen anti-Semitism is not eliminationist: throughout European history, typically, if any Jews converted to Christianity (or Islam), no further attacks were made on them.

But the Nazi Party’s ideological anti-Semitism was never based on the idea of prophet rejection, or on any aspect of Christian theology, for the simple reason that the Party never allied itself with any Christian religion, in the way some other German right-wing parties had.[5] No, the Nazi Party’s anti-Semitism was what we can call doctrinaire anti-Semitism. It was informed by the rightist anti-capitalism of the German academic right-wing critics of modern capitalism, which held that Jews represent modern capitalism, that they are solely interested in profit and market share, not Volksgemeinschaft, that they want unrestrained free markets and widespread free trade, rather than structured and controlled nationally autarchic markets. This was the justification for the singular twist of Nationalist Socialist anti-Semitism.

What was unique to Germany was the presence in the late 1800s and early 1900s of a group of major academic thinkers — truly academic superstars — whose writings were not widely influential outside the German world but profoundly informed the National Socialist ideology. It was a more “sophisticated” anti-Semitism based on a hatred of modern capitalism rather than a love of ancient religion. It tapped into a pre-existing strain of German romantic pastoralism. And it was given a racial basis by the Nazis. This is what was deliberately spread by the Nazi propaganda regime, certainly exploiting pre-existing lumpen anti-Semitism but twisting it into the doctrinaire anti-Semitism.

The idea that there is a unique form of anti-Semitism indigenous in German culture seems dubious on its face.

If you want to see the Tonnies-Sombart strain of socioeconomic theory in Nazi ideology, there is no better place to look than one of the five major anti-Semitic propaganda movies the regime produced during the period 1939 to 1940, Linen from Ireland (Linen aus Irland, 1939). I have discussed this film extensively elsewhere, so I will be brief here. Suffice it to say that the plot concerns humble German village artisans and a local company owned by a man who, although he is wealthy, has total respect for them. The artisans make linen, and the local company buys it. Together the local tradesman and the company form a cozy economic Volksgemeinschaft — the artisans earn a decent living, taking pride in the craft that they and their ancestors have practiced time out of mind, the company owner gets rich, but not “obscenely” so, and looks out for the artisans in a patriarchal sort of way. The owner and the artisans are able to get the prices needed for them all to live well because the government imposes steep tariffs on linen imported from Ireland — where apparently it can be produced much more cheaply.

Into this German spirit heaven — heaven for the workers and owners, but apparently not for the consumers who are forced to pay higher prices! — steps a devil right out of Jewish spirit hell. A big company owned by a good Aryan but controlled by a scheming Jewish manager buys out the local linen companies so that they will not oppose a scheme to end tariffs on imported linen. The manager’s scheme calls for importing cheap linen from Ireland and then shutting down the domestic industry. The Jewish manager is portrayed as quite willing to do this and thereby (the film alleges) destroy the centuries-old community and starve thousands of people, because (as he brags) he is a man of the world, not rooted in any community. Only at the end is his scheme exposed and halted.

The Conviction of Ideologues

In this essay have tried to explore a number of points, some specific to National Socialism, and some more general. I explored the general compliance mechanisms of power, purchase, and persuasion. I argue that these tools are not mutually exclusive; any regime will use all three to get citizens to comply with its goals. Clearly, the National Socialists did so. In an earlier essay I argued that they had a propaganda machine second to none, which I illustrated by showing the amount of work the regime devoted to just one tiny medium of propaganda — uniforms and insignia.[6] In this piece I covered in detail how the regime carefully used racially redistributionist economic policy to give German citizens material prosperity, thus purchasing popular support. (In a subsequent essay, I will explore the regime’s use of power to enforce support).

Into this German spirit heaven steps a devil right out of Jewish spirit hell.

This brings us to another subject that I examined: the degree to which the National Socialists were socialists. Here, the answer is probably surprising to most Americans, but as Aly’s work brilliantly establishes, the National Socialists were indeed profoundly socialistic; that is, they pursued the practice common to all socialist regimes of targeting a subset of the population and then confiscating its assets, but they pushed the practice farther than most socialist regimes do. Rather than take, say, 75% of a targeted person’s income (as the present socialist prime minister of France has tried to do), the National Socialists tried to take, and often succeeded in taking, 100% of the targets’ assets, right down to their labor, personal belongings, and ultimately their bodies — hair, teeth and bones. This worked for a short while — only about a dozen years, which is just a blink of the eye in historical terms — in delivering material wealth to the nontargeted “Aryan” Germans. The National Socialists engaged in a radical redistributionist frenzy, but it worked only for a brief period.

The third subject I explored was the nationalist side of National Socialism. I suggested that what was unique about National Socialism was its explicit identification of Jews as the main enemy, and its focus on proper “Aryan” Germans of all economic classes. It wanted a fascist dictatorship of the Aryans, rather than the Marxist dictatorship of the proletariat. This identification with the German nation, presented as a desire for a Volksgemeinschaft, was a crucial feature of Nazi ideology, crafted to win popular support, especially the support of workers and farmers, away from other socialist and communist parties. The strategy worked so well that the communists started emulating the Nazis’ nationalism. Patriotism is a much more powerful identity than class.

The fourth matter I examined was the unique nature of National Socialist anti-Semitism. It transformed the traditional religious lumpen anti-Semitism, based on prophet rejection, into a pseudo-scientific doctrinaire anti-Semitism based on race-genetic theory, Social Darwinist eugenics theory, and right-wing anticapitalist sociological theory promulgated by major German academics. So the National Socialists didn’t just engage in a radical redistributionist frenzy; they engaged in a radical racial redistributionist frenzy.

The National Socialists were indeed profoundly socialistic; they pursued the socialist practice of targeting a subset of the population and then confiscating its assets, but they pushed the practice farther than most socialist regimes do.

How does this understanding of National Socialist ideology help us come at the Goldhagen-Groth dispute? Both authors were right about some things and wrong about others. Goldhagen (and Gellately) are right in thinking that the German people broadly backed the regime, and that anti-Semitism was historically common in German culture. But Groth is right in thinking that native German anti-Semitism was no different from that kind that is present in virtually all Christian and Muslim countries (then and now), not some special “eliminationist” anti-Semitism. More importantly, Groth is right in thinking that the regime’s popular support didn’t rest upon the German people’s anti-Semitism.

He is wrong, however, in his failure to recognize that National Socialist ideology certainly did have a different and more dangerous anti-Semitism than the lumpen variety. The regime’s anti-Semitism was based on racial genetics and anti-capitalist sociological culture. More importantly, Groth is wrong in thinking that the regime did not enjoy broad support throughout its existence. It did have that support, not because the whole populace shared its ideological anti-Semitism, but because the regime delivered substantial material wealth and other seeming geopolitical successes (at least until 1943). To reiterate a rejoinder I earlier made to Groth, this hardly validates Hitler. Yes, he gave his political base material wealth and national pride, but it was wealth stolen from viciously victimized people, especially the Jews, and it was national pride based on the brutal seizure of other countries’ lands.

Let me end by discussing briefly the issue of the role that ideology played in the “Final Solution.” I’ll repeat an observation made by Stephen Kotkin, who is arguably the greatest authority on Stalin and the Soviet Union. He makes the point that contemporary scholars now have access to archives recording what Stalin and other high-level officials said in private to one another. What scholars have discovered, Kotkin notes sarcastically, is that the communists really were — communist! In other words, the Party officials were true believers in Marxist-Leninist ideology at the highest level.

The Nazi regimed enjoyed broad support, not because the whole populace shared its ideological anti-Semitism, but because until 1943 it delivered substantial material wealth and other seeming geopolitical successes.

I would suggest that anyone interested in National Socialism take the same perspective. The Nazi leadership were true believers. Hitler, Himmler, Goebbels et al. really accepted National Socialist ideology, including especially its doctrinaire anti-Semitism, as fully true. They didn’t cynically target Jews and just call them racially and culturally inferior and dangerous; no, they targeted Jews because they viewed them precisely as such.

Now, was the National Socialism “eliminationist”? It certainly seems to be an open question, in that while the Party’s hostility towards the Jews was made manifest from the start, with a sequence of targeting actions. Yet in reality no attempts to exterminate the Jews in Germany or elsewhere took place before 1941. What was going on?

My suggestion — or better, my speculation — is that we need to differentiate between inherent and operational eliminationism. From 1933, when Hitler achieved power, to 1939 when he invaded Poland and the English declared war upon him, he was content to rack up geopolitical gains and simply harass Jews into emigrating (after seizing most of their tangible assets). The arch-ideologue Eichmann himself kept pushing his “Madagascar Plan” (under which all European Jews were to be dispossessed of assets and then shipped to Madagascar to live) until 1939 or later.

The Nazi leadership were true believers. Hitler, Himmler, Goebbels et al. really accepted National Socialist ideology, including especially its doctrinaire anti-Semitism, as fully true.

This was consistent with what I will call inherent eliminationism. If your anti-Semitism holds that Jews are racially inferior but also culturally dangerous to true Aryans, and you hold that true Aryans will eventually conquer the world, this would seem to imply that eventually, Jewish people must be eliminated. But that is like saying, “Someday, the Messiah will come.” It is more a statement of faith in the future than an imperative for the present.

But in 1939, things began to rapidly change. After earlier geopolitical successes with no military opposition, Hitler’s invasion of Poland finally brought Britain and France into the war. He had earlier threatened to hold Jews at fault if war ever broke out. In 1939, he had his excuse.

I suspect that the planning for the war with Britain and France in late 1938 was a big part of the reason the regime started the production of its first two explicitly anti-Semitic feature films, Robert and Bertram and Linen from Ireland, both produced in 1938 and released the next year (the first just two months before and the second one month after the outbreak of the war). Preparing for the actual use of the Wehrmacht (and recognizing the massive increase in funding this would require) led the regime to start actively preparing the public for the wholesale dispossession of the Jews.

In 1939, planning started in earnest toward the Wehrmacht’s much bigger challenge of invading the Low Countries and France, which again would increase the need for seized assets. Moreover, both Hitler and Goebbels were disappointed with the strength of the anti-Semitic messages of the 1939 films. So the three major regime studios were ordered to start production on major production anti-Semitic propaganda films. These films (The Rothschilds, Jud Suss, and The Eternal Jew) were released in 1940.

The socialistic solution to the nationalistic military program was to target Jews for complete dispossession, followed by the looting of captive peoples generally.

The war clearly went in Germany’s favor from 1939 until 1941. The regime rapidly conquered the Western half of Poland, the Nordic countries, and France with relative ease. It was only with the defeat of the Luftwaffe in the skies over Britain in 1941 (which ended the possibility of invading Britain) that the regime began to sense its vulnerability, and it was in 1941 that the decision was made to exterminate (rather that force the emigration of) the Jews.

So it was a real change in geopolitical realities that induced the National Socialists to move from merely implicit to actually explicit eliminationist anti-Semitism, and then to the implementation of the Final Solution. The socialistic solution to the nationalistic military program was to target Jews for complete dispossession, followed by the looting of captive peoples generally. This allowed the regime to purchase the support of the average (non-Jewish) German with stolen food, clothing, furniture, and homes.

In the first article in this series, “Total Regime, Total Propaganda,” I suggested that one crucial mechanism exploited by compliance agents, especially in totalitarian regimes, is propaganda — persuasion, if you will — and that the National Socialists were adept at that tool. In this article, I’ve put the focus on the mechanism of purchase — that is, gaining compliance by trading items of value; and I’ve reported Götz Aly’s evidence of how attentive the regime was to buying the citizen’s support. Aly nicely points out that the two methods of compliance — persuasion and purchase — were mutually supportive. Dispossessing, deporting, and destroying the Jews was made easier by the relentless and remorseless campaign of propaganda against them.

In the third and final installment of the series, I will turn to the role that power played in the regime’s attainment of popular compliance with its agenda. It is ironic — as Daniel Goldhagen and Götz Aly, despite their differences, agree: the regime’s power apparatus was modest, compared to its reputation. I will examine this idea more closely.


Aly, Götz. Hitler’s Beneficiaries: Plunder, Racial War, and the Nazi Welfare State. New York: Henry Holt and Company (2005).
Backhaus, Jürgen. “Sombart’s Modern Capitalism,” in Kyklos 42 (Fasc. 4) pp. 599–611, (1989).
Groth, Alexander. “Demonizing the Germans: Goldhagen and Gellately on Nazism,” in Political Society Review Vol. 32, No.1, pp. 118-158 (2003).
Grundmann, Reiner and Stehr, Nico. “Why Is Werner Sombart Not Part of the Core of Classical Sociology? From Fame to (Near) Oblivion,” in Journal of Classical Sociology Vol. 1 (2), pp. 257–287 (2001).
Jason, Gary. “Ein Volk, Ein Fuhrer: A Review of Triumph of the Will,” in Liberty, April 2007, p. 44.
Jason, Gary. “Film and Propaganda: What Nazi Cinema Has to Tell US,” in Reason Papers 35 (1): 203-219 (2013).
Jason, Gary. “Total Regime, Total Propaganda,” in Liberty, July 3, 2016 (2016a).
Jason, Gary. “Whence did German Propaganda Films Derive Their Power?” in Reason Papers 38 (1): 166-181 (2016b).
Jason, Gary. “Selling Genocide I: The Earlier Films,” in Reason Papers 38 (1): pp. 127-157 (2016c).
Kotkin, Stephen. Interview on Uncommon Knowledge, October 6, 2015.
Ridley, Matt. Interview with Russ Roberts, Econtalk, 2010.
Stanford Encyclopedia of Philosophy. “Carl Schmitt” (2014).
Znamenski, Andrei A. “From ‘National Socialists’ to ‘Nazi’: History, Politics, and the English Language,” The Independent Review Vol. 19, No. 4 pp. 537–561 (2015).

[1] Werner Sombart in particular couldn’t resist making value judgments — especially about Jews — though he feigned being purely scientific in his writings (Grundmann and Stehr, 270).

[2] For a nice overview of the structure of Sombart’s Modern Capitalism, see Jürgen Backhaus.

[3] Reiner Grundmann and Nico Stehr note that Sombart was initially enthusiastic about National Socialism, and say that he — like other reactionary modernists such as Heidegger and Schmitt — only soured on the regime when they realized it didn’t want them for high positions or for policy advice (271). They don’t explain why the regime didn’t welcome these intellectuals, but I would suggest it was primarily because Hitler was profoundly anti-intellectual, neither comfortable around nor deferential towards intellectuals.

[4] Tom G. Palmer in a recent lecture made the point that Carl Schmitt’s perspective is very much alive in Putin’s Russia.

[5] Indeed, there was a fascination with arch-anti-Christian Nietzsche among many of the Nazi hierarchy — including, of course, Hitler himself.

[6] I have written more extensively of the Nazi propaganda machine. Some of my essays of interest might include “Film and Propaganda: The Lessons of the German Film Industry”; “Whence Did German Propaganda Films Derive Their Power?”; and “Selling Genocide: The Earlier Films.”

Editor's Note: This essay is the final part of a three-part series.

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Buying Genocide, Part 2


In the first installment of this series, I discussed two major explanations for the extensive support the Nazis received from virtually the entire German population. One is the view that the majority of ordinary Germans supported the genocide of the Jews because of the historically peculiar breadth and depth of their pre-existing cultural anti-Semitism — it was a virulent “eliminationist” strain (to use Goldhagen’s term) expressing a desire to eliminate Jews from the world. The other view (elaborated forcefully by Groth and others) is that a better explanation lies in the formidable police state that oppressed the German people, as well as the cradle-to-grave propaganda machine that worked on German opinion ceaselessly.

Only a couple of years after Groth’s article, an eminent German historian published a fine book that explored a new theory for German support for the Nazi regime. This book — Aly’s Hitler’s Beneficiaries: Plunder, Racial War, and the Nazi Welfare State — “set the cat among the pigeons,” as Tom Palmerhas put it. Really, I would suggest to Palmer that the book set a lynx among the pigeons.

The systematic plunder of others (especially Jews) and the flow of this plunder into households of average Germans was precisely what made the populace generally compliant and content.

In his preface, Aly recounts that one of the inspirations for his book was Stuart Eizenstat’s efforts to recover damages from the German and Swiss governments for Jews who had their bank accounts and other assets stolen by the Nazis. His only worry about such efforts is that they reinforce a false narrative — that only German industrialists, financiers, and other elites of the German bourgeoisie were responsible for the Holocaust. This wrongly shifts the blame from the German people generally to a relatively few “bad actors.”

On the contrary, Aly’s research has discovered that the systematic plunder of others (especially of course the Jews) and the flow of this plunder into households of average Germans was precisely what made the populace generally compliant and content. The Nazis bought the support of the people. Aly strikes a personal note by saying that when he asked relatives who lived through the regime, they cheerfully admitted that they were well-provisioned with clothes, food, jewelry, shoes, and other goods by family members serving in the German military abroad, and that the antique furniture he had inherited was undoubtedly pelf purloined from Dutch Jews. Aly holds that “Hitler was able to maintain general morale by transforming Germany’s military offenses into an increasingly coordinated series of destructive raids aimed at plundering other peoples” (4). Here he quotes Göring’s cynical words, “If someone has to go hungry, let it be someone other than a German.”

More broadly, Aly adds, his work is aimed at helping to explain why the Germans so often tolerated “unprecedented crimes against humanity.” He is admirably accepting of a multicausal (or compound causal) approach. He rightly observes that the powerful racist and anti-Semitic ideology of the regime. But ideology is only a partial explanation, in the sense that traditional German anti-Semitism was no more virulent, nor German nationalism more intense, than those that other nations experienced antecedently — or contemporaneously. And while the regime relied on a powerful propaganda machine to promulgate its general ideology and specific policies, that is only a partial cause of the people’s tacit or overt support. Aly notes (5–6) that even in the medieval pogroms, religious hatred was conjoined with overt plunder, and gives several historical examples. He sums up this point by saying, “While anti-Semitism was a necessary precondition for the Nazi attack on European Jews, it was not a sufficient one. The material interests of millions of individuals first had to be brought together with anti-Semitic ideology before the great crime we now know as the Holocaust could take on its genocidal momentum” (6).

Survivors cheerfully admitted that they were well-provisioned with clothes, food, jewelry, shoes, and other goods by family members serving in the German military abroad.

But this raises the larger question: how could the “obviously deceitful, megalomaniacal, and criminal” Nazi ideology win over the majority of Germans? Here Aly lays out his plan of attack. Part I of his bookexplores the notion that the first reason Nazi ideology had broad appeal was that while it targeted Jews (and some other groups, such as the disabled and the Roma), it was broadly inclusive, redistributing much wealth to underprivileged Aryans. Part II explores an anomaly: while the Nazis waged an unprecedentedly costly war, they managed to arrange it so that their own soldiers and citizens were well fed. Aly examines the financial tricks the regime used to transfer the wealth of the conquered countries to its own armed forces and citizenry. Part III explores the systematic and historically unparalleled plundering of the Jews. Finally, Part IV explores how internal policies (leveling wealth) and external policies (looting the Jews and conquered people) worked to cement widespread popular support, which lasted to the end of its reign.

Aly’s analysis focuses on the socialistic (i.e., redistributionist) aspects of the regime’s policies, because the common explanations — involving a demonic but charismatic Führer, or some conspiratorial clique of racist ideologues, ultra-wealthy elites, high-ranking military, or major industrialists who seduced the German public — are all unsatisfactory. Such explanations shift blame away from the vast number of Germans who supported the regime. And these “explanations” — really, just excuses — cannot account for that popular support, which manifested itself as lack of widespread opposition to the regime and a refusal to accept blame for it after its demise.

Part I begins with an exploration of the National Socialist ideal state. The ideology was hypernationalistic in that it held that nations (in the broad sense of “peoples,” or extended ethnic groups) were unequal — the German people alone being superior. But the socialist side of the ideology was important as well — all “Aryan” Germans are equal, regardless of economic class. As I suggested in an essay on The Triumph of the Will, one of the earliest and most successful of the regime’s propaganda movies explicitly pushed the theme of German unity across class. The dream of a Volksstaat was one of a “socially just state” in Hitler’s phraseology, or what Aly rightly calls a “welfare state for Germans of the proper racial pedigree” (13).

Prior “explanations” of Nazism cannot account for its popular support, which manifested itself as lack of widespread opposition to the regime and a refusal to accept blame for it after its demise.

When Hitler achieved power in 1933, he was only 43, and most of the other high-level party members were in their late 20s or early 30s; even to the end of the war, the rank and file of the Party viewed it as an extension of the youth movement. Young people rallied to support the regime — for example, university coeds would volunteer to spend their summers staffing daycare centers in Poland so that the German “settlers” could harvest crops. As Aly notes, people in their 20s often desire independence and challenging work, but also the chance to change the world, and the regime seemed to offer that.

Adding to the National Socialist appeal was a conspicuous imitation of leftist sentiments — remember, the Nazis fought the international socialist parties for the support of the German working and agricultural classes. Not surprisingly, the Nazis borrowed some of their opponents’ ideologies. The converse was also true — leftist parties started to borrow Nazi tropes.

Aly adds a point I find fascinating but paradoxical: the regime got its greatest support when it pushed seemingly contradictory policies, such as preserving tradition while embracing technological advance, or indulging the anti-authoritarian desire to topple the old elites with a desire for an authoritarian, rigid new order, or — most contradictory of all — harmonizing the social classes with committing racial genocide.

Another matter Aly explores is the large degree to which the German bureaucracy — especially civil servants in the Ministry of Economics — was transformed and used by the regime for its own purposes. For example, Göring demanded that German Jews pay an “atonement payment” of a billion reichsmarks in 1938 (about $14.5 billion in today’s money — quite a fine for the 214,000 Jews remaining in Germany at the time). The Finance Ministry immediately instituted a 20% tax on all personal assets of Jews, paid in four installments. The Ministry collected much more than Göring’s original goal.

Young people rallied to support the regime — for example, university coeds would volunteer to spend their summers staffing daycare centers in Poland so that the German “settlers” could harvest crops.

Aly argues that the willingness of the populace and the bureaucracy to support the Nazi regime resulted from the fact that the regime gave people much of what they wanted. It delivered many needed reforms (such as reforms on debt collection), as well as consumer goods (such as cars and vacations) and a number of popular policies (from increasing pension plans to environmental conservation). The regime took care to favor families in tax policy and redistribute wealth to poorer workers and farmers. It especially rewarded the families of military personnel, using such means as freezing their rents.

Aly reports, surprisingly, that the regime did not compel public employees to show absolute devotion to the Party. “Instead, it called for closeness to the common man — an anti-elitist stance that held considerable appeal for twentieth-century European intellectuals” (24).

But all of these popular programs needed funding. In 1935, the Nazis’ finance minister held a meeting in which he asked his staff to devise ways to change the tax system so as to extract maximum resources from the Jews. Proposals focused on denying Jews tax exemptions of various kinds — such as exemptions from the tax on dogs to those for people blinded in military service.

Fascinating as well is Aly’s discussion of the average non-Jewish German’s view of the Nazis as “unifiers.” Of course the Party was intolerant of “socialists [i.e., Marxists], Jews, and nonconformists.” But the post-WWI peace treaties that forbade Austria and Germany from unifying were highly unpopular: if nations of similar culture and language wanted to unite, why should other nations be able to stop them? Indeed, “Hitler always defined himself not just as German chancellor, but as leader of the entire German people, including ethnic Germans living outside the boundaries of the state he ruled” (27).

The willingness of the populace and the bureaucracy to support the Nazi regime resulted from the fact that the regime gave people much of what they wanted.

So Hitler’s early victories — the retaking of the Ruhr, the unification with Austria, and the annexation of the Sudetenland (and later the remainder of Czechoslovakia) — all “cheap” in the sense that Germany did not have to go to war to achieve them — together with the appearance of economic recovery, decisively weakened opposition to Hitler on the home front” (28). Aly adds that the regime was not maintained by force but by popular support, and it accordingly worried about the mood of the people and monitored that mood carefully. He notes that while Communist East Germany employed 190,000 secret police to control 17 million citizens, the Gestapo had in 1937 around 7,000 total staff, to keep tabs on 60 million citizens. In 1936, after an initial spasm of violence and terror against their opponents, the Nazis held only about 5,000 people in concentration camps — many just common criminals and vagrants. Aly notes, “Most Germans simply did not need to be subjected to surveillance or detention” (29).

Again, a big reason for this support was the Nazi focus on uniting the 96% of Germans it held to be racially German by smoothing out class and other social differences. Aly points out that a major tool in leveling differences within the “Aryan tribe” was the various uniformed services — the Hitler Youth, the National Labor Service, and the Wehrmacht. As I observed in my earlier review, wearing a uniform does indeed foster uniformity.

Another tool the regime used to level social differences among ethnic Germans was its move in 1939–1942 — a period when Germany seemed likely to assimilate much of Eastern Europe — to relocate Slavs farther to the East and give their land and other property to Germans. Racial ideology again justified the purchase of support: the Slavs, held to be an inferior race, must be forced to vacate their lands so that the “Aryans” would have “living space.” (The official plans called for 50 million Slavs to be relocated to Siberia, or to be slaughtered outright.) The intention was to give poor German farmers small plots of land, and poor German coal-miners access to vast new lands. As a result, “hundreds of soldiers’ wives dreamed of owning country estates in Ukraine” (31). Again, the idea was to purchase popular support with property stolen from non-Germans.

The recession hit bottom in 1933, when Hitler took power, so he got credit for the recovery.

All this was in marked contrast with WWI, during which 400,000 Germans starved to death, and the period of civil unrest and hyperinflation that followed. Between 1914 and 1918, the German average standard of living dropped by two-thirds. The regime was aware of the privation experienced in WWI, and how it undermined support for the war, and it was not going to repeat the mistake.

Aly’s second chapter has the intriguing title, “The Accommodating Dictatorship.” It explains the domestic side of the regime’s purchase of support. When Hitler took power in 1933, 6 million Germans were unemployed, and Hitler promised to put them all back to work. He appeared to accomplish this ambitious goal in just five years. Aly argues, however, that this victory was apparent, not real. He cites figures indicating that while the public came to believe that economic recovery was real, wages were falling. But the recession hit bottom in 1933, when Hitler took power, so he got credit for the recovery. Furthermore, by 1935, the regime had reinstated the draft, remilitarized the Rhineland, officially abrogated the Treaty of Versailles, and withdrawn from the League of Nations: “The early years of Hitler’s rule gave a desperate, belligerent and self-destructive people satisfaction for perceived past affronts.” (37).

But the apparent economic success of the regime was built upon massive borrowing. During the first two years, public debt ballooned by 10.3 billion reichsmarks, or about $144 billion in current dollars. The only taxes raised were those on corporations and the wealthy,and revenues were far below what was needed to fund just the military. Between 1933 and 1939, the regime dumped over 45 billion marks into the military — more than three times the total state revenues for the year 1937. The national debt expanded to 37.7 billion marks. The regime turned increasingly to extracting the money from the Jews. From the time it took power until late 1937, it pursued a campaign of harassment, including forcing Jews to sell their businesses to “Aryans,” aimed at pressuring Jews to emigrate, while it placed increasing restrictions on the ability of emigrating Jews to take assets abroad.

While the regime thus increasingly stole from Jews in a piecemeal fashion, it didn’t pursue a total looting of the Jews as such. But with the takeover of Austria in early 1938, Hitler’s personal economics advisor Wilhelm Keppler was appointed Reich commissioner for Austrian affairs and tasked by Göring with exploiting Austrian natural resources, keeping prices and wages stable, and, more importantly, “Aryanizing” Jewish-owned businesses. The debt caused by the military buildup began to threaten the economy as a whole, so the regime enacted laws requiring native-born Jews to declare all assets worth over 5,000 reichsmarks to the government, creating conditions for the complete confiscation of the assets of Jews fleeing the country, with nothing but state bonds as compensation. In April 1938, Göring met with all Reich ministers to plan “the definitive removal of Jews from economic life” (44). In the face of a worsening financial crisis, the regime sped up its annexation of Czechoslovakia and the war against the Jews. Göring told his assistants that all tangible Jewish assets were to be converted into government bonds, and the proceeds used to fund the regime’s war machine. After the outbreak of war in 1939, this 1938 model of Aryanizing Jewish assets would be applied all over the conquered lands (as Aly shows in deep detail).

But the apparent economic success of the regime was built upon massive borrowing. During the first two years, public debt ballooned.

While the Jews (and later others) were having their assets confiscated, the regime increased its taxes on the wealthiest Germans and the biggest corporations. During all this, middle and lower classes were, by deliberate design, only lightly taxed. The regime was sensitive to its base of support. This led to a long struggle between the regime’s economic realists — who felt that the lower and middle classes needed to shoulder part of the burden of the war — and what I would call the regime’s political realists (especially Hitler and Göring), who wanted to be sure that the regime’s base of support was contented enough to not rebel. Aly documents this strategy. For example, he shows that in 1941, the regime instituted tax breaks for farmers, and actually raised pensions. The latter move was intended to combat the widespread suspicion that “the National Socialists had no time for the elderly and physically weak and wanted them to die off quickly” (56). Aly understands the strategy, observing that when the regime’s ally Mussolini was kicked out by his own countrymen in the summer of 1943, Goebbels called for a renewal of National Socialism to make sure that the lower and middle classes had no material cause for complaint, so no reason to rebel. The focus was now (in 1943) to be on owners of rental property and stocks.

The battle between the economic and the political realists continued even into 1945, as the regime’s demise was clearly and universally apparent. The political realists — who included the Party members at the top of the hierarchy — prevailed. In fact, during the war, “family members of German soldiers had 72.8% of peace-time household income at their disposal. That [was] nearly double what families of American (36.7%) and British soldiers (38.1%) received” (72).

In part II, Aly takes up the subjugation and subsequent exploitation of first Western and then Eastern Europe by the Wehrmacht. Here Aly richly documents the various tricks the regime used to covertly loot lands it conquered. This was a radical form of imperialism, indeed: force the conquered lands to pay for the conquering army that oppressed it. And it was quite a financial trick, indeed.

Aly explores the foreign “contributions” that came to Germany. He notes that at the outset of war, despite wage and price controls, the profits of companies and the wages of workers increased, as did the pay awarded to soldiers. But with production more and more focused on the military, there was a gap between purchasing power and what was available to the public. This led to black markets, inflation, and a flight to tangible assets, such as durable goods. The problem grew acute by late 1939, and as the gap widened through 1941, the regime finally decided to export inflation to conquered lands. As one Finance Ministry bureaucrat put it (echoing Göring), “If there has to be inflation, better there than in Germany” (76). Aly notes that pillaging foreign economies thus served two purposes: it kept the regime’s base relatively well-provisioned, and it was a major source of funding for the war machine. Regarding the latter, the regime had the explicit goal of getting any conquered territory to pay for all the costs of military occupation. Aly documents how the regime was able to do this “with unwavering efficiency.”

This was a radical form of imperialism, indeed: force the conquered lands to pay for the conquering army that oppressed it.

In occupied Serbia, for example, the Nazis set up a new Serbian national bank with a new currency and outlawed most currency exchanges, thus forcing people to cash in their real currency for a new one. This temporarily halted inflation — and allowed the Serbs to pay their “contribution for military protection” (as the regime called it, in all the countries it occupied). During the war the regime exacted unprecedented financial tributes from the countries it conquered — tributes that “soon exceeded the total peacetime budgets of the countries in question, usually by 100% and in the second half of the war by more than 200%” (77). Aly shows in detail how this affected Poland, France, Denmark and Norway. By 1943, most of the revenues funding the Nazi war machine came from “contributions” from conquered countries, and from the regime’s “allies” (Bulgaria, Slovakia, and Romania), as well as from foreign slave labor in Germany and the complete dispossession of the Jews.

The regime, as Aly shows, was successful in its clever manipulation of official exchange rates in occupied countries. He documents this in the case of occupied France, Bohemia, and Moravia. This currency manipulation, along with the establishment of “clearing accounts,” helped German consumers and Wehrmacht soldiers as well as the war regime. Soldiers “bought” massive amounts of food and other goods in the countries in which they were stationed and shipped them home to help their families.

Aly explores the use of another financial gimmick the regime employed — “Reich Credit Bank” certificates, which looked like paper money and could be traded by troops for local goods. As one German minister put it, these were really “requisition receipts disguised as money.” The regime had devised a way to take what it needed without incurring the direct wrath of those being relieved of their goods.

When the customs border between Germany and the Protectorates of Bohemia and Moravia was eliminated, German soldiers went on a “purchasing frenzy."

The regime forced allies and conquered countries alike to buy its bonds, and by July of 1944 it owed roughly 29 billion marks (or about $421 billion in today’s dollars) to the bondholders. An internal Nazi report estimated the total value of goods and services taken from the occupied territories from 1939 to 1944 at as much as 100 billion reichsmarks ($1.4 trillion in today’s dollars).

In a chapter called “Profits for the People,” Aly explores other mechanisms of plunder. One of them was direct soldier purchases. For example, German soldiers in the Netherlands were allowed to receive up to $15,000 per month (in today’s dollars) to buy local goods and ship them home. And German soldiers could take as much cash as they wanted when leaving Germany to return to the conquered lands. This led, predictably, to German soldiers buying so many local supplies that shortages ensued, much to the distress of the German occupying authorities. When the customs border between Germany and the Protectorates of Bohemia and Moravia was eliminated, German soldiers went on a “purchasing frenzy,” buying all the Czech goods they could, furniture included.

As Aly puts it, “German soldiers literally emptied the shelves of Europe. They sent millions of packages home from the front. The recipients were mainly women. When one [i.e., an historian such as Aly] asks the now elderly witnesses about this period in history, their eyes still gleam at the memory of the shoes from North Africa, the velvet, silk, liqueurs, and coffee from France, the tobacco from Russia, and the tons of herring from Norway — not to mention the various gifts that poured from Germany’s allies Romania, Hungary, and Italy” (97). Aly quotes numerous letters of German civilians saying in essence that they suffered no privations during the war years.

Aly gives another example: in the words of a French historian, these contrived purchases for the people back home “did significant damage to the French national economy, playing a significant role in the development of the black market and inflation. They were the reason it was increasingly difficult for everyday French people to procure the basic necessities” (99). Aly shows that the same phenomenon occurred in the Baltic States, Russia, Norway, Denmark, and Poland.

In the Wannsee Conference the next year, Heydrich emphasized the need for apartments in driving the decision to exterminate the Jews.

This pervasive pillaging fostered a climate of corruption and crime. Aly quotes extensively from an internal regime report on corrupt conditions in the Ukraine. The report reviews letters written home by German soldiers, and alleges that the Ukraine has become “the Reich’s flea market,” with soldiers writing their families to send cheap jewelry, cosmetics, used clothes, and other junk to be traded with the locals for the best food and produce. All this “sharp trading” was done by the Aryans, the very people who targeted the Jews for annihilation because they were allegedly — sharp traders! Vicious irony, indeed.

The crucial year for the outright dispossession of the Jews was 1941. In that year, “while people in the East were dreaming of a black market El Dorado,” civilians in Germany’s northwestern cities were really hurting from the British bombing. The Gauleiter of Hamburg, Karl Kaufmann, requested of Hitler that the Jews be removed so their apartments could be given to non-Jewish citizens made homeless by the Allied bombs. Hitler immediately made this an order. In the Wannsee Conference the next year, Heydrich emphasized the need for apartments in driving the decision to exterminate the Jews, and in late 1941, the first Jews rounded up were in the cities most bombed.

Not only were the Jews’ apartments confiscated, but so were their household effects, from their furniture down to their clothes. This policy was extended shortly thereafter to cover fine art, which was confiscated and sold. From France alone, the regime extracted about a million cubic meters of household goods from more than a quarter million Jewish homes. There are similar figures for goods taken from Jews in Belgium, the Netherlands, Czechoslovakia, and elsewhere, and for the wholesale confiscation of containers filled with the household effects of Jews who had emigrated earlier (129). By 1942, the regime was confiscating the containers of household effects of Jews now being sent to the death camps. And the regime bragged about what it was doing — one poster Aly that reproduces has a headline proclaiming that 1,362,945 books were seized, “enough to fully equip 2,600 local libraries” (128). Aly adds that the recipients of these handouts were grateful to the regime, as shown by an outpouring of thank-you notes.

Aly provides a revealing discussion of the regime’s systematic looting of the areas of Western Europe under its control from their fall in 1940 to their liberation in 1945. He describes the various mechanisms the regime used for surreptitious transfer of assets from the occupied population to the regime’s home base, via the hands of occupying German troops, who bought goods to send home. The burden was heavy. Belgium, a nation of about 8.3 million people, whose pre-war state budget was 11 billion francs, was pressed to pay 18 billion francs to the regime for occupation costs. With stolen Belgian money, the regime was able to buy in that country 18,500 motor vehicles, 1,100 locomotives, and 22,000 freight cars — in 1941 alone! That same year the regime was able to steal 41 tons of Belgium’s gold. All this the regime itself carefully documented. During the period in which Belgium was under occupation (1940–1944), its government spent 83.3 billion francs on providing for its own citizens, but had 133.6 billion francs worth of goods and currency taken for occupation costs — not counting the stolen Belgian gold or the loot grabbed from Belgium’s Jews.

By 1942, the regime was redistributing the household effects of Jews sent to the death camps. Recipients of these handouts were grateful to the regime, as shown by an outpouring of thank-you notes.

Statistics are equally striking for the other occupied counties. By 1944, the Netherlands had paid 8.3 billion reichsmarks (about $120 billion today), quite a sum for a nation of 8.8 million citizens to bear. 60% of that money was used to buy goods for the German citizenry. France during the occupation surrendered a staggering 40 billion reichsmarks to the regime (or about $580 billion dollars). Although Germany occupied its erstwhile ally Italy only from 1943 to 1945, it managed to extract the equivalent of 10 billion reichsmarks ($145 billion current dollars) from the hapless country.

Aly does not neglect the role that the Eastern European occupied territories played in the regime’s program of purchased support. He suggests that a huge component was the use of forced — truly, slave — labor. The regime made between 8 and 12 million people work for it, essentially for free and under harsh and dangerous conditions. Most of these forced laborers were from Eastern Europe. They were housed in shabby conditions (for which they were charged), and were paid 15% to 40% lower than German workers. And the regime managed by various schemes to divert much of that pay for the war effort. The workers’ pay was taxed, of course. Also, the regime officially set aside the money for the workers’ families, back in their home countries, paying these families in local currency out of the “occupation charges.” In other words, the home countries were forced to support the workers’ families. The essence of the regime’s con was clearly identified in 1944, by eminent jurist Raphael Lemkin: “The occupied countries not only finance exports to Germany but also pay their own people working in Germany.”[1]

Workers from Poland, Ukraine, and Russia received the worst treatment. Men and women taken prisoner and shipped to Germany to work in the labor camps would have their property liquidated and the money theoretically held in trust for their return, but in practice it was merely confiscated. The conscripted workers were paid low wages, and the Poles in particular had to pay a 15% “supplemental social compensation fee” in addition to an income tax. Poles in agricultural work got as little as 8.5 reichsmarks ($125 in current dollars) to 26.5 reichsmarks ($348) per month. In addition to the special fee, they were assigned to the highest income tax rates (paid by the wealthiest Germans).

Generally, Aly notes, “the amounts deducted from the wages of Jews — as well as of Gypsies and forced laborers from Eastern Europe — were thus more than triple those demanded of German workers. The Reich was able to double its wage tax revenues during the latter half of World War II on the backs of involuntary workers assigned to German industry” (160). There was some internal opposition — that of some people within the regime who feared that exploitation of the forced laborers would lessen their will to work hard and encourage resistance at home. But one economist estimated that, among Polish and Russian workers earning 40 reichsmarks per week, only 10 were left after the various taxes, fees, and charges for room and board in the labor camps.

But even leaving those meager wages in the hands of the forced workers threatened to reduce the availability and increase the prices of consumer goods for the “Aryan” Germans. So the regime devised another scheme: paying the forced laborers in part by special “savings bonds,” which supposedly offered a 2% interest rate but in the end were virtually unredeemable.

Among Polish and Russian workers earning 40 reichsmarks per week, only 10 were left after the various taxes, fees, and charges for room and board in the labor camps.

By these various artifices, the regime was able to pocket 60% to 70% of the forced laborers’ wages, which allowed for stable prices and no shortages and — as Aly shows in detail — in great measure paid for the social welfare programs that benefited “Aryan” workers. Behold National Socialism: it delivered the goods for the national workers in great measure by exploiting the international ones!

Reviewing the specific measures — including wholesale currency manipulation and food confiscation disguised as food purchases — by which the regime was able to pillage Ukraine and Russia, Aly trenchantly observes, “Even with food rationing, and wartime changes in people’s eating habits, shortfalls occurred. But as it had not done in World War I, the German leadership transferred the burdens of those shortages to people in occupied countries, to disadvantaged minorities, and to Soviet prisoners. The result was famine in Poland, Greece, and especially the Soviet Union; in psychiatric hospitals, ghettos, concentration camps, and POW camps, people starved to death” ( 170). The result, as Aly notes, was also a savage exploitation of Soviet POWs. By 1942, 2 million of the 3.3 million Red Army prisoners had died in the camps or in transit to the camps.

The regime stole a staggering amount from the Soviet territories. In one telling chart, Aly shows that the regime was able to transfer about 106 million Gus (grain units, with 2.5 Gus being what it takes to keep one person alive for a year) from Soviet lands to the Reich in the years 1941–43. Before the invasion, the Soviets produced 101% of the food needed to feed their public. This means that the Germans deprived about 21.2 million Soviet citizens of the food necessary for survival. Aly contrasts reports by German civilians that, until February 1945, no women complained that their children lacked whole milk, with reports of about 4,000 people starving to death a day in Leningrad.

In Part III, Aly focuses on the dispossession of the Jews. Chapter 7 — aptly entitled “Larceny as a State Principle” — tackles the common view that the “Aryanization” of Jewish property benefited German businessmen and bank directors the most. Aly argues that this is a false narrative. He describes in detail how the process took place.

Behold National Socialism: it delivered the goods for the national workers in great measure by exploiting the international ones!

Typically, first in Germany and then throughout occupied Europe, Jewish assets were first nationalized (i.e., seized by the state or occupation forces), then privatized (i.e., sold atbargain prices to non-Jewish individuals). Even selling these goods at bargain prices, however, brought substantial revenues to the state treasuries. In this regard, the 1938 seizure and sale of Jewish assets, which helped the regime to spend like mad building up its war machine without inducing hyperinflation, served as a model for how it would run its conquered territories.

The model proved useful indeed. As the regime imposed onerous “occupation costs” on its conquered territories — costs that in just the first year, according to one Reichsbank study, represented 211% of regular state revenues in France, 200% in Belgium, 180% in Holland, and 242% in Norway — it used the expropriation of Jewish assets to hold off hyperinflation in those countries.It pursued the policy under tight secrecy. Since the liquidation of civilian assets was a complete violation of international law, the regime employed small cadres of trained senior officials to do the actual seizures. Aly notes that in Serbia, where enough documentation remains to reconstruct the process, within one year after the invasion a Wehrmacht administrator reported that he had all the Jewish men rounded up and shot, and all the Jewish women and children suffocated to death by truck exhaust fumes. With Serbia’s 22,000 Jews dead, administrators from the department responsible for implementing Göring’s Four-Year Plan began the seizure and liquidation of their assets. The money flowed first to the Serbian treasury, then to the Nazi treasury as payment for occupation costs. The amount seized was able to cover more than six months of occupation costs, which dramatically lowered inflationary pressures in Serbia for an even longer period.

Aly notes that while ordinarily the expropriation of Jewish assets was done without any cover of law, in 1941 the regime did pass a law — the Reich Citizenship Law — that in one stroke seized the assets of Jews, which in great measure had earlier been forcibly converted into bonds, so it was easy to do. The debts were simply nullified. In 1942, Himmler and Reichsbank President Walther Funk worked out a deal by which all gold, gemstones, and cash taken from the death camp inmates would be given to the Reichsbank, which would then pay the market rate for this loot into a special treasury account (under a fictitious owner, ironically named “Max Heiliger” or “Holyman”). While gold watches were sold domestically, the regime sold jewelry in Switzerland.

Aly describes exactly how in 1941 one Jewish couple (the Uhlmanns) were dispossessed of more than 47,000 reichsmarks, between the emigration tax, the tax on Jewish wealth, and the confiscation of bonds when they fled to Luxembourg. When the regime conquered Luxembourg, they were killed. The money extracted from them “allowed the state to avoid tax increases — equivalent to a 50% hike for eight hundred workers with two children each — that otherwise would have been necessary,” as well as to “absorb some excess spending power in the middle of the war by selling off the Uhlmanns’ possessions” (200).

With Serbia’s 22,000 Jews dead, administrators from the department responsible for implementing Göring’s Four-Year Plan began the seizure and liquidation of their assets.

Aly devotes another chapter to various ways the regime used to launder the money it stole from Jews. He starts by describing how the regime used the puppet it installed in Norway, Vidkun Quisling, to strip Norway’s 2,100 Jews of their possessions. He did this in stages, and was able to put 11 million reichsmarks from the liquidated property into the Norwegian treasury, which then passed to the regime as part of the occupation costs, which then passed into the hands of German soldiers and regime procurement officers. Watches stolen from Jews were given out to German generals, who sometimes gave them away as Christmas gifts to staff and families.

The Belgian campaign to steal Jewish assets was carried out by the German military administration, rather than a collaborationist regime. As early as October 1940, the Wehrmacht required its approval for every ordinance concerning Jewish business, the registration of all Jews and all businesses “in which Jews had influence,” and the wholesale removal of Jews from the government. The next month the Wehrmacht ordered the removal of Jews from the economy and the liquidation of their businesses. But throughout the process, the regime managed by various subterfuges to keep a public “façade of legitimacy” over this asset seizure.

In Holland, the regime followed its common course after conquest: the removal of Jews from the economy. By 1941, Dutch Jews had to register their various assets. Shortly thereafter, the liquidation of Jewish assets began, under the color of legitimate governance. Dutch stockholders helped the regime sell about 80% of confiscated Jewish stocks, the proceeds going into state and industrial bonds — which made it appear as a transfer rather than a seizure. But the bonds were soon converted into Dutch government securities and used to cover the costs of occupation. Of the 14.5 billion reichsmarks (or about $210 billion in current dollars) extracted from the Netherlands during its occupation, about 10% came from the country’s tiny Jewish population of 140,000 souls.

Watches stolen from Jews were given out to German generals, who sometimes gave them away as Christmas gifts to staff and families.

The Reich didn’t simply enrich itself; it subsidized its allies. Even in 1940, in the puppet state of Slovakia, laws were passed to “Aryanize” the economy, with the goal of shipping all Jews to Madagascar (Adolf Eichmann’s personal plan). In just the first two years, the Slovakian government liquidated or “Aryanized” nearly all the 2,000 registered Jewish businesses — to the evident advantage of the non-Jewish population. In late 1941, when it went to war with Russia, the Slovakian government decreed a compulsory “contribution” of 20% of the total Jewish wealth under its control. During 1941 to 1942 the Slovakian government deported most of the country’s 89,000 Jews — with 53,000 sent directly to Auschwitz in just the first 13 weeks. Of the 7 billion crowns that Germany stole from tiny Slovakia during the war, 40% came from liquidated Jewish wealth — amazing, considering that Jews constituted only about 3% of the population. The story was the same in the Nazi puppet state of Croatia.

Bulgaria, which had joined the Axis Powers before they began their war with Yugoslavia and Greece in 1941, had to “loan” the Reichsbank nearly 62 million reichsmarks in 1941. It received parts of Thrace and Macedonia in compensation. It then had to cover the total costs of the German forces within its territory. It passed an anti-Semitic law in early 1941 that declared Jews to be foreigners and required them to register all their assets. Over the next two years these assets were pillaged. The Jews in Thrace and Macedonia were shipped to extermination camps in 1943.

Similarly, in Romania, even by 1940 Jewish-owned properties were being confiscated. This accelerated during the next year. By the end of 1942, surviving Romanian Jews were sent to Treblinka and murdered. Himmler was able to boast of settling half a million ethnic Germans in Romania in property once owned by Jews. In the end, the Jews were forced to cover 25% to 33% of the total costs of Romania’s part in the war.

Even the ancient Jewish cemetery in Salonika was cleared of headstones and the land auctioned off for real estate development.

Aly has been able to uncover the fate of the Jews of Salonika, Greece, once a center of Jewish population.This is a story that many Greeks would rather not confront. Crucial to the story is the “Aryanization” of Jewish assets — including twelve tons of gold (worth perhaps $5 billion today). Suffice it to say that the Nazis, along with their Italian and Bulgarian allies, rapidly conquered Greece and divided it into three occupation zones. As the Germans (and Bulgarians) took the produce of the land, the Greek currency started to lose its value. Stories surfaced about Greek children starving. Even Hitler was concerned enough to raise the issue with Mussolini. The Nazis sent in a special emissary to stabilize the situation. His measures “accelerated the ghettoization, dispossession, and deportation of Jews” (250). In October 1942, the Germans were pressing for Greece’s Jewish population, mainly concentrated in Salonika, to be dispossessed. In January 1943, Eichmann’s deputy Gunther flew to Salonika to help the process. Within two months, Jews were forced to declare their assets to the newly created Greek Office for the Management of Jewish Assets. Shortly thereafter — starting March 15, 1943 — deportations of Salonika’s 44,000 Jews began (along with 2,000 additional Jews from nearby), and were completed in a matter of months.

Jewish properties were seized and sold. Even the ancient Jewish cemetery in Salonika was cleared of headstones and the land auctioned off for real estate development. The proceeds were used, as elsewhere, to fund the Wehrmacht. But because of the rapid inflation of Greek currency and the relative poverty of the land, the Nazis focused on wringing as much gold out of the victims. The gold, Aly suggests, was sold by Greek brokers in Athens, and the cash that was raised flowed to the Wehrmacht, which used it to purchase local supplies to feed the troops and to pay the troops themselves. This stabilized the currency. The 46,000 Jews sent for Salonika to Auschwitz yielded 12 tons of gold, which was between two-thirds and three-fourths of the occupation costs. This gold stayed in Greece.

Part IV of Aly’s book, called “Crimes for the Benefit of the People,” draws his themes together and adds a great deal of information on the motives of Nazi minions.

For instance, he says, “Before the victims of Nazi looting could be deported from the occupied territories, the German military officers had to agree on and in most cases provide the means of transport. They did this without the slightest objection — and not simply because they hated Jews or were willing to sacrifice the last vestige of their consciences out of a supposedly innate German need for obedience. The officers helped carry out the deportations because the deportations served their own interests” (280). That is, besides the standard explanations for the expulsion and dispossession of the Jews — i.e., widespread German racialist anti-Semitism and the regime’s propaganda “ceaselessly” portraying Jews as a dangerous enemy “fifth column” — the driving motivation for the Wehrmacht’s complicity was the desire to keep troop morale up and keep pushing ahead with the military strategy. This military imperative to seize Jewish and other assets was intensified by the resolve of Nazi economists not to fund more than half the war’s costs by debt.

Aly notes that the various deceitful and opaque means of confiscating Jewish and conquered people’s assets succeeded only too well in hiding the massive dispossession from the notice of humanity. And in setting it up so that Jews had their assets first converted to German asset vehicles, the actual extermination of the Jews was made economically tempting: simply liquidate the creditors! Aly suggests concisely that the Holocaust will never be properly understood “until it is seen as the most single-mindedly pursued campaign of murderous larceny in modern history” (285).

To the reply that the resources seizedcould not have cost more than about 5% of the total wealth in the “German war chest” between 1939 and 1945, Aly observes that this was itself a large amount. I would add that during the period from 1933 to 1939, huge amounts were seized from Germans and Austrians. And seizures could be timed to fund major new offensives, such as the battle of Kursk in 1943.

In setting it up so that Jews had their assets first converted to German asset vehicles, the actual extermination of the Jews was made economically tempting: simply liquidate the creditors!

In the years 1939 to 1945, the regime brought in from occupied lands an astounding 170 billion reichsmarks — about 2.4 trillion euros. Of the total amount of money collected by the regime during this period, about 10% came from taxes on lower and middle class Germans, another 20% from taxes on wealthy Germans, and the remaining 70% from the proceeds of theft. It is precisely this that guaranteed that the regime retained substantial support until the very end.

In a chapter called “Speculative Politics,” Aly explores how the regime was able to render more or less invisible the massive borrowing it carried out, and again how this was done to make the load of the war light on the shoulders of non-Jewish Germans. Then, in the final Chapter, Aly summarizes his view of Nazi socialism as a socialism that radically confiscated assets from targeted groups and used them to fund the war, while enabling the population to live well. He puts the total amount of Nazi wartime revenues stolen from dispossessed Jews, occupied countries, and forced labor at a remarkable 70% of its total war costs (327). His book — all 334 pages of exposition, 59 pages of notes, and 17 pages of references — makes this estimate credible.

Much of the socialized pelf was funneled directly to German civilians in the form of fine food, produce, wine and liqueurs, jewelry, household goods, clothes, toys, books, and candies, making it clear that the regime’s support was based on purchase, as opposed to power or persuasion. “Nothing less than massive popular greed made it possible for the regime to tame the majority of Germans with a combination of low taxes, ample supplies of consumer goods, and targeted acts of terror against social outsiders” (324).

In sum, Aly’s suggestion is that the Germans were not exactly Hitler’s willing executioners, nor were they his unwilling victims; they were instead his willing beneficiaries. From the start, the regime’s elimination of unemployment by massive infrastructure and military spending was financed by the confiscation of the wealth and labor of the Jews. When war got underway, the regime exploited to the ultimate degree the people of conquered countries. It was a regime that pursued a radical racist redistributionism from the first.

The regime’s support was based on purchase, as opposed to power or persuasion.

One of the matters that Aly does not consider is the important role that early computer technology played in the Nazis’ war against the Jews. Henry Hollerith, an employee in the US Census Bureau in the early 1880s, first conceived of using punched cards to record census data. “Hollerith Machines” sorted and counted the millions of cards. The Hollerith Machine Corporation was sold to a conglomerate that eventually became IBM. The German industrialist Willy Heidinger established a subsidiary of the corporation called Dehomag (an acronym for the German Hollerith Machine Corporation) in 1911. Heidinger became an enthusiastic Nazi supporter, and the Nazis appreciated his machines. They used IBM machinery to implement the 1933 census and were thus able to catalogue citizens with partial Jewish ancestry, expanding the count of Jews to 2,000,000. The Nuremberg Laws specified the number of grandparents of Jewish ancestry necessary to be counted as a Jew, and those could now be identified.

At any rate, it was the seizure of wealth that bought the support of the Germans for the regime, rather than the Germans’ pre-existing anti-Semitism. It was this kind of socialism that really won the day. But the thesis requires some additional analytical work, which will be presented in the final installment of this series.

[1]Lemkin is the man who coined the neologism “genocide,” which he did in 1943 or 1944.

Editor's Note: This review-essay is part 2 of a three-part series.

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Disquieting Developments


My father served in the Army Signal Corps, under General Patton, and participated in the liberation of one of the Nazi concentration camps. He and his fellow Signal Corpsmen photographed what he saw. As a young boy I found some of those grisly photos tucked away in the garage. They left an impression on me that lasts to this day — to this year’s Holocaust Remembrance Day, to be exact, when I decided to take some time to discuss the current state of anti-Semitism.

Europe is now witnessing a surge in anti-Semitism such as it has not seen since the Holocaust era of the 1930s and 1940s. This certainly shows up in European soccer matches, as a recent Washington Post article reports: the crowd at a game taunts the visiting fans from Amsterdam, a city with a historically large Jewish population, with chants such as “Hamas, Hamas, Jews to the gas” and “My father was in the commandos, my mother was in the SS, together they burned Jews, because Jews burn the best!” At another game, British spectators taunted a team often supported by Jewish fans with the chant “I’ve got a foreskin, how about you? F--- Jew!” In other games, players and fans have given an imitation Nazi salute (the “quenelle”) invented by a devoutly anti-Semitic French comedian named Dieudonne M’bala M’bala. The article cites a study showing that anti-Semitic incidents at European soccer games are at a record high.

Whenever there are demonstrations or riots in Muslim neighborhoods of European cities, the participants don’t scream “Death to Israel,” but “Death to Jews” and “Gas the Jews.”

More generally, as a recent US News & World Report piece put it, “From Toulouse to Paris, London to Berlin, Brussels to Copenhagen, Jews are being harassed, assaulted and even killed.” The report notes that a new study conducted by the Pew Research Center shows anti-Semitic attacks at a seven-year high. As of 2013, Jews have faced intimidation and even persecution in more than three-fourths of Europe — 34 out of 45 countries, to be exact. These attacks include desecration of synagogues and Jewish cemeteries, verbal slurs and physical assaults, and even murders — most recently of the Charlie Hebdo magazine staff and (right afterward) the killing of customers at a kosher food market.

The Pew survey indicates that currently 25% of all Europeans feel antipathy toward Jews. This result comports well with a 2013 survey reported in an article by Cathy Young. The survey was of 6,000 self-identified Jews living in eight EU countries, conducted by the EU Agency for Fundamental Rights. The results were both surprising and disturbing. The survey revealed that:

  • two-thirds of the respondents thought that anti-Semitism was a serious problem in their home countries;
  • three-fourths thought that anti-Semitism has increased over the last five years;
  • one-fourth reported being personally subjected to anti-Semitic bullying or attack;
  • nearly one-half reported being concerned about harassment;
  • two-thirds were afraid that their children would be harassed at school, or in transit to and from.

What is behind this swelling tide of European anti-Semitism? I think we can point to three groups: Muslim immigrants to Europe European leftists and European right-wing extremists.

This triumvirate of communities infected with large numbers of Jew-haters is explored in a recent report by the American Jewish Committee. As the report puts it, “Three distinct groups in France are noticeably more anti-Jewish than the overall population, according to two new public opinion surveys on French anti-Semitism. The groups are supporters of the National Front party (extreme right), to a lesser extent supporters of the Left Front coalition (extreme left), and members of the Muslim community.”

The article gives the results of polling conducted by the French think-tank Fondapol last year. They show that while about 25% of the French generally say Jews have too much power in the media, 33% of Left Front sympathizers, fully 51% of National Front sympathizers, and a mind-boggling 61% of French Muslims agree. Again, on the question of whether Jews use “Holocaust victim status” as an egoistic ploy, 35% of the whole French population agrees — already a shockingly high number — while 51% of Left Front supporters, 56% of Muslims, and a nauseating 62% of National Front supporters agree. Regarding the recent upsurge in violence against Jews, while 14% of the French public generally thought it was “understandable,” 29% of National Front supporters agreed, as did 21% of Left Front supporters, and 25% of Muslims.

The polls also showed that the degree of anti-Semitism among Muslims was directly proportional to the degree of self-reported religiosity.

Let’s examine these groups more closely.

Start with the Muslim European community. It is no shocking news to report that Europe in recent years has seen a massive increase in Muslim immigrants. As a recent Pew study reports, the Muslim percentage of Europe’s population has grown about 1% per decade, from constituting 4% of the EU population in 1990 to 6% in 2010. (In 2010, the total Muslim EU population was over 13 million.) The study projects that this will continue through 2030, when the Muslims will be 8% of the total population. France and Germany have the highest percentages of Muslims (at 7.5% and 5.8% respectively). And from that community has come most of the attackers of Jews.

The idea that the Left was sympathetic to the Jews after the Holocaust doesn’t comport with historical reality.

The polls I discussed earlier showed anti-Semitic sentiment strong among French Muslims. Other polls indicate that the same holds true of the rest of Europe. As a recent paper by Gunther Jikeli notes, many other surveys done throughout Europe confirm that there is a much higher level of anti-Semitism among Muslims than among non-Muslims (or the public at large). In a 2006 Pew study, Muslims in France, Germany, and Spain were twice as likely to have unfavorable views of Jews as were non-Muslims, while in Britain Muslims were seven times more likely. Jikeli reviews ten other studies conducted in a variety of ways in a variety of other European countries, all showing basically the same result.

It is often said that whatever hatred comes from elements of the Muslim immigrant community is created by Israel’s policies, specifically its occupation of the West Bank. I don’t find this claim plausible, for several reasons.

First, as the US News article noted, whenever there are demonstrations or riots in Muslim neighborhoods of European cities, the participants don’t scream “Death to Israel,” but “Death to Jews” and “Gas the Jews.”

Second, and more obviously, European Jews — i.e., precisely those Jews who have chosen to stay in their European homelands rather than immigrate to Israel — have virtually no influence over Israeli policies. So harassing, assaulting, and killing those Jews will certainly not change Israeli policy. And how crazy is it to think that desecrating the graves of long-deceased Jews could be motivated by the intention to protest against Israel and its various policies? I mean, if this were anger at Israeli policies, you would expect the attacks to be directed at Israeli embassies, not random Jewish graveyards.

Third, there has been tremendous antipathy toward the Jews in all Muslim lands since the inception, not of Israel, but of Islam itself. Anti-Semitism has been endemic in Islam throughout its existence for the same reason it has been endemic in Christianity throughout its existence. Judaism denies that Muhammed was a prophet and that Jesus was the Messiah. It is basically that simple. And we should note that the hatred Muslims often feel against the Jews for not accepting the Prophet is also directed at Christians (and Hindus, Zoroastrians, and so on) for the self-same reason.

None of this should be taken to mean that I think Israel’s state policies are now or have ever been above reproach, or that I think anybody who criticizes those policies is necessarily (or even likely) an anti-Semite. Of course everyone is free to criticize Israel — or America, Egypt, Iran, or any other country.

Islam itself was a colonialist creed. The Turkish Empire was hardly a Jewish one, to take the most recent case.

I just doubt the claim that Israel’s policies are the predominant cause of Islamic anti-Semitism. The existence of Israel is the current focus for that anti-Semitism, but the long-standing Muslim antipathy toward Jews would have remained even if Yasser Arafat had accepted the two-state solution negotiated by Bill Clinton some years back, and even if all Israelis moved to somewhere else tomorrow. As Hassan Nasrallah, the leader of the Islamist terrorist army Hezbollah, so charmingly put it: “If we searched the entire world for a person more cowardly, despicable, weak, and feeble in psyche, mind, ideology and religion, we would not find anyone like the Jew. Notice I do not say the Israeli.” Duly noticed.

Let’s now turn to another group responsible for the recrudescence of European anti-Semitism, the European Left. I want to start with addressing what I will call the New York Times Received Account. The name gives recognition to an NYT article written a couple of years ago by Colin Shindler.

In that piece (“The European Left and Its Trouble with the Jews”), Shindler began by noting the growth of anti-Semitic violence in France, such as the then recent firing of blanks outside a synagogue, Islamists tossing a grenade into a kosher restaurant, and the killing of a teacher and some children in a Jewish school. He then averred that much of the European Left had remained silent about these cases where “anti-Zionism spills over into anti-Semitism,” as he put it.

His thesis was that the Left was very sympathetic to Jews in the aftermath of the Holocaust, but started reversing itself with Israel’s “collusion with imperial powers like Britain and France during the Suez Crisis,” and only intensified during the 1970s with the Israelis building out settlements on the West Bank. By the 1990s, he added, many European Leftists began to view the growing Muslim immigrant population as “a new proletariat.”

I don’t find the Times Received View remotely persuasive (but then, very little of what emanates from the Great American Progressive Propaganda Organ seems persuasive to me). To begin with a couple of obvious quibbles, the idea that the Left was sympathetic to the Jews after the Holocaust doesn’t comport with historical reality. Certainly in the contest of the post-war Soviet Empire, as Daniel Hannan notes, Stalin’s pursuit of the “Doctors’ Plot” was intended to initiate a campaign targeting Jews with the goal of throwing massive numbers of them into his Gulag. Also, there were show trials of “Israeli spies” in both Czechoslovakia and Hungary, as well as purges of Jews by the Polish communist party.

Of course, much of the European Left did not support the Stalinist Soviet Empire. But much of the European Left did.

And the idea that the Left began to oppose Jews and side with the Muslims because Israel sided with imperial powers in 1956 doesn’t square with the fact that the European Left seems to have had little problem with Soviet imperialism (remember, the year 1956 also saw the Soviets butchering Hungarians who wanted freedom from their empire), or Chinese imperialism. Moreover, as Daniel Greenberg has observed, Islam itself was a colonialist creed. The Turkish Empire was hardly a Jewish one, to take the most recent case. And the empire that Iran is trying to put together (by controlling Syria, Lebanon, and Yemen) is again not a Jewish but a Shia Muslim one.

Anti-Semitic trends in socialism go back to the beginning.

But waive those points. Jews who have chosen to remain in Europe have no control of any kind over Israel’s policies. The main reason a person would allow his hatred of Israel’s policies — which are not universally accepted even by Israelis — to extend to all Jews would be that he is a Jew-hater to begin with.

And again, as Daniel Hannan has forcefully observed, anti-Semitic trends in socialism go back to the beginning. Pierre Leroux, the 19th-century leftist who coined the term “socialism,” trumpeted, “When we speak of Jews, we mean the Jewish spirit — the spirit of profit, of lucre, of gain, of speculation in a word the banker’s spirit.” The 19th-century German radical Wilhelm Marr embraced the term “anti-Semitic,” crowing, “Anti-Semitism is a Socialist movement, only nobler and purer in form than Social Democracy.” The 20th-century French socialist-communist Pierre Myrens had that, “The Yid is an Israelite by religion, a Jew by race, and what is more, a capitalist!”

Of course, the über-leftist himself, Karl Marx — whose father converted to Protestantism from Judaism, so would have been categorized as Jewish under the Nuremberg laws — held that “the essence of Judaism and the root of the Jewish soul is expediency and self-interest: the God of Israel is Mammon, who exposes himself in the lust for money.” He and his collaborator Engels wrote of the Polish Jews, “The Polish Jew-Usurer cheats, gives short weights, clips coins, engages in common swindling.” This from the “genius” revered in philosophy departments worldwide!

Jews themselves have often been politically leftist, but as a group they have historically been associated with capitalism (“money-lending”) in the European mind. And what defines the Left — from progressive liberalism, to socialism, to communism — is precisely the disapproval or loathing of capitalism.

Here of course is one of European history’s great ironies. You might call it the Catch-22 of Judaism in Europe. Jews were often barred from land ownership, membership in the trade guilds, and government service. They were, however, allowed to be peddlers, and otherwise to engage in business. They were allowed to do something Christians were forbidden to do: lend money at interest — to Christians. So Christian policy itself often drove Jews into business generally and banking in particular. Drove them into it — but condemned them for it.

Again, I want to add the caveat that while the European Left has been a wellspring of anti-Semitic sentiment, I don’t say that most European leftists harbored such feelings. I simply say that they are more likely to have such sentiments than the population as a whole.

Let’s finally consider the rise of ultra-Right parties in Europe. Over the past five years, they have been making rapid gains in membership and (accordingly) in representation in legislatures. Last year in particular saw these parties achieve major gains.

Christian policy itself often drove Jews into business generally and banking in particular. Drove them into it — but condemned them for it.

These parties fall into two broad categories: the ultra-right-wing, so to say, and the neo-Nazi. The Independence Party in the UK and the contemporary National Front in France, both to the right of what we would call conservative or neoliberal parties, are of the first category. The Golden Dawn Party in Greece and the Jobbik Party in Hungary are both in the second category. The difference between the two types of European radically right-wing parties is explored in an article by John Palmer a couple of years back.

The neo-Nazi parties mimic the German Nazi Party of yore. For example, the Golden Dawn party of Greece has its own version of the SA (Sturmabteilung), which delights in bullying immigrants and refugees. And the Jobbik party in Hungary delights in bullying the Roma (Gypsies). On the other hand, the UK Independence Party and the contemporary National Front don’t terrorize anybody, but instead oppose continued widespread immigration and want firmer measures to assimilate the recent immigrants.

Interesting here is the National Front in France. It has recently seen something of a power struggle between the founder of the party, Jean-Marie Le Pen, and his daughter Marine. The father has said a number of things that seem to show genuine anti-Semitism. For instance, he has spoken about making an “oven-load” of a Jewish singer. Regarding the Holocaust, which killed 6 million Jews, he has repeatedly made slighting comments, such as, “If you take a book of over a thousand pages on the Second World War, in which 50 million died, the concentration camps occupy two pages and the gas chambers ten or 15 lines, and that’s what one calls a detail.” Considering that of the 50 million people killed in WWII, at least 11 million died in the Nazi concentration camps, I don’t think we are talking about a detail meriting two pages out of 1,000. And he has said, “I’m not saying that the gas chambers didn’t exist. I couldn’t see them myself.” While not denying the concentration camps existed, Le Pen has clearly attempted to dismiss them, which seems odd for a person who had no anti-Semitic beliefs to do.

His daughter seems to have taken command of the party and distanced it from his anti-Semitism, focusing instead on anti-immigrationism. But even so, it seems clear that the long-term members of the party are more likely to harbor anti-Semitic beliefs than is the French public as a whole.

Now, in the European context, radical right-wing parties have a markedly different flavor from that which we Americans view as “right-wing.” Many Americans consider libertarians to be on the Right politically, but Europeans would more correctly view then as “liberal” advocates of minimal government. Most American conservatives, too, are distrustful of a powerful central government. But the European Right tends to favor economic statism and intense nationalism. What focuses their anger is the vision that many European leaders share of a “United States of Europe.”

The European Union started as a free trade zone (at which it was quite a success). Then it became a unified monetary zone (the success of which is bound to be severely tested, should Greece leave). But the goal of political union, in which the existing European nation states merge into one overarching state, sticks in the craw of the radical Right. (To get a sense of the intensity of the disagreement, you can listen to a recent heated debate between two Euroskeptics and two True Believers in a United States of Europe.)

There are plenty of reasons for even libertarians to distrust the idea of a unified European state. But one of the main reasons for the European Right lies in its own tribalist feeling of “volk,” of the people as an extended kinfolk bonded by blood as well as culture. Many of those who view immigrants as “outside the tribe” — i.e., as members of the out-group — also view Jews in this way as well. Jews are often seen by the ultra-rightists as being “cosmopolitan,” a code for saying that they aren’t really Germans (or French, or whatever). They are of “different blood.”

Add to this the traditional tie between the Right and the church in Europe, which brings in the element of Christian antipathy toward the Jews, and the attraction the fascist Right has toward socialism, with its suspicion of capitalism (and hence of “money-lending”), and you have a further source of anti-Semitism.

As Europe struggles economically, the radical Left and radical Right may continue to grow in number and political influence.

One point should be made explicitly and stressed. While the three European communities with the most anti-Semitic feeling are Muslims, leftists, and rightists, that of course does not necessarily mean that the majority of their members approve of Jews being physically attacked, or are even anti-Semitic. Reverting to one of the polls reported earlier, while 14% of the French generally say violence against Jews is “understandable” (which may or may not mean that those respondents approve of it), 21% of the Left Front, 25% of Muslims, and 29% of National Front say it is understandable. That in turn means that 79% of the Left Front, 75% of Muslims, and 71% of the National Front say that they do not believe anti-Jewish violence is understandable, much less approve of it.

That said, however, some other points must be made as well. First of all, the number of people agreeing to certain anti-Semitic statements (such as the one about Jews using the Holocaust as a victimhood ploy) does reach majority support among the three groups. Also, it is quite likely that many people who really do believe violence against Jews is understandable (and perhaps even deserved) will not want to admit that to a pollster. Almost surely, the reported percentages are lower than the real ones.

Further, as Europe struggles economically, the radical Left and radical Right may continue to grow in number and political influence. Should Greece leave the Eurozone, and should this lead to financial crisis, these groups may increase their influence. And regardless of Europe’s short-term financial future, the Muslim population is likely to continue to grow. In view of these trends, I think that the level of European anti-Semitism will probably be rising as well.

In short, though Holocaust Remembrance Day has come and gone, there is much still to ponder, and it is deeply disquieting.

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A Classical Liberal Case for Immigration Reform


1. The Issue that Will Not Die

Once again, immigration emerged in a presidential campaign — when President Obama reversed his position and issued an executive order to allow young (less than 30-year-old) illegal immigrants who were brought here as children to receive a two-year deferral from deportation and the right to apply for a work visa. Governor Romney kept trying to formulate his position on the issue, a position that appeared to be a case for increasing legal immigration while further discouraging illegal immigration.

During the past several decades, our national government has failed to fix a clearly dysfunctional immigration system. The last attempt at comprehensive reform, crafted under the Bush administration, failed to pass Congress despite bipartisan support. Obama may have played a spoiler role on the bill.

In any case, despite having had complete control of Congress for two years, he failed to get any bill passed — indeed, he never even introduced one — though he had promised to push comprehensive immigration reform. Under his administration, immigrant deportations have gone up about 30% from Bush’s second term, and double the rate of Bush’s first term.

In this essay, I will sketch some answers to the following questions: is immigration still vital? Why does our immigration system need reform? Why is getting comprehensive reform difficult? What might a satisfactory solution look like, from a classical liberal point of view?

2. A Conflict of Visions

In the matter of immigration, as in so many other “hot-button” issues in politics, you cannot understand the positions — and the passions — of both sides unless you understand that there is a fundamental conflict between two politico-economic visions, or ideologies, if you will: the populist view and the free market or (better) the classical liberal view.

Populism regards free-market activity as inherently dangerous to society. To this way of thinking, the populace, the masses, aren’t individuals freely living together out of mutual convenience; they form an organic whole — a folk, a community, a people, a culture — that transcends the individuals within it. Free-market activity, based obviously and openly on self-interest, is considered destructive to the organic community.

Despite having had complete control of Congress for two years, President Obama failed to get any bill passed — indeed, he never even introduced one — though he had promised to push comprehensive immigration reform.

Evolution explains this aspect of populism: humans evolved as a species whose members formed small tribes, working together with a degree of cooperation almost unique among animals. Tribalism helped the species flourish; it also produced such problems as intergroup warfare. Populists, however, are bent on protecting the tribe. They feel that the populace, the average people, need to be protected from powerful groups (merchants, capitalists, the bourgeoisie, illuminati, Trilateral Commission members, whatever), or from other tribes (other races, other nations, and so forth).

Populists accordingly tend to oppose free trade (“protectionism,” in the narrow sense). They also tend to oppose large-scale companies (especially multinational ones): “big business.” They tend to oppose the accumulation of large amounts of capital by individuals and especially by investment companies: “fat cats,” “malefactors of great wealth.” And they tend to oppose allowing large-scale immigration, especially of ethnic or religious groups markedly different from the majority of the populace. This is often termed nativism, but because that word has acquired an unfavorable connotation that is in many cases unwarranted, I will use the term “anti-immigrationism.”

Classical liberals usually hold the opposite views, right down the line. They favor free trade. They harbor no opposition to large or multinational corporations or to the accumulation of capital per se. It is, after all, rather difficult to have capitalism without capital. And they tend to favor the free flow of labor, as they do the free flow of goods.

Some have suggested that there is an opposition between populism and statism. I regard this as a capital mistake, when viewed either analytically or observationally.

Analytically: who generally needs to resort to government coercion? It is those who seek to “protect” the populace. Free trade is as natural between nations as it is between people within a community, and for the same reason: we all naturally “truck and barter,” as Adam Smith put it — we all seek the best goods and services we can get, for the lowest price. Coercion is necessary if one wants to block this tendency. When business flourishes, it is natural for wealth to accumulate disproportionately in some hands, but populists suggest that the government block this accumulation. And it is natural that some people will want to move wherever living conditions are better for them. It is typically the populists who want the government to stop new people from coming in.

Observationally: what does history show us? Precisely that some of the most perniciously statist regimes were the fascist and communist ones — regimes typically sold on populist grounds.

In the American context, populist sentiment informs bothmajor political parties, for each is a coalition of disparate groups, and there are elements of each coalition that have populist affinities.

Populism is found in the Democratic Party coalition in several areas. Labor unions — both the rank-and-file members as well as the leadership — almost always deeply oppose free trade. Anti-immigrationism is common among the union rank and file, and also among African Americans, who often view waves of immigrants as direct competition for jobs and political power. (However, we should note that many union leaders support immigration, either to strengthen the Democratic coalition, which supports their empowerment, or out of hope to organize the new immigrants.) Many environmentalists oppose immigration, feeling that overpopulation is ruining the ecosystem. And working-class and poor Democrats tend to envy the rich, wanting to take from them whatever possible.

Who generally needs to resort to government coercion? It is those who seek to “protect” the populace.

Populism is also found in the Republican Party coalition. Many social conservatives, especially evangelical Christians, have been anti-immigration out of a religious aversion to Catholics and Jews. Many social conservatives believe that recent immigrants are refusing to assimilate, with a multiculturalist government acting as their enabler (offering ballots in foreign languages, for example). Moreover, national security conservatives view with alarm the rise in the number of Muslim Americans, fearing potential terrorists. Many so-called “pro-business” conservatives fear multinational corporations.

The fact that the American political system is built around two major political parties, both of which are coalitions containing highly populist major constituents, helps explain why immigration reform has been hard to achieve. It is hard for either party, when actually holding power, to get the job done, because not only will the populists of the other party oppose reform, but their own populist wing will fight them as well.

Let me be clear that while I am an advocate of classical liberalism, I certainly do not believe that every issue can be settled on ideological grounds. For example, feeling comfortable with multinational or huge corporations in general does not mean that corporate crime should be ignored or excused. And specifically, I recognize that a free-market supporter might oppose contemporary immigration, out of, say, the feeling that modern immigrants vote in such a way as to undermine the free market. I address this point at great length below.

3. The Unpleasant History of Anti-Immigrationism

Contemporary opponents of immigration make a fair point: their actual arguments deserve to be addressed honestly and not dismissed on the basis of what past people (who had similar objections to prior immigrants) may have done. In logic, there is a term for the fallacy of dismissing an idea solely on the basis of its origins: the genetic fallacy.

However, if history shows that similar arguments were used in the past and were falsified by subsequent events, that would seem to raise the burden of proof on those making similar arguments now. At a minimum, they have to point to differences that explain why the same argument that failed to prove accurate in the past is likely to hold now.

My point here should be understandable especially to classical liberals, who argue that social and economic problems are usually best addressed by the spontaneous order in society rather than massive governmental intervention. We often argue for this view by pointing to the fact that before the rise of the huge federal welfare state, these problems were solved by private action by private individuals and groups.

Since the history of anti-immigrationism is easy to research on the internet (you can just start with the Wikipedia entry on nativism and move on from there), let me just highlight some points.

  • Anti-immigrationism is a political position or stance that springs up especially in a country or society that faces a rapid influx of people from foreign to it.
  • Countries that are composed primarily of immigrants (such as Australia, Canada, New Zealand, and the United States) are no less prone to anti-immigrationist movements that are other nations. Indeed, they may even be more so, because a sort of “compassion fatigue” that sets in.
  • Despite the fact that restriction of immigration into the American colonies by the British government was explicitly listed as one of the justifications for breaking away from Britain in our Declaration of Independence, nativist sentiment developed early on.
  • A very big spur to nativism was Protestant fear of the growth of Catholicism. This was behind opposition to some German immigration in the 1820s, and then to the large influx of Irish in the 1830s to the 1860s. During this period, something like 5 million Catholics entered, while the population of the country grew from about 10 to about 30 million.
  • Spurred specifically by the influx of the Irish, in 1850, nativists formed the Order of the Star Spangled Banner (the “Know Nothing” movement). The crucial requirement was to be Protestant. This was the basis for forming a new political party, the American Party. During this period there were intermittent attacks on Catholic churches and individuals, some of which resulted in deaths. U.S. Grant actually joined the party in 1855, feeing that immigrants cost him a shot at being a county engineer.
  • How well have the Irish done? By 2006, Irish-Americans households averaged $54,000 (compared to the national average of $48,000). 31% of Irish-American adults had a college degree, compared to the national average of 27%.[i]
  • One might argue that some immigrant groups have done poorly. For example, if you consider blacks as immigrants — an odd usage of the term, since they arrived with the original British settlers, so were in fact co-founders of the country, so to speak — then, no, they haven’t economically outpaced other groups. But for over a century they were slaves, and even after emancipation were subjected to profound discrimination until very recent times. Over the last half-century, they have done much better. Moreover, recent black immigrants — say, from the Caribbean — have done well economically.
  • Anti-German sentiment lasted from 1840 to 1920, especially with the influx of German Catholics beginning in 1840, with concerns over the Germans’ tendency (then) to congregate separately, have their own schools, keep their language alive, and drink beer(!). In World War I there was widespread suspicion of the German-Americans, and in Australia the Germans were put in internment camps.
  • Opposition to Chinese immigration was pervasive at the end of the 19th century, culminating in the Chinese Exclusion Act of 1882. From the vantage point of current anti-immigration sentiment, this is ironic: limiting the Chinese led to an increase in Mexican immigration into the US, as the railroad industry needed the labor to build out its network of track.
  • Even more ironically, blacks — the historic victims of much discrimination — widely opposed Chinese immigration in the 1880s. One black newspaper wrote at the time, “There is no room for these disease-breeding, miserly, clannish, and heathen Chinese.”
  • From 1890 to the early 1920s, the focus of nativist wrath switched to the influx of Central and Southern European immigrants, especially Catholics and Jews. The resurgent Ku Klux Klan exploited this sentiment from its “rebirth” in 1915 to its spread in the early 1920s, and was a large-scale movement, hitting as much as a 5 million enrollment. These voters made their preferences known to the politicians.
  • During this time, nativism and racist eugenics were intertwined, with key players in the eugenics movement pushing against immigration.[ii] The large influx of Italians, Poles, Slavs and especially Jews aroused the ire of those who believed only “Nordic” Europeans were worth allowing in.
  • In 1924, Congress passed an act that lowered the quota of immigrants to less than 165,000, that is, it virtually ended immigration. One of the major arguments pushed by labor unions, among others, was that this influx was resulting in high unemployment and driving down wages.
  • Most waves of immigration did bring in immigrant criminals. There were Irish gangs, Chinese gangs (“tongs”), Jewish gangs, Italian gangs, and so on.
  • More recent waves, such as the influx of Cubans into South Florida after the rise of Fidel Castro, and the Vietnamese influx after the fall of South Vietnam in 1975, have also assimilated well on balance.[iii]

Now, in every case, while various other arguments were given, two arguments were constant.

First, “these people” will steal jobs from (or work for so little that they would drive down the wages for) the native-born workers. This argument was used even against the Irish, the Chinese, Eastern Europeans, and many (if not most) other immigrants. Second, they are “strange” or “clannish” people who don’t fit in and whose allegiances are elsewhere (so presumably pose a threat to the country).

However, the historical reality is that the country managed to handle each wave of immigration, and overall per capita prosperity increased dramatically throughout the whole time (within the usual business cycles, of course). In fact, by the outset of World War I, if not before, America was the richest and most powerful nation in the history of mankind.

In the early 20th century, nativism and racist eugenics were intertwined, with key players in the eugenics movement pushing against immigration.

I am not saying that since the immigrants arrived and the economy thrived, therefore the immigrants were the reason why. (I will, however, support separately the claim that immigration does actually help an economy, below.) All I’m suggesting is that the fact that such massive immigration was conjoined with such a massive increase in wealth in the past is evidence against the claim that immigration hurts the economy. Moreover, the elimination of immigration in the mid-1920s did nothing to stop the Great Depression, and it may have helped bring it about.[iv]

In sum, the history of large-scale American immigration is one of broad assimilation accompanied by a rapid growth in national prosperity, albeit with some gang activity — but activity that eventually dies down, even if it doesn’t disappear entirely.[v] So immigration seems to have been broadly benign at worst, and more likely broadly beneficial over the long term. And again, to take consequentialism seriously is to look to the long term. I would suggest that the burden of proof falls on the modern anti-immigrationist to explain why things are so different now that we ought to halt immigration.

To be fair to such folks, they do offer reasons for their positions, ones we will examine in a moment.

4. What the Natural Rights Perspective Shows Us

The history of nativism is a history of exaggerated fears. Many classical liberals would say, “But of course! Open borders allow free mobility of labor, which benefits consumers by lowering prices for the goods they pay.” Yet making the consequentialist case for open immigration turns out to be tricky, as we will see below. So some classical liberals try to short-circuit the discussion by using only natural rights arguments for open borders.

Two such arguments are routinely put forward.

First, some have argued that all human beings have a moral right to mobility, i.e., that all people have an innate right to flee a repressive or otherwise dysfunctional state. This right, it is alleged, entails for the rest of us the duty to let people cross our national borders and settle here. To stop them would be to employ coercion by keeping them in places where they don’t wish to remain.

When I hear this argument from hardcore libertarians, I am invariably puzzled. Such people (who consider themselves the purest of free-market advocates) should be the first to see the flaw in the argument: it confuses negative and positive rights.

In essence, negative rights are rights that entail on others the obligation not to hinder an activity. To say that you have the negative right to free speech means only that other people have no right to stop you from speaking. Positive rights (about the existence of which classical liberals are rightfully doubtful) entail upon others the obligation to, if necessary, give their lives or property to enable some action. To say you have a positive right to free speech would mean that other people would have to buy you a TV station or some other medium to enable you to transmit your views. But that would violate those other people’s right to keep their property.

It seems clear from this discussion that a classical liberal should agree that any person has the right to leave his country, unhindered — but that is only a negative right. It entails upon us only the duty not to stop him. It does not mean that we have the positive duty to provide him residency in our own country. That is analogous to saying that I don‘t have the moral right to keep you from leaving your house, but I surely am not obligated to give you a room in mine.

The second rights argument concerns the right to enter into contracts. If I want to hire Fred to do a job for some price and Fred wants to do it for that price, it is at least prima facie clear that nobody has the right to interfere. Indeed, all free exchanges between autonomous agents are prima facie ethical from any perspective, not merely the natural rights one. Now, hiring people is simply exchanging your money for their labor. What difference does it make whether Fred comes from here or abroad?

But there are several requirements for free exchanges to be ethical. Two are obvious. First, the product or service must itself be ethical or legal (supposing that you take “rights” to be moral or legal). You couldn’t say that my hiring Fred at a mutually satisfactory price makes the hiring within our rights if, say, Fred is a doctor whose license has been revoked and I am hiring him to work in my hospital, on patients unfamiliar with his status. That would at a minimum seem to say I cannot hire Fred if he is an illegal immigrant (under laws morally enacted).

Second, the exchange should not violate the rights of others — should not cause “negative externalities,” that is, harm people not party to the transaction. If I hire Fred to paint my house, and he does a good job at a low price, but dumps toxic waste on Sue’s property, the transaction is unethical from the natural rights perspective (because it violates Sue’s rights to life and property), or any other ethical perspective, for that matter.

In what ways may immigration hurt (in the sense of violating the rights of) others?

This can be tricky. For example, if I am a bricklayer, and after talking to me about what I would charge to do the job you want done, you decide to hire Fred because he charges less, am I “harmed” by the exchange between Fred and you? I am, in the sense that I didn’t get a job I wanted — but then it wasn’t a job I had a right to in the first place. But if Fred is from another country, does that change things? And if so, why?

The historical reality is that the country managed to handle each wave of immigration, and overall per capita prosperity increased dramatically throughout the whole time.

This topic — in essence, how to view nationalism from a classical liberal perspective — is worthy of a book unto itself. But it seems at least prima facie clear to say that my fellow citizens have a moral right to my support in the form of“loyalty.”

Prima facie, the fact that I grew up in this country, that my fellow citizens protected me, together with the fact that I have the right to leave at any time (a right denied to their citizens by a number of other countries), entails upon me the obligation to obey its laws, and to fight for it if it is existentially threatened. These are my duties toward the nation, which is an aggregation of individuals.

You might also plausibly say that my fellow citizens are entitled to preference in some of my actions. If a cruise ship goes down, and I am on a raft, and two individuals are drowning, of whom I can rescue only one, and I know of them only that one is American, and the other isn’t, it is at least plausible to claim that I should rescue the American.

More relevant to the topic of this essay is the question of whether I have an obligation to my individual fellow citizens to give them some kind of preference in my consumer choices (and to expect them to reciprocate). The feeling that we should, as loyal citizens of a country, prefer our fellow citizens in commercial trade is so intuitive that we find it expressed in a bumper sticker: “Buy American!”

If we did have such an obligation, it would seem to provide an argument against allowing immigration — and against foreign trade, as well as automation, for that matter. For it would seem to suggest that since bringing in a competing non-American worker (or buying from a foreign company, or replacing an American worker by a machine) would hurt an American worker, immigration (and free trade and automation) violate our patriotic loyalty.

Yet I don’t think we have any such obligation.I also think it is easy to see why, if we remember a basic maxim of ethics: “Ought implies can.” This means that to say “person X ought to do A” presupposes that X can, in fact, do A. It would make no sense to say that I am morally obligated to end poverty today, because it is utterly impossible for me to do so.

Now let’s consider this concept of “buy American.” Suppose that Fred and Ted, whose sole relationship to me is that they are my fellow Americans, have both built cars. Does the fact that Fred is an American obligate me to any degree to buy his car? No, because in buying his car, I am perforce not buying another American’s (Ted’s) car. To favor Fred is to disfavor Ted, and both are equally American.

Would it make a difference if I were choosing between Fred’s car and Hans’s, if Hans is a resident citizen of Germany? No, because if I buy from Hans, I will have to buy his car with American currency, which means that Hans in turn will (directly or indirectly) have to spend or invest in America, which in turn will give preference to some other (unseen) Americans. As in the previous case, I am favoring one American but disfavoring another — the only difference being that the disfavored person is seen in the one case, and unseen in the other. (I am using terminology borrowed from Frédéric Bastiat, to whom I will return.)

However, we don’t need to think too deeply about such subtle questions, because there are obviously things about modern American immigration that clearly violate the rights of others. One was cited by Milton Friedman, who said, “It’s just obvious that you can’t have free immigration and a welfare state.” The point is that if you bring Fred from abroad to work for you and he begins drawing welfare benefits, of course this harms other people, to wit, the taxpayers. Specifically, to the extent that Fred takes more out of the welfare system than he pays in, his migration results in violating the property rights of taxpayers.

It seems clear that any welfare state that allows open borders will draw in people who receive benefits at the expense of other residents. Common sense would suggest that under these conditions the poor are most likely to immigrate, and more likely to exploit welfare programs than the average (i.e., native-born) citizen.

Some classical liberals reply that this is a good reason to end all welfare. Perhaps, but it merits two equally quick replies: how likely is it that the modern welfare state will disappear anytime soon? And doesn’t that mean that until all significant forms of welfare are in fact totally eliminated, no immigration, or at least, no people who are possibly going to take welfare of any sort — which, in our society, means everybody, since everybody is covered at least by Social Security and Medicare — should be allowed?

One last point regarding natural rights ethics and immigration should be mentioned: the sword cuts both ways. The right to exclude immigrants — including stopping immigration completely — can be defended on the basis of natural rights, in particular, the right of free association.

If my friends and I decide to form a club, it is prima facie our right to do so, and we have the right to exclude anybody we please. If Fred wants to join, and we don’t want to let him in, it is again prima facie no violation of his rights to say he cannot join. As long as we don’t interfere with Fred’s right to form his own club, or to join other clubs willing to let him join, we are well within our rights.

And it seems prima facie equally justified for the citizens of a democratically governed nation to exclude anybody they choose.

The conclusion is that natural rights ethics does not automatically support the claim that the mobility rights of the downtrodden and suffering poor of the earth dictate open borders. After all, if there were such rights, they would mean that everybody in the world should be perfectly to move here, no matter whether (for instance) they paid any taxes or not. Instead, it tells us that at a minimum, immigration should be legal and not harm the legitimate property rights of others.

So if we are to make a compelling case for free or even heavy immigration, consequentialist considerations must be entertained.

5. Criticism of Recent Immigration

The most recent wave of immigrants, consisting predominantly of Hispanic (mainly Mexican) immigrants, has roused a new wave of anti-immigrationism.

The new anti-immigrationism has more able writers expounding it than older varieties had. They include a group at the Manhattan Institute, such as Myron Magnet, Victor Davis Hanson, Heather MacDonald, and Steve Malanga. Also among the sophisticated anti-immigrationists are Robert Rector of the Heritage Foundation, and such academics as Samuel Huntington and George Borjas.

Contemporary anti-immigrationists differ in what they want done. Some, such as Peggy Noonan, have called for a halt to immigration to give time for assimilation. Others, such as J.D. Hayworth, have urged deportation of all illegal immigrants. Still others, such as Don Goldwater, have actually called for internment camps for illegal immigrants, who would be used as forced labor to build a fence along the southern border.

Let’s review the major reasons that contemporary anti-immigrationists typically offer to show that widespread immigration should be halted. I will use a nice survey piece on the subject by Myron Magnet. His piece is all the more powerful because, as he notes, the magazine he edits — the estimable City Journal — long supported extensive immigration, before “flipping” a few years back and opposing it. (The Heritage Foundation also “flipped” along the way.)

Reading the piece (and other contemporary anti-immigrationist writings), you see four major areas of concern about the most recent wave of immigrants: the problem of illegality; the problem of the economic costs of immigration; the problem of the social costs of immigration; and the problem of the environmental costs of immigration. Let’s take them in order.

The first problem is that unlike all previous waves of immigration, which occurred in compliance with existing law, most of the recent wave of immigrants is illegal.

  • The total has reached a high of over 12 million illegal immigrants, down recently to perhaps 11 million (since the onset of the recent recession and slow recovery).
  • This illegal immigration followed the compromise bill of 1986, which legalized virtually all the 2.7 million illegal immigrants of the time (i.e., gave them green cards, or permanent legal residency).

Here is an undeniably reasonable point, and I suspect it is a big cause of the anti-immigrationist antipathy that killed the Bush immigration reform bill.

The second problem raised by contemporary anti-immigrationists concerns the economic costs of immigrants.

  • Unlike earlier waves of immigrants, this recent (primarily Hispanic) wave came after the major expansion of the welfare state that occurred in the 1960s and 1970s, giving immigrants a myriad of welfare programs that didn’t exist before.
  • Legal permanent immigrants (green card holders) are eligible for a host of welfare benefits (unemployment, aid to families with dependent children, school lunches, etc.), and illegals seem to have little difficulty in fraudulently obtaining these benefits too. Moreover, their children are educated at public expense (though the increased education may later result in those children earning higher incomes than they would if left uneducated, upon which incomes those children will pay taxes if they become legal, as they often do).
  • Magnet reports that Catholic priests in Hispanic areas routinely help sign up Hispanic immigrant families for every benefit possible.
  • Magnet quotes Robert Rector’s famous 2007 study that helped kill immigration reform by showing that low-skilled immigrants (legal or illegal) consume, on average, $20,000 more annually in government resources than they contribute in taxes.
  • Hispanic immigrants are disproportionately low-skilled; indeed, Magnet claims that they are lower skilled even than the immigrants of the 19th and early 20th centuries. But today’s economy is progressively more epistemic or knowledge-based. Only a few industries have benefited from cheap manual labor (nanny services, home repair, agriculture), and even then it has been a “mixed blessing,” since it has “retarded mechanization.”
  • The flood of cheap labor has lowered wages for unskilled native-born workers by 8%. Though Magnet doesn’t tell us where he got this figure, it is more than likely from the work of George Borjas, an economist who has published many papers that seem to show a correlation between extensive low-skilled immigration and the lowering of native-born low-skilled workers’ wages. (See, for example, his paper on how an increase in low-skilled immigrants is correlated with lower wages and higher incarceration rates for blacks.)
  • Recent immigrants notoriously send much of their money back home.

The third problem raised by contemporary anti-immigrationists is the social costs of the recent wave of immigrants. The concerns involve crime, lack of assimilation, and the “swamping” of communities.

  • Magnet claims that recent immigrants are more inclined to crime, and have lower stores of “social capital: strong families, self-reliance, entrepreneurism, a belief in education,” and a belief in the future of America, than earlier immigrants.
  • He notes that 30% of federal prisoners in the year 2000 were foreign-born.
  • In 1998, 30% of California’s population was Hispanic, but 42% of its new prisoners were.
  • Cops in New York report that in heavily Hispanic neighborhoods, an estimated 70% of criminals are Hispanic.
  • Hispanics have about double the rate of unwed pregnancies that whites do.
  • Hispanics have moved disproportionately to certain areas of the country and have “swamped” the communities, resulting in whole parts of cities becoming essentially “Little Mexico Cities.” This puts pressure on the local school systems, which are failing in California.
  • Large clusters of foreign-born people in a given area decrease “social capital,” that is, make people less trusting, less willing to help other people, and so on. This is a point most famously explored by sociologist Robert Putnam, whose research shows that areas of high immigrant population have the lowest levels of social trust. (It is important to note that Putnam himself supports immigration.)

The fourth problem that concerns many contemporary anti-immigrationists (though not one mentioned in Magnet’s piece) is that America is running out of room for all these teeming hoards of immigrants. They consume too many resources for our poor land to support. As Jason Riley notes in his pro-immigration book, Let Them In,[vi] there has long been an affiliation between the environmentalists and the anti-immigrationists, one going back to the founding of that über-environmentalist group, the Sierra Club (ironically founded by an immigrant).

6. Rebuttals to These Criticisms

I think the case put forward by Magnet and like thinkers is nowhere near as compelling as it superficially appears to be. Indeed, much of it is just silly. To explain why, let’s briefly review some basic logic and classical liberal economics.

Start with the logic. The correlation of A and B doesn’t by itself prove that A causes B. You have to rule out other possible explanations (preferably by a control group experiment). Otherwise you simply have a correlation fallacy. So, for example, to say that illegal immigration from Mexico accelerated as American welfare programs expanded in no way proves that the latter caused the former. As we will see, there are other more plausible explanations, and the correlation is spurious anyway. (Of course, this does not mean that illegal immigrants never receive benefits, or that it is no problem if they do. As I explain in the final section of this piece, the system I propose would allow more open immigration, but only for those who will not access welfare.)

Some anti-immigrationists have actually called for internment camps for illegal immigrants, who would be used as forced labor to build a fence along the southern border.

Now consider some economics. Bastiat, in his classic essay That Which is Seen, and That Which is Not Seen, suggests that what makes for good economic analysis (as opposed to the economically ignorant thinking of the average person) is the effort to look for the less obvious effects of an action when calculating the costs and benefits it brings. Consider everyone affected, and consider the long-term unintended consequences as well. If a window is broken, you see the owner of the house being forced to give a job to a repairman. It looks as if the broken window had “created” work. But you don’t see that had the window not been broken, the homeowner could have bought a pair of shoes, thus employing a shoemaker. And in that case, the homeowner would have both a functioning window and a new pair of shoes.

Similarly, showing that a nanny from Mexico “took” a job that a more expensive native-born nanny held or might have held doesn’t mean that society has lost anything. The Mexican nanny will have money to spend, and the mom will have extra money to spend on her preferences, which will create jobs elsewhere that native-born workers (possibly including the ex-nanny) can fill.

Let’s now consider the four objections to the recent wave of Hispanic immigrants in order.

What about the first problem, that other waves of immigrants were primarily legal? Well, to the point that we should only allow people to enter this country legally, I wholeheartedly agree . . . that much is clear just from our natural rights analysis. But I would point out some things that lessen the force of the objection.

  • Some prior waves of immigrants faced few legal hurdles, so obeying the law was rather easy for them. Through much of the 19th and 20th centuries, you just bought a ticket, took a boat over, and stepped onto American soil; then you were legal. That is one (though of course not the only) reason why our population exploded so rapidly. While there was some risk in making the passage in sailing vessels, with the rise of steamships the risks became minimal. No capital, employment, or other requirements were imposed, except freedom from certain diseases.
  • Even in the early 20th century, when immigrants were processed through Ellis Island, the authorities were primarily looking to turn away people with communicable diseases or a criminal background. Only about 1% were rejected.
  • One reason there is so much illegal immigration is likely that legal immigration levels are set way too low.Until recently, the sheer demand for labor was so great that it drew people across the border. This is an argument for making immigration easier, since the general economy will grow wealthier if productive enterprises can efficiently access labor (which, like capital, is essential for most industry).
  • The reason illegal immigration was easier for Mexicans was that Mexico shares a long common border with us — not some greater innate propensity for law-breaking than was found in earlier waves of immigrants.
  • Maybe one reason Hispanics felt for so long that it was no big deal to cross the border illegally is because there were periods whenwe didn’t think it was either. We didn’t enforce the laws very strictly for many years (following the policy of “catch-and-release”, common in the ’60s and ’70s, though not in the ’50s and not over the past decade or so).[vii] Deportations soared in the second Bush term, then soared even higher during Obama’s term in office.
  • The recent wave of Hispanics appears to be a consequence of factors not likely to recur. It looks like a “one-off” event. As late as the 1960s, Mexican women gave birth to an average 7 children each. By this decade, the rate had dropped to 2.3 per woman, or not much above the replacement level of 2.1. (America’s rate was below replacement levels for quite some time, but recently hit 2.07. About this, more below.) So a rapid build-up of Mexicans, coupled with the weak Mexican economy and their physical proximity to America (in the absence of a mandatory e-verify law, about which more below), is what led to such massive crossing of the border. There is clear evidence that the number of attempted crossings has plummeted in the face of, among other things, more work in Mexico over the last decade.
  • In fact, the number of Hispanic immigrants has been plummeting for a decade (for a graph, see this summary). As a recent amazing Pew Center report (“The Rise of Asian Americans”) notes, 2010 marked the first time that there were more Asian immigrants than Hispanic ones.
  • Most serious crimes such as burglary, rape, robbery, and fraud, have statutes of limitation. It thus seems odd to suggest, as many anti-immigrationists have, that the civil infraction of crossing the border illegally should have no statute of limitation for prosecution. True, the illegal immigrant is committing a civil infraction by remaining here, but the major point remains: if we can cease pursuing a rapist after seven years (even though his victim may still suffer), why continue to seek out those who crossed out of a need to find work, and remain here to work? Of course, once again, this does not mean that we should welcome those who come here to get on welfare.

What about the second problem, regarding the economic costs of immigration to society? Start with the concerns about immigrants’ use of welfare programs.

  • That recent immigrants are able to access welfare benefits that prior immigrants couldn’t is absolutely true, and in a reasonable reform package (such as the one I propose in the final section) that would be dealt with. But there are some problems with Magnet’s conclusions from that point.
  • To begin with, singling out Catholic priests is surely odd. No doubt many do encourage immigrants to take welfare wherever they can. But so does the federal government itself. It runs ads informing people how to get food stamps (actually, more like food credit cards) and encouraging them to do so. I am not arguing that the government should do this — indeed, my proposal for immigration reform would stop everybody from doing this, government or nongovernmental groups. I just resent Magnet’s cheap shot against the Catholic Church. Additionally, the one group most disproportionately using welfare is African-Americans, and they are largely Protestant.
  • Riley notes that when you compare all legalimmigrants to native-born citizens of the same economic level, immigrants use welfare programs less. (NB: in any case, illegal immigrants are not eligible for welfare, though their US-born children, being citizens, are.)
  • And Riley notes that welfare dependency was going down even as illegal immigration peaked, due in great measure to welfare reform passed in 1996. While illegal immigration doubled between 1995 and 2004, welfare caseloads dropped by 60%.
  • From 1995 to 2001, noncitizen enrollment in TANF (Temporary Assistance to Needy families) dropped 55%, and in food stamps by 52%. It would appear that the rules governing the ease of getting government benefits along with the general economic conditions determine the number of people on welfare, not immigration law.[viii]
  • Between 1990 and 2004, there has been a very clear inverse relationship between the rate of illegal immigration and that of unemployment — the higher the unemployment, the lower the illegal immigration, and the lower the unemployment, the higher the illegal immigration. This doesn’t suggest that immigrants are coming for welfare.
  • As Riley notes, in 2006, among foreign-born workers generally, labor participation rates exceed those of native-born workers (69% vs. 66%). The unemployment rates for foreign-born workers is significantly lower than for native-born workers (4.0% vs. 4.7%), and among Hispanic males the disparities are even higher. None of this suggests that the immigrants are here for welfare.
  • The Rector study struck many then (and since) as dubious. In essence, Rector added up what unskilled immigrants paid in taxes, then what they cost the government in terms of services, including the education of their children, and showed that on average the latter exceeds the former. But this seems too narrow a measure of how immigrants benefit the economy. It ignores the increase of society’s wealth from the value the immigrants create as well as the reduced prices they bring.[ix] This is surely perverse.
  • Suppose, for example, Fred and his home improvement crew are immigrants, and they offer to add a room to my house for $10,000, whereas Bob and his native-born worker team want $25,000. I go with Fred, saving $15,000. Under Rector’s analysis, society only benefits from the taxes on $10,000. But my savings of $15,000 surely leave me wealthier, and I will either spend the money or save it, thus creating new jobs as well as allowing society to tax it elsewhere.[x]
  • One might object here that in a free market, the wages Fred and his crew would get would reflect what their work is worth. But first, not every actor in a free market will ask for exactly the same amount — some will try for higher than what the market might dictate, hoping the customer is unaware of that true, lower market price. More importantly for this discussion, the presence of Fred is what will eventually make Bob more reasonable in his pricing.
  • Also, the amount of work to be done is not fixed. For example, think of a case such as this: Sue is a trained accountant, raising her children at home. She could earn $800 a week if she could find a nanny, but a native-born nanny costs $800 a week. She decides to stay at home with the kids. Society derives no taxes. But an immigrant nanny offers to mind the kids for $400 a week. Sue employs the nanny. Not only does society get the taxes from the nanny’s $400 per week; it also gets the taxes from Sue’s $800 (or if Sue can write off the nanny costs, the extra $400). Rector’s analysis doesn’t reflect such cases of native-born workers entering more productive work because of the availability of immigrant labor.
  • Rector’s analysis applies only to the very lowest-skilled immigrants, as he himself conceded, but that characterizes only about one-third of all immigrants.[xi]
  • Moreover, it is arguable that illegal immigrants, at least, contribute more into Social Security and Medicaid than they receive, if they are using other people’s Social Security numbers (unless they later get into the system).
  • More generally, Rector doesn’t disentangle the problem of the unsustainable growth of the major entitlement programs from the contributions of low-skilled immigrants to society. The three major entitlement programs, Social Security, Medicare, and Medicaid, have unfunded liabilities in the tens of trillions of dollars. By Rector’s own analysis, the vast majority of native-born Americans aren’t paying their own way in terms of the taxes they pay and the government benefits they receive. If that is true already of a couple hundred million existing citizens, focusing on a million more per year seems overwrought.
  • In case you suspect me of arguing tu quoque, let me point out that my own proposal — outlined in detail in the final section of this paper — would permanently and completely disentangle immigration from entitlement programs.

To the claims about the unfavorable labor impact of Hispanics and their sending money back to their home countries, the rejoinders are obvious.

  • First, notice that this criticism seems to contradict the prior one. If the immigrants are coming here to get on welfare, why would they be stealing so many jobs?
  • If there is little need for low-skilled labor, how is it the immigrants keep finding work in such huge numbers? At the peak of illegal immigration back in the mid-2000s, national unemployment was only about 5%, which was quite, quite low compared with much of Europe.
  • If we are moving or have moved to an epistemic society, then why are we deliberately restricting the number of highly trained engineers who want to come here from abroad? (On this, much more below).
  • If we ban immigrants because they take jobs from native-born workers, should we not outlaw trade with foreign countries and automation, too? Both take jobs from the native-born low-skilled.
  • The point about immigrants retarding mechanization and lowering wages for native-born workers only emphasizes the fact that immigrants generally charge lower prices for their labor. Yes, we could require lettuce growers to use expensive machines or native-born workers at much higher wages, but consumers would pay higher prices for their products. Worse, there would be opportunity costs: the money used for this unnecessary machinery could be used to develop better varieties of produce. And (recalling Bastiat again) we have to consider the unseen jobs created by those lower prices. The money we all save on our groceries, for example, allows us to go out to more movies and restaurants, creating more jobs for higher-skill, native-born workers in those industries.[xii]
  • No doubt this is what led a group of 500 economists to write a letter to Congress in 2006 saying that while a small percentage of workers may be hurt by immigration, on balance it is a net gain for society.
  • It is not clear to what degree, if any, immigrants really lower wages for native-born workers, long-term. Riley notes that Borjas’ initial study (2003), which showed a 8.9% decline in wages, assumed that the number and size of companies is fixed and that immigrants are perfect substitutes — when he removed those assumptions, he got a 5% figure. A study by Borjas and Lawrence Katz two years later showed only a 4% drop, and a later study by Pia Orrenius and Madeline Zavodny found only a 1% lowering of wages and no drop in employment for native-born workers.
  • But other studies show no impact of immigration on wages and employment of native-born workers. David Card’s 1990 study of the Mariel Cuban immigrant influx showed no unfavorable results on wages or employment level[xiii]; so did the Rachel Friedberg-Jennifer Hunt 1995 of the impact of immigrants on native-born labor wage rates; a 2007 study by Giovanni Peri focusing on California, the state most affected by the recent wave of immigrants), showed no job losses when correcting for similar levels of education, and actually a 4% gain in real wages (ranging from a fraction of a percent for high-school dropouts to between 3%–7% for high-school grads).
  • A 2006 Pew Center study of immigration and employment levels from 1990 and 2004 found that the high levels of immigration had no significant impact on employment rates of the native-born. A 1994 study by Richard Vedder, Lowell Gallaway, and Stephen Moore found no significant correlation between the percentage of immigrants in the workforce and the unemployment rate.
  • All this may seem puzzling: how could a large influx of people in a low-skill (or high-skill) occupation not lower wages profoundly and permanently for the native-born workers in that trade? Here it is important to note several important points.
  • First, even legal immigrants are often willing to work for lower wages than native-born workers, in that they are certainly willing to work for low or even minimum wage at many jobs native-born workers won’t do for anything like that wage — picking crops, tending for the elderly and children, working menial jobs in unpleasant environments, and so on. These are jobs native-born workers haven’t taken in sufficient numbers, even in this prolonged period of high unemployment.
  • Second, remember that we are talking about long-term impacts. Suppose Sue is a nanny who will only take care of kids for $600 a week, while a legal immigrant is willing to do it for $400, which is still above minimum wage. Sue may lose her job, but she will be able to move on to more productive work — say, teaching preschool students for $800 a week.
  • Third, the claim that uneducated native-born workers are perfect substitutes for foreign-born uneducated ones is dubious. After all, to be a native-born American without a high-school diploma in a country that has such a massive free public school system may indicate that you have behavioral problems (don’t like studying, bore easily, don’t like taking direction, are of very low intelligence, have anger management issues, and so on). Being equally uneducated from another country may just mean that you were born very poor and nothing else. Moreover, being willing to travel hundreds of miles over ocean or desert likely indicates a reserve of moxie a native-born worker may not have.
  • Again, these studies don’t address the fact that any disparate impact on native-born minorities may be attributable to their being stuck in lousy public schools. Remember, the rise of the teachers unions was in the 1960s, and so the most recent wave of immigrants has attended schools virtually immune to reform, unlike prior waves of immigrants.[xiv]
  • When immigrants send money back to their home countries, it doesn’t just disappear. That money will sooner or later have to be spent or invested here, providing jobs here for the native-born (Bastiat again).[xv]

To the third problem raised by contemporary anti-immigrationists, about the social costs of immigration, a few points need to be made.

  • Robert Putnam, whose work is often cited in opposition to immigration, notes that recent immigrants are learning English at the same rate as immigrants did 100 years ago (though he doesn’t specify the exact rate).
  • The 2000 census indicates that 91% of the children and 97% of the grandchildren of Mexican immigrants speak English well.
  • Riley points out that many articles accusing Hispanics of failure to progress are based on faulty statistics, in that they do not disaggregate the ongoing recent arrivals from early immigrants. Obviously, the rate of English fluency will be higher among immigrants from a decade ago than it would be among new arrivals.
  • If we look at Hispanics as a group, their crime rates don’t seem out of line with their demographics. The Bureau of Justice Statistics reports[xvi] that in 2010, of the total 1,550,600 male and female federal and state prisoners, 345,900 were Hispanic, or about 22% of the total. That year, Hispanics were about 17% of the total US population. Considering that Hispanics are a much younger group than Americans as a whole, are typically much less able to attend good schools, and are more likely to be incarcerated for immigration crimes (such as illegal reentry and visa fraud) this seems roughly proportionate. By comparison, blacks accounted for 38% of US federal and state prisoners, while constituting about 13% of the population.
  • Regarding swamping, El Paso (75% Hispanic), which is right across from Ciudad Juárez (a center of drug cartel violence), has the second lowest crime rate of any major American city.
  • Again, if we focus on Hispanics as a group,while the out-of-wedlock birthrate is higher among Hispanics than whites, it is still much lower than among blacks, and more importantly, 80% of all Mexican-American children are raised in two-parent homes.
  • Moreover, 77% of all Hispanic women marry by age 30, only slightly less the 81% figure for white women, and the rate of divorce is the same.
  • Now let us turn to immigrants and crime. As a nicely nuanced study by the Center for Immigration Studies (CIS) has reported, data on criminality rates among immigrants is often unreliable or contradictory. One study they report from 2007 puts the total immigrant prisoner population (legal and illegal) at 7% of all prisoners, while immigrants were reported to be 12.6% of the total population. But the Department of Homeland Security (DHS) estimated the total percentage of immigrant inmates in federal and state prisons at 20%, while the percentage in the population was about 16%.
  • Let us take as accurate the much higher DHS figure, though it is debatable. Again, given the fact that immigrants are likely to be younger, less well educated, and obviously much more likely to be imprisoned for immigration crimes (such as illegal reentry, alien smuggling, and visa misuse), this seems about proportionate.
  • I concur with the conclusion of the CIS report, which is that “it would be a mistake to assume that immigrants as a group are more prone to commit crime than other groups. . . . Nevertheless, it also would be a mistake to conclude that immigrant crime is insignificant or that offenders’ immigration status is irrelevant in local policing. . . . [I]n many parts of the country, immigrants are responsible for a significant share of crime.” That is why any comprehensive immigration reform should involve zero tolerance for serious crime, rapid deportation after punishment for immigrant crime, and enhanced background checks of potential immigrants.

The fourth problem raised by modern anti-immigrationists — the idea that America is filling up and has no more room for millions of immigrants — is patently weak.

  • Riley notes that world population growth rate peaked at 2.17% in 1964, has been declining ever since, and will be under 1% in less than four years. It was 1.1% in 2009, so Riley’s prediction seems reasonable.
  • If you moved the entire world’s population into just Texas, the population density would be less than that of the Bronx.
  • Donald Boudreaux notes that even with America’s population of about 310 million, the amount of land taken up by urban and suburban development in the lower 48 states is only 3%, and that figure is likely high. Include Alaska, and that percentage drops even more.
  • Since 1900, we have increased by 700% the land devoted to national and state parks and wildlife areas. The amount of land devoted to agriculture and ranching is no larger than it was back then.
  • Some argue that while we have more than enough space for new immigrants, we don’t have the necessary human support and physical infrastructure for them. Butcompared to what we had in 1920, when the last major wave of immigrants occurred, the US has gained per capita ten times the miles of paved roads, twice the number of doctors, three times the number of teachers, five times the number of cops, and twice the number of fire fighters.
  • Let me add that if you compare countries by population density, America is nowhere near the top, nor even the middle. Bangladesh has 2,957 people per square mile; India 933; Japan 873; the Philippines 811; Vietnam 674; the United Kingdom 656; Germany 593; Italy 518; China 361; and Mexico a rather low 142. America? It has 83 people per square mile, among the lowest.
  • For the US to become as dense as even Britain, it would need to have about 2.5 billion people. There is no way that would ever happen — demographic trends show most countries now stable or even shrinking in population, some (like many European countries) dramatically so. The world population is due to peak at perhaps 10 billion or a little more in midcentury, then decline worldwide. And Britain is hardly overcrowded.
  • To Malthusian worries about overpopulation and the exhaustion of natural resources, economist Greg Mankiw had a great reply, one harkening back to Julian Simon: “Those who fear overpopulation share a simple insight: People use resources. The rebuttal to this argument is equally simple: People create resources.”

7. The Positive Case for Continuing Immigration

I believe the case against immigration has been stated fairly and rebutted squarely. But is there a compelling case, not just that immigration has been good for America, but that we need more of it?

Yes there is. Let us start by observing something important about immigrants: they are remarkably inventive, innovative, and entrepreneurial. Some recent reports offer ample evidence of this.

  • A report by the Partnership for a New American Economy shows that at the ten top American universities for patent production, immigrants accounted for an amazing 76% of patents issued last year. Virtually all (99%) of those patents were in STEM fields (science, technology, engineering, and mathematics).
  • In the most innovative area of the American economy, foreign-born inventors were especially fecund: they were involved in 87% of the patents in semiconductor device manufacturing, 84% in information technology, 83% in digital communications, 79% in pharmaceutical products, and 77% in optics.
  • Considering that university research constitutes 53% of all American basic research, and that (at least according to Nobel Laureate economist Robert Solow) about half of all of America’s economic growth is due to technological innovation, these figures are telling.
  • This report only confirms what has been a long-standing American experience. For example, a recent study showed that in the period from 1901 to 2011, America won more Nobel Prizes for chemistry, physics, physiology, and medicine than any other country by far — 314 in total. Of these, 102 — 32%, or nearly a third of them — were awarded to immigrants. This percentage is far higher than the percentage of immigrants in the population as a whole (which averaged at most around 12% throughout this period).
  • Compare our record to Germany, of whose Nobel Laureates only 17% have been foreign born, and Japan, of whose Nobel Laureates precisely none have been foreign-born.
  • Another example is the report (by economists Jennifer Hunt and Mariolaine Gauthier-Loiselle) published back in 2008 by the prestigious National Bureau of Economic Research. They studied patent data by state from the years 1950 and 2000. They showed that the rate of invention by native-born researchers was not diminished by the research of immigrants, and that each increase of 1% of foreign-born college grads in a state increased patents per capita by 15%.
  • Finally, there is the now classic 2007 report by Vivek Wadhwa, AnnaLee Saxenian, and associates that studied data from the World Intellectual Property Organization Patent Cooperation Treaty database. They found that in 2006, 24.2% of all US international patent applications had at least one foreign-born applicant.

One reason immigrants with technical degrees create jobs is by making American high-tech companies more productive, hence more profitable. That is, tech jobs — like all jobs — in America are not a zero-sum game: those talented techies from abroad come up with new ideas, which create new product lines or improve existing products, which in turn increase the profits of those companies, who can then expand operations creating new jobs for native-born workers.

  • For example, Bill Gates recently testified before Congress that at Microsoft, four new native-born workers were hired for every foreign-born one.
  • And Nick Shulze of the American Enterprise Institute has noted that each foreign-born worker with an advanced STEM degree creates an average of 2.62 jobs for native-born workers.
  • Technological inventions then go on to make all other American industries, from agriculture to manufacturing, more productive, and hence more able to expand and hire the native-born workers.

A second reason technically trained immigrants create (or at least retain) jobs is by helping keep American high-tech located in this country.

  • Over 40% of Ph.D. scientists working in this country are foreign-born. And over a third of the engineers and scientists in Silicon Valley are foreign-born.
  • However, the truth is that fewer and fewer native-born American students are choosing STEM majors. In 2009, we graduated fewer computer science students than we did 25 years before, and in chemical engineering, math, and microbiology, we graduated only the same number as we did then. At the present time, over 40% of all Ph.D. students in engineering and science are foreign-born.
  • But high-tech industries — indeed, all industries — need STEM-degreed workers. If we don’t produce them in great enough numbers — which we manifestly are not — and if we don’t allow them to immigrate here, our industries will simply ship operations abroad to countries that are producing those trained people.
  • Steve Jobs made this point directly to President Obama in arguing for allowing more trained immigrants in, pointing out that the 700,000 workers at Apple plants in China are supported by 30,000 engineers, and “You can’t find that many in America to hire.”

The third reason — and it is a major one — why immigrants with STEM degrees have created jobs is that they are disproportionately likely to start new companies.

  • The list of prominent high-tech companies founded or co-founded by foreign-born entrepreneurs is as long as it is impressive: Apple, eBay, Facebook, Google, Intel, Nvidia, Yahoo!, YouTube and Zappos come to mind.
  • A study done last year by Stuart Anderson of the National Foundation for American Policy showed that of the top 50 venture-capital backed startup companies, almost half were founded or co-founded by immigrants, and that immigrants held key management positions in three-fourths of those companies. Each immigrant entrepreneur created jobs for 150 Americans on average.
  • The classic Wadhwa et al. study, mentioned earlier, showed that roughly half of all Silicon Valley startups were founded or co-founded by immigrants. It also showed that over one fourth of all American tech firms founded between 1995 and 2005 had an immigrant founder or co-founder. In 2005, those companies — created by just a couple of dozen creative immigrants — together generated over $52 billion in sales, and employed directly 450,000 workers (and probably millions of workers indirectly).
  • More broadly, 40% of all Fortune 500 companies were either founded or co-founded by immigrants or children of immigrants.

But crazily, our immigration system has only made it harder for talented professionals to immigrate here or stay here (if they have a student visa).

  • The main program that allows STEM-trained workers to immigrate from abroad is the H-1B visa program. This year, as in most of the years up to the recent recession, all the allotted slots were taken in a day. This occurred despite the fact that an H-1B visa costs about $5,000 in fees and attorney expenses.
  • The reason for this is that for years, Congress has imposed a laughable cap of only 85,000 such visas a year. And under the American Recovery and Reinvestment Act of 2009, any company that had received TARP funds or new Federal Reserve help was restricted in its hiring of new H-1B visa immigrants.
  • In fact, the number of permitted skill-based visas (H-1B, EB-1, EB-2, and EB-3) dropped from 301,000 in 2000 to 270,000 in 2009.
  • Getting visas for foreigners already working here (L1-B) is another illustration: there are only 250 USCIS caseworkers who evaluate the applications, and they seem to be arbitrary on their rejections.

Clearly, even politicians who should know better still believe in the “zero-sum game” view of technical work.

Let me conclude with a demographic point. While huge waves of immigration are nothing new in American history, the population change we are undergoing is. The baby boomer cohort — people born between 1946 and 1964 — is the largest in American history, numbering nearly 80 million people, or about 25% of the population. These people are beginning to retire now, and the native-born younger cohorts are nowhere near as large. That means the nation will age, unless we allow widespread immigration. As ZeroHedge blogger Tyler Durden has aptly put it, America faces a “demographic cliff.”

Ironically, Steven Malanga, one of the anti-immigrationists at the Manhattan Institute, wrote an excellent piece in 2010 on what the aging of a population does to a country. Birthrates are shrinking worldwide, thanks mainly to economic development. While we are roughly at replacement level, many countries aren’t. Japan is projected to drop in population size by 21% in the next 40 years, Poland by 16%, Russia by 22%, and Germany by 14%. Since innovation and invention typically come from the young, this means that these countries will experience slow productivity growth rates, and hence slower or even no economic growth. He illustrates this with a detailed discussion of the case of Japan, “stuck in the world’s first low-birth recession.”

If the immigrants are coming here to get on welfare, why would they be stealing so many jobs?

An aging population presents many problems. The elderly retire, so society loses their labor. They live off accumulated capital, so less capital is available for new investment. Their medical costs rise dramatically. And they are less inventive than the young — which means that technical research may suffer.

What is richly ironic is that the US is managing to hang on to a replacement-level birthrate only because recent immigrants and their children have a much higher fertility rate than other people in the country. For example, Mexican-American women now have higher birthrates than Mexican women do.

Recently, economists James Stock and Mark Watson published a study (reviewed nicely in an Atlantic piece) arguing that we face a demographic problem, and need to increase our immigration accordingly.

8. One Anti-immigrationist Response: More Command-and-Control

The facts about the value of skilled immigrants are so compelling that many — although by no means all — contemporary anti-immigrationists have suggested that we “shift” immigration away from low- to high-skill labor. Borjas, Huntington, and Rector have all suggested this.

Specifically, Rector has called for:

  • Continuing to enforce the existing laws against illegal immigration;
  • Not granting amnesty to any of the 11 million or so illegal immigrants in this country now;
  • Allowing at most a temporary guest worker program; eliminating birthright citizenship for illegal immigrants (which I suspect would require amending the constitution);
  • Reducing the number of green cards based on kinship; and
  • Increasing the number of H-1B and other visas for skilled workers.

But this proposal presents a number of problems.

  • As economist Gordon Hanson (a co-author with Borjas in a number of articles) has noted, this “would eliminate the benefits to US consumers and employers from low-skilled immigration” (presumably lower prices and greater efficiency of production). As he further notes, “Economic theory suggests that the wage losses associated with immigration are more than offset by income gains to factors that are complementary to immigrant labor.”
  • He also notes that it would induce shifting manufacturing to lower-wage countries.
  • Let me note what I think is an even larger problem. If we are to oppose low-skilled immigrants because they lower wages for native-born low-skilled workers, wouldn’t that argue even more strongly against allowing in more immigrant high-skilled workers as well, because they would lower the wages for native-born ones? Certainly, past attempts to increase the ludicrously low number of allowable H-1B visas have met with fierce resistance from American-born tech workers. There are already organizations of engineers lobbying to halt high-tech immigration.
  • The proposal still leaves an aging workforce, because the number of high-skill immigrants is not huge.

Curiously, none of these contemporary anti-immigrationists who say they are willing to see more high-tech workers actually try to put a number on how high to raise (say) the H-1B limit. This is easily explained: they can’t. The Byzantine crazy-quilt of various visas and immigration venues (H-1B, H-2A, H-2B, EB-1 and so on) is set in a command-and-control way by politicians and bureaucrats trying to figure out the “optimal number” of each type of worker the economy “really needs” (again, as if God writes in stone how many jobs of a given type there will be) — but won’t turn out to be “too many” (meaning enough to lower the existing wages of anybody, as if keeping wages high is what God wants).

In this regard, I am surprised that the anti-immigrationists haven’t mentioned countries such as Canada and others that have actually tried to implement detailed “points” programs to determine just how “skilled” a worker is.

For example, under Canada’s scheme, candidates are rated as skilled labor on the basis of a somewhat complicated points program. Under this scheme:

  • A prospective immigrant applying under the “skilled labor” category gets points for a variety of things, and he has to have 67 total points to qualify.
  • So, for education, the prospective immigrant can get from 5 points for completing high school to 25 points for a Master’s or Ph.D.
  • He can get up to 24 points for being fluent in English or French, up to 10 points for age, up to 21 points for work experience, and up to 10 points for having a job offer from a Canadian employer.
  • He also needs to show funds in a Canadian bank (ranging from $10,000 for a single person to $27,000 for a family of seven or more) or have a job in hand in the country.
  • Moreover, he must have no criminal record.

As command-and-control approaches go, this is certainly sophisticated. But it has all the defects of any such scheme, since all are by definition grounded on a less-than-free market. The more obvious defects:

  • You don’t have to be Mises or Hayek to see that even if the various levels were set by perfectly rational, informed, and disinterested administrators, they couldn’t anticipate the ever-changing market needs. The economy is a chaotic system. How could any bureaucrat keep track of current needs in thousands of different skilled occupations?
  • Worse, the administrators are anything but perfectly rational, informed, and disinterested people. In fact, they are usually of, at best, mediocre intellect, lacking in knowledge of what they aim to regulate, and highly interested in the vested interests of whoever lines their pockets.
  • Why would having, say, a Master’s in Film Studies make you more economically valuable than, say, being a short-order cook?
  • Suppose you are a Ph.D. in electrical engineering, but broke. Aren’t you still a good candidate to become a citizen?
  • Would someone who trained on the job (say, in repairing computers) always be able to document his proficiency?
  • Don’t many very talented people drop out of college because they are bored, they have run out of money, or are forced to deal with a family emergency? Do we really want to exclude such people? Remember: Bill Gates was a college dropout.
  • If this system is so good at picking winners, why isn’t Canada the world leader in high-tech innovation?

I am a practical man. If the matter of just removing the caps on high-skill visas were all we could get by way of immigration reform, I would, like Mayor Bloomberg, support it. But let’s look at some better ideas.

9. Hanson’s Proposal

Economist Gordon Hanson has an approach to the problem that he calls a “rights-based program,” with a number of valuable features worth considering.

Under his plan, the goal would be to increase the ability of businesses to hire immigrants, and minimize the costs to taxpayers by “graduating” immigrant access to public benefits.

His plan includes these features.

  • Immigrants would begin with temporary renewable work visas (say, with 3 year terms).
  • On such a visa, the immigrant would have limited rights to certain public benefits (education, participation in a self-funded pension plan, and in a self-funded medical plan).
  • On such a visa, the immigrant would have no right to access what we normally call welfare (as opposed to “entitlement” programs such as Social Security and Medicare): public assistance (like TANF), food stamps, public housing, and Medicaid.
  • If the immigrant complies with the terms of the visa, it would automatically be renewed.
  • After a “specified number” of such renewals (he doesn’t actually specify the number), the immigrant could apply for a green card, which as now would put the immigrant in the Social Security and Medicare programs, and allow access to welfare programs.
  • The existing illegal immigrants would be allowed to apply for “special pool” temporary work visas, not green cards, perhaps limited to those who have been here six years or more.
  • To get a special pool visa, an existing illegal immigrant would need to have his employer apply. (What to do about people who own their own businesses or are otherwise self-employed, Hanson doesn’t say.) Since this would expose the employer to legal sanctions, some kind of immunity deal would have to be brokered.
  • Those illegal immigrants unable to qualify for special pool visas could apply for the regular temporary visas.
  • To ensure that allowing this many illegal immigrants a path to legitimacy doesn’t encourage more future illegal immigration, Hanson suggests that better enforcement would be needed. He sagely advises converting the Basic Pilot Program, which allows employers to check the validity of a job applicant’s Social Security Number electronically, against the DHS and the SSA, be made mandatory. That would make identifying the employment of illegal immigrants easy.
  • To set the number of temporary visas, the government could require businesses to advertise all their jobs and allow foreigners to apply, and the excess of applications over openings would be a metric the immigration authorities could use to issue temporary visas in the areas where they are needed most.
  • Congress would set a yearly cap on the number of visas to be issued, cutting down the number when there is a labor excess.

The appealing aspects of this system are that it directly addresses the pool of illegal immigrants, it tries to allow for the growth of immigration as needed, it allows for a shift to higher-skill immigration, while trying to limit the impact on the taxpayer. But it faces some major objections.

  • As Hanson concedes, it would create several classes of candidates with different levels of rights. The temporary visas would carry no welfare rights, but the green card had many rights restored to it in 2002 (under the argument that the immigrants were paying taxes for them).
  • He gives no idea of what the self-funded entitlements would look like.
  • It is unclear why any current illegal immigrant wouldn’t just try to get a regular temporary visa, because to get a special pool visa would require asking his current employer to identify himself.
  • The amount of work required of businesses to post openings, keep track of worldwide applications, and submit “special pool” applications on behalf of employees would be enormous, and would be quite a contribution to what is already a massive regulatory drag.
  • It is likely that immigrants would be applying for a large number of different jobs at the same time, compounding the workload for businesses.
  • It would be especially onerous for small businesses, which produce the majority of innovations and new jobs.
  • It would bias the immigration system against immigrants who want to start businesses or be otherwise self-employed.
  • Worse, again, it requires a command-and-control setting of quotas administered by biased and self-interested bureaucrats and politicians, almost all of whom are ofmediocre intelligence.

10. Becker’s Proposal

One economist reasonably labeled “classically liberal” is Gary Becker, 1992 Nobel Prize Laureate in economics. In a recent book,[xvii] he proposed a novel solution to the problem of immigration. As I have already reviewed the book in these pages, I will cover it briefly here.

Becker points out that immigration — both illegal and legal — is driven primarily by two gaps: between the average wage of the poor and the rich countries; and between the fertility rate of the poor and the rich countries.

Suppose you are a Ph.D. in electrical engineering, but broke. Aren’t you still a good candidate to become a citizen?

While he is sympathetic to open borders, he agrees with his old teacher Milton Friedman that immigration into a welfare state is problematic.

His solution to the costs of allowing widespread immigration into our country is bold and simple: allow anyone who wants to immigrate (except for the obvious cases of criminals, security threats, and people with communicable diseases) to do so upon paying, say, a $50,000 fee (which could be adjusted up or down as needed). He points to a number of advantages of this idea.

  • It would automatically tilt immigration in favor of the highly skilled, who can more easily pay the fee themselves or get employers to pay it,
  • It would automatically tilt immigration in favor of the young, because they will have a longer time to recoup their investments.
  • It would attract only the most committed to long-term immigration, because short-term immigrants would be deterred by the loss of their fees.
  • It would lessen nativist feelings, because people would see immigrants contributing tens of billions of dollars to help the government pay its bills.

I like Becker’s proposal, and would certainly take it over the present situation. But I have a few problems with it.

  • Regarding nativist sentiment, again, it ran high long before there were any appreciable welfare programs.
  • To the extent that we discourage the lower-skilled immigrants, to that extent we miss out on their substantial contributions to lower prices and greater productivity.
  • If Rector is right, $50,000 only covers about two and a half years of what immigrants cost society on average.
  • Worse, for high-skilled immigrants, who Rector agrees already contribute more than they take in, the $50,000 would seem to be a violation of theirproperty rights.
  • His scheme would deter some immigrants we especially want, such as young technical graduates who in a recession can only find low-skill work, but stand to get better work in a recovery, or entrepreneurs aiming to start a new company (risky enough, if they don’t have the capital to begin with).
  • Contrary to what he says, it would likely bias immigration towards older workers who have had time to accumulate the money.

11. Another Proposal

Let me try to sketch an alternative plan, based on what I view as the best ideas of Hanson’s and Becker’s plans, and informed by what Milton Friedman had to say about illegal immigration. I can only sketch it, for each part would require a large paper elaborating the policy details, and frankly, I am not a policy wonk. But I would suggest that a satisfactory program of reform would involve the following.

  • Any comprehensive immigration reform must not serve as an inducement for further illegal immigration. We should adopt Hanson’s mechanism for dealing with it: make computer checks of Social Security numbers mandatory for all new employees of all companies.
  • We need to dramatically increase the speed by which people wishing to immigrate legally are processed. I would suggest privatizing part of the process by, say, letting private security firms do the background checks that any applicant should undergo. As it stands, it often takes years for people to be given legal permission to come in. That has surely been a major source of illegal immigration.
  • Like Becker, I favor just junking the byzantine command-and-control visa schemes, and like Rector, I favor ending family preferences (except for minor children) as well asthe “diversity lottery.”
  • Like Becker, I want immigration to be open to all who want to come for work — except, naturally, people with a criminal background, or who pose a security risk, or have communicable diseases. We should have enhanced checks to search for criminals and security risks.
  • Like Hanson, I would issue a temporary work visa and a permanent residency card, but different from the current green card. Call it a blue card.
  • Both the temporary visa and the blue card would carry the same rights. The only difference would be that the blue card would be permanent, and allow application for citizenship in five years. Both would be aimed at eliminating the cost of immigrants to taxpayers.
  • Start with the major “entitlement programs.” Blue cardholders would not be part of the Social Security system. Instead, they would be required (as Hanson suggests) to be part of a defined contribution plan. He doesn’t give a model, but I will: it would be something like the Milton Friedman-inspired plan Chile adopted over 30 years ago, but updated and improved. That is, it would be like a 401k, but with investment limited to low-cost broad index funds and bond funds (so that workers wouldn’t gamble too dangerously with their retirement funds).
  • This would be the personal property of the worker. If he returns home, it would go with him. If he dies before he uses it up, it will be passed on to his heirs or whoever else he wants.
  • He would be required to contribute 10% of his salary before taxes, and that contribution would be deductible from them, with the Social Security contribution from employer and employee eliminated.
  • Even if the blue cardholder later became a citizen, he would never be part of the Social Security system, only of his blue card retirement system — period. Remember, he wouldn’t have been paying taxes to support the Social Security system, so he shouldn’t ever be entitled to it.
  • Instead of the Medicare and Medicaid programs, blue card holders would have a plan such as that advocated by eminent economist John C. Goodman. It is a voluntary subsidy system. In essence, it would give participants a subsidy of $2,500 per adult and $1,500 in addition, to buy catastrophic health insurance (think of it as a catastrophic health insurance voucher), and encourage health savings accounts for routine medical expenses.
  • The program would be funded by taxes on the pool of immigrants and their employers, in lieu of the Medicare tax. If the immigrant returns to his home country, he keeps his HSA, but loses his insurance. If he becomes a citizen, he stays on the system permanently. Again, he didn’t pay for Medicare, so shouldn’t receive it.
  • Regarding what we normally call “welfare,” i.e., means-tested direct government benefits, I would take Gordon Hanson’s plan one step further: neither temporary visa holders nor blue card holders would be eligible for them. Of course, once a blue card holder became a citizen he would be eligible.
  • Finally, recall that the visa and blue card holders would be paying all other local, state, and federal taxes (sales, gas, property, and income taxes) and fees. So their share of the police, fire, defense, and education services would be covered by their taxes, just as those of ordinary citizens are.
  • All illegal immigrants here could apply for temporary work visas, then blue cards. Their penalty for coming here illegally would be that any contributions made to Social Security and Medicare using “borrowed” ID numbers would not be credited to them, and they would pay any past income or other taxes due.
  • How many would accept the new rules? If the most extreme anti-immigrationists are right, none would stay, because those immigrants are all here for welfare. But I suspect that most will stay. Immigrants who accept the new rules will be legal and in the open, paying taxes in full, and paying their own way fully.

To be fair to Becker, he has a legitimate criticism of any proposal such as mine: that, over time, immigrants would grow in total percentage of the population and be able to vote away any restrictions such as I propose.

To this I have several replies. First, even at the peak periods for immigration in the past, immigrants at most came in at about 1.6% of the then existing population, and never constituted more than about 15% of the total population. It seems unlikely they could outvote the native-born.

Second, the restrictions I propose (such as personal ownership of one’s retirement account, and a self-funded medical plan that allows one to choose his own doctor) would likely prove popular with a fairly high percentage of the immigrants themselves.

Finally, the same point could be made about Becker’s proposal. Say we set the price of immigration at $50,000. Why couldn’t immigrants vote later to lower it to $5,000, or even $5?

There are several topics that space prohibits me from addressing fully. Let me just briefly state them, and my opinions on each, foregoing the elaboration and defense.

  • The first is how to handle those who clearly have no desire to work here permanently, but only temporarily — especially in the agricultural industry. Should we have the sort of short-term visas we had on the 1950s? I incline to say yes, but under the same restrictions as for permanent residents on entitlement and welfare programs.
  • Second, what should we do with the existing green cardholders? My view would be that ex post facto changes in the law are ethically (and legally) dubious, so I would let them remain as is. Only new permanent immigrants would go on the blue card program.
  • However, I would allow green cardholders to switch voluntarily to the new program, and it occurs to me that some of them — especially the younger ones — might well want to do that. The thought of not being on the Social Security system, but holding your own account, which can be handed down to your children in the event of your death, and doesn’t disappear when you die, and is not subject to being seized at some future date (i.e., “means tested” away) would surely be appealing to many. Also, as the Social Security and Medicare programs head off the financial cliff, many green card holders might be motivated to switch. If they do, they surrender any past contributions to those programs and any future participation in them.
  • Third, would I extend the waiting period before allowing those permanent immigrant workers who want to apply for citizenship to do so? No. Current green cardholders — who are eligible for many welfare benefits — can apply after five years, and I think that would be fine for blue cardholders. It is unlikely that many people who want welfare will work for five years just to qualify for it. But we could always extend the time required before applying for citizenship.
  • Fourth, to the issue of “anchor babies,” i.e., women who illegally immigrate to give birth to children who are then automatically citizens, while I don’t regard this as a major problem (there are only about 1 million such children, after so many years of a porous border), I would support conditioning the passage of immigration reform on the passage of a constitutional amendment conferring birth citizenship on only those children whose parents are here legally.

We have ample room for many, many more productive people. Let’s let them in, in numbers and skill-sets governed by the free market — but make sure they pay their own way, going forward.

[i] One might quickly reply that the Irish are above average now, but only after 150 years. But the equally quick counter is that their labor helped build this country along the way, especially in building the canals and railroads that were crucial to America’s rapid economic growth. Moreover, they gave not just their labor but their blood, starting most prominently in the Civil War — over 150,000 Irish fought for the Union, often as volunteers, but mostly as draftees. Of course, being immediately subject to the draft upon signing their citizenship papers made many recent Irish immigrants oppose that war, and some rioted against the draft. But the Irish certainly fought in huge numbers in the Civil War, and every war since.
Remember that the imperative of consequentialism is that we look at the costs and benefits over the long term. After all, virtually any economic change (introducing new technology, trading with other countries, or what have you) would always be bad, since somebody is bound to be discomforted in the short term.

[ii] One such worthy was Henry Goddard, IQ testing guru, who argued that 60% of Jewish immigrants came out at the “moron” level on his tests. Harry Laughlin, superintendent of the Eugenics Record Office from its founding in 1910 until 1939, was also an influential advocate for immigration restriction. Congress certainly heard testimony from the eugenicists arguing in favor of the restrictions on immigration. True, Congress hears a lot of testimony, and there is no way to tell how much the eugenicist testimony helped the cause of ending immigration. But the fact remains that their testimony was both solicited and given.

[iii] Hispanic immigrants are now the biggest groups in some Southwestern cities, such as Los Angeles and El Paso. Some argue that they have “ruined” L.A. and its formerly “good” school system, but that is, to say the least, debatable. El Paso, with its 75% Hispanic population, has the second lowest crime rate of any big city, and a decent school system. Streitfeld suggests that Hispanics have helped revitalize parts of L.A. that were hit hard by the earlier recessions the city has undergone. Moreover, the school system in L.A. has been going downhill ever since teachers unions assumed control, decades back.
The best answer to the claim that the influx of Hispanic immigrants has “ruined” the L.A. or California school system is the report by the Goldwater Institute studying the impact of Jeb Bush’s reforms on Florida’s school system. After his far-reaching reforms — which increased standards and genuine measures of progress, ended “social promotion,” instituted merit-based pay for teachers, and most importantly enhanced school choice — Florida’s Hispanic students statewide have the second-highest reading scores in the nation, exceeding the scores for all students in California. What has hurt California’s public school system is manifestly not the presence of Hispanic kids, but the complete control of it by the teachers unions, who block all attempts to reform it.
Obviously, I am not saying that the presence of large numbers of students who do not have English as their native tongue is beneficial to a school system. It is of course an extra burden. I am merely observing that in the past, prior to the advent of complete union control of the US public education system, it presented no insurmountable obstacles, and that where today proper reform has been instituted, it presents no insurmountable obstacles.

[iv] The argument for this is that America prior to this point had high tariffs, thus making markets abroad harder to access, but America during this period allowed virtually unlimited immigration. With the severe anti-immigrationist law of 1924, for the first time in history we had no free influx of labor (and thus consumers) and high tariffs, which were jacked up even more, shortly thereafter. The presence of huge pools of new residents prior to that provided both lower wages (hence prices) for domestically produced goods (which otherwise would be higher with the companies protected from inexpensive labor abroad), and increased internal markets for the produce of the nation. Again, I am not arguing that the immigration was “the” cause of the Depression at all, merely that there is reason to think that it may have played a role, and in any case, ending it did nothing to hold off the disaster.

[v] It might be claimed that the continued existence of Italian-American and Russian-Americangangs shows that not all ethnic groups rid themselves of organized crime. But I don’t find this in the least persuasive. The heyday of Italian-American organized crime was the 1920s–1930s, with lingering power in a few big cities into the 1980s, and pretty much shut down during the 1990s, despite the resurgence of gangster movies during the 1970s and onwards. Moreover, if the Italian-American gangs in their prime were more prominent than prior ethnic gangs, that was because those prior ethnic gangs weren’t given the gift of prohibition. As to the current presence of Russian-American gangs, they are from an entirely different wave of immigrants, viz., post-Soviet immigration.
Again, one might argue that this history suggests that any massive influx of immigrants of the same ethnic class will bring organized crime. Perhaps, but even if so, the history also shows that the costs of this organized crime is minor compared to the long-term benefits of the new groups — especially if you don’t have Prohibition!

[vi] Riley, Jason Let Them In: The Case for Open Borders (NY: Gotham Books, 2008). See pp. 15–37.

[vii] In fact, Magnet seems to suggests this view, when he quotes approvingly his colleague Malanga, who says, “Those earlier immigrants brought in a rich store of social capital: strong families, self-reliance, entrepreneurialism, a belief in education for their children, optimism about the future and belief in their new land rather than fatalism and cynicism. . . . by contrast, the American-born children of Mexican immigrants, two and a half times likelier to drop out of high school than the average American-born kid, earn less than the national average.”

[viii] It might be argued that illegal immigrants do cost society in education, which in California is about $13,000 yearly per student in direct costs alone. But the replies are obvious. First, to the extent those children are or become citizens, which many or even most eventually do, their education pays off in higher earnings to them, hence higher taxes paid to the governments (local, state, and federal). This is likely to be true even for L.A., whose school system processes a disproportionate percentage of California’s immigrant population, unless of course L.A. drives those educated children away by anti-business policies. Second, school expenses are paid primarily by property taxes, which illegal immigrants certainly pay (either directly, if they own their property, or indirectly, if they rent — as landlords build taxes into the rent they charge).

[ix] It might be replied that while reduced prices through lower wages increase society’s wealth, they lower wealth per capita. But this is dubious under a static analysis, and very dubious under a dynamic one. Statically, while some people’s wages may be lowered under immigration (though as I argue later, this is not clearly true), since prices go down, wages buy more, so average real wealth likely stays the same. This is precisely the same point with free trade — allowing cheap foreign goods will lower some wages short term, but the vastly lowered prices increase per capita wealth. Dynamically, by applying more efficient labor, immigration allows the more productive deployment of native-born labor — I point I explore later.

[x] A quick reply is that Fred and his crew may have a whole passel of kids, whose education is a cost to society. However, the equally quick counter is that Rector’s analysis already includes that cost. I am pointing out some benefits of immigration his analysis leaves out.

[xi] “Immigration Heritage,” editorial in the Wall Street Journal, Friday, June 8, 2007. This includes both legal and illegal immigrants.

[xii] It might be suggested that if we bring back the bracero program, and pay immigrants a low wage to (say) pick crops, they will just unionize, and the wages will just rise to what native-born workers would charge. The reply is that this has not happened, and didn’t happen during the period in the 1950s when the first Bracero program was enacted. Moreover, if the new bracero workers did unionize, then mechanization would become cost effective. That would means that the cost would go up for everyone, but that will happen anyway is we do not allow for immigrant labor.
Also, remember this: the rate of private sector unionization continues to decrease even among native-born workers. Only about 7% of private industry workers are now in unions, way down from the 35% or so back in the early 1950s.

[xiii] It might be suspected that the reason the Card study showed no impact on wages is because the Mariel immigrants were in large part insane asylum or prison inmates, so wound up in institutions. But the Card paper addresses this, arguing that only a small percentage of the Mariel immigrants were criminals or mentally ill, and that most of those were soon deported back to Cuba. Perhaps the Mariel immigration was too small for a proper statistical analysis to show the negative effects of the criminal and mentally ill Marielistas on society, but in any case the other studies cited looked at other groups of immigrants, and the general conclusion was the same.

[xiv] Again, one might argue that the presence of large numbers of children of immigrants is a big part of why the public schools are lousy to begin with. To that point, see the study “Demography Defeated: Florida’s K-12 Reforms and Their Lessons for the Nation” (cited above) showing that after reform in Florida, Hispanic students have moved ahead nationally — and so have African-American students. As I noted above, historically, before teachers unions took control of the American public school system, waves of non-native speakers (Jews, Poles, Chinese, Hungarians, Germans, Italians, and so on) were educated rapidly in the American public school system in the dominant language, and it is now being done successfully in schools that have been reformed (under the pressure of school choice in particular).

[xv] Even if the money sent home by the immigrant is converted to the local currency and invested there, the bank or other entity exchanging the American currency for foreign currency would have to spend it or invest it back here, again creating jobs. This is what I mean by the qualifier “directly or indirectly.”

[xvi] See page 13.

[xvii] Becker, Gary. The Challenge of Immigration (London: The Institute of Economic Affairs, 2011).

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