Tag Archives: keyhole solutions

The stability of excluding migrants from the franchise: part 1

December 20, 2013 Vipul Naik 2 Comments

One of the main concerns surrounding open borders, or radical immigration liberalization in general, is political externalities: migrants may vote in ways that destroy the prosperity-creating institutions of their destination countries. This would be bad not merely from a citizenist point of view, but could also entail killing the goose that lays the golden eggs, thus leading to an overall decline in global utility. To minimize this (potential) danger, a keyhole solution that has been advocated is to significantly increase the length and complexity of the path to citizenship.

My co-blogger John Lee has argued that open borders can be separated from open citizenship both in theory and practice. My co-blogger Nathan Smith, in his DRITI proposal for migration to the United States, has suggested that migrants have some fraction of their income be stored in a mandatory savings account, and once the amount in the account crosses a threshold, they can become citizens, if they are willing to forfeit the amount to the state. This creates a de facto waiting period as well as what amounts to a citizenship tariff.

Stability and other dimensions

In a previous blog post, I had written that any proposed keyhole solution needs to be evaluated along four dimensions:

Moral permissibility
Desirability
Feasibility
Stability

The purpose of this post is to consider the keyhole solution of an extended (or, in the limit, an infinite) waiting period for migrants to obtain citizenship (and hence access to the franchise) along the fourth of these dimensions, namely stability. In other words, I’m asking the question: suppose a political compromise were somehow worked out where a new visa class were created whereby it would be very easy to migrate — temporarily or permanently — but very difficult, or almost impossible, to obtain citizenship, and therefore, to vote. Would such a compromise be stable?

Before I begin discussing this, a few brief words about the first three dimensions. Each of these dimensions is very tricky:

Moral permissibility is something that many people would disagree on. Is a society where a large fraction of the resident population is disenfranchised morally permissible? I think it is, for similar reasons as those that John Lee offers in his blog post. But it’s a difficult and contentious issue, as Nathan has noted in the past. So I’ll duck the question entirely in this post. Obviously, one would need to seriously consider moral permissibility before actually advocating or lobbying for such a proposal, but the goal of this post is more limited: let’s first figure out if the solution can be stable! I do think that the keyhole solution is, at any rate, not so obviously morally impermissible as to make it pointless to even study it along the other dimensions.
Desirability would depend crucially on what we understand of the research on political externalities and the arguments that free migration might kill the goose that lays the golden eggs. My co-blogger Paul Crider recently argued that a lengthy path to citizenship was undesirable, contra co-blogger Nathan. To say something intelligent about this would require a lot of space. Suffice it to say that concerns about political externalities are sufficiently plausible that one can make at least a prima facie case that keyhole solutions should be investigated.
Feasibility would be something that depends heavily on the current political climate and the specific country where the proposal is being considered. It’s a topic worth exploring in its own right. I believe it makes sense to investigate stability before investigating feasibility, because one of the arguments for infeasibility is that people (whom one would need to get on board for feasibility) are concerned that the solution (of delaying or denying citizenship) isn’t stable.

Stability and the political tug-of-war

My ultimate goal will be to examine historical instances of disenfranchised segments of the resident population and when, if ever, these segments of the population got to vote. Prior to doing that, I’d like to explore a theoretical framework intended to address the question. The framework begins with the observation that decisions about enfranchisement and disenfranchisement are controlled by the elected governments, and the politicians here are concerned about getting re-elected. Although it is not the only motive, one major constraint affecting what politicians can afford to support is the effect it has on their electoral prospects.

A year ago, I had blegged for which of four possible positions on immigration and US politics readers found most plausible:

Immigration good for Democrats, bad for Republicans regardless of either party’s position on immigration. In other words, even if the Republicans took a pro-immigration stance, more immigration would still hurt them. The electing a new people argument offered by Peter Brimelow of VDARE has this structure. Mark Krikorian of CIS also makes similar arguments. This argument naturally appeals to:

Those trying to sell restrictionism to the Republican Party.

Those trying to sell pro-immigration policies to the Democratic Party.

Immigration good for Republicans, bad for Democrats regardless of either party’s position on immigration. I don’t know anybody who has taken this position, but I’m adding it for logical completeness. This argument naturally appeals to:

Those trying to sell pro-immigration policies to the Republican Party.

Those trying to sell restrictionism to the Democratic Party.

Immigration good for whichever party adopts a more pro-immigration stance: In this view, both parties need to compete to be more pro-immigration, and whichever party manages to be more pro-immigration will benefit more from immigration. This seems to be the view of many open borders advocates and other pro-immigration forces, such as my co-blogger Nathan here and here. This argument naturally appeals to pro-immigration forces trying to simultaneously make inroads into both parties, setting up a “race to open borders” between both parties.

Immigration bad for whichever party adopts a more pro-immigration stance: In this view, both parties gain from adopting a more restrictionist stance. Restrictionists who are trying to make a broad-based appeal to both parties would find this argument appealing. In this view, the vote of people with restrictionist sympathies matters a lot more than the votes of potential immigrants and their apologists. Thus, whichever party adopts a more pro-immigration stance will lose a lot more in terms of restrictionist votes, even if they gain a few immigrant votes. Such an argument, if believed, would lead to a “race to closed borders” between both parties. Some restrictionists have made these types of arguments, though they’ve largely focused on (1).

One can consider a similar story with respect to excluding migrants from the franchise. I’ll form the story more generally, since the purpose here is to consider historical examples around the world, not to study modern-day politics. Consider a country with a de facto two-party system where the parties are A and B. Consider the following possibilities for what might happen if migrants excluded from the franchise (under a keyhole solution compromise) were given the franchise:

This would significantly improve the electoral prospects of party A, regardless of whether party A or party B plays they key role in granting them the franchise.
This would significantly improve the electoral prospects of party B, regardless of whether party A or party B plays they key role in granting them the franchise.
This would significantly improve the electoral prospects of whichever party were seen as taking the lead, or being more actively involved, in giving them the franchise.
This would significantly improve the electoral prospects of whichever party were seen as less enthusiastic, or more opposed, to giving them the franchise. One possible story for this is nativist backlash against whichever party is seen to be championing migrants.

In the earlier discussion of Democrats and Republicans, (3) was the ideal position from the pro-immigration perspective, and (4) was the ideal position from the restrictionist perspective. In some sense, the story is flipped now: when trying to judge the stability of the keyhole solution, (3) is the worst possibility (both sides have incentives to compete for granting migrants the franchise), and (4) is the best (each side wants to avoid being seen as friendly to the idea of extending the franchise to migrants). (1) and (2) are intermediate: if it is known in advance that one specific party would benefit by granting the franchise, then the other party would oppose it. If decisions to grant the franchise require supermajorities in the legislatures, and political power is approximately evenly distributed in the legislature, the existing arrangement of denying the franchise would be relatively politically stable.

Although (3) is in some ways the worst for stability, it is plausible to imagine the keyhole solution being stable even if (3) were true, as long as one party had accumulated a huge lead over the other in terms of being seen as friendly to the idea of the migrant franchise. In this case, the other party would need to either expend a lot of effort overtaking its competitor in terms of how friendly it appears to the migrant franchise, or it could just block the legislation to grant migrants the franchise. The latter course of action might well prevail for a fair length of time, if for no other reason than status quo bias.

Stability and feasibility: it’s relative

One plausible argument is that if a keyhole solution were sufficiently feasible as to actually get implemented, it would also be stable. In this view, then, stability is not something to be worried about per se, and all our energies should be focused on the question of feasibility. However, this is not completely satisfactory particularly in the context of the franchise because of the incentives (for members who agree to the original compromise) to later defect and enfranchise the migrants, particularly if (3) is the most valid.

The relevant question (that we will consider for each example we explore) is what, historically, has been relatively easier: liberalizing migration, or enfranchising existing migrants?

Short versus long run: a brief note

The answer to the question of whether a particular electoral arrangement is stable depends to a considerable extent on the timeframe over which the arrangement is considered (as some of the historical examples below, that I’ll discuss in my next blog post, shall clarify). One can critique practically any arrangement by arguing that it will not be stable over the next 100 or 200 years. But such a critique, to be taken seriously, would need to be clarified in at least two ways.

The critique should point out to specific features of the proposed arrangement that make it more unstable relative to other arrangements. It is not enough to point out that the arrangement will be unstable. Even the status quo isn’t particularly stable over a sufficiently long time frame. The world in 2013 looks different — very different — from the world in 1913.
The critique should elaborate on whether the factors that make the arrangement unstable over the long run also affect our assessment of its desirability over the longer run. In other words: does the keyhole solution self-destroy because the problem to which it was a solution became irrelevant? To the extent that this is the case, the long-term instability of the keyhole solution is not a problem. Let’s say, for instance, that a concern is that if migrants are given a quick path to citizenship, then they will vote badly. Somebody proposes a keyhole solution of a lengthy path to citizenship. One might critique such a keyhole solution on the grounds that in a century, most people will be very loath to make any distinctions based on nationality of origin or length of stay in granting citizenship, due to a shift in global values surrounding human rights and the relationship between people and political institutions. This is plausible, but one would simultaneously need to consider whether this changed relationship also nullifies, or at any rate, weakens, the original political externalities concern. On the other hand, if the instability of the keyhole solution arises from factors that make the underlying problem worse (for instance, a world war or large-scale ethnic conflict) then indeed this is a problem.

As Nick Beckstead and Carl Shulman explained, the long run is very important, if we care about humanity without much bias for the present. And the long-run effects of open borders and/or keyhole solutions are very important. To the extent that we can speculate intelligently about these, or even better, make guesstimates, such speculation and guesstimates have considerable value. Nonetheless, we should be wary of the risk of making the future a Rorschach test for whatever we prefer to believe about the world, a point that Will Wilkinson eloquently made in a related context.

What historical examples are useful for understanding the question?

Any arrangement that has persisted for a reasonable length of time in the real world can safely be called stable, concerns of tipping points notwithstanding. There may well be other stable arrangements that have not yet existed in the real world, so this is just a starting point. The most direct evidence in this regard would be historical examples of large non-citizen populations that arose as a result of guest worker programs or illegal immigration, and the extent to which there were pressures to grant citizenship and the franchise to the large numbers of non-citizens that accumulated as a result of these programs.

In my next post, I will look at the following historical examples.

In the United States, slavery was ended after the Civil War of 1861-1865. However, blacks (including freed slaves) were de jure and de facto barred from political participation on a significant scale via Jim Crow-era voter literacy tests, until the Civil Rights Act of 1965 (there were admittedly a number of smaller civil rights acts in the years leading up to that). The arrangement appears to have been stable for a considerable length of time, and does not seem to have attracted any vocal political opposition until the end of World War II, although there were unsuccessful legal attempts to overturn other parts of Jim Crow-era legislation such as enforced segregation. In private conversation, Ilya Somin cited this as an example of how excluding people from the franchise can be stable for considerable lengths of time, and my co-blogger Chris Hendrix cited the same example in an EconLog comment. Is that a justified inference to draw? What other lessons can we draw from this historical fact? (Note that the purpose here is to assess stability, not to discuss the moral permissibility or desirability of the exclusion from the franchise).
In relative terms, have pushes for granting citizenship (and hence the franchise) to existing non-citizen residents (including both legal and illegal immigrants) been more powerful than pushes for expanding migration, or less? The answer is not clear-cut, and a reasonable case could be made either way. In the United States, for instance, a typical “comprehensive immigration reform” proposal typically focuses on (a) creating a path to citizenship for existing residents (the pro-immigration side), (b) more resources for enforcement and border security (the restrictionist side). This is what is considered a reasonable compromise. Even expanding high-skilled immigration gets low priority in comprehensive immigration reform bills, and guest worker programs are opposed by both the territorialist left and citizenist right (loosely speaking). On the other hand, “comprehensive immigration reform” proposals rarely make headway anyway (the only major amnesty in the US was in 1986, though Europe seems to have had amnesties on a more regular basis). Expansions of legal migration opportunities have happened in small steps, but more steadily. The evidence is decidedly mixed.
Germany has had a large Gastarbeiter (guest worker) program and it has been argued that, for a considerable period of time, there was no political pressure to grant citizenship to these guest workers (a large number of them from Turkey), despite their forming a large mass of possible voters. How true is this? This question is worthy of further investigation.
Other examples worth looking at might be: how did the Reform Act of 1867 (enfranchising the British working class and lower middle class), championed by Benjamin Disraeli, affect the electoral landscape in Britain? How did the 19th amendment to the United States constitution (granting women the right to vote), favored mainly by the Democratic Party, affect US electoral politics? How sensitive were the votes of Jews to the perceived anti-Semitism of European parties?

Contra Tyler Cowen, closed borders should scare people

October 10, 2013 John Lee 2 Comments

Tyler Cowen of Marginal Revolution recently graced us with a pretty bracing set of criticisms:

In my view the open borders advocates are doing the pro-immigration cause a disservice. The notion of fully open borders scares people, it should scare people, and it rubs against their risk-averse tendencies the wrong way. I am glad the United States had open borders when it did, but today there is too much global mobility and the institutions and infrastructure and social welfare policies of the United States are, unlike in 1910, already too geared toward higher per capita incomes than what truly free immigration would bring. Plunking 500 million or a billion poor individuals in the United States most likely would destroy the goose laying the golden eggs. (The clever will note that this problem is smaller if all wealthy countries move to free immigration at the same time, but of course that is unlikely.)

Co-blogger Nathan Smith has already taken Tyler to task on the economics, asking Tyler specifically if keyhole solutions like immigration tariffs would address his concerns about the risks of open borders. Tyler issued a laconic response, which referred to Nathan’s suggestions as “surrender”, presumably because any sort of immigration restriction is inconsistent with open borders. Nathan has already updated his post to address Tyler’s riposte. Since we have covered the economics around Tyler’s thinking fairly comprehensively already, I want to tackle something different: exploring what we mean by open borders, and why an open borders agenda (as opposed to some generic “liberal immigration policy”) matters.

But first off, as reasonable as Tyler’s critique may be, I find it strange in how it implies that restrictionist myths and urban legends deserve more credence than any economist would give them. The tone of Tyler’s criticisms about the risks of open borders strikes me as slightly reminiscent of Paul Krugman’s tone on macroeconomic policy: worded just so, to avoid falling afoul of the economics, without really dissuading people from mistaken beliefs about what the economics says. Paul Krugman hardly ever directly contradicts the mainstream economist consensus that monetary policy can be effective at the zero lower bound. But if you ask any layperson reading Krugman what Krugman believes about the efficacy of monetary policy when interest rates are low, I’d bet you the median layperson thinks Krugman believes monetary policy is totally ineffective, making fiscal policy the only game in town.

Likewise, if you ask him, Tyler is all for liberal immigration policies (as he said himself, right before launching into his critique). He doesn’t buy into the myths that immigrants are fatal drains on the welfare state, or deadly threats to the working class of the developed world. The prevalence of these two myths, in the face of all the economic evidence, is depressingly common; it is as if the lay person believed “all Chinese are opium addicts” or “deporting Jews will reduce the prevalence of poisoned wells”. Like numerous other economists, Tyler has explicitly declared he repudiates the popular scaremongering myths about immigration’s economic effects. It is all the more surprising then that he declares “people should be scared” of open borders — when, as he’s said time and time again, the main reasons people fear immigration have nothing to do with fact.

To solidify his critique, Tyler says that he is in particular worried about a scenario where:

The US is the only country that opens its borders
The US opens its borders essentially overnight (i.e., from highly restrictive one day to highly liberal the next)

But other than as thought experiments, I daresay you won’t find any blogger on this site who would say “Yes, that’s a regime I’d be happy with and world that I’d gladly sign up to live in, because the risks are so obviously worth it!” There’s more than one way to skin a cat. There are plenty of ways to gradually open the world’s borders while mitigating their risks. Here, the three most obvious options off the top of my head, with links to prior Open Borders posts where we’ve explored them (those posts are far from the final word, but they show just how untapped an intellectual well this area of thought is):

All three options are eminently practical ways of achieving open borders which address the perennial question, “But what on earth would you do with 500 million new American residents tomorrow?” And there are plenty of other practical ways to open the borders; I see no reason to wed ourselves to a particular approach. Maybe some countries will only be able to open their borders via guest worker visa regimes. Maybe others will only be able to open their borders via immigration tariffs or surtaxes of some kind. Still others may be able to get away with true open borders. And I’m confident many countries are capable of mixing and matching. You can imagine a North American free movement union between Canada and the US (or perhaps even, as Barry Goldwater envisioned, such a zone that includes Mexico) which imposes a different regime on immigrants from other countries. The destruction of all conventional immigration policies on some longer timeframe than “within the next 24 hours” is something I’d be happy to see. But even that is only one possible means to the end of open borders.

At this point, you’re probably either scratching your head, or nodding it in agreement with Tyler’s point from earlier about surrender, because what I’ve just outlined may well strike you as utterly inconsistent with the label of “open borders”; after all, what is open borders if not a total rejection of conventional immigration policies? But I don’t define open borders as one particular policy regime or one particular set of immigration laws. I define open borders simply as the principle that, subject to clearly-defined (i.e., not wishy-washy, unclear, or opaque) necessary constraints, people are free to travel, live, and work wherever they want. I am happy to accept any policy regime that satisfies this principle.

Tyler’s critique focuses on an airy-fairy type of open borders which any reasonable person can see is not going to happen, and likely shouldn’t happen at all. So while we’re at it, we might as well criticise a single world government too, since that’s also going to be an absurdly impractical and unreasonable way to open the borders. Where I find Tyler’s critique goes astray is that it focuses on one particular means of opening the borders, instead of the end itself — thereby lending more credence to restrictionist myths about the evils of open borders.

Ultimately, open borders is an end; it is the freedom to author your own life story. It is about being able to sleep safe in your own home, with your family, amongst your community of friends, knowing the government doesn’t have the arbitrary and unchecked power to take you away from all of them tomorrow morning. It is about being safe in the knowledge that the job your employer hired you to do can’t be eliminated by government fiat tomorrow because you made the mistake of being born in the wrong country. All of these are rightful ends for anyone to aspire to. They may well be unattainable on some level, but that is no reason to reject open borders out of hand, any more than the infeasibility of economic “perfect competition” constitutes a reason to reject economic liberalisation. Rejecting open borders because you reject one possible open borders policy is an oddly narrow-minded approach unworthy of an economist or thinker of Tyler’s stature. Even mainstream immigration liberals who remain skeptical of open borders like Matt Yglesias find Tyler’s stance here bemusing.

I can imagine no better label for a world with freedom of movement than a world of open borders. What else captures the sentiment so concisely? If Tyler is so unhappy about calling the goal of free movement “open borders”, he’s free to propose a catchier title. But I really don’t think freedom of movement is something Tyler opposes. He may well have ideas about how to achieve open borders that don’t jive with mine. That’s fine. I’m happy to have a debate about how to achieve open borders. I think Tyler’s on the same page with me here, which is why he kicked off this debate about whether rhetorically, the open borders label is tactically useful.

But while Tyler’s gotten to that point, what concerns me more right now is how far the rest of the world is from reaching that point. Most people don’t give a second thought to the fact that people die every day thanks to the governments we elect and the taxes we pay. We so blithely accept that the state has total, virtually unlimited power to abuse innocent and unarmed civilians. It’s one thing to disregard a destitute person living in, say, Zambia. None of us is responsible for giving that person a job, or for preventing that person from finding work in Zambia. But it’s a completely different thing to disregard how our tax-funded armed forces treat that person as a life-threatening enemy of the state, simply because he or she tried to find work in our country.

When it’s our money and our political authority being used to prevent that person from finding or holding down a job someone in our country is willing to hire them to do, I have a huge problem with that. The use of armed force against armed force is one thing. The use of armed force against civilian job-seekers or civilians seeking to be with their family is another; it is galling. We would never accept it against those born in our own country. Why do we so easily accept bringing tanks and gunships to bear against those innocents born outside our own country? Once we accept that this is a problem, we might still conclude that there’s no reasonable solution to the immigration problem, and that current policy to risk the lives of unarmed civilians is the best we can hope for. But most people, unlike Tyler, aren’t even willing to accept that this is a problem!

Given Tyler’s libertarian leanings, I imagine he won’t disagree much with me on these points. So it’s all the more puzzling to me then that he slips into the trap of encouraging popular fallacies used to justify the torture and slaughter of innocent immigrants. As Tyler points out, people fear the risks of more liberal immigration. But they will be fearful whether you call it “amnesty”, “comprehensive immigration reform”, or “open borders”. And their fears, in almost every single case, will be far more grounded in speculation and conjecture than any empirical fact. Tiny, statistically insignificant effects on a subsegment of the native working population will be blown up into “They took our jerbs!”-style paranoia. Economists quite bravely stuck their necks out for the cause of free trade, despite knowing the popular fears and risks. What keeps them from preaching the same consensus they’ve reached on immigration?

Putting modern economics aside, reasonable people in the US once feared letting blacks into the labour market (they had this “reasonable” fear that freed blacks would lynch them in retaliation for centuries of slavery — for what it’s worth, a more reasonable fear than the notion that Latin American immigration would turn the US political system into that of Chavez’s Venezuela). Pretty reasonable people once feared the impacts of letting women into the labour market. People fear any kind of change. Citing fears instead of facts is no way to make a reasonable policy argument.

It’s not news to anyone that the notion of open borders is scary. Dramatic policy changes should scare any reasonable person, because that’s only human. But scariness in of itself is not a plausible reason to come down firmly on one side or another. Many historical struggles for justice and human rights were shockingly frightening. Abolishing slavery or allowing women into the labour market constituted far more radical and scary reforms than would be dramatically liberalising immigration quotas, or dramatically halting most deportations. You tell me, what’s more dangerously untried and radical: allowing an illiterate, newly-freed black to buy his own land and farm his own crops in 1870; allowing a woman to build an aeroplane in 1940; or allowing a Pole to work on a UK construction site in 2010?

And on the flip side, it’s impossible to ignore how radically totalitarian is the immigration status quo. None of us can condone an immigration system that bans a woman from attending her daughter’s wedding because it suspects she’ll want to immigrate (never mind that, legally present or not, she won’t be eligible for most state entitlements). None of us can condone a legal system that gives government uncontrolled, unchecked, arbitrary power to destroy jobs, families, and homes in one fell swoop. I can’t see anyone signing up to defend a legal system that arbitrarily decides who you can love or who you can work for based on which emperor technically ruled the piece of dirt your ancestors happened to live on two centuries ago.

As the recent tragedy at Lampedusa, Italy illustrates, our legal systems often as good as murder people — people whose lives are so full of suffering that they willingly risk death to immigrate to our jails. We force people to choose between dying in sweatshops or dying at the hands of our border patrols. As some Syrians trying to flee chemical warfare are learning first-hand today, our ostensibly humane laws declare that it is better to force people to be gassed by a dictator than to let them try to make ends meet in our countries. How is any of this not radical? How is it not frightening that we supposedly have to resort to these measures to make the world safe for “civilisation”?

Are we truly happy and safe today because our border guards force Bangladeshis to die in sweatshops and Syrians to suffocate under clouds of sarin? Yes, inasmuch as today’s policies are inefficient and inhumane, the right solution isn’t tearing down every guard post and every border fence in the world within the next 24 hours. But beginning to think about a good alternative to closed borders consistent with both security and dignity is surely a moral imperative. I don’t think any of us want to live in a world that has to destroy human rights in order to preserve them. The problem with the traditional liberal approach towards immigration reform is that, implicitly or explicitly, it embraces closed borders. It might want to open them a little, but it has no sound reasoning (other than “this feels right, I guess”) for picking a trade off point between open and closed borders.

Open borders matters because it is the only paradigm that rejects the fallacious and unethical presumptions of closed borders, and the only paradigm that provides a sound moral basis for moving towards liberal immigration policies in the first place. Open borders presumes a right to move, one that can be overridden as necessary. Closed borders presumes a total ban on movement, one that can be overridden as necessary — a ban nevertheless so strong, it has to be enforced by punishments that destroy mutual employment, family, and community relationships; punishments that sometimes result in the taking of human life. Tyler may well draw a different line than I, or many others, do about what sorts of immigration restrictions are necessary. But I believe we are all on the same page: that people should be free to move, and that this right should only be denied when clearly necessary.

Defenders of the status quo ban essentially assert that a fascist totalitarian regime which kills unarmed civilians is the only way to preserve civilisation and safeguard people’s lives and property. Maybe they think our policies should kill slightly fewer people per year, but they otherwise are comfortable with the status quo as it is. Baldly saying ,”We need to open the borders”, forces a rethink of how readily we can accept the status quo. We know there’s a problem today, a problem that costs the human race thousands of lives and billions of dollars every year. Have we truly explored every possible alternative to the totalitarian border regime we have today?

Writing off open borders as an unattainable goal without exploring all avenues we have to get there I think amounts to saying “It is just and right that we force people to die under a cloud of poison gas or in a sweatshop’s fiery inferno, because that is an appropriate punishment for daring to be born in the wrong country.” Sure, that’s a strawman, since no reasonable person wants to sign on to that trade-off. But that trade-off is exactly the one our governments make in our name every damn day, and it’s a trade-off they’re making based far more on “scary” prejudices than it is on any evidence or fact. Opening the borders is the only way we can put an end to the unholy, inhumane slaughter of innocents — the slaughter of slightly less fortunate people who, same as you and me, just want a better life for themselves and their family. Before we reject open borders, and say there’s nothing we can do to stop the killing and dying, let’s at least be sure we’ve covered all our bases.

The Pledge

September 3, 2013 John Roccia 8 Comments

I am guilty of often being a moral absolutist – an ideologue. I try to avoid it, but it’s a failing of mine. I often mentally frame arguments in “all or nothing” terms, and sometimes that can lead me away from positive solutions. As an example: It’s my natural inclination to be opposed to keyhole solutions such as that of immigrants paying an up-front cost to immigrate that is paid back after a certain period. In my mind, such a cost has the potential to be prohibitive to the very poorest people of the world, who are those who stand to gain the most by coming to a first-world country and most harmed by not being able to.

Since I so strongly believe that freedom of movement is an inalienable right, such half-measures strike me as weak compromises. However, that’s my flaw. The keyhole solution outlined above, while it may have a number of negatives when compared to open borders, is none the less vastly and absolutely better than our current situation. There’s no reason for me to oppose it, other than my tendency to make the perfect the enemy of the good.

While we’re on the subject of my flaws, we might as well bring up another that you’ll find to be directly related – pride. I am too proud by far in many areas of my life. I am the kind of person who often loses out on getting things I actually want because I am unable to humble myself to get them. And worse than my own pride is the fact that I tend to project pride onto others – for example, if a law were passed tomorrow that said anyone could immigrate to America as long as the would-be immigrant bowed in reverence before some icon of the country – whether it be the current President, the flag, some statue, doesn’t matter – I would oppose this with every fiber of my being. I would find it a disgusting, dehumanizing law. However, anyone who could swallow their pride and just ignore the display as the petty thing it was would find that their life was much improved – after all, what’s a little genuflection if it means the rest of your life can be lived in the first world? But again, such is my flaw.

However, I am attempting to correct these flaws – or at least compensate for them. I am trying to grow as a person, and so I am trying to open my eyes to potential solutions that my flaws might otherwise prohibit. And in so doing, I’ve come to think about victim-blaming.

Ask most people, and they’ll tell you victim-blaming is a horrible thing to do. Blaming a woman for getting raped, a black man for getting wrongfully arrested, or a foreigner for not being allowed to immigrate and you’re seen as uncompassionate at best, hateful and bigoted at worst. But isn’t that just the sin of pride all over again? What if there really was something that the woman could have done to avoid her fate, the black man to avoid the arrest, and the foreigner to make immigration easier? Is it wrong to theorize about what the victim might do differently, if the end result is fewer rapes, fewer wrongful arrests, and more immigration?

I’ll avoid the specifics on the other example topics, but what if there was something that foreigners could do to make allowing them to immigrate more politically viable? Even if it was something humiliating or demeaning, something that would infuriate anyone with even an ounce of pride? Just as a hypothetical: Imagine that there was a small town in a third-world country where almost everyone wanted to emigrate to America. And imagine that as part of their campaign for acceptance, they turned their whole town into a mock-suburbia; they wore American-style clothes, ate American-style food, baked apple pie and played baseball, spoke English exclusively and maybe even learned to
fake a Midwestern drawl. Imagine that they renamed their streets after American presidents, got rid of all of their religious materials (except Christian, of course), said the Pledge of Allegiance every morning, and even wore makeup to disguise their skin tone. Now if you’ve managed to read this far without the bile rising to the back of your throat, imagine this: Imagine it worked. Imagine that their efforts, perhaps chronicled by some journalist, so swayed the American populace that American leaders allowed the whole town to emigrate to America. Despite the demeaning trial they went through, they now get to live their lives in a safer, more prosperous environment. They get what they wanted.

What then? If it worked, would we encourage others to copy their efforts? We could say, “well, they shouldn’t have to do that!” And I agree – they shouldn’t. To the core of me, such an act would disgust me. But isn’t that just the pride talking? Shouldn’t we care more about the end result, if the end result is something much better than the trials to get there?

If the answer is yes, let’s look at perhaps a more realistic application of the idea. What if those that wanted to emigrate to America (or any other country, for that matter) signed a Pledge, a formal (if legally meaningless) document where they swear to uphold the ideals of whatever country they wish to enter; to be productive and not draw on social services; to learn the language and speak it exclusively; to adhere to the mores and cultural norms of their new homeland. Such a document is meaningless in terms of legal fact – but such symbols have always held power over the minds of men. If you think signing a non-legally-binding document where you promise to enforce certain rules on yourself is absurd, remember that the entire American government is predicated on such an absurd idea. And such ideas, no matter how absurd, can sway people.

Such a pledge might be demeaning, and in a just world no one would have to sign it in order to move to a new country. But could it work – or at the very least, could it help? That’s the real question we should be asking.

Keyhole solutions: permissibility, desirability, feasibility, and stability

August 16, 2013 Vipul Naik 5 Comments

At Open Borders: The Case, we have often discussed a general class of “compromises” between full-scale open borders and full-scale closed borders that we call keyhole solutions. The possibilities include immigration tariffs, guest worker programs, linguistic and cultural fluency requirements, and DRITI (migration taxes). As John Lee recently blogged, we also note that open borders does not necessarily imply a path to citizenship for all prospective migrants, although such a path to citizenship may be desirable for other reasons. However, just to be clear, it is not generally the case that Open Borders bloggers endorse each and every keyhole solution, and even to the extent they do, they may not endorse every possible practical implemenetation of the keyhole solution.

Before proceeding, I’d like to note that the general discussion of such keyhole solutions is in the context of migration that is otherwise radically liberalized, not as ways to mitigate (real or perceived) problems with migration that occurs under the status quo. In particular, even if a particular potential migration-related problem (such as crime) does not seem to be actually occurring under the status quo, it might still be worthwhile to consider a keyhole solution to that problem as a possible add-on to a proposal for radically freer migration. Even if there are no compelling reasons to believe that the problem would be severe under open borders, investigating keyhole solutions might still be justified from a “Burkean conservative” perspective, or equivalently, from a moderate and reasonable version of the precautionary principle.

In this blog post, I outline four criteria that can be used to evaluate a potential keyhole solutions. Future blog posts will go into considerable detail evaluating along these criteria various types of keyhole solutions.

Moral permissibility of the keyhole solution

Certain kinds of keyhole solutions may be morally impermissible. For instance, consider a “keyhole solution” to the problem of crime that allows people to migrate as long as they agree to be shot dead if they are suspected of committing any crime (no matter how minor). This keyhole solution might strike some people (including both open borders and closed borders advocates) as immoral, even if it were effective at reducing the risk (and the perception of risk) arising from immigrant crime.

There are some examples that appear morally impermissible from an open borders perspective but not from a restrictionist perspective. For instance, one can argue that guest worker programs as currently constituted are a reasonable keyhole solution: people can migrate if they find a willing employer, and they are required to leave the country if they lose the employment status without acquiring a new one. From the open borders perspective, this may be better than closed borders, and hence less morally impermissible than closed borders, but it is still somewhat morally impermissible, because it denies the right to migrate. It also opens up workers to more risks of worker abuse (see also this video).

Desirability of the keyhole solution

My co-blogger John Lee wrote:

Once we protect non-citizens from arbitrary deportation, the moral harm of raising the bar for citizenship seems almost non-existent. It certainly pales in comparison to the moral harm of keeping people out of your country at gunpoint because you’re afraid letting them in might morally obligate you to throw a blank passport at them.

In other words, John is saying that allowing people to move freely (whether temporarily or permanently) is morally required, whereas giving them a path to citizenship is not. John is not opining here on whether denying a path to citizenship is desirable.

If a particular keyhole solution is morally permissible but undesirable, then the main significance of proposing that keyhole solution is as an alternative to closed borders, not as an alternative to open borders. In the jargon of this blog post of mine, a keyhole solution that is morally permissible but undesirable would (typically) correspond to a rank ordering (1) > (2) > (3), whereas a keyhole solution that is morally permissible and desirable would (typically) correspond to a rank ordering (2) > (1) > (3).

Feasibility of the keyhole solution

Open borders advocates and the audience for their blog posts are not philosopher-kings creating policy in a vacuum. Such policy is created by politicians who respond to incentives, generally catering to the electorate, with some slack exploited by special interest groups. Even if a keyhole solution looks great on paper, it may not be feasible to actually bring about. For instance, one might argue that an immigration tariff scheme in infeasible because of taboos against selling citizenship. Generally, it seems to be that many of the infeasibility claims are not insurmountable, and there may be “keyhole solutions within keyhole solutions” that can be used to get over public resistance. This isn’t to say that these keyhole solutions will be implemented any time soon — it’s just to say that they may be about as feasible as outright open borders, or perhaps even more so. Particularly in the case that a keyhole solution isn’t desirable in and of itself to open borders advocates, its being more feasible than outright open borders may form a compelling reason to advocate it nonetheless (provided it is morally permissible).

Stability of the keyhole solution

Another related concern is stability. Whereas feasibility is about whether the keyhole solution can be implemented in the first place, stability is about whether the keyhole solution will remain intact over time. For instance, some people have argued that denying voting rights to prospective migrants may be feasible, but it’s not stable, because politicians would be sorely tempted to offer citizenship to the currently disenfranchised migrants and win over their loyalty. John addressed this particular example somewhat in his post (same as the one quoted above), but the topic of the stability of voting rights denial or of lengthy paths to citizenship will be treated in more detail in a future post.

Immigration-backed Bonds

August 12, 2013 Hansjörg Walther Leave a comment

Nathan Smith has proposed a scheme for a keyhole solution: DRITI, that has as its main features return deposits, surtaxes, and savings accounts. While I found it interesting, it looked a little complicated to me. In a similar vein, Anu Bradford suggests that a bond be posted by companies for the immigrants they hire. I liked that idea, too, but I share David Henderson’s reservations regarding the exact scheme.

Now, allow me to offer my own proposal. I am for real open borders. So it is only meant as a compromise that could work with most people being skeptical or even hostile to open borders. For want of a better name, let me call it an “immigration-backed bond” (unfortunately, “immigration bond”, which would be a better term, already refers to bonds that immigrants have to post to get out of detention).

The main points that I would like to change are these:

The above proposals rely on individual and private contracts. It would be preferable to exploit economies of scale and create a market with public information.
A product that needs to attract a lot of capital has to be reasonably simple. Even better if it conforms to some standard template.
There is often a complaint that proponents of open borders want the benefits for themselves, but risks are socialized. It would be nice if you could instead put your money where your mouth is.
Self-interest has been a reliable motivation for ages. So those who supply the capital should reap a profit commensurate with risks taken.
To increase political feasibility, I would also like to create a material interest on the part of the government.

The basic structure of an “immigration-backed bond” may look complicated, but only relies on rather standard features that have been around for a long time, e. g. for corporate and mortgage-backed bonds. It is a bond that has a certain maturity, e. g. in ten years, and is then paid back. In the meantime it pays a regular coupon. The coupon depends on a pool of immigrants and how they behave. It might pay back before maturity (in part or whole), i. e. there is a “callable” provision. And in extreme cases what you receive at maturity could be less than 100%. Of course, the coupon would have to be high enough to compensate you for the risks you take.

How does this relate to the immigrants?

For every, let’s say, $20,000 in bonds issued, there is a visa for one immigrant. The visa is “shall issue” and not “may issue”, i. e. the government can only refuse to issue it if there are some predefined reasons (e. g. no clean criminal record, affiliation with a terrorist organization). “Shall issue” is in line with a prima facie right to immigrate, whereas the current “may issue” is not. The bond insures risks from the immigrant, and the $20,000 serve as collateral if there are any problems that result in expenses to the government or third parties (e. g. fines, damages, cost of repatriation).

Unlike with current visas, the immigrants keep their visas as long as they pay up. So losing a job or changing employers would not be a problem per se. Or someone else might pay for them, e. g. a charity, family members or a spouse. If the immigrant does not incur any such costs, or less than some limit, they become permanent residents at maturity. If they default on payments or cross the limit, they can be sent back to the country they came from.

It still may not be clear how this would work on an operational level. So let me elaborate. To make it very concrete I suggest a rather specific implementation. However, I don’t think that the specifics are in any way optimal. They are only meant to show that there is no inherent problem.

The main part would be to set up a special legal entity (usually called a “Special Purpose Vehicle”) that obtains a certain amount of money from investors, let’s say, 500 million dollars for ten years, which would correspond to a pool of 25,000 immigrants. Half a billion dollars would be more than enough for a liquid market in the bond. In principle, the Special Purpose Vehicle could directly handle everything and have a dedicated staff for that purpose. However, that is not particularly likely because it is inefficient to start all over again for each new bond. Instead most operations would probably be outsourced to external parties who receive a fee from the Special Purpose Vehicle for their services.

As for the external parties involved I could imagine the following:

Investment banks set up the Special Purpose Vehicle and take care of bringing the bond to market.
A bank takes over the financial side of operations.
Rating agencies might supply a rating for the risks involved.
An accountancy firm supervises the different operations.
Probably a law firm takes care of handling charges from the government and re-couping them from the immigrants.
One or more human resource consulting firms originate the pool, i. e. select the immigrants (and probably also match them with job offers).
Some other party (e. g. a telephone operator) collects payments from the immigrants.
Insurance companies might also be involved, e. g. insuring extreme risks.

What is perhaps unclear is how some party (probably a human resource consulting firm) would originate the pool. Here’s how this could work:

The Special Purpose Vehicle comes with a definition for the characteristics of the immigrants. That’s because investors probably want to have an idea of what the risks are. The human resource consulting firm would then try to find people with the relevant profile in the usual way via ads or going through their databases (and probably also match them with respective job offers). Or it could be the other way around: the human resource consulting firm has a larger pool of potential immigrants, they “repackage” part of their larger pool and offer it to someone who wants to set up a Special Purpose Vehicle. An accountancy firm certifies they follow a defined protocol. To make the originator interested in delivering a good result, they could be asked to take on some of the risk themselves, e. g. with payments staggered until maturity, dependent on whether there are unexpected losses.

How would the definition be set for the pool? The main point would be to target a certain level of risk, and select immigrants accordingly. So any set of attributes that has predictive power, such as age, gender, education, etc. might be interesting as well as indicators for commitment (acquisition of relevant language skills, knowledge about the target country). The originator could also ask the immigrants to post some collateral themselves, or that someone vouches for them (e. g. their prospective employers, domestic citizens in the receiving country, immigrants with a good track record in some other pool, etc.). So parameters like degree of self-collateralization or percentage vouched for by reliable parties could also play a role.

What happens with the money?

Obviously, it would be stupid to leave it in a bank account at money market rates, so it should be invested in something. And here is where I would rely on the interest of politicians and the government: the money is invested in newly issued government bonds. And to make this even more attractive for the government, you could give them better than market conditions, e. g. no coupons or even negative coupons that are paid and not received by the Special Purpose Vehicle. Technically, you would perhaps want to keep the two things separate, so you have standard government bonds that can be sold in the market, plus a regular or lump payment to the government.

Up to this point, this looks like a money-losing operation. Holders of “immigration-backed bonds” would only have government bonds with lower or even negative coupons minus additional costs. That’s why the Special Purpose Vehicle has a claim on the immigrants for regular payments that cover all costs so far (market interest rates as an opportunity cost, expenses for origination and operation, extra payment to the government, a risk premium for investors).

It may be the business of the Special Purpose Vehicle to collect payments from the immigrants. However, it would probably outsource operations to some other party. Any company in the business of collecting money over a wide area would do. One idea would be to collect it via phone bills. Alternatively, contributions could be tacked onto tax payments as a surtax that is routed to the pool (minus some compensation to the government for supplying the infrastructure and costs for collecting the surtaxes). Since immigrants might die or leave the country before the ten years are over, there could also be a so-called “callable” provision, i. e. early payback of part of the principal, either by lot or pro rata. The government might also have to cede any extra payments after that point, so the underlying government bonds can be sold in the market. Or you could do without such a provision and investors would have to bear the risk of the respective defaults.

Could this work in the real world? Just a back-of-an-envelope derivation to see whether the dimensions are okay: If the pool were pretty risky, e. g. on a par with a junk bond with a rating of BB, you would want a premium of perhaps 5% per year to compensate for this. This is a truly risky pool, as over ten years you would expect charges and defaults of about $10,000 dollars per immigrant. You would also want a market rate for a riskless security over ten years. Now those are very low at the moment. A realistic long-term level would perhaps be something like 4%. Then there may be additional costs for origination and operation of 2% and a further 2% to get the government interested. This adds up to 13%. Now 13% of 20,000 dollars would translate to 2,600 dollars a year per immigrant or somewhat more than 200 dollars a month. My guess would be that this is more of an upper bound.

The government would get 10 million per year and half a billion in capital for ten years. The originator and operator (and their subcontractors) would obtain an annual $10 million together. Again this is only meant as a rough estimate and more of an upper bound to see whether something like this could work.

Would a typical government be interested? I think it would. For an extra 100.000 immigrants in one year, the government would have $40 million in extra money per year and an extra $2 billion in government bonds issued. For an extra 100,000 immigrants per year, you would have to do this for ten years in a row and then revolve. Now it is an extra $400 million per year and $20 billion in government bonds issued. Many governments in the Eurozone would have been glad to get their hands on such cheap refinancing. Of course, in that case the underlying government bonds would account for much of the risk premium.

With this rough calculation, my conclusion is that “immigrant-backed bonds” could be feasible and interesting for all parties involved. However, there are all kinds of loose ends and potential problems:

Unlike with mortgages that can be originated over an extended time frame and then repackaged, here many things have to happen within a short period of time, e. g. 25,000 applicants with a job offer right now. There could be some leakage with offers or applications being withdrawn at the last minute. However, one solution would be to have an excess of applicants and jobs, so there are always enough to fill the pool.
It could be tricky to define when and how much to pay to the government. As for fines and damages, this would be the same as what the immigrants have to pay directly. But how about expenses for court cases, police enforcement, etc.? What about if these charges materialize only after the bond has matured? And how about welfare payments? There could be some moral hazard problems here.
Is insurance limited to $20,000 per immigrant (or whatever it is, as the figure was purely arbitrary) or is there a real insurance via the pool where also extreme risks are insured (e. g. one of them perpetrating a major terrorist attack)? In the latter case: What if the Special Purpose Vehicle goes bankrupt? A typical solution would be to insure such extreme risks with a reinsurance company.
Asymmetric information and adverse selection: the immigrants who are selected could not immigrate in other ways, so there might be some hidden risks.
The originator could be corrupt. Supervision by an accountancy firm might not be sufficient to detect this. However, one remedy is to make them share in the risk via staggered payments that depend on results. The prospect of repeat business and protecting your reputation could be additional motivations for diligent origination.
“Asset-backed bonds”, after which this proposal is modelled, have fallen out of favor with investors and regulators in the wake of the financial crisis, but have made a modest comeback since then. So there might be a certain reluctance to participate in an offering, especially in the beginning.
It is easy to shoot down such a scheme with moralistic hyperbole: “You are treating immigrants like a commodity.” There is also a lot of potential for harrowing stories how immigrants are “exploited” or about “human trafficking.”
There might be perverse incentives for politicians to close down other venues because “immigration-backed bonds” are more lucrative. So there could be some crowding-out.
It might be hard to end such a scheme if you want to go for real open borders. On the upside, that would also apply if the government wanted to abolish it for more closed borders.

I am admittedly not an expert on structuring such products, so there might be even major improvements or else arguments why the whole concept would not work. That’s the reason I would like to offer this proposal for debate. However, if “immigration-backed bonds” came to pass as the best possible alternative under given circumstances, I would certainly be interested in investing my own money in them, just to show that I put my money where my mouth is – and to make a profit from a great opportunity to increase wealth.

[I would like to thank the Open Borders team for valuable input on a previous version of this post. I hope I now address most of the points they have raised. As always: all errors are mine. And for full disclosure, I would like to add that I work in the financial sector, but have no professional stake in what I suggest. And I am certainly not speaking on behalf of my employer.]