The dark side of DRITI

It is my belief that my DRITI proposal is the best immigration policy that has yet been proposed. Again and again, whenever I read about a new proposal for immigration policy, my reaction is something like “Not as good as DRITI.” Or, “Not incentive compatible; it needs a few more features to work; and at that point it would be identical with DRITI.” Or, “This is an attempt to solve problem x, but DRITI solves that problem more efficiently” or “less coercively.” Reading Paul Collier’s Exodus, my main regret was that he had never heard of DRITI. The book would be so much more interesting if he were assessing, contesting, debating with, and exploring alternatives to the best immigration proposal around, rather than the idiotic status quo, or a vague specter of pure open borders.

However, DRITI is easy to misunderstand, partly because it can be sold in ways that make it seem too good to be true. Thus, when I describe it as “the citizenist case for open borders,” that might sound like DRITI can work a miraculous restoration between Steve Sailer and Bryan Caplan. If I say that we can let everyone in while holding natives harmless, well, who could object to that? Yet I still doubt that I’ve conveyed to people just how fantastic DRITI would be. My endless harping on open borders probably makes it sound to some like I regard it as a panacea. Well, yes, I almost do.

A few quick calculations may elucidate. Gallup polls have found that 150 million people want to immigrate to the United States. Of course, DRITI taxes would deter some of those people, but the formation of diasporas would encourage faster migration, so if those factors offset each other, 150 million is probably a good estimate of the number of DRITI migrants. Now, suppose that average income of Americans is $60,000; average income in source countries is $10,000; and DRITI migrants close half that gap when they move. So they make $35,000 on average. Now let DRITI taxes take 28% of their gains for transfers to natives, plus 14% t0 be put into forced savings accounts. Immigrants have still doubled their incomes, and by revealed preference, they can’t be worse off. Meanwhile, 150 million times $10,000 equals $1.5 trillion of revenue. This money is then distributed evenly among all 300 million US citizens. Everyone gets $5,000 / year. The 60%+ of Americans who are homeowners would get land value windfalls, and Americans with relatively high skills (e.g., college grads and above) would probably see their wages rise, so the losers on the native side would be high school grads and under, people in manufacturing, the low-skilled. But $5,000 per person per year would significantly raise their incomes. A single mother of three, for example, would get $20,000 just in transfers from the government. Even if her earnings took a major hit from immigrant competition– and DRITI would mitigate that somewhat, since immigration who had to pay DRITI taxes couldn’t bid wages down as far– she’d probably end up better off. So DRITI could boost the wealth of most Americans, raise the earnings of many Americans, and largely eliminate income poverty among natives. At the same time, 150 million times $5,000 equals $750 billion channeled into savings accounts. Let’s suppose 2/3 of immigrants decide return home (and withdraw their forced savings there) and 1/3 decide to stay (and forfeit their forced savings). Then over time, an annual average of $250 billion more pours into US tax coffers, while $500 billion goes abroad. That’s about four times as much as all OECD foreign aid. And it would probably be far more effective on a dollar-for-dollar basis than government-to-government foreign aid, since it would go directly to the people on a work-tested basis, and not only to the people generally, but to a select class of particularly enterprising and hard-working people coming home after having witnessed how advanced economies work. And having witnessed how democracy works, too. DRITI return migrants would be likely to emerge as a kind of local elite in countries all over the world, and there’s every reason to think they would be a particularly enlightened one, having risen not through coups or corruption or nepotism or anything like that, but through hard work and foreign adventures. They would have to like their home countries enough to have returned home when they could have stayed in rich countries: they would be, if you like, patriots. The Marshall Plan is nothing to DRITI.

Still, DRITI has have what would seem to be “dark sides” to unreflective believers in the mainstream social norms.

Much more visible poverty in rich countries. DRITI would let in tens of millions of people from countries a lot poorer than the US. Some of these would succeed to the extent that they would not be poor even by US standards. A minority might fail to the extent of struggling to meet basic needs, and there would be more homelessness and begging in the streets– probably a lot more– than there is now. Charitable soup kitchens would be very busy. But perhaps even more challenging in their own way would be the vast middle of the DRITI immigrant distribution, who were moderately successful in their own eyes, and better off than at home, but quite poor by US standards. The market would cater to them, and great shantytowns and slums would emerge, full of people planning to live in America for a little while and go away, finding ways to make ends meet that would seem fantastically abstemious to normal Americans. Many of these would never bother to learn English.

No welfare for immigrants. Some think there should be a level of income/living standards below which no one should fall, and there are a lot of public programs in place– food stamps, public housing, Medicaid– vaguely designed to achieve this end, though ultimately, since the 1996 welfare reform, the US doesn’t quite have a social safety net. DRITI would deny immigrants, or at least DRITI visaholders, access to these programs. The only solution if a DRITI immigrant wound up in desperate poverty, hungry or sick etc., would be to let the immigrant send himself or herself home, thereby forfeiting the deposit required to get the visa. Doubtless, some immigrants would face pretty severe hardships before resorting to that, either because they didn’t want to lose their money or because they didn’t want to go home. And we’d see them.

Destitute voluntary deportees dumped in foreign cities. Those who did take the voluntary deportation option would get dumped in foreign cities, nearly penniless (though the DRITI deposit might include a small amount of money to be given to them back home in the event of a voluntary deportation). Many of these would have sold all they had, or even borrowed, in order to get a DRITI visa to America. They would return home disappointed and impoverished. I doubt there would be very many cases like this, but there might be many, and there would certainly be a few.

Regressive transfers from poor immigrants to better-off natives. DRITI immigrants wouldn’t be earning much, yet a substantial share of their small earnings would be taken away in taxes. The proceeds would be used to pay transfers to natives. It would probably be very common for two people to work side-by-side, one a DRITI immigrant the other a native, doing the same job and earning the same wage, yet the native would enjoy a much higher standard of living than the immigrant, because the native would be receive transfers from the government, while the DRITI immigrant would be paying extra taxes to the government. Quite affluent people, too, would receive transfers financed by taxes on poor DRITI workers.

Diasporas of foreign sojourners isolated from mainstream society. With tens of millions of foreigners arriving on DRITI visas, large foreign diasporas would form on US soil. There would Chinese neighborhoods, Indian neighborhoods, Vietnamese, Russian, etc., in many cities, in some of which a foreign language would be the dominant spoken tongue, and which might have more loyalty to and interest in their home countries, than the United States. Many of the people in these communities might mingle very little with US natives.

Discrimination. I favor explicitly permitting discrimination against DRITI immigrants, because statistical discrimination can be efficient and to avoid subjecting natives to “forced integration,” but even if it weren’t explicitly allowed it would probably happen. But suppose it is allowed. Some jobs say, “DRITI immigrants need not apply.” Or “No Nigerians need apply.” (Like “No Irish need apply” in the last century.) Some advertisements on Craigslist or in the newspapers say, “Seeking quiet US citizen roommate…” There might even be restaurants, night clubs, resorts where DRITI immigrants were not allowed. I doubt that a significant part of US social space would be explicitly denied to DRITI immigrants, but they might feel the indignity of a certain amount of exclusion. Their friends might sometimes have to say, “Oh, we can’t go there though– you wouldn’t be allowed” and make other plans.

Taxation without representation. DRITI immigrants would be paying a lot of taxes, yet they wouldn’t have the right to vote. In fact, in the numerical example above, we would end up with a situation where 1/3 of the adult resident population of the US couldn’t vote. Is that a violation of democratic principles? (Not really. Democracy is about consent of the governed, and DRITI immigrants would have explicitly consented. But that’s a subtle point, and people would doubtless feel unease at the abrogation of the “one person, one vote” principle.)

“Overpopulation.” I put the term in scare quotes because “over” suggests excessive, which suggests a standard, optimal population, but there is no standard, no particular reasoning for saying that a given population level is optimal. Still, if DRITI grew the resident population by 50%, we would see a huge building boom, growing cities, more crowding in available housing, and a general rise in population. I actually doubt this would put a great strain on the natural environment; I suspect that it would show up more in the form of higher population density in city centers. At any rate, people would often find themselves thinking, “And this place used to be farmer’s fields!…” and we would hear many complaints of “overpopulation.”

If DRITI has so many dark sides, why do I support it? One answer is the huge gains in human welfare, the expansion of liberty, the mobilization of resources to end world poverty, the improvements in religious freedom, the geopolitical gains to the US vis-à-vis rivals, the undermining of dictators’ control over their subjects, and I think also, the stimulus to innovation that would come from the mingling of cultures and the appearance of a new mass consumer market on the doorstep of high-powered US corporations.

The other, more morally urgent answer is that we can’t go on this way. The Obama administration may deport over 2 million people. This is barbarous, morally unacceptable, inconsistent with liberty, freedom, respect for human rights, everything that gives America its moral substance and gives Americans a certain right to hold our heads high among our fellow men because of what we stand for. It is a crime. Yet if we stop doing it, we will motivate more people to come. The only way to make the law both morally tolerable and incentive-compatible is to open the borders to immigration. All the “dark sides” of DRITI are, unlike the status quo, morally acceptable.

Nathan Smith is an assistant professor of economics at Fresno Pacific University. He did his Ph.D. in economics from George Mason University and has also worked for the World Bank. Smith proposed Don’t Restrict Immigration, Tax It, one of the more comprehensive keyhole solution proposals to address concerns surrounding open borders.

See also:

Page about Nathan Smith on Open Borders
All blog posts by Nathan Smith

6 thoughts on “The dark side of DRITI”

  1. I understand that there are political expedients that we have to take into consideration, but we should distinguish between “the best immigration proposal” and “the best immigration proposal that we think responds to the concerns of immigration critics”.

    DRITI is essentially a very heavy tax on immigration. This is better than a quota, but can it be called the “best” policy? Taxes create deadwieght loss, and this one is no different.

    Maybe by “best” you mean pareto optimal. But if we required every policy to be pareto optimal there would be very little creative destruction and the economy would stagnate. In other words, I don’t think “pareto optimal” is a good stand-in for “best.”

  2. Good point about the trade-off between Pareto-optimality and creative destruction. However, I think open borders is a sufficiently radical proposal that I wouldn’t worry too much about “too little creative destruction” in a DRITI world. I think a lot should be conceded to the precautionary principle when one proposes something as radical as open borders, yet there’s also a lot that ethics forbids us to concede, such as deportation of illegal immigrants.

    As for DRITI being a heavy tax on immigration, I do tend to envision that, at least at first, but DRITI is more general than particular numerical examples, and a low-tax version of DRITI could also be envisioned. “Pure” open borders, whatever that means, might be a special case of DRITI in which the tax is reduced to zero. However, a (so to speak) “generous” version of DRITI would presumably fall further short of the Pareto-optimal standard, harming many low-skilled natives.

    Another interesting case is what you might call an international-development-maximizing version of DRITI, in which forced savings and citizenship thresholds are set very high, but the tax is zero. Basically, we would create very strong inducements for people to come here from poor countries and save a lot of money to develop their homelands, but make the option of staying quite unattractive so that the vast majority of immigrants would go home.

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