Selling Illegal Residents the Right to Stay -Becker

No one knows for sure how many illegal immigrants are in the United States, Europe, and other countries, but there are surely many millions. Figures for the US, the country with the largest number, vary widely, but The Department of Homeland Security estimates that this country in 2006 had close to 12 million illegal residents. There is even greater disagreement about what should be done about these residents. This can be seen from the widely different stances taken by the presidential candidates and others. At one extreme are those who call for the apprehension and eviction of as many illegal residents in the US as is possible. Yet this seems a very unrealistic goal when there are so many illegal residents; the US will not apprehend and return millions of persons to Mexico, or wherever else illegal residents came from. Nor is it desirable to go to the other extreme, and just give blanket amnesty to all illegal residents, for amnesty now would encourage future illegal immigration since they too would expect amnesty. Complete amnesty just makes a mockery of immigration laws, and rewards those who came to the US illegally, as opposed to the many potential immigrants who wait years for the right to immigrate legally. I argued earlier on this blog that selling the right to immigrate would be the best approach to legal immigration (see my post on May 28, 2007 for details of this proposal). This approach would lead to acceptance of greater numbers of legal immigrants, perhaps by a lot, since the revenue from the payments by immigrants could replace other taxes. Paying for the right to immigrate would also negate the argument that immigrants get a free ride because they gain access to health care and other benefits. Moreover, making immigrants pay for to come attracts the type of immigrants who came much earlier in American history: younger men and women who are reasonably skilled, and who want to make a long-term commitment to the United States. These types would be more willing to pay a perhaps sizable price for admission because they would stand to benefit significantly from migrating. To prevent the price from excluding young and ambitious men and women who would like to immigrate but do not have the financial means, the US government could encourage a loan program to help finance the cost of immigrating that would be similar to the loans available to college students. The analogy to college students is close since immigration is also an investment in human capital. One great advantage of selling the right to immigrate is that the same approach can be used to deal with illegal residents, so that it also helps solve the vexing problem of illegal immigration. Instead of offering free amnesty to illegal residents, this approach gives them an opportunity to legalize their status without giving them advantages over those who wait to come as legal immigrants. Illegal residents would be able to come forward and pay to change their status to that of legal residents. Many illegal residents would gladly pay for the right to become legal since that would open up enormously job and other opportunities available to them. The ability to buy the right to stay would be especially attractive to immigrants who want to make a long term commitment to this country since gaining this right stabilizes the future not only for them, but also for their children. Even though children of illegal immigrants born in this country are automatically citizens, younger children would tend to return with their parents if the parents are sent back. Allowing illegal residents to convert their status to legal residents by paying the price to immigrate should satisfy both the hawks who do not want to give free amnesty to illegal residents, and the doves who do not want to force illegal immigrants to leave the country when they have been working and contributing to the economy. Under this proposed system, illegal residents would not get free amnesty since they would have to pay for the right to stay. Neither would they be forced to return to the countries they came from since they could buy the right to stay. Illegal residents should be required to pay more than those coming legally to punish them for having come illegally. To be sure, the problem of illegal immigration would not go away even if all illegal residents could convert their status by paying the immigrant price (plus something extra). Some residents here illegally would try to avoid paying this price by remaining in the underground economy. These would be mainly illegal residents who only plan to work for a short while, accumulate a nest egg, and return to their home countries. If these immigrants were apprehended and want to stay, they should have to pay a higher penalty to stay than illegal residents who came forward voluntarily. If they refuse, they should be returned to where they came from, with possibly other penalties as punishment. If one of the present immigration quotas prevented a person from coming legally, he can then either wait possibly a long time for a chance to come legally, or he could try to enter immediately as an illegal immigrant. A market for immigration gives these persons a legal alternative to immigrate when they want to because they can buy the right to immigrate legally. For this reason, an approach that sells the right to immigrate should greatly reduce the numbers of persons who come illegally, or remain as illegal residents. Effective policies have to be developed to cope with the remaining illegal residents and immigrants, but they will be a much smaller problem when many illegal residents would be able to legitimatize their status by paying for it. I do not believe that the problem of illegal immigration when everyone can buy the right to immigrate legally will be much more serious than is the black market in cigarettes, alcohol, and gasoline that has emerged in order to avoid the high taxes on legal transactions of these products. The proposal I have made to sell the right to immigrate has been criticized as "repugnant", and contrary to the tradition of free and unlimited immigration to this country in the 18th and 19th centuries. But the immigration issues at present are also very different from those in earlier times. Immigration is no longer unlimited, for it is severely constrained by various quotas. Is selling the right to immigrate as repugnant as forcing millions of hardworking illegal immigrants to return home to countries they left possibly years ago? Or is a sale of immigration rights as repugnant as giving free amnesty to millions of persons who violated US laws by coming illegally? Selling the right to immigrate is a contemporary solution to a major contemporary immigration problem that has created deep divisions within the American population by pitting persons of different ethnic and skill backgrounds against each other. Instead of mindlessly using the word "repugnant", critics should concentrate on whether selling immigration slots to illegal residents as well as to immigrants who enter legally is a good way to help resolve these immigration conflicts. I believe it is.

Comments

[Horace]

I'm sure the Founding Fathers would be proud of our reducing immigration to a commodity. We could make it an offering on the futures markets and trade it like pork bellies, oil, corn or wheat. Imagine what a citizenship share would sell for in times of strife.

[neilehat]

And what have the founding fathers got to do with anything? They're long since dead and gone, and the times have are also long since gone. As has been said, "It is time to think anew and act anew." The same applies to the Constitution. The only immutaable section is the Preamble, the rest, simply the details of implementation.

"I know nothing but my country, my whole country and nothing but my country". As far as I'm concernerd, the rest of the world .....

[Bob K]

The overwhelming majority of illegal immigrants clean toilets, wash dishes, mown lawns etc. Not exactly the wealthiest bunch. How much cash do they have to pay for a green card? Maybe they should also set up a subprime market for green card loans, just like mortgages and credit cards.

[Bob K]

The green card for investment policy is ironic, since the US government exerts political pressure on small countries to not sell citizenships or residence permits under similar investment programs.
"You can't do it but we can."

[Hans Bader]

This is an idea well worth considering.

It also has implications for the debate over amnesty of illegal immigrants.

If a green card has an economic value of about $100,000, it makes little sense to give illegal immigrants a renewable Z visa entitling them to remain in the country for a nominal fee of $2000 (as the Ted Kennedy-George Bush "comprehensive immigration reform" proposal did), and then claim that doing so is not an amnesty.

Charging a more substantial, market-based fee for legalization would also give the federal government the resources to help out communities whose public schools and hospitals are being overburdened by illegal immigrants who do not pay enough taxes under current law to cover those services.

[TLB]

I only scanned this, but it's basically a useless idea when the only real way to solve the problem is simply to enforce the law. We're going to do that anyway under whatever scheme is proposed, we might as well do it now. That way, many illegal aliens would go home and many fewer would come here.

And, all the amnesty proposals required fees, and if additional fees were required the left would complain about indentured servitude, etc. and would work to reduce the fees.

Stop coming up with Rube Goldberg schemes, and encourage political leaders to enforce the laws. You can do that by having an effect on their careers by asking them questions designed to make them look bad and then promoting their responses.

[Jack]

HUMAN!!!! Geesh! Becker may have good intent, but some of these responses are just slavery and self-indenture wrapped in "market" jargon. Have corporations, and plantation owners "front the money? Oh........ then what? Buy out their contract if they want to quit???

Now just WHY would corporations and "businessmen" want to pay to import labor? Simple isn't it? To GET labor at substandard non-living wages.

What North America is experiencing today is reaping the harvest of couple of centuries of, let's say, "non-cooperation" with Mexico and with our border representing the widest wage disparity on the face of the earth, there are no simple solutions to the immigration "problem" and especially not as long as the business community embraces it as a cheap source of labor.

One market based improvement? Raise the min wage to at least $10 - $12, which is hardly revolutionary considering studies show it takes $18 to afford a very basic standard of living. There would then be far less incentive to hire new immigrants and we should hammer those businesses that try to cheat the min wage.

For the rest, there is NO viable solution as long as there is the enormous surplus of labor starving, in part due to our own (and China's) policies right next door. Mexico has $100 million population "sharing" one trillion of GDP while the 300 million in the US has $14 trillion GDP.

Also, half of Mexico's population was born after the mid-70's. Any policy wonk would have to ask themselves, what policy is going to work to keep energetic young men and women down there to starve and watch the same for their large extended families? Answer: None that the US would adopt.

Provincial US citizens should look to Europe and see how Spain and Portugal have been integrated into the EC and decide whether they want to attempt to wall out poverty or seek mutually beneficial policies to improve North America's productivity and diminish the wage gap between the two countries.

[neilehat]

Jack, You hit the nail on the head, "half of Mexico's population was born after the mid 70's". Wasn't it Malthus who called this "surplus population". How come he didn;t forsee mass migration, forced and otherwise (ethnic cleansing)as the solutions of choice. Just remember, the Papacy has called the "pill" a "NO-NO". Remember, all of this is God's Will.

[DanC]

Jack
One strongly suspects from your collective comments that you have never opened an econ textbook.

Indentured servitude was a part of the founding of this country. I have seen estimates that in the 1600's perhaps 75% of immigrants were indentured servants. While the system had serious flaws by modern standards it served a purpose.

Mexico has problems that were created by Mexico. If they want to correct those mistakes they can, they don't need the United States to act as big brother fixing their problems.

Selling citizenship to immigrants is a good idea. Letting employers front the money is also a good idea.

Why would an employer front the money? Because they have a hard time finding workers who will or can take the jobs. But for the employer, the cost of an immigrant employer has gone up under this new system.

Depending on the elasticity of demand for these various workers, the cost will be shared by the employer and employee. The cost of immigrant labor will increase as the immigrants will have legal status and have greater access to a fuller range of jobs

You can think of it as a tax on the employers of new immigrants. As the cost of immigrant labor increases, the more attractive domestic labor becomes.

Or you can think of it as an apprentice program, where immigrants come and work with employers to increase their job skills.

Wage rates are a function of the marginal productivity of labor and the cost of capital. Arbitrary minimum wage laws do little to help unskilled workers advance.

The billions in revenue that this system could generate could fund social security, community health clinics, education programs etc.

Compared to the current system it is a big improvement.

[Simpsonian]

Sounds like an interesting idea. Although the only reason such measures are required is enrollment difficulties in the US's substabtial welfare programs. The next question is: how do we set the price?

[Jack]

DanC: Hmmmmm, from your collective comments one would assume that had you opened an econ text the material would have been overshadowed by your ideological "beliefs" and biases. Let's take a look:

Jack
One strongly suspects from your collective comments that you have never opened an econ textbook.

Indentured servitude was a part of the founding of this country. I have seen estimates that in the 1600's perhaps 75% of immigrants were indentured servants. While the system had serious flaws by modern standards it served a purpose.

......... Well possibly...... however at that time the problem was that of luring immigrants and overcoming the costs of crossing the Atlantic and NOT overcoming an artificially imposed, theoretical, barrier to immigration.

Mexico has problems that were created by Mexico.

......... Indeed they do. And don't look too closely but we are creating similar problems of our own as our wage-wealth gap becomes virtually the same as that of Mexico. Naturally in their much poorer, all for the top, economy that leaves nothing for those near the bottom but to run....... somewhere. Guess where?

If they want to correct those mistakes they can,

.......... Well going from what's taken place here since 1980, even in the "premier" democracy of the world, it's not easy to fix "mistakes" that are greatly appreciated by those in or close to the seats of power. Do you have some practical advice for Mexican peasantry being shoved off their farms by NAFTA policies that are cramming heavily subsidized US commodities down their throats?

........Or? Given, as today's news finally reported that gas made from ethanol is in toto more polluting and energy wasting than just using gas from oil, why is it that Mexico's sugar industry is in a shambles due to US subsidies of our own small sugar industry? Wouldn't it make FAR more sense to cooperate with Mexico and employ them to make eth out of their inexpensive sugar and low wages since sugar is eight times more efficient than corn for making eth. Is it pleasant to shoot our own toe while standing on the throats of our neighbors?

they don't need the United States to act as big brother fixing their problems.

.......... Hmmm, let's see, who NEEDS what in this equation?? Ipso facto with 15 million "illegals" making up ten percent or so of our work force......... just perhaps WE need their surplus labor as much as they need a few of our dollars. Currently despite the hardships in Mexico, and somewhat amazing to me, it's less than 1% of their population that comes here each year.

.......... so leaving out for now, the "win lose" approach so favored by some who'd build "walls" to keep "them" "down there" wallowing in abject poverty are there perhaps some win-win-win approaches? The sugar to ethanol one is ideal as Brazil runs its whole fleet on sugar-eth, something that couldn't be done in Chicago using our whole corn crop.

........ In short, for those who've read some pre-devil take the hindmost econ, how could the world's greatest consumer market of $14 trillion cooperate to mop up some of the massive unemployment of it's one trillion dollar neighbor?

Selling citizenship to immigrants is a good idea.

........... sorry. I'm old school and not a fan of being the nation that sells citizenships and tortures "non-combatants". Subjective? sure.

Letting employers front the money is also a good idea.

.............. Why? If the Feds are getting the money (to expand a bureaucracy?) why not let them take it in installments? The IRS is pretty good on debt collection.

"Why would an employer front the money? Because they have a hard time finding workers who will or can take the jobs."

....... finishing your sentence..... "at below US wage levels..." Many WILL recall we built home and bricked, roofed, framed and landscaped them BEFORE this was low paid "immigrant" work.

But for the employer, the cost of an immigrant employer has gone up under this new system.

...........Oh? so are "we" designing our economy around illegal immigrants indenturing themselved to corporations to pay a bribe to the Feds to look the other way????? Better: SET a rational level of legal immigration and FIX the illegal situation by enforcing the laws against companies hiring illegals. Or is that just too honest for these times?

Depending on the elasticity of demand for these various workers, the cost will be shared by the employer and employee. The cost of immigrant labor will increase as the immigrants will have legal status and have greater access to a fuller range of jobs

............. Elasticity eh? Well along about page 157 of most Intros to econ you'll note a page or two about generic labor NOT having economic power to influence wages paid by better organized employers. It's pretty good reading and usually leads to an understanding as to why every developed nation has a min wage law and farm price supports. Or, a simpler explanation can be heard as low wage folk ask "What are "they" paying" while those who do have a franchise are heard to say "Well we sat down and hammered out a compensation package, the lawyers are touching up my contract...."

You can think of it as a tax on the employers of new immigrants. As the cost of immigrant labor increases, the more attractive domestic labor becomes.

......... I'd agree with the last sentence, however, the big picture is that of nearly infinite supply of low wage labor the world over and as big as the US consumer society is, we can NOT absorb it all.

Or you can think of it as an apprentice program, where immigrants come and work with employers to increase their job skills.

........... Well, I'll think about that while watching new immigrants humping sheetrock year after year.

Wage rates are a function of the marginal productivity of labor and the cost of capital.

..... so the early chapters claim and curiously congruent with JFK's hopes that a "rising tide would lift all the boats". Sadly despite a doubling or more of productivity since 1980 and vast amounts of capital generation those of median incomes and lower have had NO increases. Why? Interestingly the tides for CEO's rose some 500% in the same time. Why?

Arbitrary minimum wage laws do little to help unskilled workers advance.

........... Umm I always want to ask one of you guys what you think should be done about the increasing gap between min and even the more popular $10 wages and the $18 that it takes to maintain life in most of the US? Do you favor MORE transfer programs that added over a billion dollars to Walmart's bottom line last year???

Also........ if you "feel" that an employer using a human with a basic cost of $18 for $7-$10 and passing the rest on to taxpayers, do you also "feel" that we should subsidize his rent and vehicle costs too?

The billions in revenue that this system could generate could fund social security, community health clinics, education programs etc.

........... gimme a break!! The $3,000 being bandied about times the fantasy of getting it from 10 million largely impoverished immigrants is $30 billion, a figure that strikes me as less than the cost of running the 'crat farm itself.

Compared to the current system it is a big improvement.

......... we don't have a system, we've chaos and levying fines or taxes on those currently living in the shadows is hardly likely to create order or wealth to anyone.

[Enthalpic]

This is what asian governments did in cooperation with UNHCR when facing with hundreds of thousands of refugees arriving from Vietnam. First they placed everyone in concentration camps. The UNHCR then asked governments from around the world to take in these vietnamese refugees. This same approach can be applied successfully in dealing with illegal immigrants from the US despite the fact that there are millions, not thousands, of illegal immigrants.

[DanC]

Jack
Thank you for the eloquent confirmation of my suspicions.

[DPB]

Don't we already have such a program with the E-1, E-2 and EB-5 Visa programs?

For less than "flush" immigrants, this could give rise to the re-emergence of that 18th century practice of indentured servitude with the immigrant working off the debt (and is probably informally occurring already in the illegal human trafficing trade).

[Jack]

Thanks, Dan............. McCain?

[matthew]

at least admit your analogy with indentured servitude is bizarrely inappropriate... my thoughts were exactly Jack's when I first read your point thereon. other than that, I'll leave each to interpret as he/she will.

[George Weinbaum]

Professor Becker, your proposal is absurd. Suppose we auctioned 300,000 immigration slots a year. I expect we could get $250,000 per slot, for a $75 billion a year profit. Payable in advance from someone who will be employable here at a decent wage.
Collecting $2,000 per illegal immigrant which I think was McCain's proposal is nuts. "Educating" one illegal immigrant child costs LA Unified Schools $11,000 per year at least. Add in medical care, feeding criminals they bring etc., this is a loser. Who is Mexico, unlike India exporting to the US? 28% of the high tech companies in the Silicon Valley are owned by NRIs, non-resident Indians. Think about that.
Further, the $2,000 will be paid over time. Half of these amounts will never be collected. Or else as another poster suggested some sugar daddy will pay it. We get the $2,000 and someone who makes $7 per hour as an unskilled laborer who has five kids, collects food stamps, etc. This is a good idea? Professor, do a little DCF analysis, farm it out to someone in Chicago's GSB. This idea is: NUTS!

[DanC]

To those you think for the Founding Fathers would react in horror to selling access to citizenship, the historical record is the opposite.

I don't like Prof Becker's government loan program for new immigrants. I prefer that employers foot the bill under an apprentice program. If that shares some traits with indentured servitude from an earlier period, that is fine with me.

The reality is the charities and private support groups would quickly spring up to help fund greater immigration. Think of how the history of Europe would have changed if the United States had allowed Jews to buy entry and flee Nazi Germany.

Or how much would elites in southern California pay to make their domestic staffs legal workers?

Prof Becker is asking how do we deal with the immigrants in the country. They are already in the country using schools etc. How do we humanely confront the issue of millions of immigrants in limbo.

[Jack]

George......... I agree with most of your post and think we've too much immigration and should slow the pace. But, for educating the kids of immigrants the cost is about the same as educating our own kids, and of course we didn't have to invest in the education of the immigrant.

I'd imagine that India is having discussions about "brain-drain" as did the UK a while back, as they bear the costs of educating, while another nation reaps the return.

For those buying the selling of citizenships, if the goal that of trying to make another buck on it? (The productivity gained at depressed wage levels is the first buck gained........ or the whole deal would collapse.) or to slow the pace of immigration?

Having decided that; do you want to base it on high bid? or as some have suggested a high, flat rate that would be impossible for low wage "braceros" to pay, but would be easy for those such as Russia's post-collapse millionaires, Saudi or other oil-royales, and assorted scammers the world over?

[DanC]

To Jack
What makes you think that changing the status of millions of immigrants to legal, after a payment or tax, will depress wages. How does that work?

More severe penalties for employers of illegal immigrants, would encourage compliance and dampen the pull of immigrants.

If the world's millionaires want to come to the United States and pay our taxes, I will welcome them with flowers. I would have a system where the employers could bid and set prices.

Jack, please give more thoughts to your posts.

[Mowry]

My question is what would happen if an immigrant defaulted on his or her loan? Would the government rush to the person's dwelling and deport them? If the loan is given by an employer, and the immigrant quits or runs off, what happens then?

I think you might need security for the loans, and I think this creates a problem for the lowest earners, unless the goal is to encourage low-wage earners with no savings to return home, or not to come in the first place.

In the sense that the plan would make it far easier for talented, educated people to come to the United States, I think it's a good idea.

[Chris]

I think there are better proxies for desirability than the ability to pay for a greencard. Why not award greencards based on some combination of academic credentials and English speaking ability? That at least would demonstrate the ability to integrate.

My other issue with the purchase of greencards, is that is would be a boon to organized crime. Already, many immigrants arrive in the States indebted to smugglers. Wouldn't this trend just increase with a greater emphasis on paying to immigrate?

[Anonymous]

مركز تحميل

[Anonymous]

بنت الزلفي

[Anonymous]

g9EeJH