I have advocated the DRITI policy– instead of coercively restricting migration, tax it and use the proceeds to compensate natives– for years, and Principles of a Free Society was written, if you like to think of it that way, as a political philosophy suited to undergird DRITI policies. By now, this has become a standard part of the case for open borders. Thus, in “Meant for Each Other: Open Borders and Western Civilization,” Bryan Caplan writes:
Still worried [about open borders undermining natives’ wages]? There’s a cheaper and more humane remedy than keeping foreigners out: Charge them an admission fee or surtax, then use the proceeds to help displaced native workers.
Which is the same idea as DRITI. Not that I’m blaming Caplan for borrowing the idea from me without acknowledgment. Caplan knows I advocate migration taxes. He even wrote one of the blurbs for Principles of a Free Society. But Gary Becker proposed a migration tax to the IEA back in 2010. Actually, that was four years after I published the idea, but Becker had written about it before, in an op-ed in the 1980s. Recently, at the APEE conference in Las Vegas last April, Richard Vedder also proposed a migration tax. The idea is really too obvious to quibble over its paternity. It’s a simple cross-application of the standard free-trade advocacy truism– “yes, free trade has winners and losers, but tax the winners to compensate the losers”– to migration policy. I’m not sure whether Caplan got the idea from me. I’m pretty sure that if he hadn’t got it from someone, he’d easily have thought it up on his own. It’s a no-brainer for economists, but somehow policymakers are blind to it. Or so I thought.
What I didn’t realize is that Singapore already has something close to a DRITI policy in place, as Carl Shulman reports. From 1970 to 2010, the number of foreign workers in Singapore rose from just over 20,000 to more than a million, a third of the labor force, and still rising. Most of these are not the high-skilled workers that OECD democracies tend to privilege. Nearly a million are here on low-skilled “work permits,” including foreign domestic workers (214,500) or construction workers (319,100). How is the number of immigrants regulated? First, by Foreign Worker Levies, i.e., migration taxes, a policy variable. There are also Dependency Ceilings, maximum foreign shares of an employer’s workforce. Shulman doesn’t say how often these are binding, but they seem liberal, e.g., 87.5% of construction crews can be foreign. And how much do migration taxes raise?
Levies for unskilled workers range from $3,600-$9,000 per annum. With around a million workers subject to levies, the proceeds to Singapore should be in the billions of dollars (all figures are Singaporean dollars, about 0.8 $USD each).
Total levies collected amounted to $1.9 billion in 2010 and $2.5 billion in 2011. Total government operating revenues in 2010 were $45.5 billion and $50.5 billion for 2011, so worker levies alone accounted for 4-5% of operating government revenue. Since then the migrant population has grown substantially and levies have been hiked, by a third or more in many cases, with further increases scheduled, so the current percentage is likely significantly higher. Even so, the figure will be small compared to the economy, because low-skill workers contribute disproportionately little to economic output, but is high as a proportion of compensation costs. While Singaporean natives with such low incomes would pay no income tax, the top levy rates for unskilled workers (charged to employers) can be half or more of wages.
In short, while we can quibble about details, Singapore more or less understands and is applying and applies the citizenist case for open borders. Singaporeans benefit from cheap cleaners, bus drivers, and domestic workers. And they don’t just benefit themselves; foreign workers also gain opportunities. As Vipul Naik pointed out in conversation, if all developed countries adopted policies like this, migrant wages and wages in migrant source countries would be competed up. I might argue for slightly different moral side-constraints (e.g., I wouldn’t endorse deportation of pregnant women), but it would be a great thing for both economic development and freedom if other developed countries followed Singapore’s lead.
Lastly, a more general point. Singapore is amazing. Every time I read about policy in Singapore, I find myself involuntarily thinking Wow! This is the most enlightened regime on earth. Perhaps that’s a slight exaggeration, but few would deny that Singapore is a spectacular success. So why don’t we make more of them? Much of the key to Singapore’s success seems to be simply that it’s a sovereign city-state. In general, sovereign city-states make wildly disproportionate contributions to civilization. Think of the city-states of ancient Greece, Athens and Sparta and Corinth, birthplaces of philosophy, history, science, and democracy. Or the city-states of Renaissance Italy– Venice, Florence, Genoa– which were also gloriously accomplished in arts and letters and sciences. Today, Hong Kong has a kind of partial sovereignty. It, too, is a dazzling success, whose success has spilled over in a massive way. Hong Kong has been a major catalyst for China’s economic take-off. Yet, perversely, we have established a system of international sovereignty which makes it impossible to found new sovereign city-states. We need charter cities.