22 October 2009

Gary Becker in controversial "extend markets to unfamiliar areas" shocker

Gary Becker thinks the US should charge immigrants $50,000 for entry (HT: Trade Diversion).

Makes sense to me. Poor people want to move to rich countries. Rich people don't want them to (except maybe the liberal elites).

And that is because the price of immigration is set artificially at zero. Presumably there is a positive price at which there is positive (i.e. larger than at present) immigration and in which there is a clear pareto improvement for everyone.

Most of the HUGE gains from immigration go to the poor, so why not allow them to choose to pay a bit of those potential gains in order to gain passage? So long as this is enough to compensate any labour-market losses of natives.

This of course assumes some kind of functioning credit market. And some way of allocating those entry fees to those most disadvantaged by the increased immigration (i.e. those with a similar skills profile to the immigrants).

Simple no?


HT: White African for the link (which I've lost) to the info-graphic


Matt said...

Actually, I'm not convinced that its the rich in Western countries that are against immigration. Unskilled migration brings cheap labour for domestic business, and staff for running rich households. It is the lower classes that have the most to fear from immigrants who will be directly competing with them for work.

Charging for entry will bias things in favour of skilled, educated migrants. That's better that nothing, but not exactly the group we want to target.

Rather than charge them for entry and try and work out some complex credit system for funding the upfront cost, why wouldn't you just tax the immigrants?

Ranil Dissanayake said...

"Rather than charge them for entry and try and work out some complex credit system for funding the upfront cost, why wouldn't you just tax the immigrants?"

Virtual high five, my first thought too.

In any case, I wonder if Mr. Accounting for Tastes (one of my least favourite academics working, a man who seems not to understand anything that is not an equation) has considered that the effects of a $50,000 entry fee on illegal entry? (a tax would have a similar effect).

Or that in most cases, the poorest and those in most desperate need to migrate have already reduced their space for failure in migration to zero by selling everything they have, using all their assets, in many cases getting into debt and getting their family into debt just ot have a shot at getting into a new country.

The cost of immigration to most poor migrants is extraordinary. The price is 0. Important distinction to make, and Becker isn't the type of person to make it.

The idea only holds water for middle income and skilled migrants. Letting the poorest into the country is a moral question, and a question about local labour market needs. Not about cost or price.

Philip said...

But surely this doesn't go far enough. If you're going to charge people to enter a country you'll need to also charge them to stay. So a better proposition would be to charge a set fee (annually or monthly) to all people wishing to reside in a country regardless of whether they were born there. That would truly allocate scarce spaces to those with the greatest demand (assuming they were able to express their demand in a market-based way - thanks Sen).

Actually, this has really set me thinking. I may write my own thoughts elsewhere, but I think that an application of trade theory, especially Paul Krugman (unexpectedly perhaps) could be a good way of taking this further...if free movement of people is as good as free movement of goods, services and capital, then perhaps the same problems are also associated with it.

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