While charging money is not an awful solution, I fail to see how an auction model would really help reduce illegal immigration. I'll probably blog this later, so I'll just give a precis of the argument. I know people who went through the immigration procedure, and the uniform opinion is that the current system places very high costs, if not in cash, then in time. The procedure at foreign embassies is time consuming (opportunity costs) and often requires travel and extended stays in distant cities. Similar conditions hold after successfully acquiring permanent resident status, as someone tries to get citizenship.

If we want to reduce illegal immigration, we need to find a way to deal with the fact that it's possible to make vastly more north of the Rio Grande than it is south. The people entering without visas are not in a position to pay vast amounts of money. Any solution that increases the cost of immigration won't make a difference.

Is it true that if you invest a certain amount of money in a business or property in the United States, you can get a green card?

There was a Chinese-American entrepreneur here in Pittsburgh who claimed that he could attract investors for his real estate project by tapping into his network in China, in exchange for which these folks would be able to immigrate.

Anyone know if this is a fairy tale?

Might be good to differentiate between people who immigrate physically, as in reside and supposedly contribute to US economy/society, and those who seek US legal status, which many elites around the world do, for a variety of reasons. Unless all we're after is their money.

It seems foolish to exclude highly educated, desirable immigrants because of an inability to pay. Perhaps these indidividuals could secure a loan to pay their entrance requirement. Maybe the US Government could loan the money to qualified applicants.

I still don't see much of a reason for charging a fee, however, when the same results can be achieved through a merit-based immigration system. Educated, law-abiding individuals with high demand skill sets should be given priority, period. No need for a fee, in my view.

Illegal immigration could be halted easily, if there was the political will to do it. The majority of the American public wants this, but have thus far been unwilling or unable to demand it of their leaders.

I have only one major issue with Becker's latest post--the fee system would NOT greatly change the number wanting to enter illegally (most of those individuals are poor, uneducated, and therefore unable to pay the fee), but maybe, as Becker suggests, Americans would be less tolerant of it (though they are intolerant of it now!).

You know, I don't even have to argue against this nonsense. Becker needs to take the Ellis Island tour and come to terms with just how unsuitable his own immigrating ancestors were for inclusion in his vision of America.

Why not just confiscate their art and gold teeth at the border and send them to labor camps to work off their "entrance fee"? It is absurd and evil to handicap new immigrants with $50K in high interest consumer debt. The practical effect of this is identical to indentured servitude. It is illegal under the 13th Amendment. We fought a war over this, remember?

"Since I am a free-trader, readers might expect my preferred alternative to the present system to be 19th century-style unlimited immigration."

No, actually, I would have expected you to ditch the automony rhetoric when it comes to anything that might threaten the comparative advantages you have secured for yourself in the "free market". And I would have been right.

The pay-back period for most immigrants of a $50,000 or higher entrance fee would generally be short-less than the usual pay-back period of a typical university education. For example, if skilled individuals could earn $10 an hour in a country like India or China, and $40 an hour in the United States, by moving they would gain $60,000 a year (before taxes and assuming 2000 hours of work per year). The higher earnings from immigrating would cover a fee of $50,000 in about a year! It would take not much more than four years to earn this fee even for an unskilled person who earns $1 an hour in his native country, and could earn $8 an hour in the U.S.

I gasped when I read this. It seems to completely disregard the higher cost of living after immigrating. An unskilled worker earning $8/hr can barely survive in the U.S., nevermind pay back a $50K loan. Assuming 2000 hours per year, that's $16K gross income. After tax, rent, food, and other expenses, that worker would be lucky to have $1k/yr to apply to the loan. Which, by the way, would also be accruing interest. And can someone please explain to me how an immigrant earning $40/hr can pay back a $50K loan in less time than a college graduate earning $40/hr?

Corey said:


It is absurd and evil to handicap new immigrants with $50K in high interest consumer debt. The practical effect of this is identical to indentured servitude.

An excellent point that I missed!

As a wealthy businessman, I would be thrilled to put up the $50K each for a bunch of poor immigrants in exchange for 20-year work contracts. Naturally, I would provide them with room and board (in shacks near my fields/mill/factory/whatever) as well as a couple hundred bucks a month for spending money.

Heck, I'd even make it a 10-year contract, if they were willing to give up the monthly allowance.

"You know, I don't even have to argue against this nonsense. Becker needs to take the Ellis Island tour and come to terms with just how unsuitable his own immigrating ancestors were for inclusion in his vision of America."

There was no welfare state then. Different scenario entirely. Should American really let ANYONE who wishes to enter do so. Should America really desire the tired, unwashed masses when we live in the era of the welfare state? Is that what you suggest?

"An unskilled worker earning $8/hr can barely survive in the U.S., nevermind pay back a $50K loan. Assuming 2000 hours per year, that's $16K gross income. After tax, rent, food, and other expenses, that worker would be lucky to have $1k/yr to apply to the loan."

I think you're getting the picture here. Those unskilled workers are left out, because they are more likely to be a net negative to the system. I don't favor this fee idea, but I do favor putting some sense into our immigration policy. Importing an underclass, which doesn't pay in, and which uses many resources, isn't the brightest idea. Not that I don't sympathesize with those who wish to make a better life for themselves and their families. But when is America going to realize the obvious--that America is a great country, but we can't ALL live here.

There is some problem, however, reconciling Becker's assertion that fees would work for political refugees as well, as you point out someone making meager wages will have limited capacity to repay loans (even if he really, really wants to avoid political or religious persection). I am not a fan of this fee scheme, but if one wanted to retain it, the fee could vary with earning potential for those seeking refugee status, or just abandon the fee for this class altogether.

Palooka:

I think you're getting the picture here. Those unskilled workers are left out, because they are more likely to be a net negative to the system.



Yes, but that's not the picture that Becker paints in his essay above. He claims that those workers would be included and could pay off the debt in "not much more than four years".

Three comments:
First, the proposal bears some similiarities to indentured servitude, particularly in making immigration an explicitly economic choice. It differs in important ways as well(the government is presumably indifferent as to how one earns the money to pay its fee so the immigrant is not in real servitude).
Second, what does one do with the unsuccesful immigrant? Send him or her back? The sending nation may not want its failures returned.
Third, are there some instances where the US wants to pay someone to come rather than charge them or would this be resolved by businesses paying the immigration fee for the individual?

Commenting only one Becker's premise that a 21st century wealthy welfare state may be the only reason some immigrants do come here, we see this migration already every summer. I live in a Northern city in a state that provides quite a lot health and human services. It is a perennial news story about the number of out-of-state people using the benefits that the taxes of the permanent residents pay for.

Why not, instead of assigning a price to the right to immigrate, issue credits equal to some tolerable level of legal immigration? If you issued randomly issued right-to-immigrate credits, then the secondary market would result in the highest productive individuals selecting to immigrate (ie, those with the higher expected returns on employment in the US), and the profits generated by selling credits could be a source of revenue for the source country. Of course, then the host country foregoes the tax revenue, and since Dr. Becker was animating this discussion by noting the strain put on the treasury by immigration, I suppose that is the answer. But, a market would result in full citizenship, I assume, and thus the immigrants would be paying taxes upon arrival, so that is mitigated some. Just wondering why Dr. Becker finds it superior for the US to charge a price, rather than issue credits, since the latter seems to work so much better when used elsewhere (like in tradeable pollution markets).

Another problem that needs to be kept in perspective is imperfections in Latin American capital markets. Hernando de Soto discusses this in his book, _Mystery of Capital_. Poorly defined property rights appears to be at least partially responsible for these capital market imperfections. So, how could an individual with PDV expected profits greater than $50,000 get the capital they need to purchase the right? This is another reason why it seems like an actual market might be superior, because then the price of the credit would to adjust to reflect those imperfections, and both increase immigration of "high type" immigrants, lead to a net decrease in illegal immigration, and thus free up policing resources.

Nevermind - I overlooked Becker's discussion of the loan programs at the end of the article.

But how in the world will you prevent illegal immigration? It seems like your plan will only INCREASE the desire for illegal entrance since the savings would be at minimum $50,000. I just don't see how this would prevent the poor people who are coming because they have almost nothing from still trying to get across illegally.

J.S.

http://voicesofreason.info

I often hear people say they would be happy to have open borders, if not for the welfare state. That strikes me as a reasonable position, but shouldn't we also consider that immigration policy and welfare policy are not independent of each other in a public choice framework? In particular, if more immigrants came to the U.S., would that not put greater pressure on politicians to reduce (or at least not increase at so fast a rate) the size of the welfare state?

A pragmatist in favor of smaller government must choose which policies are most politically feasible, and looser immigration standards seem more palatable on the present political scene than reductions in government benefits.

I am not suggesting that we repeat immigration restrictions immediately -- that would be fiscally disasterous, as noted in the post -- but a slow loosening over time seems not unreasonable to me, given the public choice ramifications.

Here's the one I find most offensive:

"I believe that with unlimited immigration, many would come mainly because they are attracted by these government benefits, and they would then be voting to influence future government spending and other public policies."

First, I seriously doubt that many people will leave their countries and uproot their families just for the possibility of getting ... workfare! Come on.

Second, Becker says very plainly that he does not want poor immigrants because they might vote for future gov't benefits. So I guess Becker's U.S. is kind of a mini "Club for Growth": if you believe at all in government, don't bother applying. (Unless you need the courts to enforce your contracts or the police to protect your gated mansion). Becker seems to have given up on convincing the "masses" with the logic of his arguments. Instead, he'd rather just keep them out.

I wonder how many of those that made the American economy great would have been excluded from the US had Becker's proposal been in place in the 1800s.

It is possible that the poor and hungry make the best immigrants and the ones most likely to contribute to American society. Those who already have succeeded in their home countries and can afford $50,000 to immigrate may not necessarily be those most likely to contribute to American society.

I also think Becker mistakenly assigns certain characteristics to those able to afford the $50,000 that they might not have. Youth? Why isn't it likely that they will be older given that $50K would take some time to save? Skilled? Maybe - but why not those who have come by enough money to immigrate through other means such as political connections? That is a LOT of money in a country like El Salvador - beyond even the means of a skilled worker for the most part. More ambitious and hard working? Why? Poor folks like Carnegie seemed to have sufficient ambition and willingness to work.

Just my two cents worth.

This blog has stimulated some fierce (but ultimately friendly) discussion among my fellow grad students. We are not decided yet whether this would reduce illegal immigration or inadvertantly increase it. I look forward to Dr. Becker's comments later.

My thinking is that there are Type I and Type II errors, assuming the USA wants the most productive and brightest of immigrants (call them "high types") but does not want the worst of the lot (call them "low types"). I get the order reversed usually, but I believe that a Type I error is to allow low types in, and a Type II error is keep high types out. Dr. Becker's proposal seems as though it will lead to a pooling equlibrium where high types select into the United States because the present-discounted-value expected benefits of immigrating are presumably greater than $50,000. A highly productive worker can earn more than this, he notes, in a few years or so, so this is probably not unrealistic. And given that Dr. Becker has noted, in his policy prescription, government sponsored loans, this deals with imperfections in developing country's capital markets (if anything, government-sponsored loans will probably end up increasing the likelihood of getting some low types, since my impression is that the state is less risk-averse in its loaning practices).

But the question my friends and I were debating about is whether this will lead to a net reduction in low types immigrating. That is, we can see how it would lead to high types legally immigrating, but we weren't sure whether it might have an increase/decrease in the number of illegal immigrants.

My thinking was that it would lead to a decrease in illegal immigration. Assuming a fixed population of illegal immigrants, this mechanism divides the population into low and high types, thus allowing high types to safely enter and keeps low types out. But low types can still enter through illegal immigration. I believe, but I have yet to work this out, that this will lead to a decrease in illegal immigration because a smaller population of illegal immigrants means the police do not have to spread their resources out as much. The police, in other words, become more productive in response to the mechanism. Because they are now searching over 100 illegal low type immigrants instead of 200 mixed with high and low type, there is a higher probability of catching a low type (conditional p=1).

But, a friend wondered what would happen if we allowed the high types to be replaced by low types. That is, assume there is are 20 individuals with trucks, and each truck carries 1 illegal immigrant. In the old regime, when types were mixed, assume the police had a 50/50 chance of catching every truck. In the end, they'd catch 10 trucks consisting of 5 high types and 5 low types.

After the mechansism, the high types exit from the illegal immigrant pool. Furthermore, assume that they are immediately replaced with low type immigrants. There are 20 trucks with 20 low types total. The police catch with p=.50, and end up catching 10 low types. But, they also end up letting in 10 low types. Under the earlier version, they caught 5 low types and 5 high types, but let in only 5 low types (as well as 5 high types).

So, in that assumption, when you let the high types be replaced by low types, you end up with the same amount of illegal immigration, but a net increase in the number of low types immigrating illegally. In other words, you get more of the TYpe II error, even though the mechanism eliminated the Type I error. I need to think about this problem some more, but I'm curious to what Dr. Becker thinks about it. One thing one could do is use the revenues generated by the credits to spend on monitoring and policing the border. Use it, in other words, to purchase more police, guns, canines, etc. This might be sufficient, at some point, to cause a net decrease in illegal immigration, even allowing replacement.

I love the analysis, Scott. I think that there would be an increase in legal immigration with no noticeable decrease in illegal immigration under this plan. It would have to be implemented along with some form of tighter border security, something our government has always been reluctant to do.

Going back to david for a second... Did you just claim that we have to "convince the masses" in MEXICO of the "logic of our arguments" before we can tighten border security? I would assume this is too absurd to consider, except we already have a powerful lobby from the Mexican government operating to keep our immigration controls light and our entitlements heavy.

It is a serious concern that Mexican immigrants who maintain dual citizanships and questionable loyalty to the United States will gain an undue influence in our government. I believe this is what Mr. Becker is talking about. Whatever happened to "forsaking all other princes and potentates" anyway?

Prof. Becker, you may want to visit an immigrant enclave or two. The proposition that a $50k visa would lighten the stream of illegal immigration belies a complete ignorance of the characteristics of the illegal immigrant populace.

2nd, to the commenter who said there was no welfare during peak Ellis Island immigration: read a book or two, namely on the Bund, Hebrew Immigrant Aid Society, Council of Jewish Federations and Welfare Funds, the facts at this link http://www.clevelandmemory.org/italians/appendix.html#347,
Emigrant Savings Bank, Mutual Aid Societies, etc. And realize that it was actually easier to get a hand-out back then than it is today if you are foreign born, see the 1996 welfare reform law.

Is buying your way into the country comparable to buying your way out of a draft, which was allowed, for $300, in the Civil War? I think the ethical dilemmas are comparable.

Also, since, as was the case with the Civil War buy-out, Becker's proposal would result in a wealth transfer, perhaps significant, from the immigration countries to the emigration countries. The immigrants, qua emigrants, will finance their entry fee in the home country, perhaps at very high rates, and then pay those fees with income generated in the immigrant country.

Finally, if an entry fee makes sense, then doesn't an auction make even more sense?

"A highly productive worker can earn more than this, he notes, in a few years or so, so this is probably not unrealistic."

This is EXTREMELY unrealistic.

This has been said before, but I'll say it again. Yes, $10/hr to $40/hr results in a raw increase of a rough $60,000/year, but that's not counting taxes (say $30k per year), increased cost of house, car, food, utilities, etc.

The best analogy is that of student loans, how many people pay those of "in a few years"? And these loans would be higher interest.

Even more damning, how many would actually make anything even resembling $80k? Seriously. The mean US annual income is $36,520.(http://www.bls.gov/oes/current/oes_00al.htm)

Those that would make that amount are already here on H1B's and the like.

Interesting discussion here. A couple of points (made as an American that currently is working in Mexico on a contract)

(a) I feel that the $50k entrance fee is unrealistic and counter-productive. Empirical evidence has shown that hungry willing to work immigrants have made America great. Conversely, colonial outpost like Haiti, Cuba, and Mexico have fared less well. (My point being that just importing the 'high class' is not a prescription for success)



(b) The borders should be opened. Obviously there are security concerns that must be taken into account, but contrary to most grade-school level economics - the economy is not a pie - it will expand.

(c) The welfare state must be curtailed for the above to succeed. (Perhaps like Kendall suggest, that open borders will pressure smaller welfare states)

(d) How do states like Arizona, New Mex, and Texas get compensated. Surely, these 'open borders' are going to come at an expense. How are those states compensated?

(e) Hopefully, more immigrants would keep the pressure off raising the minimum wage. The minimum wage law is a failure both socially and economically. Such laws only result in two things; Higher prices for goods, and pressure to increase outsourcing.

So, we don't want the world to send us their "tired, poor, and huddled masses yearning to be free"? If the country had adopted Becker's pay-for-entry program years ago, we might have missed out on any number of wonderful citizens. Of course those with "value," I think of the Barishnikovs of the world, would likely have been underwritten, but I'm certain the relatives of great classmates (children of poor immigrants) would have been left out.

"My thinking is that there are Type I and Type II errors, assuming the USA wants the most productive and brightest of immigrants (call them "high types") but does not want the worst of the lot (call them "low types")." - et al.

Analysis is fine and all but what about time? Just another example of short-sightedness in our political economic thinking. I think it's hard to reduce immigration to net benefit or loss to our economy. Shouldn't we be eager as a society to clothe, feed and educate as many people as possible, regardless of origin and current cost to society? Problem is we don't see such expenses as long term investment but just costs and burdens. Why is a welfare mother with three children viewed as a burden when the three children will eventually grow up and be contributors to the economy? Reality is that we are still tribal and the immigration issue draws from a well of xenophonia and ethnocentrism.

If the issue is illegal immigration, a lot can be done to address this if we go after the employers of illegal immigrants. But American's don't want to do certain jobs? Well, immigration is only the symptom of the disease of a too-rigid labor economy. Realistically, who is going to tackle the illegal immigration issue when there are huge political pressures to keep wages ("cost of business") low?

"But American's don't want to do certain jobs?"

NO, they don't want to do some jobs at the wages illegals get paid. In the absense of illegal labor, the wages rise, inducing legal labor to take up those undesirable jobs. Also, some substitution of capital will take place when the wages increase.

The idea that there are insufficient numbers of Americans willing to do the labor even at higher wages, or that the system would collapse without illegal labor, is a total fabrication of the highest order. It is a lie perpetuated by business interests and those politicos who think the demographic shifts favor their party. Unfortunately, both parties have a stake in illegal immigration continuing, despite having a majority of the American people fed up with illegal immigration and its ills.

"NO, they don't want to do some jobs at the wages illegals get paid. In the absense of illegal labor, the wages rise, inducing legal labor to take up those undesirable jobs."

Actually, the absense of cheap labor will just lead to more outsourcing. Very. Simple. Economics.

(b) The borders should be opened. Obviously there are security concerns that must be taken into account, but contrary to most grade-school level economics - the economy is not a pie - it will expand.

(d) How do states like Arizona, New Mex, and Texas get compensated. Surely, these 'open borders' are going to come at an expense. How are those states compensated?

I'm sorry, but there seems to be a contradiction there... If immigration is a net benefit for society, why would we need to compensate the states who gain the most immigrants? Are you assuming at this point, that the welfare state has already been reduced or eliminated?

I agree that a healthy, hardworking, younger workforce would be a benefit to the American economy as a whole. There would be a serious wage hit in certain labor markets, but I doubt Professor Becker would argue that we need protectionist policies for wages.

At the risk of making what will be a very unpopular point for some people here, I think the biggest problem with open borders is that mass immigration from Mexico leads to non-assimilating enclaves. Immigrants in these areas do not learn english, maintain dual citizenships, and have no long-term connection to the United States. Even if the welfare state was eliminated, policies such as an official english language and an end of dual citizenship would have to be put in place.

Actually, the absense of cheap labor will just lead to more outsourcing. Very. Simple. Economics.

"but I doubt Professor Becker would argue that we need protectionist policies for wages."

That is exactly what he is arguing for, a $50K tax on being willing to work for less. He admits the departure from free-market ideology in his post!

"I think the biggest problem with open borders is that mass immigration from Mexico leads to non-assimilating enclaves."

Whatever, I lived in LA for 8 years and didn't see this. If anything, LA absorbs latino culture to its benefit. There is nothing inherently wrong with dual citizenship or bi-lingual education in a multi-national economy.

The basic structure of our economy today, with labor primarily offshore and benefits entirely on-shore, is NOT fair or moral. People are using the fact that folks outside the country see through this structure as an argument for destroying the local benefits when really, it is an argument for extending the benefits as far as the labor is extended.

It is perverse to attack the welfare state because outsiders admire it. This is especially true when those outsiders actually are participants in the American economy but are being excluded from its benefits by a one way geographical door.

You lived in LA and didn't see signs of non-assimilation? Well ok then... I guess there's no point in trying to convince you otherwise. I see it in Wisconsin.

It is well to remember the U.S. immigration history of the Eastern European Jews in the late 1800�s and early 1900�s: they were initially thought to be �undesirable� immigrants (poor, language deficiency, low IQ test scores) yet became productive cost-benefit citizens over time. And their children excelled in the U.S. educational system and became very successful productive members of society.

Mr. Becker�s proposed fee system would have excluded most Eastern European Jews to the detriment of the U.S. I have doubts about a fee system or purportedly scientific human capital metrics incorporated into immigration law to produce a prudent immigration policy.

Corey,

Need proof about non-assimilation?

Heard of MEChA?

"Heard of MEChA?"

Yes, and I have heard of the Nation of Islam and the Aryan Nation groups as well, as far as I know, every identifiable ethnicity in our country has at least one radical separatist group. I think you are missing the forest for the one ugly tree.

The US did appropriate traditional chicano lands by the way, MEChA is at least right about that.

Expressions of cultural allegiance are just as protected as any other non-violent form of speech, societies with less xenophobia than ours have no trouble enjoying other people's cultural festivals and that tolerance diminishes the audience for radical separatists.

I personally do not believe that total assimilation helps either culture. One side inevitably loses some of its valued traditional identity and the other loses the ability to access diverse ideas.

Some assimilation is good because common ground has to be found if we are to communicate and get along, but my experience visiting other cultures leads me to conclude that there is less variation in basic human goals and needs than we might assume. At a minimum, our shared life cycle gives a starting point for understanding even absent shared spoken language.

"Yes, and I have heard of the Nation of Islam and the Aryan Nation groups as well, as far as I know, every identifiable ethnicity in our country has at least one radical separatist group. I think you are missing the forest for the one ugly tree."

And these other "radical separatist groups" exist on hundreds of college campuses across this country, with official university sanction? Has a member of one of these other "radical separatist" groups recently run for governor of our largest state, California, as a Democrat or Republican?

"At a minimum, our shared life cycle gives a starting point for understanding even absent shared spoken language."

This is such complete drivel. The praises of a multi-lingual society are many, but have you actually studied what occurs in multi-lingual societies? Hint: it's not unity and harmony.

I would urge commenters not to unduly focus on the $50k price tag. It's just a number, likely thrown out because it's nice and round. Perhaps the fee will be $10-$20k. Or maybe we'll all be surprised and the eventual number is much higher. The market will decide. Or if you don't like a fixed rate, maybe we could auction off the immigration slots ebay style.

And who says Becker's Immigration-Mart idea can't be incorporated into the current framework? We can still give preference to family members, selected skilled workers, etc., and ALSO sell the right to immigrate to those who are passed over using the above criteria.

I will say that I think the only way selling immigration can stem the flow of illegal immigrants is if the proceeds go to strengthening the border security.

I would like to draw a connection between three separate points made in this thread.

a) Prof. Becker's suggestion that family reunion priorities be eliminated from immigration law.

b) The comment that before the welfare state, organizations like HIAS were providing handouts to poor immigrants.

c) The comment that it is really very difficult for government systems to make long-term judgements about the economic prospects of an individual.

Does anyone think that the following logic is reasonable:

1) Families naturally tend to make long term economic decisions. The decision to spend money raising and educating children is a gamble. The children may or may not be good "economic investments". Children may or may not even be good "emotional investments" because they are not guarenteed to love their parents or bring tthem any type of pleasure.

2) Parents in general (and,in cultures where the family is much larger than the nuclear one, older family members) are remarkably resourceful when it comes to making their investments pay off. Most parents don't take their offspring to court to make them get good jobs and take care of them in their old age. And they don't prosecute their children to compel their loyalty/love. But they usually manage to get more or less what they want.

3) HIAS and such organizations operated on a similar basis. They invested in the immigrants with whom they presumed they had familal-like loyalties. They couldn't be absolutely sure that the recipients of their aid would feel compelled by the same sense of familial loyalty, but in general the Jewish community which funded HIAS was very good at helping immigrants make their way in America, and exerted tremendous pressure on them to do so. Again, much like a family does.

4) What would happen then if immigration law forced potential immigrants to have a sponsor which would legally ensure their care (for say, 2 or 3 years or so)?

Those potential immigrants who were already qualified to fill empty jobs would easily find a business sponsor .

Those potential immigrants whose benifits are largely a matter of speculation would probably have to resort to close friends, but especially to family members already in the United States and who have already had enough economic success to be able to financially ensure another person's welfare for 2 or 3 years.

These family members would probably be more likely than the government to be able to judge whether such a gamble is worthwhile.

Moreover these family members have greater and more subtle means at their disposal for making the person indebted to them live up to their expectations.

Last but not least, these family members would most likely be former immigrants who "made good". They could provide valuable information, contacts, and advice to the new immigrant. (aka path-dependence)

This might also alleviate some of the problems of immigrant enclaves where people are not encourage to learn English. Immigrants who learn English are more likely to become economically successful than immigrants who don't learn English. They would thus be more likely to have the financial resources to sponsor new immigrants. And they would likely mentor their charge to follow in their footsteps by learning English and becoming successful too.

Unfortunately, such a policy would exclude people who have not yet proved themselves and who are not so lucky as to have contacts in the United States. This would be painful and harsh, but perhaps not in comparison to the alternatives.

"societies with less xenophobia than ours have no trouble enjoying other people's cultural festivals and that tolerance diminishes the audience for radical separatists."

Yes, corey... I hear Holland's tolerance in welcoming immigrants with open arms has paid off in spades.

Many illegal immigrants pay huge amounts of money to smugglers to get into the country. What would the economic effect be of letting them post that money into a US bank account where they could use it to start a business. Seems like a better deal than paying it to a Chinese crime syndicate.

What is a prudent immigration policy? What is the goal? What are you measuring?

I argue you need high numbers of low wage immigrants to reach economic goals. Yes, there are social costs yet the evidence suggests net economic benefits to low wage immigration likely outweigh costs.

Fact: you remove all low wage immigrants from U.S. and the economy would crash. Thus, it may not be advisable for public policy to favor educated and wealthy immigrants over poor and uneducated immigrants.

While Dr. Becker's post addresses a mechanism for allowing immigrants to enter the United States, I think the line of thinking might be applied to a matter more urgent - granting full migrant status to people who are already in the US as legal(or even illegal) workers.

Can we not implement a rule that says that anyone who has legally entered the US and paid, say $50,000 or $100,000 or pick-a-sensible-number, in taxes be granted a green card? At once, this would mean higher skilled workers, presuming they have higher paying jobs, will be granted status faster. And lower-wage immigrants, in taking longer to reach that threshold of tax payment, would demonstrate a solid desire to live and work legally in the US.

"Fact: you remove all low wage immigrants from U.S. and the economy would crash."

This is just ridiculous logic for arguing for the status quo. You remove ANY group consisting of millions of workers and the economy would "crash." That doesn't mean the economy, in the absense of massive illegal immigration, wouldn't function. An adjustment period would occur, and it would make sense to allow many to stay who have already made the US their home, but if we were to halt illegal immigration today, markets WOULD adjust, the sky would not fall, especially if stemming illegal immigration was gradual.

"Yes, there are social costs yet the evidence suggests net economic benefits to low wage immigration likely outweigh costs."

The only benefits are lower prices. No taxes--besides sales taxes--are collected. Americans in the lowest wage tiers are actually hurt because the influx of low skilled workers lowers wages. Increased crime also is likely to occur (lower education and income levels do that). All while tax paying Americans pay for medicaid, medicare, education, roads, etc. It's difficult to measure the benefit of illegal immigration found in lower priced goods and services, but I have serious doubts it is greater than the costs. And don't Americans have the right to insist that those costs be reflected in policy without being labeled xenophobic and racist?

Palooka: Do you have evidence to support your allegations and arguments?

Prof Becker's suggestion is already effectively in place. There are economic costs to migrating legally, which are already imposed on an individual, through things like visa fees and other restrictions (for example, an individual immigrating from India without a promise of financial support in the US has to show adequate financial status for visa approval). There will always be barriers of this nature to immigration. What a proposal of this sort would do is discourage a number of legal immigrants from entering the US. Personally, (I am from India, and while I am here, I plan to go back) I think while there are many people (who lie in a likely target group) who are eager to immigrate legally, they are not sufficiently desperate to shell out additional fees of the sort described by Prof Becker. I would also argue that the group of people who would avail of this proposal are small enough to make little difference to the long term social security or tax burden on the public.

However, I find arguments of this nature disturbing for a few reasons.

1. This argument assumes that a sufficient metric of an immigrant's possible contribution to american society is his or her ability to satisfy a certain minimum financial threshold. This is a simplistic measure at best, given that a great number of successful americans were immigrants with little or no financial resources to begin with. There is also the small matter of the willingness of American society to tolerate and even utilize poor, illegal immigrants for jobs which ordinary Americans would accept only at much higher renumeration.

2. While a worker in India would earn $10/hr as opposed to $40/hr, the purchasing power of the $10/hr is much higher in a country like India, so in real terms his/her wage is greater. Consequently if a fee of $50,000 or higher is imposed, it could be a sufficient economic disincentive for such workers to immigrate. Essentially, immigration is not a one way deal, the U.S allows immigration of any sort because such immigration satisfies real economic needs in the U.S. Shifting burdens on legal immigrants of this kind may be counterproductive.

3. The economic free labour market argument. Imposing constraints of this nature is an artificial device to control a labour market, and would probably incentivize illegal immigration. Also, there is no reason why such additional controls should be imposed on what is already an unfree labor market. It appears to me that the tolerance for immigration within the US is already stimulated by the demand for labor, and the present setup is pretty good in satisfying this demand in sectors which require educated and trained personnel, through allowing immigration legally.

The real contribution to immigrant populations is in the relatively poor, and unskilled labor categories, and a lot of this is illegal in nature. Additional barriers of this nature are at best going to drive the illegal immigration networks further "underground" and create a greater incentive for an illegal trade in human trafficking.

Additionally, significant additional immigration fees would likely cause knowledge based businesses to outsource more jobs offshore. Beware of the law of unintended consequences: high wage knowledge jobs are mobile � most can be located offshore. Low wage labor is often geographically restricted (construction, hospitality, food). The potential result of a fee based system could be loss of high wage jobs and a shortage of low wage labor in the U.S. Thus, a fee based immigration system may be counterproductive to U.S. interests.

"Palooka: Do you have evidence to support your allegations and arguments?"

Do you? The costs of providing medicare, medicaid, welfare, and education to illegals are known costs (or are costs which can reasonably be estimated). Do you dispute this?

The only subtantial benefit illegal immigration gives Americans is lower (how lower is uncertain) priced goods and services. You have already suggested you are in possession of "evidence" which suggests the benefits of illegal immigration outweighs the costs. You have not presented this "evidence," but have the audacity to ask me for evidence to support my quite mild and self-evident assertion that, "It's difficult to measure the benefit of illegal immigration found in lower priced goods and services, but I have serious doubts it is greater than the costs [of illegal immigration]." Maybe you can provide other potential benefits, but your silence thus far speaks volumes. Maybe you can present a reliable way to estimate the degree of which prices are lower because of illegal immigration. I'd like to see that, really. The only significant benefit garnered from illegal immigration is lower priced goods and services (a significant but unknown quantity). I repeat: I doubt that this benefit outweighs the considerable (and known) costs of illegal immigration.

It seems peculiar that you demand I prove the lack of benefits to dispute your assertion there are benefits which outweigh the costs. These are? How reliable and certain or these estimates? Contrast that with the KNOWN costs. Increased medicaid, medicare, education, criminal justice, and welfare expenditures.

Additionally, significant additional immigration fees would likely cause knowledge based businesses to outsource more jobs offshore. Beware of the law of unintended consequences: high wage knowledge jobs are mobile � most can be located offshore. Low wage labor is often geographically restricted (construction, hospitality, food). The potential result of a fee based system could be loss of high wage jobs and a shortage of low wage labor in the U.S. Thus, a fee based immigration system may be counterproductive to U.S. interests.

====

This is probably the most mixed up you've been yet. You must compare Becker's proposal to the CURRENT system. As such, there is no possible way one can construe his proposal to increase high-skilled outsourcing, as it would increase the supply of high skilled laborers IN the USA (thus lowering wages, thus making it less likely to be outsourced, all while lowering the supply of high skilled labor abroad). You are comparing Becker's proposal to a system of totally unrestricted immigration to get your bogus result. Shame on you.

Moreover, you have already been put in your place on the low skilled outsourcing argument. Low skilled work performed by immigrants in the US today is NOT the kind which can be outsourced. Can you name one low skill job, typically performed by immigrants, which can be outsourced easily or at all? As one commenter said when you initially made your weak claim, "Actually, a lot of low paying jobs are not amenable to outsourcing. How do you outsource dishwashers, gardeners, nannies, and janitors? For jobs like these, the absense of cheap labor is likely to lead to automation, not outsourcing."

Evidence: An authoritative 1997 study by the National Academy of Sciences (NAS) concluded that immigration delivered a "significant positive gain" to the U.S. economy. The report is said to be one of the most important on this subject to date. For the full text of this study see http://www.nap.edu . Immigrant Contributions to the U.S Economy:

1 An immigrant and his or her children will pay on average about $80,000 more in taxes during their lifetimes than they collect in government services.

2. Immigrants with college degrees will pay $198,000 more in taxes during their lifetime than they collect in government services.

3. In 1997, the U.S. reaped a $50 billion surplus from taxes paid by immigrants to all levels of government.

4. Without the contribution of immigrant labor, the output of goods and services in the U.S. would be at least $1 trillion smaller than it is today.

5. The total net benefit (taxes paid over benefits received) to the Social Security system if current levels of immigration remain constant is nearly $500 billion for the 1998-2022 period and nearly $2.0 trillion through 2072.

6. Immigrants collectively earn $240 billion a year, pay $90 billion a year in taxes, and receive $5 billion in welfare.

7. Immigrants who become U.S. citizens typically pay more in taxes than native-born Americans. Federal taxes paid by families with a naturalized citizen average $6,580 per year compared with $5,070 for U.S.-born-only families.

8. Businesses founded by immigrants are a source of substantial economic and fiscal gain for U.S. citizens.

9. The average immigrant contributes about $25,000 to local and state governments.

One of the study's most important finding seems to be that immigration has an overall positive effect on the economy. According to panel chairman James P. Smith, a senior economist at California-based RAND corp., "Immigrants may be adding as much as $10 billion to the economy each year. It's true that some Americans are now paying more taxes because of immigration, and native-born Americans without high school educations have seen their wages fall slightly because of the competition sparked by lower-skilled, newly arrived immigrants. But the vast majority of Americans are enjoying a healthier economy as the result of the increased supply of labor and lower prices that result from immigration."

The study reported that while immigrants may use more publicly funded services than they pay in on an annual basis in the states where immigrants are most concentrated, the panel reported that in the long-term on a national level, "the majority of new immigrants and their descendants will add more to government coffers than they receive over their lifetimes. The positive fiscal effects of immigration at the federal level are shared equally by all residents across the nation."

In testimony before Congress last year, Federal Reserve Board Chairman Alan Greenspan said, "I've always argued that this country has benefited immensely from the fact that we draw people from all over the world."

I can't find those statistics at the page you listed. I also find it likely that we're talking about legal immigration. We all agree that balanced, controlled, legal immigration is a boon to society. Let's be honest though. When we talk about "opening the border" we're really concerned with Mexican immigration.

http://www.cis.org/articles/2001/mexico/release.html

"That the majority of Mexican migrants earn low wages is undisputed. Therefore, as a group, they also pay lower than average income taxes. Mexicans who reside in the United States also have larger than average family size, so they may consume proportionately more in public education services than they pay in local taxes." - p. 257

"Among recent and prior migrants, Mexican-born migrants feature the lowest levels of formal schooling and English proficiency. Both characteristics are important determinants of labor market success and the likelihood that immigrants will not become public charges. Tables 1A through 1F provide summary education and English proficiency statistics for Mexican migrants, compared to other foreign born, " - p. 264

Read the whole thing if you like. It's the government's study on the effects of mexican immigration produced by the Center for Immigration Statistics. You can just look at the highlighted facts posted on the main page if you like... they're very telling. Mexican immigration, legal and illegal, is a net drain on society.

The Center for Immigration Studies is a biased source subscribing to a low-immigration vision and advocates fewer immigrants.

The National Academy of Sciences is a well respected independent source advocating no point of view - sticking to the facts and evidence.

Ahhh... well at least we cleared that up. I suppose you could point out which fact in the 144 page study you disagree with... They have pages upon pages of charts and statistics... Want to pick one? It shouldn't be hard. I still don't know where that information you found is located, by the way.

A commenter has already pointed out the flaw of your "evidence." It is about "immigrants," not illegal immigrants (who pay only sales taxes) who occupy mostly low-skill, labor intensive jobs.

If what you suggest--that illegal immigration is a net benefit to state financial resources--then we wouldn't see border states struggling with the problem like they are. In fact, your own evidence contradicts your assertion. "The study reported that while immigrants may use more publicly funded services than they pay in on an annual basis in the states where immigrants are most concentrated."

I'm not sure how this jives with the previous assertion that "An immigrant and his or her children will pay on average about $80,000 more in taxes during their lifetimes than they collect in government services."

This disparity probably occurs from rosey extrapolation (or previous, irrelevant data) about how productive an immigrant's family may be. Or the misleading lumping of data of illegal and legal immigrants (the former drawing net negatives, the latter drawing net positives). Or perhaps the total exclusion of illegals altogether.

Thanks for the link, btw. Though one can only access parts of the study you mentioned, it's still providing plenty of ammunition.

"Generally, these studies have found that both natives and immigrants make the largest tax contributions to the federal government, that immigrants make lower average tax contributions, and that immigrants are a greater burden on state and local governments (Vernez and McCarthy, 1996; Garvey and Espenshade, 1996). Three studies have examined fiscal impacts of immigrants in California. Los Angeles County (1992) found that recent legal immigrants, legalized aliens, and undocumented aliens and their children incurred costs to the county in excess of their share of the population. Although these immigrants and their families composed 25 percent of the county population, this group consumed 30.9 percent of total county services while paying only 8.7 percent of tax revenues, most of which flowed to the federal government."

The NAS study you cited then goes on criticize these studies for focusing on undocumented aliens. I don't know why that would be a flaw if one wanted to address the problems arising from undocumented aliens. But maybe that would be a problem if you wished to conflate legal and illegal immigration in order to obscure the impact illegals have on fiscal matters. It's ridiculous to treat the issue of immigration as a monolithic one--that you're either for it or against it. One can be for immigration, and also oppose the chaos that our current immigration policy is creating.

Daniel,

You have to buy it, I believe. But portions of it can be accessed for free. OR at least some of the NAS work on immigration can be.

I thought we were discussing legal immigration and proposals to improve our flawed immigration system. I am not interested in debating illegal immigration or bashing illegal immigrants.

Please distinguish legal from illegal immigration. I do not favor or advocate illegal immigration. It would also help to distinguish between two forms of immigration: non-immigrant intent (work visa) and immigrant intent (green card).

One goal of immigration policy is to have support mechanisms to reduce the social disruption of immigration and maximize economic gain.

We're talking about opening the borders and under which circumstances that would be an acceptable policy. Talking about open borders while only looking at statistics for legal immigration is foolish. We should actuall be considering all the illegal immigration and more because we have to assume that our laws DO discourage SOME people from crossing the border.

None of us would argue that immigration held to our current legal standards is a net gain for society... as I've said before. Our laws are designed to prevent a burden on our public services, encourage assimilation, and discourage immigrants from clustering in enclaves. Open borders would remove these safeguards, and the best way to study the effects of open borders is to look at statistics for illegal immigration.

I don't think by selling the rights to immigrate, illegal immigration can be stopped. A lot of the people who immigrate illegaly are very poor people. They cannot afford the price to buy the right to immigrate. These people will still try to cross the border for free rather than pay for it.They don't want to be burdened for the rest of their life with a huge loan.

"Open borders would remove these safeguards, and the best way to study the effects of open borders is to look at statistics for illegal immigration."

How about looking at American History and the expansion that occured the last time we had open borders. The statistics for illegal immigration are hopelessly dependent on the form of this week's immigration policy.

Imposing "illegal" status on immigrants makes it harder for them to do the productive work that we hope immigrants will do. It creates an under-caste that causes all sorts of problems for social administration.

To the extent that America's collection of wealth has depended on access to cheap overseas labor, it is greedy and protectionist and immoral to stop that labor from following the money here.
Calling it a "safeguard" leads to the question, what are you protecting and how is closed border policy consistant with open market policy.

One goal of immigration policy is to reduce or prevent illegal immigration. It is helpful to distinguish between two forms of immigration: non-immigrant intent (work visa) and immigrant intent (green card).

Our current system is flawed by not allowing enough legal non-immigrants to come in temporarily to satisfy economic demand. The result is excessive and unsupportable illegal immigration causing social disruption.

The solution is designing a workable non-immigrant (intent) temporary work visa program to meet economic needs. Unfortunately past programs were not designed or managed prudently and caused unacceptable social disruption (bracero program).

As an alternative to a fee based or human capital metric system I suggest a controllable non-immigrant temporary work visa program with oversight and support mechanisms to reduce social disruption and maximize economic gain. We should keep our current family based system and reform the employment based (both non-immigrant and immigrant intent) system.

While I think this is an interesting idea, though I do believe that some sort of community service agreement could be a viable way to earn your citizenship for those without the cash. However Prof. Becker says "The United States, the leading destination for immigrants..." and "I believe that with unlimited immigration, many would come mainly because they are attracted by these government benefits, and they would then be voting to influence future government spending and other public policies," yet is that really the case? It seems like the US would get less immigration than the more socialized European nations if immigration was prompted largely by a desire to take advantage of first world social services.

The EU does get huge waves of immigration, both legal and illegal. The only variable between the two situations is that the United States has a border with Mexico. All of europe is being flooded with immigrants, especially Sweeden, which has one of the largest welfare states of the EU. Even notoriously tolerant Holland is looking for ways to control its immigrant problem, and Sweeden is debating whether to curtail its entitlements.

The rich countries have capital and more highly evolved economies. The poor countries have people. Lots and lots of people. There's plenty of land and financial capital in the US. Open the gates and let the games begin! Are we or are we not free market capitalists?

RE: non-immigrant temporary workers, it is essential that the US gets its arms around this issue. Someone above already made the point: most good jobs will increasingly be knowledge jobs and there are weak constraints on where those jobs are located. Certain clustered industries will be insulated, but see article in NY Times today on outsourcing lab work to India and China. It's just the beginning.

Point is, immigration debate is not a real economic debate. It's a social debate, the proverbial shifting of the deck chairs on the Titanic. Fine if we want to keep people out. But if we were concerned about the future economy, we need to talk about long term investment in education and more discipline in our individual and collective economic choices.

NYT article:
Medical Companies Joining Offshore Trend
http://www.nytimes.com/2005/02/24/business/worldbusiness/24offshore.html?adxnnl=1&adxnnlx=1109257480-lUy4ZPdb6tKyRG5LQNLTdg&pagewanted=print&position=

Are we headed towards an hourglass economy with lots of wealthy "owners" and lots of service employees? (The current administration will go down in history for being asleep at the wheel while protecting access to oil and protecting he wealth of the already wealthy.)

Again, if you want to use the "free market" approach to open borders, you have to be willing to forgo the welfare state and probably free education as well. If each immigrant received services based on his/her contribution to the economy, then of course you would be right.

Sweden, furthermore, has been experiencing a signficiant strain on its welfare system due to its liberal immigration policy, and it seems to be causing not only economic problems, but also socio-racial problems as well. For instance,

"... the last two decades, Malm� has acquired a population that is almost 40 percent foreign. Most of the students in its public schools are of foreign parentage. Some immigrant neighborhoods in the city have (official) unemployment rates exceeding 50 percent. Malm�'s mayor, Ilmar Reepalu, has pleaded for immigrants to be settled in other parts of Sweden. This has made Reepalu popular in Malm�, but not in those other parts of Sweden. Others uneasy about immigration are too impatient to work through official channels. Much of the Islamic Center was destroyed by a fire of suspicious origin in 2003."

If we look just at Sweden, there appear to be prudential reasons for considering some limitation on immigration specifically due to welfare state problems Becker mentions.

To something I said earlier about the possible deterrence effects of this mechanism Becker proposes - I think I was confused about something. I was assuming that the police would be more productive in catching immigrants it the pool of illegal immigrants decreased. But, I suppose that that is not an assumption one usually makes when thinking about the economic model of crime. So, I'm not really sure one could say either way whether a shrinking pool of illegal immigrants would change the relative prices the illegal immigrant is facing when making his decision to illegally immigrate. The fee-based system would appear to shrink that pool, and thus in that sense decrease the pool of illegal immigration, because certain individuals are self-selecting into the fee-based system. But my question as to whether it might shrink the pool even further by raising the probabilities of arrest (assuming police productivity increased as the pool decreased) is based on a statistical assumption that the two are not indepedent, and I doubt that is necessarily true. After all, if the police catch illegal immigrants crossing a border with p=.50, they catch with p=.50 regardless of how many are traveling over because their policing is based on geographic checkpoints. I suppose I had in mind more of an example of now actually being able to ignore certain parts of the border, and concentrating those resources elsewehere, thus increasing the chance of catching an illegal immigrant, and therefore raising the expected costs of illegally immigrating (thus having some marginal deterrence effect) but I don't know enough about the technology of policing to know whether that's a reasonable assumption or not. I suspect it's not.

Wouldn't a 50K entrance fee also skew the intake of immigrants towards older folk who have had the time to sock away that much capital? If so, you're also reducing the amount of time the average immigrant will be paying into social-spending schemes such as SS before starting to draw, and reducing our net gain thereby.

"Why not just confiscate their art and gold teeth at the border and send them to labor camps to work off their 'entrance fee'?"

This is silly, Corey. Said immigrants are not being forced to come here. The decision to immigrate is, for most, a rational one, based on the idea that one and one's family will do better in the U.S. than in the home country. Given an entrance fee, many on the margins will simply decide that they're better off staying put. For the non-economic immigrant (i.e. refugees), a separate system can be employed.

I believe that with unlimited immigration, many would come mainly because they are attracted by these government benefits, and they would then be voting to influence future government spending and other public policies.

So what about a policy of unlimited work visas? Either the cheap foreign labor comes to the US corporations or the US corporations will send their factories overseas anyway.

I recently had a friend apply for a tourist visa and I was apalled at how she was treated by US consulate. There was a three month wait for the required interview. On the day of the interview she had to stand on the sidewalk in the tropical sun for hours next to a pile of garbage that had been rained on the night before. Overall the whole bureucratic was vague and arbitrary. And that was just for a tourist visa.

The solution to illegal immigration is to make it easy enough (administratively) for people to come to the USA for the purpose they want (tourism, jobs, and occasionally citizenship) that they don't feel they have to get in illegally.

"Wouldn't a 50K entrance fee also skew the intake of immigrants towards older folk who have had the time to sock away that much capital?"

I thought this was likely as well, but Becker actually thought the opposite would occur because the younger you enter the more justifiable the decision is from an economic standpoint (longer to make up the fee). It would seem the old would be able to afford it easier, but that doesn't mean they would want to (they may decide the 50k is better spent in their home country).

Right, the young have future incomes making the decision to immigrate justifiable. The old, presumably, would be coming here to retire, and that might make it less likely.

Plus, Becker notes government loans would make saving for the fee easier. A person would need to somehow show to the loan officer, I presume, that they could pay back the loan, and a younger individual with certain characteristics would probably have an easier chance of doing so.

This idea, despite being bad for many other reasons, would most certainly NOT decrease illegal immigration into the United States. Not a single person who illegally enters this country is able to pay such a huge amount of money to come here legally. The most they can do is scrape together maybe $500-$1000 to hire a "coyote" to help sneak them across the border. And anybody making $10 an hour in China probably will stay there, those who want to come here make more like $1 a day.

Nico, I agree and expressed my disagreement with that point as well. Those entering the country illegally today are the least likely to participate in the program Becker has proposed. If Becker believes we are in error, I would encourage him to address that in his response to comments.

Nico, you may be right, but note that Becker's proposal has a government loan component. It is not necessary in theory that they save the entire $50k, in other words, since they can work out a payment plan for after they get there. You might still be right that even given access to capital, they wouldn't be eligible for loans because they're high risk or because you believe their labor opportunities in the USA still would not make enough money for them to borrow, but I just wanted to point that out nonetheless. It seems plausible to imagine that this would draw some of those more productive workers currently illegally immigrating out, but to what degree is an empirical question. I hear so many good things about Latin American immigrants here in Georgia (that population has been rising tremendously over the last few years), that I tend to believe the expected profits for an immigrant are greater than $50,000 in some cases, though I know nothing about this area.

Why would an illegal immigrant borrow $50k? The presence of millions such persons is testament to the fact one can work, and draw state benefits all while being an "illegal" immigrant. What possible incentive does such a person have to get a loan for $50k?

Martin Wolf has an interesting point of view this morning in the FT (sorry, subs requested). Here is how he starts:In the earlier column, I argued that three fallacies bedevil this debate.

The first is the argument that immigration increases economic growth. But what matters, instead, is its impact on incomes per head of the original population.

The second is the "lump of labour" fallacy, in this case the assumption of a fixed excess demand for labour. In a flexible economy, however, the quantity of employment adjusts to the number of people available for work.

The third is the urgency of specific shortages. But "shortage" is just a label for something underpriced. Changes in relative wages (and associated adjustments in incentives to acquire and impart skills) should in time secure the needed adjustments.

"Since I am a free-trader, readers might expect my preferred alternative to the present system to be 19th century-style unlimited immigration."

Since you're a religiously conservative old white guy, no one would ever mistake you for an immigration enthusiast. Nothing gets under the skin of most conservatives more than the thought of inferior races hoarding into America. It would have been completely out of character. (Like your plan to have the government force every human to buy health insurance, which might have been a good idea.)

On the other hand, I am surprised that Becker only went half way. Markets have buyers and sellers, right? Why not let Americans sell their citizenship as well? Of course, to me it seems that charging money for American citizenship is distasteful and against America's creed, let alone selling one's citizenship.

I agree with those who say that charging $50,000 to those who can pay it will have only a little impact on illegal immigration. It will increase the number of rich immigrants from 3rd world countries who can afford to pay it and wouldn't bother moving here illegaly otherwise. (One thing common among poor countries is that they all have at least a handful of very rich people.)

I'm surprised there's been no discussion of the effects of immigration on long-term economic growth, and what could develop into an economic race w/ China. Both legal and illegal immigration have a huge positive impact on economic growth. The US's role as the sole economic superpower gives us untold power around the globe. In a world where China & the US are roughly the same size, our power would be greatly restricted.

One might argue that the size of the American economy won't be affected greatly, one way or the other by immigration policy, but if America increased the ease and number of immigrants from China (for example, by allowing all Chinese PhDs, who make up significant portions of US grad school enrollments, the right to citizenship). This could help increase the size of the brain drain from China, which would help US economic growth while sapping China's. Yet, as China's economy continues to grow, it will become increasingly difficult to

The one powerful objection to this was made by Posner -- it is mostly in the US's interests for Chinese (and Korean & Indian & African) students to return to their countries & serve as a stabilizing force there.

It is equally surprising that, given the current political climate, that the debate over SS & immigration has not crossed paths. The more immigrants let into America, the easier it will be for America to keep our seniors out of poverty via SS. A few weeks ago Becker expressed his support for a ss privatization plan designed to increase America's debt. Allowing more immigration is one way to decrease it, both by an increase in economic growth & in the wages paid by immigrants themselves.

Also, about the chat on illegal mexican immigrants helping or hurting society .. the statistics suggesting illegal immigrants don't pay their fair share didn't imclude the profits of companies and individuals who benefit by hiring immigrants at lower wages. One of the reasons illegal immigration is tolerated in states that "suffer" from it is that a lot of business owners depend on illegal immigration. When you factor that it, as well as the consumption of illegals, I suspect that the numbers would tell a bit of a different story. The gap between what the wage is for illegals and what the minimum wage would be with no illegal immigrants is effectively a tax paid by those immigrants.

there will be some competition:

Russia�s able-bodied population is shrinking and if the country is to achieve further economic growth it needs more immigrants, Minister for Economic Development and Trade German Gref told a government session Thursday.

From 2006 Russia will be entering a stage of �considerable reduction in the working population�. While next year Russia�s labour resources could be reduced by 30,000 people, in 2007 the number will go down by 370,000, and by 538,000 in 2008, ITAR-TASS news agency quoted German Gref as saying.

Because of this, Gref considers migration policy to be a most important factor in rectifying the situation. The current process of �migrant quotas�, in his opinion, is �inefficient and non-transparent�. In particular, while in 2000 the migration flow into the country exceeded 200,000 people, in 2004 one could say it was �zero� (approximately 30,000).
http://www.mosnews.com/news/2005/02/24/grefmigr.shtml

Yes, if we allow citizens to sell their spots in the country, we'd solve the problem of retirement and medical costs. I suppose folks with no savings could live nicely off $50,000 in a foreign country. I guess this might drive up the cost of an MRI in Bangladesh.

I think a big psychological hurdle to pragmatic thinking of this sort is that designating some categories of people undesirable and selling what citizens in those catgories or others got for free forces us to confront just how unjustifiably lucky we native-borns are--at least by the criteria of would-be immigrants--to be U.S. citizens. It makes me feel guilty and unworthy, if not undesirable! Is there anything at all that entitles us to discriminate between immigrants beside the privilege of private property ownership? What if you're a citizen who doesn't believe in private property?

Palooka - I can think of a few reasons why an illegal immigrant might prefer to purchase citizenship for $50,000.

1. The threat of prosecution and deportation would rob them of all future earnings, as well as whatever welfare they receive from living in the United States. It's plausible that a legal immigrant would have access to higher paying jobs than an illegal immigrant, simply because by virtue of their citizenship, they can move more openly and are eligible for careers which require credentials and a background check. This would mean that being illegal brings an income stream less than legal - that is a hypothesis, but it seems reasonable.

2. Being illegal, their mobility in the labor market is limited. Their mobility within broader society is probably limited, too. I take for granted many benefits from citizenship, such as a driver's license and the right to vote, but I imagine that those would be valuable to an illegal immigrant.

3. Moral reasons. Possibly, an illegal immigrant prefers a state of the world in which they are not forced to use deception in order to gain access to our country. They may even value honest at a pricetag greater than $50,000.

There is no reason why family unification should not be preserved as a basis for legal immigration. Indeed, other classes of immigrant whose admission was overwhelmingly in the US (or any admitting country) might also be retained. It is to provide a mechanism to control and direct immigration by those who have no established basis for admission, and who might at the moment seek to enter illegally, that Prof Becker' ideas are pertinent.

I would make some points. There is (and presumably would remain) a difference between residence and work permission (albeit indefinite) and citizenship. The former does not necessarily have to lead to the latter, or do so very quickly, and the basis on which it did so would need to be explicit from the start.

Comparisons to indentured labour are not correct. Even if an immigrant was financed through loans advanced by an employer (i.e. an employer paid the fee and the new worker paid it back) nothing would bind the worker to that employer, provided the financial terms of the loan were met (size and frequency of repayments, options to clear debt etc.) It would be necessary to make illegal (and therefore unenforceable) loan terms that bound an immigrant to the origal loan-making employer, or that charged interest above a certain level, or that imposed penalties for early redemption above a certain level. If a worker's services were in high demand it would not be hard to find an employer who would pay his debt off at the outset (a golden
handshake).

It is also incorrect to compare Becker's proposal to some golden by-gone age of open immigration. The USA has long practiced immigration control, and though many new immigrants do arrive legally every year under a variety of mechanisms, Ellis Island it ain't.

As has been pointed out, many immigrants to the US and the European Union are prepared to pay large amounts to ruthless organisations to arrange their illegal entry. That money would be diverted to legitimate recipients. However, as has also been suggested, there are substantial costs to entering legally now, and these would have to be greatly reduced if the real cost of admission was not to be too high.

The economic arguments about the Becker arguments encouraging illegal immigration are interesting. Assuming most illegal immigration to be economic in origin, the advantages of the legal route might need to be enhanced with non-monetary features. However, it is interesting to think of the price being able to fluctuate, along with other incentives, as economic conditions dictated, and as there was competition with other countries, which would also be selling their right to work.

In theory one might sell one's residency, but one would need somewhere to go. It would then become something like the real estate market. The issue would then have to be whether the right to work could be permanently divorced from citizenship, which could be retained, or not. If you were free to sell only citizenship, not residency, there would be few willing to do so.

As Martin Wolf says in the Financial Times today (and it is a pity it is not available online) the big fallacy in current immigration policy is that the government does or even can know what is most beneficial for the economy (or society for that matter) as far as these things are concerned. They are the product of so many diverse individual choices that only a market is likely to order them optimally.

Potential immigrants could also fund admission from family at home, to whom they would (as now) remit additional income. The advantages for all concerned of doing this legally would be immense. However, as Wolf says in the FT, it is important to decide whose benefit one is seeking in discussing this issue.

Wolf says: "The interests to be served are predominantly those of the citizens of the receiving country, though humanitarian obligations should also be taken into account. But we should separate the two considerations."

Most of the replies above seem to have taken the interests of the intending immigrant is those that should be served, and have not separated those from the interests of existing citizens. Yet the Wolf dictum (established for a disucssion of the UK) has always traditionally been the way in which Americans have discussed immigration - the fact that they or their ancestors might (or these days, might not) have benefitted from different arrangements has never been considered especially relevant, and in reality it will not be (unless one still has family anxious and unable to enter).

The USA is willing to spend hundreds of billions on a "humanitarian" effort in Iraq of uncertain outcome and benefits. Since the USA is so humanitarian minded it should also be willing to spend a few hundred billion for immigration "scholarships". Each hundred billion that the USA put up could be used to pay for 2 million $50,000 immigration "scholarships" which amounts to supporting a free immigration rate of about 1% of the US population every few years.

Scott,

Thank you for sharing those thoughts. Indeed many of those did come to mind, I just don't think they're particularly relevant to the kind of illegal immigrant which makes up the bulk of that class.

Threat of deportation is small, and if it occurs it can be remedied through reentering again illegally (the cost is especially low if the immigrant is from Mexico). Just look at the many city and county governments which instruct their personnel to specifically NOT inquire about the status of immigrants. The chance is low, and for many the cost and inconvenience of reentry is also low. This is not to say many illegals would not pay a small price to have this threat removed, but $50,000? Who are we kidding?

2/3 of immigrants from Mexico don't even have a high school education. Many of them cannot speak even remedial English. Their mobility is already severely limited, and becoming "legal" would do little to rectify that situation. Again, I don't doubt for a second many want to obtain legal status, and that they would pay some amount do so (a price much, much lower).

Those illegals which possess greater education, opportunity, and immense costs of reentry would be more likely candidates. That is, however, a minority of the illegals entering this country. Thus, I believe Becker's proposal is unlikely to significantly reduce the number of illegals, as he suggested.

Unless you are in favour of unlimited immigration - which does seem impractical in the modern world - then you are left with a scarce resource, American citizenship for non-natives.
How, then, to distribute this scarce resource? You could give it away for nothing, rationing according to some other criteria. But most attempts to give things away for nothing involve tremendous waste and rent seeking (from traffic congestion to Soviet supermarkets): the available surplus will sometimes be completely wasted in queuing and other maneuvering to get the asset - as we currently see. Does anybody deny the current system imposes a tremendous cost on applicants? Does anybody seriously believe that the successful applicants are more deserving than the unsuccessful ones?
Gary Becker's proposal seems a very sensible response to a tragic situation. The idea of a poor labourer working for years to pay off his debts is upsetting - but if people from developing countries find that's a good deal, the fault is with the inequalities of the world, not with Professor Becker.
Bear in mind, too, that the money raised could be used for development assistance. Citizenship is far to valuable not to be priced.

If we're not going to allow ourselves to be hindered by social conscience or political viability, why stop at a fee based system for immigration. Why not provide for a system that pays less desirable (perhaps defined as those individuals that receive in benefits more than they return to the system over some set given period, which acts as a trigger) citizens to leave for another country? This would then help bring the social costs into equilibrium. Presently, undesirables have no incentive to leave to improve their lot, and the social safety net provides incentive to stay. If payment was provided that was a percentage of the discounted present value of the stream of income provided to them as long term benefits, these individuals can then pick up and begin a life anew in some other country. This would be an improvement over a system that regulated just immigration to the US, as it provides for some form of equilibrium in the level and growth of population. This of course assumes that foreign countries have equivalently libertarian immigration policies. Given this we can then provide some stability to population movement worldwide, as the cost and benefits of accepting or denying payments will factor into individual's decision making. Given the right levels of payment, we may find that individuals may decide to simply stay put rather than immigrate to the US (this seems very much like foreign aid to me, but of course we are leaving politics out of this...)thereby increasing the precentage of more desirables as opposed to the less desirables in the total population. This sytem also appears to work under a competitive analysis point of view. Lack of a policy to encourage reverse immigration and high social benefits generate significant barriers to exiting the "business" of living in the US, whereas the current system realistically has low barriers to entry. This generates an unstable environment as the new entrants that fail to generate benefits to society have few alternatives to the social system. By decreasing the barriers to exit then a better equilibrium can be achieved, social costs and benefits would be in better balance, and labor markets as well would be more fluid.

I've read most, but not all of the comments here, so I apologize if this information is duplicative.I am an immigration attorney representing a mostly Chinese clientele, the majority of whom enter the country illegally, so I have some reliable information on the smuggling costs. The current going rate is $65,000 for persons smuggling from the Fuzhou province of China, where the vast majority of the illegal entrants from that country have come from for the last fifteen years.

They happily pay the fee as most were unemployed in China or employed in awful conditions. They are able to pay it back without fail by living frugally, and sharing rooms that are frequently provided by their employer. They eat at the restaurants they work at, and usually do not pay taxes unless they gain immigration status (illegals are no longer permitted to pay taxes as of last year even if they want to). They do not view themselves as indentured servants, nearly all are happy to live in the United States, and virtually none have any desire to return to China, except to visit family.

Like Marco, I'm an immigration lawyer, and I agree with his comments. It probably would take a "penalty" of this magnitude to make any type of legalization politically feasible in the current climate. When Congress passed the last limited "amnesty" (and I know, 245(i) was NOT an amnesty) there was a $1000 penalty that was to be an alternative to the US government paying for deportation. This would be similar.

Most of my clients are in debt to smugglers for at least $50K, and if this amount could be in the form of a loan, most undocumented aliens would pay, because they would be able to eventually Naturalize and thereby bring other relatives here. I think the student loan comparisons are apt - this is not an unreasonable sum to pay for the promise of a better life and/or family reunification.

And, praktike, you CAN buy Citizenship outright with an investment in the US, but the price is high - one million dollars. See INA sec. 203(b)(5)(C)(iii).