Can immigration (or capital inflow) hurt the welfare of a country? Yes, if there are decreasing returns to the factor, as this little paper will explain. The idea is important, and probably is new — at least, I couldn`t find it by a google search — but an economics journal would say it is obvious, I think, so I probably will not try to publish it in a journal. I will post it on the web instead. I do hope it gets into the academic literature and the policy debates. If it is received favorably, I will tidy it up and put it into journal style, adding cites and superfluous generality, and checking my arithmetic. My target audience is trained economists even now, however. Please let me know if someone has already made the external diseconomy argument. I wouldn`t be surprised if someone had done so back in the 1920`s.
I`ve found that economic theory is a useful servant for understanding facts, but many bright people seem to view theory as the master to which their awareness of reality must be enslaved. For them, this paper might be an eye-opener.