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Toward an Optimal Immigration System
A half-step toward a better future
Immigration is one of the most contentious issues today, with a growing chorus of voices calling for more restricted borders. But the data are clear, as outlined here, free global migration would bring more growth and innovation, necessities in the face of growing global challenges. Presently, however, truly open borders are politically unpalatable. For this reason, I propose a radical new approach that balances short-term concerns with long-term benefits.
Most of the world employs a discretionary immigration model wherein a prospective immigrant files an application, pays a nominal fee, and government bureaucrats determine eligibility for an entry visa. The visa can later be converted into Permanent Residence, or a “Green Card.”
In the US, immigration is discretionary and largely based on family reunification. Some 81 percent of immigrant visas are issued to family members of American citizens, and only 5 percent for employment or investment. This stands in contrast to many other countries, where “merit” plays a larger role in admission.
The drawbacks of the American system are numerous and beyond the scope of this article. But generally speaking, it subjects immigrants to huge risks, is opaque, and unpredictable. It’s also too restrictive, especially for young and educated individuals who seek to live, work, and contribute to the United States.
A competing immigration model can be found just north of the border. Canada’s system seeks to admit migrants on the basis of “merit” rather than familial relation. In the Canadian system, immigrant character traits are assigned point values. For example, a prospective migrant gets a certain number of points for English proficiency, work experience, education level….etc. If the immigrant accumulates enough points, they become eligible for a visa.
But the Canadian system has its own problems. It still naively assumes that bureaucrats can determine “merit” better than society itself can. Who is to say, for example, that an uneducated, but skilled carpenter has less “merit” than an immigrant holding a PhD in French Literature? Is “low-skilled” labor any less crucial than “high-skilled” labor? These are judgment calls that are difficult to answer.
Ultimately, we have to think beyond 20th century discretionary models if we are to take on the challenge of migration in the 21st and beyond.
A market-based system seems preferable as it would take the government out of the driver's seat, reducing opportunities for rent-seeking, greatly shrinking the bureaucracy, and curtailing the Byzantine rules and regulations that result from political compromise.
Visa auctions are one possible means of utilizing market power. The concept is simple, the government allocates a limited number of immigrant visas every year and allows anyone to bid on them. The winner of the bid gets the right to select the individual to receive the visa.
The problem with auctions is, should the visa quota be set too low, only the wealthy will be able to afford one. Restrictive quotas could exacerbate illegal immigration by further stifling the visa supply. Also, because visa quotas are fixed, the number of new migrants would not be able to adjust with demand.
Toward an Ideal Immigration System
I prefer a tariff, or “entry fee” approach, similar to that proposed by Nobel Prize-winning economist Gary Becker. Like an auction, the market/society, not the government, select the individuals allowed entry (subject to standard background and health checks). But unlike auctions, they also select the number of migrants as well. The government merely sets the entry price, allowing visa demand to fluctuate.
My plan consists of three parts. First, the government would set aside some number of humanitarian visas that would be issued to random refugee applicants, free of charge. For the US, that would be somewhere in the range of 50-100k visas a year.
Second, all foreign students who study on student visas would be given a pathway to remain in the country upon graduation and apply for permanent residence. This encourages migrants to study in local universities, it also self-selects young/educated migrants who have their whole productive and tax-paying lives ahead of them.
Third, for everyone else, we abolish all visa quotas and allow anyone to immigrate to the country, subject to a health and background check….so long as they pay an entry fee. The entry fee would be determined by an independent agency, free from corrosive political interference.
As with an auction, anyone can pay the entry fee. It can be financed by the immigrant themselves, their family, non-profits, future employers, or even through bank loans or income-sharing agreements. The challenge is setting the fee at the right price.
Addressing Short-Term Concerns
The purpose of the fee is to alleviate concerns about welfare abuse. I have suggested voucher-based education, healthcare, as well as a Negative Income Tax. The fear is that some individuals may immigrate to take advantage of welfare benefits while not contributing toward their financing.
This concern is largely overblown. Government funding would ideally come primarily through a Value Added Tax (VAT) and a Land Value Tax (LVT). These taxes cannot be evaded by incoming migrants. In fact, the presence of more migrants inevitably means greater LVT and VAT revenue.
Nonetheless, the migration of older individuals presents potential financial challenges. Older migrants will have fewer productive years ahead of them, have paid less accumulated tax behind them, and will cost significantly more to provide healthcare for.
With this understanding, I propose an entry fee that is scaled based on just one variable: age. The fee would begin at zero for 18-22 year olds, as they have their whole working and taxpaying life ahead of them. From this age, however, the fee would gradually increase and would be calculated to roughly recapture the lost tax revenue and increased costs of the arriving migrant.
Selling visas might seem callous or inhuman, but it’s a vast improvement over the status quo. Compared to the current discretionary models, this proposal would be transparent; one could easily look up the fee schedule. It would not be subject to direct political manipulation, and not require a significant government bureaucracy, with officials only needed to collect fees and undertake health and background checks.
Furthermore, broader eligibility and non-existent quotas would do catastrophic damage to the human smuggling industry. For many, a border entry fee of 0-$30k would be preferable to paying similar sums to human smugglers and taking risky/illegal journeys to the destination country, only to live a marginalized life. There would be no need for expensive border walls and border agents would primarily be tasked with arresting actual criminals, not migrants seeking to reunite with family.
Additionally, the entry fee would raise significant revenue. For the United States, it could raise in the tens of billions annually. This revenue can be used to lower taxes or to fund benefits like a public library system.
Toward a Better World
This proposal is a half-step toward untethering people from their country of birth and unlocking their full potential. Long term, it would behoove humanity to adopt Nathan Smith’s idea of creating a “World Migration Organization,” modeled after the World Trade Organization, that works to gradually ease global barriers to human migration.
In addition to eased borders, some cities, such as my proposed experimental zones, could pilot totally open migration policies. There, we could analyze the effects of truly free migration on the economy, welfare, and society. If the results are positive, those innovations could be rolled out more broadly.
Ultimately, to unlock the full potential of humanity, borders must be erased. In the meantime, we must refrain from heeding the populist hymns against migration, as they lead us to folly. No system or proposal will be perfect or satisfy everyone. All we can hope for is pragmatic and gradual improvement in the right direction.