Immigration Reform--Posner Comment

I approach the issue of immigration reform (theoretical reform�neither Becker nor I are considering the political obstacles to radical changes in immigration law) somewhat differently. I begin by asking: why restrict immigration at all? The only answer I consider fully compatible with a market-oriented approach to social issues is that the immigrant might reduce the net social welfare of the United States, if for example he was unemployable or on the verge of retirement, or was a criminal, or was likely to require highly expensive medical treatment, or if he would impose greater costs in congestion or pollution than he would confer benefits, with benefits measured (crudely) by his income before taxes and by any consumer surplus that he might create. I assume that the welfare of foreigners as such does not enter into the U.S. social welfare function; but immigrants who create net benefits in the sense just indicated contribute to the strength and prosperity of the nation. The problem of the �undesirable� immigrant�the immigrant who wants to free ride on the services and amenities that the United States provides its citizens�could be solved by means of a two-stage process. In the first stage, the prospective immigrant would be screened for age, health, IQ, criminal record, English language capability, etc.; the screening need not be elaborate. If the would-be immigrant �passed� in the sense that he seemed likely to add more to U.S. welfare than he would take out, he would be admitted without charge. If he flunked the screening test, an estimate would be made of the net cost (discounted to present value) that he would be likely to impose on the U.S. if he lived here and he would be charged that amount for permission to immigrate. An alternative, less revolutionary, approach to screening out free-rider immigrants would be, first, to deny immigrants access to Medicaid and other welfare programs until they had lived in the United States for a significant period of time, and, second, to auction off a certain number of immigrant visas to the highest bidders. Immigrants willing to take their chances without access to welfare programs (not that all access could be denied�no one could be refused emergency medical treatment on a charity basis), and immigrants willing to bid high prices in an immigration auction, would be likely to be productive citizens, in the first case, and to cover any costs they would impose on the nation�s health or other welfare systems, in the second case. Either the more or the less revolutionary alternative would impose significant transition costs, but that would be true of any radical change in immigration policy. The obvious cost (though not really a cost, rather a redistribution of income) would be that by increasing the supply of labor, an immigration policy that made it easy for employable workers to enter the U.S. labor force would reduce wages in the labor markets that the immigrants entered. A closely related but subtler consequence is that the downward effect of large-scale immigration on wages (a short-run effect, in all likelihood) would complicate the process of determining the correct fee to prevent free riding: an immigrant who might be able to pay his way at the existing wage level might be unable to do so if the wage level fell as a result of massive immigration. Similarly, congestion and pollution externalities might increase at an increasing rate with massive immigration, requiring a further adjustment in the fee charged the �undesirables.� Either approach seems to me preferable to a flat fee for all would-be immigrants. A flat fee would not do away with the need to screen, since some would-be immigrants might impose net costs on the U.S. that were greater than the fee; that is why Becker�s approach includes screening. The flat fee would exclude two types of immigrant that should, in a market-oriented approach, be admitted. One type would be �undesirables� willing and able to compensate the United States for the expected costs that they would impose--and so they would not be free riders after all; a very wealthy person on the verge of retirement would be an example of such an �undesirable.� The second type would be highly promising would-be immigrants (for example, persons with a high IQ) who for some reason�perhaps because they reside in extremely poor countries�simply could not pay the down payment on the fee. The fee would, it is true, increase government revenues, which may seem a plus. But it would do so at the usual cost of distorting the allocation of resources, in this case by excluding immigrants in the second class. I note two complications. First, it may be desirable to adhere to the current policy of granting asylum to foreigners who are escaping persecution, even if they do not seem likely to be able to pay or to earn enough to cover the costs they�ll impose on this country. My reason is not sentiment, but the fact that people who are persecuted tend to be either nonconformists or members of particularly successful minorities, and in either case they, or at least their children, are likely to be productive citizens even if their U.S. employment prospects are dim. Second, the United States in formulating immigration policy may have to worry about �brain drain,� and, what may be more important, �leadership drain,� from poor or unstable countries. For example, it would be highly unfortunate if all the Iraqis who have the ability and motivation to build a democratic, free-market society fled to the United States. Thus it may sometimes be in our national interest to exclude persons who would otherwise be highly desirable immigrants, in order to shore up forces or tendencies in their own countries that promote U.S. interests. However, I do not know how to mesh this concern with either my or Becker�s proposals.

Comments

[Daniel Chapman]

This discussion has degenerated. Please keep the discussion above a certain level of civility and insight or else or hosts will be tempted to disable comments. I think I've made every point I can possibly make, and I'm going to withdraw from the "back and forth" that this discussion has turned into.

[N.E.Hatfield]

BTW, Check out the following website at the DOJ:

www.doj.gov

and dig up the latest (FEB.) news releases. Specifically, "Three Visa Brokers Sentenced for
Widespread International Bribes For Visas Scheme". Looks like we've got a much further road to travel before we can sell visas to the highest bidder.

While we're at it, perhaps we ought to scrap the entire system of Immigration Law and develop one that brings the U.S. into line with the 21'st Century and its problems. Maybe then, we can get control of the emigration/immigration problem. But we still need to get the root of the problem. Why are people immigrating in mass in the first place?

Hope this helps.
N.E.Hatfield

[RD]

Come now, what level of insight could this thread ever have claimed?

[Johnnie]

I recall a scene from one of Isaac Asimov's Foundation novels in which people navigated through a vast concourse by following colored lines on the floor. That is what immigration is like. Through some sort of capillary action, a person leaves some obscure spot in the old country and ends up at some obscure spot in the new country. But what is the impetus to start the journey to begin with and to follow through to the end?

Immigration is only the second half of a closed loop. The first half is a flow of information from the destination country to potential emigrants, and possibly later a repatriation of income. The information flow provides the impetus to migrate.

It is likely that the quality of information (about conditions at the other end) at the beginning of a migration is low, which puts the "importers" of labor--prospective employers--at an advantage, rather than the labor itself. If a charge is to be made for immigration, could the charge to be made to fall on the party who has better information, the importers of labor, rather than on the laborers themselves?

[David]

It is interesting how no one cares about migration from Maryland to New York, or Iowa to Chicago, or Oregon to Los Angeles. (Vice versa causes a little resentment, but mostly because of big-city ways or funny accents - nothing substantial). Yet when we talk about migration from Canada to Buffalo or Mexico to San Diego, people get up in arms. They start arguing that our way of life will be destroyed, or that the immigrants will depress the labor pool, or that the new migrants will freeload on our welfare benefits. Of course, the economic statistics don't back up those claims, aside from maybe temporarily depressing wages for low-skilled employees (which the business people here should like).

I can't help but think that this is largely about bias of one sort or another. The U.S. Constitution forced us to think of the 50 states as one, but it still allows us to view the rest of the world as "the other." Nationalistic sentiment -- a sense of entitlement based on one's place of birth -- can be overblown, even to the point of causing wars. Just look at history. I think we need to take a hard look at just why we restrict immigration and make sure that our laws serve rational, and not irrational, ends.

[Palooka]

"Of course, the economic statistics don't back up those claims, aside from maybe temporarily depressing wages for low-skilled employees (which the business people here should like)."

Most people don't care too much about legal immigration, though some sensible changes are due. The cause of concern, for most, is illegal immigration. And the statistics, in the case of illegal immigration, DO back up the claims that illegal immigration is a net nagative.

[David]

Of course illegal immigration is a net negative, because illegal immigrants cannot hold legitimate jobs and do not pay taxes. If their status were legalized, they would be a net benefit. Hence, we should legalize more immigration.

Of course, the immigration laws that are necessary should be enforced; we should prosecute and/or deport the terrorists and criminals. But the problems caused by overly restrictive immigration laws are not themselves a reason to restrict immigration. That is circular logic.

[David]

Another aside: because of their illegal status, we cannot accurately measure the positive impact on the economy of illegal immigrants. I would guess that illegal migrant workers greatly help the farming industry. Not to mention the illegal nannies that too many of our political nominees seem to have used. :) All that show up in the statistics are the costs (e.g., medical care or other services provided to illegal immigrants by the states). So it is possible that even illegals provide a net benefit to the economy, though that benefit would be greater if they paid taxes and could hold legitimate jobs.

[Palooka]

Paying state and federal income tax would reduce some of the negative impact, but I am not convinced it would eliminate it. The assumption that immigration is always a positive is an invalid one, especially considering the welfare state. I have already written enough about that, however.

[David]

And you ignore the statistics and studies, which were cited by others earlier. Sadly, this is an ongoing theme of the Posner/Becker posts. There are a lot of economics terms flung about, but precious few real statistics or citations to thorough studies. My father is an economics professor, and really, he might as well be a statistics professor. Thorough economic study requires getting your hands dirty. You can't just assume that x+y=z.

[Palooka]

"And you ignore the statistics and studies, which were cited by others earlier."

If you read that exchange carefully, you would already understand that the commenter which cited those statistics, after he was confronted with conflicting evidence from the report he cited, conceded they did nothing to prove the beneficience of illegal immigration. He now claims he's not interested in the question of illegal immigration, and is not keen on "bashing illegal immigrants." When facts are unflattering, I guess that is "bashing." So, like good little PC drones, we should just ignore it.

Also, there have been statistics posted on this thread which demonstrate the opposite of your claim. I guess you can ignore statistics all you want? Not that this "proves" anything, as the saying goes, "there are three kinds of lies; lies, damned lies, and statistics."

[N.E.Hatfield]

Johnnie's brought an idea to light that's interesting that Asimov has touched on. That is, the underlying reasons for migration be it emigration or immigration are psychosocial in nature affecting the basic psychodynamics of the individual. Is it the case that there is a concious propaganda effort to create dissatisifaction at a basic psychological level that leads to behaivors leading to migration? Now I don't believe there is, but it could very well be that through the marketing of the mass media on a world wide scale; is having such an unintended affect. That is, the portrayls of the "superiority" of Western (industrial) lifestyles be it material or otherwise, is creating anxiety and dissatisfaction in the populations of the world creating the desire for getting their share of the percieved lifestyle. Maybe Goebbels "19 Principles of Propaganda" are truer than we would like to imagine.

These principles maye be closer to the primary cause of migration than the ones I was thinking of; be they social, political, economic, religous or the basic fight against boredom in life (the desire for something new, different and hopeful). If this is the case, perhaps it's time to develop a Ministry of Information that controls information releases. But somehow this seems to run afoul of our Constitution. Maybe it needs to be modified too; if we're ever going to solve the problem.

Hope this helps.
NEHatfield

[Charlie Bourne]

(1) The US abandoned free immigration (huddled masses longing to be free, Ellis Island etc etc) long ago, so what has that got to do with Becker or Posner arguments? It is the current system with which comparison should be made. Is a film like "El Norte" not representative of the fate of some illegal immigrants under the current system? Is that better than what Becker and Posner propose? I would say No.

(2) What payments do many illegals make to enter the US oe EU now? The 50+ intending illegal immigrants to the UK who suffocated to death recently in a truck waiting to cross the English Channel had paid for heavily in cash to their gangland courier - is that better than paying the state? I would say No.

(3) Indentured labour holds a worker to a specific employer and for a term of years. This is indeed illegal. But immigrants would pay off any loans at varying rates, and could move employers. There could be a legal maximum interest rate and other simple mechanisms to prevent debt poenage (which people seem to think is indentured servitude) through lack of sufficient capital to buy day to day necessities.

(4) In an article in the Financial Times yesterday Martin Wolf wrote supporting a similar idea to Becker's for the UK. He made a crucial initial point: "[The following argument presumes that] 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 as those that should be served, and have not separated them from the interests of existing citizens. Yet the Wolf dictum 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 and more open arrangements has never been considered especially relevant, and would not be now. One can make accusations of hnypocricy, but apart from making one feel self-righteous, they don't address the issues at all.

(5) If the US sold residency/right to work and eventual citizenship, other advanced economies might follow suit and there would be a range of prices and destinations to suit all - including those who wish to move between equivalent economies, and those from advanced economies who want to go to poorer countries (which might be quite cheap after all).

[Michael Walker]

Palooka: I simply provide evidence suggesting immigration is good for the U.S. and contradicts erroneous assumptions. Becker and Posner offer suggestions to improve immigration policy that merit consideration yet would not likely improve the system or solve the problem of illegal immigration.

I subscribe to free trade philosophy and think current immigration policy flawed resulting in unacceptably high levels of illegal immigration causing social disruption. In my opinion, the current system does not best serve U.S. national security and economic interests. I suggest a solution to minimize social disruption and maximize economic gain that would reduce illegal immigration and strengthen national security. I may be wrong.

It appears you focus on illegal immigration yet offer no solutions to improve immigration policy other than to restrict immigration. The evidence suggests that restricting immigration would harm U.S. interests.

[Palooka]

Michael,

I do not favor the proposed fee system. I do favor having more merit criteria (primarily education level and/or English language skills) interjected into the formula.

I do not favor continuing our present policy of essentially tolerating massive illegal immigration. I think the law should be changed, or the law should be enforced. I agree with you that Becker's proposal would not begin to alleviate the illegal immigration problem.

Where we ran into conflict is that I take issue with anyone who suggests that immigration (legal and illegal) is always and forever a positive to the economic and social fabric of the nation. That simply defies logic and defies the facts. Some immigration is bound to be a economically negative (the present situation with Mexican immigration), and some immigration is bound to be less positive than other possibilities.

[Charlie Bourne]

Whether or not immigration is a positive depends on whose perspective you are looking at things from - (A) a segment of the population, (B) the whole US economy, (C) the people entering or (D) the countries of immigrants' origin. One assumes the various symmetries are not zero sum - a well educated professional is a loss to a poor country but might be little use in the US, while an unskilled criminal in a poor country with work and incentives might be a very productive labourer in the US. Immigrant influxes would reduce the cost of labour - unwelcome to native workers, welcome to employers, and questionable in terms of impact on tax revenues terms, investment, and dollar value GDP. But as soon as the business is extended to second and third generations, there is almost certain to be a strong positive for all concerned. Historically there always has been - is there any reason that would not happen now, irrespective of how immigrants entered? So does it matter how immigrants enter, so long as it does not undermine the legal and political values of the US? If that is the case there is a very strong reason for finding some way of reforming the present system - any suggestions beside the rather different ideas of Becker and Posner?

[Michael Walker]

Let free market dynamics work for immigration policy. The premise is that robust immigration is, on balance, in the U.S. interest � with conditions (national security and minimize social disruption). Let economic labor demand and private enterprise determine the scope of immigration � with reasonable limits and private business accountability. Let markets and free enterprise determine human capital � not the government. Let markets determine numerical limits � not a government mandated arbitrary cap. Design intelligent yet simple immigration support mechanisms to reduce social disruption and maximize economic gain.

Screen out criminal and national security threats. National security demands utilizing technology: give all visitors and immigrants (tourists, business visitors, temporary workers and newly admitted residents) traceable identification cards. Create a specialized administrative legal enforcement mechanism for work visa compliance (including market wage, tax and social benefit compliance).

That said, I suggest a cost-efficient and controllable non-immigrant temporary work visa program with Department for Homeland Security oversight and support mechanisms. The current temporary work visa programs (H-1B; H-2B; H-2A) do not work well for private enterprise. A simple market based work visa program with high-tech ID cards should significantly reduce illegal immigration and strengthen national security.

Reform the employment based immigration system based on market forces. If the temporary workers prove themselves to employers grant them eligibility to apply for residency after a reasonable period of time. Many temporary workers have no desire to apply for residency and a prudent program would allow them to legally enter and work in U.S. (and exit) at minimal transaction cost.

In short, if the goal is to reduce social disruption and maximize economic gain we should reform the employment based system to correspond with market forces and keep our current asylum and family based systems (human rights and public policy support asylum and family unification).

[Anonymous]

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[Anonymous]

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