Tag Archives: keyhole solutions

Saudi Arabia: a land of closed borders, keyhole solutions, or both?

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I don’t often think of Saudi Arabia as a country I’d particularly like to migrate to, which is why I’ve always found it surprising how popular Saudi Arabia is in polling data on migration. For instance, a recent Gallup poll put Saudi Arabia as the 5th-most desired destination migration country in the world, projecting that 29 million people would permanently settle in Saudi Arabia if they could.

My initial reaction was to surmise that perhaps Saudi Arabia’s status as a cultural or religious beacon in the Muslim and/or Arab worlds accounts for this. It’s also worth noting that millions of Muslims from around the world descend on Saudi Arabia for the Muslim haj or umrah every year. It’s not difficult to imagine that some of them might want to retire and die in the land of their prophet, or just fall in love with the country from their visit there.

However, some recent news from the BBC has made me rethink this hypothesis a little: apparently Saudi Arabia is copying the US and Israel in constructing a 1,800km long border wall that will seal it off from Yemen. Unlike the US, Saudi Arabia actually has legitimate reasons to fear that terrorists will cross the border here: a destabilising situation in Yemen has reportedly allowed al-Qaeda to thrive there. But according to the BBC, security is not the whole story:

Border security has dramatically worsened in the aftermath of the revolution, as thousands of illegal immigrants, drug smugglers and gun runners try to slip from impoverished Yemen into Saudi Arabia, one of the world’s richest countries, Lt al-Ahmari told the BBC’s Frank Gardner.

Five Saudi border guards had recently been killed along the border in shoot-outs with well-armed smugglers, he added.

The first part of the fence has already been built on the coast, slowing down – but not stopping – the tide of illegal immigrants.

It seems a bit disturbing to me to characterise economic migrants or refugees fleeing war and terrorism in the same boat with “drug smugglers and gun runners”. If all they have in common is that they’ve crossed an arbitrary line in the map, what purpose does this serve? Are we now to classify high school students and cyberterrorists in the same bucket because they both violate intellectual property laws with their online activity?

The “one of the world’s richest countries” certainly gives one pause at the suggestion that security against terrorism is all there is to this. There are plenty of rich oil-producing countries in the Middle East — so it does puzzle me that, say, the United Arab Emirates don’t pop up as much in Gallup’s polling. But perhaps the reason Saudi Arabia is popular with prospective unauthorised immigrants is because of its long land borders which can be easily crossed. Saudi Arabia also has an extensive guest worker programme which I suppose further spreads word of the economic opportunities there.

I am curious to find out more about immigration to Saudi Arabia. There are plenty of questions which come to mind:

  1. What accounts for its unusual popularity on the list of prospective immigrant destinations? All the other countries which top the list are developed Western democracies.

  2. What kinds of immigration programmes does Saudi Arabia have? They recently gave unauthorised immigrants a 3-month amnesty to either leave or regularise their status, but otherwise it is unclear to me how their programmes operate, though I do know that they have millions of guest workers.
  3. What is the status of unauthorised immigration in Saudi Arabia? If it is true that 10% of the 2 million annual pilgrims overstay their visas each year, there could be millions working and residing without permission in Saudi Arabia (indeed, it looks like some have settled there permanently).
  4. How does Saudi Arabia handle permanent residency versus nationality? Has it successfully decoupled the two concepts? Some anecdotal evidence suggests that perhaps it has. Some might term this a keyhole solution. Although I am not happy about the idea of someone spending their entire life in a country and yet being unable to claim citizenship there, if Saudi Arabia does easily grant residency while more tightly controlling citizenship, this is actually much more civilised and moral than the alternative in much of the “civilised world,” which is to deny most human beings both residency and citizenship.

I am not sure whether the Yemeni border wall is justified. But whether it is or not, it is sad to think that those fleeing war, oppression, or economic collapse will be the ones who suffer the most. Drug smugglers and gun runners have the resources to find another way in or out. Regular people don’t have those resources. In principle, under international law, the borders are open for refugees. But in practice, it’s a different story. It is sad to think that there are millions of innocent people, who through no fault of their own, will remain trapped in a country wracked with conflict, having nowhere to go.

Open borders and the justifications for the welfare state

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Three major justifications for the welfare state, distinct but related, are (1) social welfare functions may be increased by redistribution (see my previous post on “the conservative social welfare function,”) (2) the welfare state serves as a form of social insurance against the ill chances of life, and most impertinently ambitiously (3) welfare and aid to the poor generally may be a public good via its effect on the utility functions of people who are at least mildly altruistic. Jonathan Gruber’s Public Finance and Public Policy, 3rd ed. offers the following defense of argument (3), stopping at argument (1) along the way:

Why is the government involved in the business of redistributing income?… If society cares equally about the utility of all its members, then social welfare may be maximized by redistributing from high-income individuals (for whom the marginal utility cost of losing a dollar is low) to low-income individuals (for whom the marginal utility gain of getting a dollar is high). Arguments for redistribution are even stronger if society cares in particular about low-income persons, a philosophy embodied in the Rawlsian social welfare function…

The private sector, however, is unlikely to provide such income redistribution, since redistribution faces the same free-rider problems encountered in private provision of other public goods. The consumption of the poor is a public good: I would like the poor to consume more, but I would prefer if others provide them the means of doing so, since I would then get the benefits of seeing the poor consume more but not bear the costs of their increased consumption. If everyone feels this way, then there will be too little private redistribution because everyone will be relying on others to contribute… There may be a role for a government in solving this free-rider problem by taxing its citizens to provide public redistribution. (Gruber, pp. 490-491)

Let me unpack this.

Recall that a public good is defined by two characteristics: (a) non-rivalry, and (b) non-excludability. Non-rivalry means that one person’s use of a good does not preclude another person’s use of it. Non-excludability means that it is not feasible— as distinct from merely not legal as a matter of policy– to exclude anyone from using the good. In this sense (to illustrate the concept) public schools are not a public good, though the general public refuses to hear this message and public finance economists often try to weasel out of it because of its unpopularity. Nonetheless, the fact is logically inescapable, for it is quite feasible– though perhaps illegal, but that’s beside the point– to exclude a child from a public school classroom. Also, classroom seats may be scarce/rivalrous at the margin, and a teacher’s grading time is certainly a rivalrous service: I can grade student A’s exam or student B’s exam, not both.

A welfare payment is certainly not a public good. It is rivalrous: if you receive cash from the government, I can’t receive that same cash. It is excludable: it is clearly feasible not to send the welfare payment. How, then, can Gruber claim that redistribution might be a “public good?” In a rather subjective sense. If a poor person eats a meal, no one else can eat that meal, or get any immediate benefit from it. But if a certain kind of altruism is built into others’ utility functions, these altruists all get some satisfaction from the poor person eating the meal. Given that the poor person eats, these altruists can’t be prevented from thus enjoying, second-hand, his meal. Therefore, this benefit is non-excludable. Nor does one altruist’s enjoyment of the poor person’s meal prevent another person from enjoying it. Therefore, this benefit is non-rival. Being non-excludable and non-rival, the external benefits of helping the poor

I have many objections to this interesting argument. First, it seems improper, somehow, for public policy to take into account such subjective factors. If one does allow it, the practice soon leads to unwanted conclusions. Suppose that, instead of altruism towards the poor, the general population felt hostility towards some group, but didn’t bother to harm that group much because of a free-rider problem. (“I wish somebody would go beat up those nasty wogs, but I can’t be bothered to do it myself.”) If we accept Gruber’s “public good” argument for the welfare state, we should also have to argue, it seems to me, that the brutal mistreatment of unpopular minorities is a public good. Second, the attitudes imputed to the public are not observable. If they were observable, the welfare state could be financed by a Lindahl tax enjoying universal consent. Of course, this argument applies to some extent to all public goods– how much people like a public good can’t be measured effectively in the absence of revealed preference and the price mechanism– but at least in the case of other public goods, the physical use of the good– walks in the park, driving on the roads, listening to public radio, whatever– is observable. Third, the argument is, in its strange way, simultaneously flatters and insults taxpaying citizens, with a certain insolence in both respects. It tells the citizen: (a) we know that, whatever you may say to avoid paying taxes, you really do care about the poor, but (b) we know that, left to your own devices, you won’t give as much as you wish that people like you would give. If some citizen sincerely says, “No, I really don’t care about the poor at all,” the public goods case for the welfare state fails. On the other hand, if most people, when it comes to charitable matters, follow Kant’s advice and act by maxims they desire to be universally practiced, the public goods case for the welfare state fails again.

But my biggest objection to the “public goods” argument for the welfare state is that it assumes what might be called a citizenist, or perhaps a territorialist, social welfare function. That is, it imputes to citizens a certain degree of altruism towards their fellow citizens, but not an equal degree of altruism towards the rest of mankind. If citizens would like the poor in general to consume more, regardless of nationality, then their first priority would probably be open borders, though possibly, if they have a very different understanding of how economy and society work than I do, they might support more foreign aid instead. At any rate, helping poor people resident in the US would not be a very high priority. Even if citizens are assumed to have a citizenist social welfare function, that should really point them towards the citizenist case for open borders and keyhole solutions (like DRITI) that hold natives harmless. To offer the public goods case for the welfare state, and at the same time to support migration restrictions, seems to make sense only from a decidedly territorialist perspective, i.e., if citizens feel altruism towards those present in a country, or at least they’re squeamish about observing dire poverty, but place little or no value on the welfare of those not on the country’s territory. They don’t want to be made to feel pity towards the less fortunate: hence they support the welfare state, and at the same time, the border as blindfold.

It’s irritating to have such attitudes imputed to me as a citizen-taxpayer. Even more irritating is the suggestion that such attitudes are implicitly granted the moral high ground. Gruber may well be right that attitudes such as he describes are an important reason why the welfare state exists. But since some of us don’t share the territorialist social welfare function, the welfare state cannot properly be regarded as a public good. And from a universalist utilitarian or Rawlsian perspective, the territorialist attitudes on the part of citizens that undergird support for the welfare state may be among the chief barriers to rational pursuit of the welfare of mankind.

A Voice for Immigrants – Could it be Dan Mitchell?

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I’m a big fan of Dan Mitchell. We agree on 95% of political issues (and since I’ve never met anyone who agrees with me 100%, that’s a high mark), he’s got a great sense of humor (both in the sense that he’s funny, and in the sense that he appreciates humor and can laugh at himself), and he’s clearly a man who isn’t afraid to be open about his beliefs, even unpopular ones. But while these are all great qualities in a person, none of them are the thing I like best about him.

The thing I like best about Dan Mitchell is that he’s tireless.

You see, Mitchell has a solid, consistent belief structure, and he’s been advocating for policy based on that structure for a long time. And while every once in a while he gets a win, it can often seem like people fighting for human rights and liberty are taking ten steps back for every one step forward. That kind of record would demoralize most people, but Dan Mitchell has been fighting that fight for years and years, and hasn’t given up yet. That’s why I admire him.

It’s also why I’m writing this. Dan Mitchell’s most recent “Question of the Week” was on the subject of immigration. Immigration reform might be the single policy issue about which I’m the most passionate, and if I could convince a tireless crusader like Dan Mitchell to add the plight of the would-be American Immigrant to his mental checklist of injustices to fight, I think I could go to sleep knowing I’d done many people around the world a huge service. So with that said, while I’d like many people to read this, it’s primarily addressed to Dan Mitchell. I’m going to lay out three reasons why I think he should support a policy of radically increased immigration allowance, or even open borders. In an ideal world I’d convince him – but at worst, hopefully I’ll give him a little extra evidence in favor of that position.

Reason #1: If Immigration Is Mostly Good With Some Bad, It’s Actually Easy To Eliminate Just The Bad

Dan Mitchell is a reasonable person. In his Question of the Week post, he says:

By the way, a senior staffer on Capitol Hill floated to me the idea of a new status that enables illegals to stay in the country, but bars them from citizenship unless they get in line and follow the rules. I’m definitely not familiar with the fault lines on these issues, but perhaps that could be a good compromise.

This is only a very small, single example of a “keyhole solution” – a solution specifically tailored to the problem at hand. To most people, the only three options that come to mind regarding immigration are “allow all of it,” “allow none of it,” or “allow some of it.” But those aren’t the only ways of addressing the issue. It’s very possible to get just the “good parts” of immigration, in the same way that if you like the taste of soda but don’t want the sugar you can have diet soda. Let’s discuss the possibilities of “diet immigration” by discussing what could be considered the “bad parts” of immigration, and how we can eliminate them while still allowing immigration itself.

One of Mitchell’s worries, shared by many free marketers, is political externalities: immigrants may vote for bad policies like increased taxation, wealth redistribution, and the like. But if you can craft an immigration law to any specifications you like (in particular, you have the leeway to keep people out completely and arbitrarily), you could easily craft a law that makes immigration and even permanent residency perfectly legal for anyone, but does not include citizenship. Then there’s no voting issue – the people can come, but they can’t drop a ballot in the box. Continue reading A Voice for Immigrants – Could it be Dan Mitchell? →

Moral Intuition, Open Borders, and the Euvoluntary Principle

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This is a guest post by Sam Wilson, who writes for the Euvoluntary Exchange blog. His immigration posts can be found here. Sam Wilson also wrote a guest post for EconLog containing an empirical analysis of the political externalities of immigration to the United States.

I’d like to first thank Vipul Naik for offering me the opportunity to share some of my thoughts here. I am a proponent of free migration for all and I agree that border restrictions are among the most severe barriers to
prosperity facing humanity. Freedom of movement is both a matter of basic human dignity and a necessary check on the bloodlust of tyrants. Open borders advocates support the primary cornerstone of liberty: self-determination. I am proud to count myself among their number.

At the blog I regularly write for, Euvoluntary Exchange, we spill quite a bit of digital ink investigating the intersection of everyday morality and market exchange. Needless to say, this can cover a lot of ground. Morality suffuses the whole of humanity, and the exchange relation elevates our species from scattered clusters of extended family bands to complex societies where stranger can live alongside stranger in peace and prosperity. The overarching puzzle for a euvoluntaryist like me is to identify instances where moral intuition leads ordinary people into supporting policies that undermine or thwart others’ natural propensity to truck, barter, and exchange. Deontological concerns conflict with consequential outcomes, and part of the euvoluntary project is to catalog and describe these conflicts in the hopes that we can help people to see how a quotidian morality can be antithetical to the human endeavor of peaceful cooperation.  Here are some of my previous thoughts on how euvoluntary exchange relates to the issues of immigration.

Keyhole solutions are the topic for today. Naik described three options:

  1. Open borders without keyhole solution A.
  2. Open borders with keyhole solution A.
  3. Closed borders and/or status quo.

From these three primary positions, we can map six sets of rank-ordered preferences:

  1. (1)>(2)>(3)     open borders → keyhole → status quo
  2. (1)>(3)>(2)     open borders → status quo → keyhole
  3. (2)>(1)>(3)     keyhole → open borders → status quo
  4. (2)>(3)>(1)     keyhole → status quo → open borders
  5. (3)>(1)>(2)     status quo → open borders → keyhole
  6. (3)>(2)>(1)     status quo → keyhole → open borders

Naik provided an excellent descriptive analysis of each of these rank orderings, including examples where examples were to be found. I’d like to extend this a bit to plumb the moral intuitions underpinning (4)-(9).

Effective advocacy must be predicated on mutual understanding. What moral principles do open borders advocates share with the median voter? How are open border policies consistent with these moral principles? How can we prompt people to closely examine their positions in light of commonly-held moral principles? How shall we coordinate a consistent message?

Let’s start by parsing anti-foreigner bias. Documentarian Morgan Spurlock (of Super Size Me fame) has a show called 30 Days where regular folks do something unpleasant for a month to see if they change their mind at the end of the treatment. Episode 201, “Immigration” put a gentleman who was a strong (9) in a household of undocumented workers. By the time he was done, he was either a weak (9) or maybe a (7). Why the change of heart? Judging by his comments, I think it was a confluence of at least two factors: (A) legislative bias and (B) construal-level error. Legislative bias economizes on scarce attention: elected representatives are the presumptive experts in policy formation, so if a “law” is on the books, it (presumptively, of course) represents careful deliberation and is quasi-panglossian. Furthermore, the experiences of foreigners are processed in far mode, highly abstract, liberated from concerns of detail. It’s fairly easy to see how this confluence of cognitive shortcuts can contribute to support for the status quo. Note that this result is robust even in the absence of aesthetic objections to immigration. You don’t have to be a nationalist to trust your politicians and to glaze over the challenges of living in poverty.

I suspect that aesthetic objections define the boundary between short- and long-term coalition possibilities. Convincing (5)s or (8)s of accepting keyhole solutions as a morally acceptable improvement seems straightforward: the immense inequality imposed by strict immigration restrictions swamps the inequality that would arise from red card solutions and the regulatory apparatus needed to administer keyhole solutions will likely be less onerous than attempting to patrol expansive geographical borders. These are folks for whom the barriers to changing immigration policy are technical matters: how will the welfare state accommodate an influx of newcomers? How will the political and bureaucratic process manage the administration of the keyhole solution? I am inclined to dismiss the ethical objections grounded in claims of potential exploitation because of reasons examined in great detail at my home blog: any potential exploitation introduced by a keyhole solution will enter immigrants’ decision calculus; those that still elect to come do so with the understanding that life after migration beats their alternatives at home. Nobody is being tricked here. If they choose to come, it’s because it beats the alternative. Forcing someone to accept a relatively worse alternative to satisfy a sense of moral smugness is immoral.

But how should an open borders advocate negotiate with both the keyhole-averse and the keyhole-first people? (7)s and (5)s appear to have mutually exclusive moralities: one is so against paying for social services for immigrants they’re willing to consign peaceful people to lives of poverty, the other so adamantly against re-crafting second class citizenry that they’re willing to do the same. Deontology triumphs over consequences yet again. I’m afraid I don’t have an answer to this dilemma. At home, we in the euvoluntary crew make our bones by showcasing the monstrous consequences of interventions and hope that our arguments are sufficiently convincing. For grown adults with myelated frontal cortices, I worry that it isn’t, but I don’t know for sure what else to do. Suggestions are welcome.

A related, minor point concerns disingenuousness. (8)s and (9)s may claim to be (6)s or (7)s in the abstract, but if it looks like the status quo is actually under threat, they may revert to near-mode objections to immigration. This is a perpetual challenge to anyone attempting to overcome atavistic biases. There’s some literature on truth-revealing institutions, but these are typically used to solve local, small-scale public-goods provision problems. Raising exit costs ex ante will do little but ensure a coalition never forms in the first place, particularly since the narrowly self-interested people (the immigrants themselves) are expressly disenfranchised. Dishonesty is an existential risk. Account for it. Lame advice? Perhaps. I’m not sure what else to say though.

Some objections to immigration are taste-based. Aesthetic arguments are generally more immune to reasoned debate. You can’t just tell George Bush about the health benefits of broccoli and expect him to overcome his atavistic childhood revulsion. No, he just hates broccoli and he won’t eat it, and that’s that. Even the most brilliant elocutionist is going to have a hard time changing an individual’s values. It might be possible to form a coalition with folks naturally amenable to welcoming immigrants, but the enduring challenge is to build a larger constituency over the long run. Think of this as a plank in the larger platform of the liberty movement. The heavy lifting is to convince people that plebeian dignity is a worthwhile goal, that self-determination is the birthright of all people. If we can figure out how to do this, concerns about faction alignment will be trivial.

As for specific advice on how to swell the ranks of folks who appreciate the dignity of the fourth estate? I’m no marketing expert, but consistency, professionalism, and integrity have served me well in the past. Many people seem to be averse to monstrous outcomes, so a touch of consequentialist reasoning probably isn’t out of order. Discerning and redirecting deontological objections is probably important too. I find it encouraging that blatant racism has become unpopular in the US; if the same can be done with nationalism, that might be a step towards a more universal equality of opportunity. I welcome ideas about how to do this. More importantly, we should be diligent about how we raise our children. Part of the Socialist Party’s Fabian strategy was (is?) to pre-empt public education. Guiding the mind of the future median voter may be a matter of hoisting the yoke of state-approved education. Like all good economists, we know to set marginal cost to expected marginal benefit. It seems to me that we’ll be able to get more bang for our buck by sharing classical liberal values with folks who aren’t already set in their ways.

Auctions, tariffs, and taxes

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A draft that Alex Nowrasteh sent me to read provoked me to think in a new way about various market alternatives for regulating immigration. All of the following policies use the price mechanism, in one way or another, to ration visas by willingness-to-pay, while capturing some of the surpluses generated by immigration to return them to natives.

1. Auctions. Under this mechanism, a certain number of visas would be sold to the highest bidder. There’s a lot to be said about auction design, but for concreteness, you could just let everyone submit a bid, and then accept the top x bids, requiring them each to pay, not what they bid (which would make them bid strategically) but the lowest acceptable bid (which would make them reveal their true values). Auction winners would pay their bid, and be issued visas.

2. Tariffs. Under this mechanism, the government would set a price for a visa, and whoever was willing to pay it would receive one. There might, of course, be restrictions: knowledge of English, perhaps, or criminal background check, or some regions of the world (Pakistan?) might be excluded or treated differently on national security grounds.

3. Taxes. This is the approach I’ve long advocated: the DRITI scheme would be one way to design it. In this case, to come would be nearly free– in the DRITI scheme, I have people preimburse the government for a deportation option which they could then exercise if they were destitute and wanted to go home– but those who came to work would pay a surtax (DRITI has some other features but never mind those for now).

Now, at a highly theoretical level, the effects of all these policies could be much the same. It is not the case that, say, auctions are necessarily more restrictive than tariffs, and tariffs than taxes. If you auctioned off enough visas, that could be quite a loose immigration policy. If you set a tariff, or a migrant surtax, very high, the policy could be rather restrictive. If the government knows its own preferences and the demand curve for immigration, it doesn’t matter whether it controls the quantity (via auctions) or the price (via tariffs/taxes): the number who will come, and what they will pay, will maximize the government’s objective function. Similarly, if immigrants know what they’ll earn and are not credit-constrained, it doesn’t matter whether they pay everything up front (via auctions/tariffs) or over time (via taxes): either way, those will come whose net present value of migrating is greater than the net present value of the payments required.

There are a lot of practical differences between the three policies but I think the crucial one is how the burden of uncertainty is distributed, if, as is realistic, the government does not know exactly what the demand for immigration is like, nor do immigrants know exactly what they’ll earn in the US.

Under the auction mechanism, the government faces no uncertainty about what may the most important variable, namely, how many immigrants will come, though it faces uncertainty about how much it will raise from the auction. Immigrants, on the other hand, face a lot of uncertainty, because they don’t know if their bids will prove sufficiently high to qualify for visas. Immigrants might find it difficult to plan, not knowing whether they would be able to come or not. Also, they wouldn’t know how much they would end up paying. If an immigrant bids $500,000, he might be fairly confident of coming, but not know whether he’d end up paying $20,000 or $100,000.

Under the tariff mechanism, the government faces uncertainty about how many immigrants will come, and also about how much revenue it will receive in total, but not about what price each immigrant will pay. It knows how much revenue it will get per immigrant. Meanwhile, immigrants know what they’ll have to pay for a visa, and face no uncertainty on that front. But they face a lot of uncertainty about what they’ll earn in the US, and how much they’ll like it there. The value of immigrating is probably quite uncertain, but they have to pay the same price in any case. If they pay a lot, then are unlucky in the labor market, or have overestimated their value, or become unbearably homesick, they’re in trouble. Of course, they might also get large, unexpected surpluses if their fortunes in the US are better than they had anticipated. But it’s a risky undertaking.

Under the tax mechanism, the government faces uncertainty, both about how many immigrants will come, and about how much the immigrants will earn and therefore how much they’ll pay in taxes. The government, moreover, has to wait to get paid. Immigrants, on the other hand, face much less risk. They don’t know how well they’ll succeed in the US, but if they do badly, they can go home, or if they stay even though they’re earning little, they’ll pay little (though even a small amount might be painful) for the privilege of staying. If they do well, they’ll pay a lot, but they can afford it then. If they earn well enough but dislike life in the US, they’re not bound to stay just so they can pay off the debt they incurred for the visa: the visa was near-free. Immigrants also don’t need to have a lot of liquid assets to come.

I much prefer the tax mechanism, because the government can handle the risk easily. The government is highly “diversified” in that many immigrants will come, and more taxes from the successful will offset fewer taxes from the less successful. And the government can easily afford to wait and garnish wages rather than getting a lump sum up front. I think only the tax mechanism would (virtually) eliminate undocumented immigration, because anyone who could afford to pay a coyote could afford to get a visa. I also think the government could raise the most money through immigration taxes, because immigrants who were relieved of risk and the need to go into debt would be willing to accept arrangements that, on average, would ultimately cost them a good deal more than what they would have agreed to pay as a lump sum ex ante.

But it occurs to me (or perhaps Vipul suggested it, I can’t remember) that a policy path to open borders might involve (a) auctions first, (b) then tariffs, and (c) taxes last.

If the public appreciated the efficiency advantages of regulating immigration by working through markets, but was still spooked by the possibility of getting swamped, they might go for the auction approach. That way they’d still control how many immigrants came in.

If the auction mechanism had been in place for a while, people might start to feel they knew something about the shape of the immigration demand curve, which would make them more comfortable with the idea of tariffs, since the number of immigrants who would use them, though unknown, would be less unknown. People could make an educated guess. Moreover, the auction mechanism would have some problems which a tariff could resolve. For example, what’s the auction schedule? If it were annual, people would have to wait a long time for it, and to lose a bid could mean the disruption of a lot of big plans. If it were monthly, people would speculate on a favorable month. Prices might fluctuate in strange ways. Some might be willing to pay a lot more than the usual auction prices during the off-season, while others would overbid and regret it. A tariff would promise to be less arbitrary and raise more revenue.

Later, when the tariff mechanism had been in place for a while, people would have a clearer idea what the income profile of immigrants tended to be, which would help them project the earnings of a migration tax. There would be lots of stories about spirited, entrepreneurial aspirants to immigration who, however, couldn’t raise the money to come, though they seemed sure to succeed in the US if they could just get over that hurdle. Others would pay the tariff, get homesick, but be stuck, needing high earnings to pay off creditors. A switch to taxes would promise to relieve immigrants of risk and avoid excluding promising people merely because they had poor access to credit, while at the same time, increasing the revenue the government could take in.