Tuesday, February 22, 2005
The Becker/Posner Immigration debate
Over at the Becker-Posner blog, Gary Becker and Richard Posner have been debating the immigration issue. Mind you, this is purely theoretical reform (given the political minefield involved) intended to provoke some debate on the issue and they acknowledge it as such. First, Gary Becker proposes a market-based solution.
The best alternative to the present quota system is an ancient way of allocating a scarce and popular good; namely, by charging a price that clears the market. That is why I believe countries should sell the right to immigrate, especially the United States that has so many persons waiting to immigrate. To illustrate how a price system would work, suppose the United States charges $50,000 for the right to immigrate, and agrees to accept all applicants willing to pay that price, subject to a few important qualifications. These qualifications would require that those accepted not have any serious diseases, or terrorist backgrounds, or criminal records.
Immigrants who are willing to pay a sizeable entrance fee would automatically have various characteristics that countries seek in their entrants, without special programs, point systems, or lengthy hearings. They would be younger since young adults would gain more from migrating because they would receive higher earnings over a relatively long time period. Skilled persons would generally be more willing to pay high entrance fees since they would increase their earnings more than unskilled immigrants would. More ambitious and hard working individuals would also be more eager to pay since the U.S. provides better opportunities than most other countries for these types.
These calculations might only indicate that $50,000 is too low an entrance price, and that an appropriate fee would be considerably higher. But with any significant fee, most potential immigrants would have great difficulty paying it from their own resources. An attractive way to overcome these difficulties would be to adopt a loan program to suit the needs of immigrants who have to finance entry. One could follow the present policy toward student loans, and have the federal government guarantee loans to immigrants made by private banks.
And this is Richard Posner's take.
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 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 trouble I see with Becker's idea is that a $50,000 fee (or any fee for that matter) will force any would-be immigrant to make a cost-benefit calculation. If the would-be immigrants (especially the highy skilled ones) are from one of the fast growing developing countries (China, India, Brazil etc), the cost-benefit calculation may end up working against the United States rather than for it, as more of them may be tempted to stay home/go home to tap emerging opportunities.
The trouble with Posner's first proposition is that any attempt to screen out relatively less skilled workers may affect the bottomlines of firms that hire them in large numbers, legally or otherwise. Any increase in cost will almost certainly be transferred to consumers. It also seems like both sets of solutions are destined to increase the number of illegal immigrants.
The best alternative to the present quota system is an ancient way of allocating a scarce and popular good; namely, by charging a price that clears the market. That is why I believe countries should sell the right to immigrate, especially the United States that has so many persons waiting to immigrate. To illustrate how a price system would work, suppose the United States charges $50,000 for the right to immigrate, and agrees to accept all applicants willing to pay that price, subject to a few important qualifications. These qualifications would require that those accepted not have any serious diseases, or terrorist backgrounds, or criminal records.
Immigrants who are willing to pay a sizeable entrance fee would automatically have various characteristics that countries seek in their entrants, without special programs, point systems, or lengthy hearings. They would be younger since young adults would gain more from migrating because they would receive higher earnings over a relatively long time period. Skilled persons would generally be more willing to pay high entrance fees since they would increase their earnings more than unskilled immigrants would. More ambitious and hard working individuals would also be more eager to pay since the U.S. provides better opportunities than most other countries for these types.
These calculations might only indicate that $50,000 is too low an entrance price, and that an appropriate fee would be considerably higher. But with any significant fee, most potential immigrants would have great difficulty paying it from their own resources. An attractive way to overcome these difficulties would be to adopt a loan program to suit the needs of immigrants who have to finance entry. One could follow the present policy toward student loans, and have the federal government guarantee loans to immigrants made by private banks.
And this is Richard Posner's take.
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 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 trouble I see with Becker's idea is that a $50,000 fee (or any fee for that matter) will force any would-be immigrant to make a cost-benefit calculation. If the would-be immigrants (especially the highy skilled ones) are from one of the fast growing developing countries (China, India, Brazil etc), the cost-benefit calculation may end up working against the United States rather than for it, as more of them may be tempted to stay home/go home to tap emerging opportunities.
The trouble with Posner's first proposition is that any attempt to screen out relatively less skilled workers may affect the bottomlines of firms that hire them in large numbers, legally or otherwise. Any increase in cost will almost certainly be transferred to consumers. It also seems like both sets of solutions are destined to increase the number of illegal immigrants.
