Keyhole solutions

This page describes an umbrella term used for a wide variety of approaches, and an underlying common theme to those approaches. The concept isn’t clear-cut. Moreover, this site does not take an official position on the desirability of keyhole solutions, either in general or any particular ones. They are discussed to offer a complete sense of the form that a more liberal migration regime can take.

TL;DR

The term “keyhole solutions” is used for the radical idea of targeting specific problems through narrow, targeted solutions rather than trying to restrict or control unrelated activity. In the context of migration, they involve taxing or restricting specific problematic migrant activities rather than a blanket denial of migration.
Keyhole solutions are not specific policy ideas, but rather, represent a way of thinking that can be used to generate and justify policy proposals. Keyhole solutions associated with different problems can sometimes be contradictory.
Receiving country governments control migration policy, and these governments, at least in theory, aim to maximize their citizens’ welfare. The discussion of keyhole solutions is therefore dominated by keyhole solutions for (real or perceived) harms from migration to citizens of receiving countries. Typical keyhole solution-type proposals commonly considered include immigration tariffs, guest worker programs, and linguistic and cultural fluency requirements.
There are many possible objections to keyhole solutions on grounds of moral permissibility, desirability, feasibility, and stability. Citizenistically biased keyhole solutions are susceptible to objections from a universalistic angle.
Despite their apparent simplicity, keyhole solutions are a breakthrough idea, and many economists and leading thinkers, such as Milton Friedman, appear to have failed to consider them carefully enough.
Keyhole solutions could be used to convert potential Pareto improvements into actual Pareto improvements. In plain language, they can help make sure that the gains from migration liberalization are realized by most people, including those who might otherwise be somewhat hurt by migration. Economist Michael Clemens calls these “win-win-win” ideas. Economist Lant Pritchett notes that distributional concerns should be tackled separately from identifying welfare-maximizing policy.
Keyhole solutions can be thought of as a form of compromise, so even people who don’t think of the problem that keyhole solutions purport to “solve” as a legitimate problem may choose to support them as part of a package deal.
To understand a particular keyhole solution better, it helps to think of the rank-order preference between open borders without the keyhole solution, open borders with the keyhole solution, and the closed borders-like status quo. Different people have different rank-order preferences, and this could give rise to interesting coalition dynamics.

Basic idea

Economist Tim Harford has used the term keyhole economics to describe an approach to dealing with specific problems that goes something like this: target the problem as narrowly as possible. Identify the precise location of the problem and restrict (or tax) that while not restricting other loosely related activities. This is based on the commonsense principle: don’t draw a sword to kill a mosquito.

In the context of migration, the general philosophy of keyhole solutions pushes policy proposals in the following two ways:

If the perceived cost or harm lies at the intersection of migration and some other domain, then concentrate on solutions that address that intersection, rather than broadly trying to restrict migration or broadly trying to reform the other domain. For instance, if the problem lies with migrant welfare use, the most keyhole solution-like approach is to change the rules, or enforcement of rules, surrounding migrant welfare use. More broad-brush approaches such as making general changes to the welfare state, or trying to tweak migration policy to exclude people who might use the welfare state, are less deserving of the “keyhole solution” label.
In general, “soft” restrictions, such as taxes or tariffs, are preferable to “hard” restrictions, such as blanket denial. Thus, for instance, an immigration tariff is more keyholish than discretionary control of migration.

Introductory discussions of keyhole solutions in the migration context

Although the general idea is not due to him, Bryan Caplan was instrumental in highlighting keyhole solutions as a way of thinking about addressing real and perceived problems with migration, and also probably the first to use the term in the migration context. In his essay Why Should We Restrict Immigration? (part of Cato Journal Winter 2012), Bryan Caplan writes (Page 17, concluding paragraph of essay):

Even if all these empirical claims are wrong, though, immigration restrictions would remain morally impermissible. Why? Because there are cheaper and more humane solutions for each and every complaint. If immigrants hurt American workers, we can charge immigrants higher taxes or admission fees, and use the revenue to compensate the losers. If immigrants burden American taxpayers, we can make immigrants ineligible for benefits. If immigrants hurt American culture, we can impose tests of English fluency and cultural literacy. If immigrants hurt American liberty, we can refuse to give them the right to vote. Whatever your complaint happens to be, immigration restrictions are a needlessly draconian remedy.

In an earlier blog post for The Economist titled Immigration Restrictions: A Solution in Search of a Problem (which he later expanded into a video), Caplan writes:

Every blogger I know tells me the same story: The fastest way to provoke angry comments is to post a kind word about immigration. In the blogosphere, as in real life, complaints about immigrants abound. The funny thing, though, is that the complaints are diverse, but the cure is almost always the same: Cut immigration quotas, reinforce the border, and deport the illegals.

What would happen, though, if we actually wrote down specific complaints about immigrants and tried to figure out specific solutions? While we’re at it, why not focus on specific solutions that are cheap and relatively humane?

Suppose, for example, that the complaint about immigrants is that “They take advantage of the welfare state.” If that’s the problem, the simplest solution is not the get rid of immigrants, but to make them ineligible for benefits. Make them pay the usual taxes, but make it clear that welfare, unemployment benefits, Medicare, Social Security, and the like are only for native-born citizens.

(More at the link).

“Keyhole solutions” represent a way of thinking, rather than specific proposals

Although some policy proposals for more liberal migration have a more “keyhole solution”-like flavor, it is not the case that a particular proposal is a “keyhole solution” whereas another is “pure open borders” in a literal sense.

Any move to radically liberalize migration within the current framework of nation-states is likely to involve many changes (most of them relatively minor) to both the de jure and the de facto legal regime. Often, it is not clear which of these changes represents the “pure” open borders approach and which is a “keyhole” approach. Rather, keyhole solutions represent a way of thinking that could be used both to generate and justify particular policy ideas.

For instance, if the concern is that welfare use by migrants will bankrupt the welfare state and cause fiscal insolvency, then increasing and better enforcing restrictions against migrant welfare use would be a keyhole solution to the problem. On the other hand, if the concern is that large-scale migration of relatively poorer and in many ways more disadvantaged people exacerbates local inequality, perhaps increasing migrant welfare access could be viewed as a keyhole solution. For somebody who does not care about either issue, neither is a keyhole solution.

Examples of “keyhole solution”-type proposals

Regulation of migration is largely in the hands of national governments of migrant-receiving countries, and these governments are (at least in principle) operating on citizenistic principles, i.e., seeking to maximize the welfare of their current citizens (the situation in practice can be quite different, but at any rate politicians need to frame their policy justifications in citizenistic terms). Thus, most of the keyhole solution-type proposals considered are generally designed to address perceived harms of migration to current citizens.

Immigration tariffs: Charge a fee for immigration, possibly influenced by market forces, rather than putting hard quotas.
Guest worker programs: Expand the scope of existing guest worker programs, and create new ones, that do not offer citizenship/voting rights or welfare benefits/schooling subsidies.
Linguistic and cultural fluency requirements: Require a certain minimum of linguistic and cultural fluency as a prerequisite for immigration.

That being said, it’s certainly possible to construct keyhole solutions that address concerns about harms to migrant-sending countries, as well as harms to migrants themselves. Many international organizations that are focused on facilitating and better managing migration do come up with proposals of this sort. As noted earlier, the term “keyhole solution” is not really about any particular proposal as much as it is about a way of thinking.

An interesting scheme that combines ideas from immigration tariffs and guest worker programs, while also addressing concerns about brain drain, is the Don’t Restrict Immigration, Tax It scheme proposed by economist Nathanael Smith, who also blogs for this site. The full text of the chapter where Smith proposes this scheme can be downloaded as a Word Document or as a PDF.

Objections to keyhole solutions

As discussed earlier in the page, “keyhole solution” refers not so much to specific policy proposals as to ideas that lead one to generate and justify such proposals, and different problems may have mutually contradictory keyhole solutions.

Also, as discussed earlier, most widely discussed keyhole solutions have a citizenistic bias, i.e., they are intended to address concerns about harms to citizens of migrant-receiving countries. Thus, the objections to these generally come from a more universalistic perspective. Some of the common objections are discussed below:

The implementation of keyhole solutions is inegalitarian, discriminatory or un-libertarian. For instance, requiring immigrants to display English language proficiency is discriminatory.
Keyhole solutions lack political feasibility, and therefore are not worthy of serious consideration.
Keyhole solutions lack political credibility (for their long term survival): For instance, a keyhole solution that denies immigrants the right to vote lacks credibility because all it takes is one bunch of politicians eager to grab their votes a few years down the line.
Discussion of keyhole solutions implicitly endorses the framing that migration is a problem and that it is morally permissible to design one’s own solutions to restrict it. This could be a concern if the keyhole solutions themselves are relatively minor and unproblematic.

For more on this topic, see:

Keyhole solutions: permissibility, desirability, feasibility, and stability by Vipul Naik, August 16, 2013.
The open borders wing of the open borders movement; or, Against keyhole regimes by Paul Crider, Open Borders: The Case, December 12, 2013.

Keyhole solutions are a breakthrough idea

In a blog post titled Milton Friedman opposed a Pareto improvement, Bryan Caplan notes that despite Milton Friedman’s concern about immigration and the welfare state, he did not give much thought to keyhole solutions.

Q: Instead of a green card [resident alien status], can the USA issue a blue card which does not give welfare?

A [Friedman]: If you could do that, that would be fine. But I don’t believe you can do that. It’s not only that it is not politically feasible, I don’t think that it is desirable to have two classes of citizens in a society.[…]

[…]

My last, best way to rescue my intellectual idol is his admission that he’d never thought about the proposal before. But isn’t that bizarre? Friedman, who could run mental circles around lesser geniuses, never asked himself, “What is the least un-libertarian way to deal with the conflict between free immigration and the welfare state?”? The lesson, perhaps, is that what Tim Harford calls “keyhole surgery” (looking for the least intrusive solution to market and/or political failure) is a major intellectual advance – obvious in retrospect, but deeply counter-intuitive nonetheless.

Converting potential Pareto improvements to actual Pareto improvements

Keyhole solutions help address one objection to open borders: although open borders are a potential Pareto improvement over the status quo (i.e., winners gain more than losers lose), they are not an actual Pareto improvement, because at least some people lose. Keyhole solutions can be designed so as to convert these potential Pareto improvements into actual Pareto improvements. Michael Clemens, a proponent of freer migration, has said something to the effect that keyhole solutions can convert “win-win-lose” scenarios to “win-win-win” scenarios.

Nathan Smith, in a paper titled Open Borders with Migration Taxes are the Optimal Policy, and a blog post of the same name, explains, both verbally and mathematically, why open borders with migration taxes (a type of keyhole solution) would be optimal.

Development economist and open borders advocate Lant Pritchett has made the argument, although he uses the term “instruments-to-targets approach” to describe keyhole solutions. Here is a quote from Page 94-95 (part of Chapter 3) of his book Let Their People Come: Breaking the Gridlock on Global Labor Mobility (free PDF chapters, Amazon paperback):

This is about the political traction of the idea that because it lowers the unskilled wage and increases wage inequality, labor mobility should be opposed. Though the general popularity of the notion might not have much to do with economists, it is worth a word or two about the economists’ response to this idea. The economists’ typical response to objections to potential Pareto-improving policies that worsen the income distribution is to say “Instruments to targets.” That is, nearly any macroeconomic or microeconomic policy reform—trade liberalization, airline deregulation, macroeconomic stabilization—will produce some change in the economywide income distribution. But the usual approach is to recommend a policy if it is potentially Pareto improving and to also recommend that broad distributional concerns be addressed through the best available instruments for redistribution. That is, there is a broad tradition (to which many object but is nevertheless widespread) that one cannot burden every single policy with a complete general equilibrium analysis of not only the aggregate but also the distributional impact of each policy and use every policy as a distributional instrument. Rather, the “instruments to targets” literature suggests that the most effective policy is to have the best instrument for each target. In this view, while any policy (say trucking deregulation) might have distributional consequences, the policy recommendation should maximize output with one set of instruments and redistribute with another.

For more on the specific issue of compensating people who might lose out, see the blog post Funding compensation for natives who lose out: through the economy at large, or through migrants? by Vipul Naik, Open Borders: The Case, January 2, 2014.

Keyhole solutions as compromise and dealism

People who are unconvinced of the legitimacy of the problem being “solved” by the proposed keyhole solution may still support the keyhole solution as part of a package deal to liberalize migration. Here, “unconvinced of the legitimacy” could mean unconvinced of the empirical truth that the claimed harms will arise, or unconvinced of the moral significance of the harms. In either case, the keyhole solution may still be good to propose as part of a package deal.

For instance, somebody who wants a more liberal migration regime for universalistic reasons, but is asked to give honest suggestions to a national government following a citizenistic framework (i.e., seeking to maximize benefits for its own citizens) may propose a migration regime with citizenistic keyhole solutions as a matter of intellectual honesty. This is related to the idea of dealism that economist Robin Hanson alludes to in his blog post:

In my role as one person among many, who can join fights or support deals, I will choose in order to get what I want. This may sometimes include joining a fight, and sometimes that fight might be to achieve more liberty. But in my role as economic adviser, a role I admire and embrace, I will try to fairly and consistently suggest the most efficient deals, as the availability of such advisers offers a great opportunity for everyone to get more of what they want.

I accept that such deals may not always contain the most liberty possible, because while people do usually want liberty, all else equal, they often want other things that conflict with liberty. In my role as a neutral adviser, it is not my place to tell people they should want something other than they do want; my job is just to get them more of what they want. Since this is exactly what I would want an expert adviser to do for me, it is what I will do for them. If loving them in this way is wrong, I don’t want to be right.

Rank-order preferences for open borders with and without particular keyhole solutions

The following blog posts discuss various rank orderings related to open borders and keyhole solutions:

Six possible positions on a specific keyhole solution by Vipul Naik, Open Borders: The Case, November 1, 2012. The post notes that, for any specific keyhole solution proposal, there are six possible ways of ranking “pure open borders”, “open borders with the keyhole solution”, and “the closed borders-like status quo.” The coalition dynamics between people with different rank-order preferences is important in understanding the political viability of migration liberalization as well as keyhole solutions.
Moral Intuition, Open Borders, and the Euvoluntary Principle by Sam Wilson, a guest post for the Open Borders blog, February 20, 2013.
The dark side of DRITI by Nathan Smith, Open Borders: The Case, November 17, 2013.
The open borders wing of the open borders movement; or, Against keyhole regimes by Paul Crider, Open Borders: The Case, December 12, 2013.

Open Borders: The Case