Radical Markets in Immigration

I just finished Posner and Weyl’s Radical Markets, and I’m happy to say it’s well-worth the price.  The book isn’t just engaging and exceedingly well-written.  Its policy proposals and vision are thought-provoking enough to inspire twenty blog posts.

That said, almost all of those blog posts should be highly critical.

Let’s start with their best idea – the Visas Between Individuals Program (VIP).  Here’s Posner and Weyl’s sketch:

[A]ny ordinary person could sponsor a migrant worker… for an indefinite period rather than a renewable three-year period.  We would allow people to sponsor one migrant worker at any moment in time.  This could either bring a rotating cast of temporary guest workers (one at a time)… or one permanent migrant over a lifetime.

What’s in it for the sponsor?  Money, of course.  Would-be migrants offer sponsors a cut of their earnings in exchange for the right to work in the sponsor’s nation.

The VIP comes with a list of restrictions:

1. The sponsor must provide basic health insurance for his migrant.

2. The sponsor is financially responsible if the migrant can’t find work, commits crimes, or disappears.

3. The migrant cannot collect welfare.

4. Stronger immigration enforcement.

However, the VIP also includes a mighty regulatory loophole: “migrant workers must be permitted to work for below the minimum wage”!  (All other labor regulations still apply).

I freely admit that I love the VIP.  Why?  Because despite Posner and Weyl’s disclaimers, VIP is a thinly disguised version of my preferred immigration policy: open borders.

How so?  Because the VIP opens up a free market in immigration permits.  There’s no reason for a typical citizen to personally find “his” migrant a job or a place to live.  Instead, specialized firms would buy up almost all the permits and handle almost all the legwork.  One key service these firms would sell, of course, is sponsor insurance.  “Sell us your permit, and we’ll happily assume all the legal risks” would be a standard deal.

Posner and Weyl could fairly protest, “Fine, but so what?  The sponsors get risk-free money, and migrants get good jobs.  That’s the whole point of the VIP – and it’s not open borders.”

But they’d be wrong.  Their VIP would indeed approximate open borders, because the market price of a permit would be near-zero.

Remember: Posner and Weyl give one permit to every citizen!  If people had to personally employ, house, and insure their migrant, only a minority would bother.  Since you can sell (or rent) your permit to a middleman in exchange for risk-free cash, however, few permits would go to waste.

Upshot: Hundreds of millions of permits would be floating around.  And while hundreds of millions of people around the world do indeed express a desire to move to the First World, all historical experience tells us that migration this massive would take decades.  Remember – East Germans had over a decade to safely flee to West Germany, but most stayed put.  Most Puerto Ricans now live in the U.S., but this took over a century.  Even in an extreme scenario where a hundred million migrants already have their bags packed, it’s hard to escape the conclusion that the price of a VIP would be dirt cheap.

Back in the heyday of taxi medallions, shrewd reformers occasionally pleaded, “Give every current medallion holder one extra medallion.”  If I were a self-interested medallion holder, this would have seemed like a tolerable reform.  With sufficiently elastic demand for taxi services, this 2-for-1 proposal would have enriched medallion holders along with the public.  But if reformers said, “Give every current medallion holder a hundred extra medallions,” it would be tantamount to the abolition of medallions.  Permits are only valuable if they’re scarce relative to demand.  Posner and Weyl make VIPs so abundant that their proposal is tantamount to the abolition of immigration restrictions.

To repeat: I consider this the main strength of the VIP.  If you really wanted to let natives visibly profit from immigration, though, you’d have to drastically slash supply.  If each native received a one-year VIP per lifetime, Posner and Weyl’s proposal would work as intended – though this would naturally slash the global economic gains.

You might demur: Sure, VIP may be open borders in disguise, but isn’t it far more politically palatable than open borders?  I doubt it.  A few policy wonks will like the VIP.  For the man in the street, however, tradeable migration permits sounds like indentured servitude – especially if migrants can be paid less than minimum wage.  Furthermore, as VIP prices plunge toward zero, you should expect a massive backlash: “You promised natives a windfall – and we got chump change!  Another elitist trick.”

Selling immigration liberalization is an uphill battle.  But if you want to win over public opinion, you can’t just wave money around until nativists sell-out their ideals.  Enlightened self-interest may rule markets, but benighted nationalism rules politics.  Alas, the VIP does nothing to change that.

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