Response on Sale of Rights to Immigrate-BECKER

A lot of comments, and many are of high quality, including some that disagreed. I had expected the clear majority to be opposed, and on this at least I proved right! Once again some of the discussion cleared up various issues, but some points need to be highlighted. We now have severe restrictions on the number of immigrants allowed in legally. Although my $50,000 figure was just an illustration, I believe that more, not fewer, immigrants would be coming even with this price than under the present system since ALL applicants who met certain simple criteria would be accepted. Economic analysis proves that there certainly exists a positive price (and I believe a significant one) that would have a larger number of immigrants than under the present quota system. Some of you complained about the red-tape involved now in immigrating to the US. I believe the immigration service is one of the most arrogant of all government agencies. They have the power to say �take it or leave it� since they are rationing a valuable asset, entry permits. Unlimited entry at a fixed price will not only raise the number of immigrants-if the price is not too high-but would drastically cut all the time-consuming and annoying hassle involved in immigrating. And it might even make immigration agents a little pleasant since immigrants would be paying for the right to come. Some of you missed my stress on overcoming the financial difficulties of paying a high fee by encouraging loans to immigrants from private banks. They would be encouraged not by government insurance, but by giving them the many of the other privileges now available to those collecting on student loans, such as that immigration loans would not be dischargeable by bankruptcy, and that earnings could be garnished if some immigrants are in arrears. With such loans available, the unskilled will not be priced out of the immigration market. They would have to put together perhaps $5000 as a down payment, or about 1/3 of the gross earnings of an unskilled worker in the US. Many unskilled individuals could pool family resources to do that, as they did in earlier times when transportation costs to the US were so much larger than they are now. Recall that the cost of transportation in the 18th and 19th century to the US by boat from Europe was a significant fraction of the earnings during the first year in the US of the many low skilled immigrants who managed to come. The term �payback period� is technical, and only is a way of describing how many years before the after-tax gain in earnings from immigrating covers the cost of immigrating. It does not mean they would have to pay the loans back in a few years; I agree that would be very difficult for low skilled individuals. My proposed loans would be longer term, as is the case with student loans. I am confident that the absolute number of unskilled immigrants (as well as the total number of immigrants) who would enter under my fee system would exceed the number entering under the present system since unskilled applicants are discriminated against under the present quota system. So it is erroneous to call my proposal anti-immigration, or even anti unskilled immigration. I am certainly pro immigration, and I surely believe unskilled and other immigrants have contributed, and will continue to contribute, a lot to the American economy and society. I also believe, however, that countries benefit more from having immigrants who make a commitment to stay, as 19th century immigrants to America did. My proposal works toward selecting more committed immigrants. Of course, they would still be free to return if they decide to do so, but the US gains more from their staying-if they are productive, etc- than it gains from whatever influence they bring back upon returning to the countries they come from. Some of you complained that making immigrants pay is like bringing in indentured servants. Do you believe they are better off if they are not allowed in at all, which is the present system? Or do you believe students are �indentured� because many of them have large loans when they finish school? They surely are a lot better off than if limited financial resources prevented them from going to college at all! Some of you doubt whether some immigrants come at least in good part to take advantage of medical, welfare, education, and other benefits. Although we need more evidence on this, there are a few studies showing that these entitlement �type benefits do affect immigration by poor individuals and families- see for example, an article by Terra McKinnish in the Winter 2005 issue of the Journal of Human Resources. Auction or credit systems are in the same spirit as my proposal. In all cases, it is necessary to decide either the price to be charged immigrants, or the quantity to be auctioned or credited off. With full information about supply and demand curves, they are identical in terms of incidence, although credit systems allow other to capture the revenue. Why is that desirable? Many of you raised a challenging question that I only briefly addressed: would my system increase or decrease the number of persons who would try to come illegally? On the one hand, they would escape paying the entry fee, so that would obviously be one force increasing the number entering illegally. But there is much more to the answer than that. Under the present system they do not have the right to come legally, so theyhave to try to come illegally if they want to come. I would give them a legal immigration alternative, and I believe many would choose that alternative since there are huge employment and other advantages of being here legally rather than working underground. Moreover, we would have the additional resources to add to patrols and others who are policing the numbers trying to cross illegally, or who overstay their visas. In addition, I believe attitudes toward illegals would harden since, unlike the present system where they are excluded from coming, they could be coming legally. Some of you-not all!- confused the effect of charging an entry fee on the number of illegals in a system where they could have come freely, with the actual present system where the only way they can come is to come illegally. So I am pretty sure the number coming illegally would go down, but I agree that is not certain. Much more could be said, but I believe I responded to the main points. My apologies that I did not have time to address all the relevant comments. Perhaps we will return to this topic in a future blog since our pieces stimulated so many good responses.

Comments

[Palooka]

"palooka, are you saying that it is immoral to offer someone the option to take out a sizeable loan because of the possibility that they will not be able to repay it?"

No, and I have no idea where you got that idea. But in the storm of comments earlier with Gowder, maybe I posted something which was not explicit (a lot my argument was presupposing Gowder was correct for argument's sake).

[doug]

my first comment (and my comments toward Becker's posts generally) was quite negative, and, upon reflection, too harsh. I latched on to a few statements Becker made which annoyed me (i.e., foreigners come here b/c of government handouts), and never really considered his argument. I do think it is imperative that the illegal immigrants who now reside in America are given an avenue to pursue their rights, such as the right to apply for driver's licenses, which will naturally increase the range of jobs they can do, and give them incentives to build a future in the US (aside from moral reasons). I also agree that Becker's idea is better than the present system where illegal immigrants have no chance to become American citizens.
Even so, I don't think I can come around to the view that the US should try to charge a revenue maximizing price, particularly for those poor illegal immigrants who reside in the US already. One reason is that society would also benefit by giving illegal immigrants more incentives to invest in their future here, by buying houses, cars, getting car & professional licenses, and acquiring skills. Setting a price much lower than what would maximize revenue yet enough to raise a substantial amount of money which should go to communities who spend money on services for these immigrants & to make the US's immigration services & border patrol more effective.
I would recommend a system like present (which kinder treatment to students applying for visas, and speeding up the whole process), a lottery system to fill up a certain quota (i think it's impossible to argue for open borders), and then employing a system like what Becker advocates for those who did not get in. (In the end, it looks like what Posner advocates.)

[Daniel Chapman]

There is no "right" to a driver's liscense. This "right" doesn't even exist for citizens.

[Adam]

All of this makes sense, for someone immigrating from a poor country to a rich country. But what about someone immigrating from a rich country to a not-as-rich country?

For example, I intend to immigrate from the US to Australia. This is motivated by personal factors, as well as the increased quality of life, and an affinity for the Australian culture.

In order to move though, I have to take a significant pay cut -- once you factor in taxes, my pay will be cut about in half.

This pay differential is acceptable because of the non-financial benefits of living in Australia. If I had to pay a US$50k fee however, it would be much more dicey.

Also consider someone immigrating from Sweden (or really anywhere in Europe) to the US. It's very unlikely that they are moving to the US to take advantage of extra welfare benefits, and it would be ridiculous to make them pay as if they were.

In short, it seems as though you've only considered immigrants who come to the US from poor countries, not immigrants who come from rich countries, who make up a large proportion of all immigrants.

One could get around that problem somewhat by varying the fee by how much someone's income is expected to change -- someone who will earn an extra $50k/yr should be willing to bear a higher fee than someone who will make an extra $10k/yr.

[BB]

That last Corey's comments were ludicrous enough to warrant them being attributed to someone else.

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