Bleg on Nathan Smith’s DRITI scheme

UPDATE: Added links to downloadable versions of the relevant chapter from Nathan Smith’s book.

One of the questions that many people have asked regarding the Open Borders site is — what’s the first step you propose? As a site, we do not take a very specific position, though we do recommend various keyhole solution-type proposals like immigration tariffs and guest worker programs as conversation-starters. But it would be useful to have a single scheme or proposal that attempts to address all the different aspects together, and which people on different sides of the issue can then critique.

My co-blogger Nathan Smith, in his seminal (or at any rate, should be seminal) book Principles of a Free Society (Amazon ebook) has come up with just such a scheme. It’s called Don’t Restrict Immigration, Tax It (DRITI) that combines the ideas of many keyhole solutions to the various objections that have been raised to immigration. Although the book is not available for free, it’s only $2.99, and I strongly urge you to buy it — the chapter on immigration alone is worth the price of admission for people who are interested enough to follow the blog. The full chapter can be downloaded as a Word Document or as a PDF.

Cover of Principles of a Free Society

But in order to make the idea more widely accessible, I have, with Nathan’s approval, put up a page about DRITI on this website. The page describes the key features of Nathan’s proposal, along with links to some online discussions of specific aspects of the proposal on this blog and elsewhere.

Although the scheme looks great in theory, there is a difference between theory and practice. I’ve already had a back-and-forth with Nathan on the aspects of the scheme that I was most concerned about (and his replies have largely satisfied me) — the relevant links are on the DRITI page. But others reading about it may have other questions. Please voice your views and ask your questions about the scheme in the comments below, and hopefully Nathan will reply to them, either in the comments here, or in a subsequent post.

7 thoughts on “Bleg on Nathan Smith’s DRITI scheme”

  1. One big problem if you want to convince conversatives: the surtax on immigrants’ incomes and benefit for low-income citizens. If that benefit is a cash transfer, conservatives will see DRITI as a big step backwards–they’d see a program that would take able-bodied, self-sufficient Americans, put them out of work, and force them on the government dole. If you want to convince conservatives, that low-income benefit has to be a tax cut.

    But while we’re at it, why not make it a tax cut for everybody? Say immigrants pay the current rate plus the surtax, but citizens get a cut based on the total number of immigrants (which would presumably increase) to keep the program as a whole revenue-neutral.

    Liberals won’t like the revenue-neutrality, but most will support more open borders anyway. Meanwhile, conservatives would like it because they get a tax cut, something they’d want to do even without immigration reform. And by tying the cut to the total number of immigrants, you give conservatives a reason to cheer when the news says more immigrants are coming.

    1. A tax cut is what I would suggest, precisely to avoid the various perverse incentives associated with targeted subsidies or compensation. I don’t have Nathan’s book in front of me right now, so I don’t remember exactly what he proposed.

      The reason why I would focus (and I don’t know about Nathan) on low-income natives is that restrictionists, on both the left and the right, as well as a number of progressives who have mixed feelings about open borders, put a lot of emphasis on the fact that low-income natives are the one group who are unambiguously likely to see their wages garnished by immigration. Not by much, but somewhat. Actually, it’s low-skilled natives, not low-income natives, but given the correlation between income and skill, that boils down largely to the same thing (there are exceptions such as graduate students and people in other form of apprenticeships who accept low wages during an earn-cum-learn period). Thus, I think that these groups would be mollified by the promise that the benefits of immigration would be equitably distributed to all including the groups who may prima facie see losses from immigration.

  2. Just for the record, here are a couple of tweets from Bryan Caplan responding to DRITI:

    first tweet: “Big improvement over the status quo, but may be even less politically realistic than open borders.”

    second tweet: “Many countries have opened their borders to some other countries, but who’s ever tried DRITI?”

  3. It’s interesting: I am actually highly sympathetic, in general, to the idea that it’s bad and demoralizing to make people dependent on income transfers, yet I still favor compensation to natives in the form of transfers rather than tax cuts. Tax cuts inevitably favor those who actually pay taxes, and it’s those who don’t pay taxes (or very little) who would be hardest hit. I’m trying to make open borders roughly Parents-superior to the status quo.

    Concerning Bryan Caplan’s point about realism, well, the obvious reason DRITI hasn’t been tried is that it hasn’t been thought of, not by most people certainly, not even by policymakers. That’s a little bit like arguing, in the 1970s say, that Milton Friedman’s voucher schools were less politically feasible than complete educational libertarianism, on the ground that there are many historical examples of the latter, none (or hardly any) of the former. Yes, but vouchers and DRITI are adapted to appease some of the new ideological attitudes which have made people accept compulsory education and migration control.

  4. I’m thinking more in terms of the politics of passing reform than compensating anyone (probably because I believe more immigration is likely Pareto-superior in the general equilibrium even without redistribution).

    I could be wrong, but I’m operating under the assumption that liberals will generally agree to more open borders while conservatives won’t. Conservatives are the ones you have to convince to actually get a majority to pass reform, and they’ll respond better to a general tax cut than to income transfers that they’d call just another entitlement.

    1. While it’s plausible that open borders would be Pareto superior even without redistribution, I think there is a sufficient chance of identifiable subsets of the native population being modestly hurt that a keyhole solution would be better for a more guaranteed Pareto superiority.

      Regarding who needs to be sold on open borders, I think there is ample opposition to open borders from the left as well as the right, though with some important differences. My recent blog post highlighted some of the differences as I perceive/understand them.

  5. What I like about the scheme is its reliance on taxes, rather than upfront tariffs, which eliminates the need to determine at point of entry how long the person intends to stay. However, the absence of a huge upfront payment may be viewed as bad by some people. To take a somewhat different type of example, in the home loan/mortgage industry, eliminating the need for down payments is believed by many to lead to an increase of default risk, because a huge downpayment serves as a deterrent to people who may lack the financial resources or the seriousness to pay their installments on time. I’m wondering what you think of an analogous concern in the case of migration.

    Also, even as things currently stand, the US requires various visa applicants to pay fees for certain criminal and background checks. However, I suspect that these fees would likely go up considerably under more open borders, because as things currently stand, the US government relies on employers and degree-granting institutions sponsoring the authorization of the worker/student to have a strong incentive against selecting criminals. Under more open borders, the investigatory costs of criminal and background checks may be higher, so these fees would probably be quite high, probably more significant for migrants and visitors (especially from countries close to the US) than the refundable mandatory return deposit.

    I think that a case could be made to basically eliminate the multitude of visa categories, but offer special discounts on the (generally high) background check fees for people who already have an authorization from a reputed college or employer. Colleges or employers that sponsor people who “turn out to be criminals” in sufficiently nontrivial percentages will lose that discount (the discount could be tiered one instead of a single number) so that they have an incentive to do their own due diligence for applicants. This would also discourage diploma mills for criminals. Self-motivated sojourners, who do not already have a job or educational plan lined up, would have to pay the full no-discount background check fee, which would still be affordable. The fee, however, would only be an entry fee, and would not bind the person to staying with that employer or educational institution.

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