I just finished Posner and Weyl’s Radical Markets, and I’m happy to say it’s well-worth the price. The book isn’t just engaging and exceedingly well-written. Its policy proposals and vision are thought-provoking enough to inspire twenty blog posts.
That said, almost all of those blog posts should be highly critical.
Let’s start with their best idea – the Visas Between Individuals Program (VIP). Here’s Posner and Weyl’s sketch:
[A]ny ordinary person could sponsor a migrant worker… for an indefinite period rather than a renewable three-year period. We would allow people to sponsor one migrant worker at any moment in time. This could either bring a rotating cast of temporary guest workers (one at a time)… or one permanent migrant over a lifetime.
What’s in it for the sponsor? Money, of course. Would-be migrants offer sponsors a cut of their earnings in exchange for the right to work in the sponsor’s nation.
The VIP comes with a list of restrictions:
- The sponsor must provide basic health insurance for his migrant.
- The sponsor is financially responsible if the migrant can’t find work, commits crimes, or disappears.
- The migrant cannot collect welfare.
- Stronger immigration enforcement.
However, the VIP also includes a mighty regulatory loophole: “migrant workers must be permitted to work for below the minimum wage”! (All other labor regulations still apply).
I freely admit that I love the VIP. Why? Because despite Posner and Weyl’s disclaimers, VIP is a thinly disguised version of my preferred immigration policy: open borders.
How so? Because the VIP opens up a free market in immigration permits. There’s no reason for a typical citizen to personally find “his” migrant a job or a place to live. Instead, specialized firms would buy up almost all the permits and handle almost all the legwork. One key service these firms would sell, of course, is sponsor insurance. “Sell us your permit, and we’ll happily assume all the legal risks” would be a standard deal.
Posner and Weyl could fairly protest, “Fine, but so what? The sponsors get risk-free money, and migrants get good jobs. That’s the whole point of the VIP – and it’s not open borders.”
But they’d be wrong. Their VIP would indeed approximate open borders, because the market price of a permit would be near-zero.
Remember: Posner and Weyl give one permit to every citizen! If people had to personally employ, house, and insure their migrant, only a minority would bother. Since you can sell (or rent) your permit to a middleman in exchange for risk-free cash, however, few permits would go to waste.
Upshot: Hundreds of millions of permits would be floating around. And while hundreds of millions of people around the world do indeed express a desire to move to the First World, all historical experience tells us that migration this massive would take decades. Remember – East Germans had over a decade to safely flee to West Germany, but most stayed put. Most Puerto Ricans now live in the U.S., but this took over a century. Even in an extreme scenario where a hundred million migrants already have their bags packed, it’s hard to escape the conclusion that the price of a VIP would be dirt cheap.
Back in the heyday of taxi medallions, shrewd reformers occasionally pleaded, “Give every current medallion holder one extra medallion.” If I were a self-interested medallion holder, this would have seemed like a tolerable reform. With sufficiently elastic demand for taxi services, this 2-for-1 proposal would have enriched medallion holders along with the public. But if reformers said, “Give every current medallion holder a hundred extra medallions,” it would be tantamount to the abolition of medallions. Permits are only valuable if they’re scarce relative to demand. Posner and Weyl make VIPs so abundant that their proposal is tantamount to the abolition of immigration restrictions.
To repeat: I consider this the main strength of the VIP. If you really wanted to let natives visibly profit from immigration, though, you’d have to drastically slash supply. If each native received a one-year VIP per lifetime, Posner and Weyl’s proposal would work as intended – though this would naturally slash the global economic gains.
You might demur: Sure, VIP may be open borders in disguise, but isn’t it far more politically palatable than open borders? I doubt it. A few policy wonks will like the VIP. For the man in the street, however, tradeable migration permits sounds like indentured servitude – especially if migrants can be paid less than minimum wage. Furthermore, as VIP prices plunge toward zero, you should expect a massive backlash: “You promised natives a windfall – and we got chump change! Another elitist trick.”
Selling immigration liberalization is an uphill battle. But if you want to win over public opinion, you can’t just wave money around until nativists sell-out their ideals. Enlightened self-interest may rule markets, but benighted nationalism rules politics. Alas, the VIP does nothing to change that.
READER COMMENTS
Yngve Høiseth
Jul 16 2018 at 6:13pm
What if we combined the VIP with a hard limit on the number of immigrants per year which where auctioned out? Do you think that would be a more palatable solution, while ensuring allocative efficiency?
EB
Jul 16 2018 at 7:32pm
I like your last paragraph. I think it can be extended and amended to something like this: Selling X-liberalization is an uphill battle. But if you want to win over public opinion, you can’t just wave money around until X-haters sell-out their ideals. Enlightened self-interest may rule markets, but benighted cooperation rules politics.
Amy Willis
Jul 17 2018 at 8:49am
May also be of interest… Russ interviewed Weyl on the book in this EconTalk episode from May.
JFA
Jul 17 2018 at 9:21am
Bryan’s analysis is off and seems to ignore the first 2 restrictions of the VIP:
The sponsor must provide basic health insurance for his migrant.
The sponsor is financially responsible if the migrant can’t find work, commits crimes, or disappears.
You’re not going to sponsor a migrant who makes less than minimum wage if you have to pay for that migrant’s health insurance, and the you are only going to sponsor migrants who don’t pose a significant financial, criminal, or flight risk (which will most likely only be those migrants who can obtain high-paying jobs). The only way someone would sponsor an immigrant with those risk is if that immigrant would make a lot of money, which again suggest only immigrants capable of getting high-paying jobs would be sponsored.
It would seem that this would be more akin to an expansion of the H1-B visa program rather than approximating open borders.
The only way this turns into open borders is if you have a foundation that buys up lots of permits and assumes the risks that individuals would probably not take.
Thaomas
Jul 17 2018 at 10:20am
Selling immigration liberalization would be a lot easier if some of those in favor did try to sell no restrictions whatsoever. Sell it as a normal incremental reform, one with marginal benefits exceeding marginal costs. Increase H1B visas by a million or so, issue green cards on graduation, refocus immigration enforcement toward deporting felons for a few years, and see what happens. Maybe at that new margins the marginal costs and benefits would have shifted toward costs and we could stop or retrench or not and we could do more like allow citizenship for immigrants that have been her more than x years and/or add several hundred thousand new slots for low skilled workers but with preferences for education. What people really seem to fear is the idea whatever reform will result in control at all.
Hazel Meade
Jul 17 2018 at 11:40am
The biggest incremental reform I would like would be to repeal two aspects of the current system:
The bar against people who are currently in the country illegally from applying for permanent residency through legal channels without leaving the country.
The labor certification part of the employment sponsorship.
The first is responsible for millions of people being unable to legalize their status without being separated from their spouse or children for many years, or in the case of those brought here as children, from being able to get their lives and careers started like any other American. There should be some sort of statue of limitations where if you’ve been here 10-20 years and are now otherwise legally eligible to immigrate, you should have a clear path to do so that doesn’t not force you to abandon your family or career.
The second is responsible for preventing many highly skilled immigrants from getting legal visas and consequently tilts the percentage of US immigrants away from the highly educated and towards refugees and asylum seekers – who tend to come from very poor countries. The annual quotas for work visas aren’t even used up because of this and those numbers are turned over to other categories. Let employers decide who they want to hire and just set some minimum credentials like a Bachelor’s degree.
Matthias Goergens
Jul 18 2018 at 2:44am
Why even set a minimum credential like a Bachelor’s degree? Employers are already making decisions about who is best to employ. If you need to ration further, go by eg amount of actual income taxes paid (which more or less should be a function of salary).
Taeyoung
Jul 21 2018 at 8:37am
If the price of a permit is zero, then guranteed people who oppose mass immigration will buy up permits to block immigration. The price is not going to be zero. In the initial years, the equilibrium would probably be higher immigration than now (and much, much higher immigration than polls say Americans want), but it would give a mechanism for people who oppose immigration to reduce immigration as well, and pool their resources to buy up as many permits as possible.
The ability to sue sponsors (or perhaps these intermediary companies) for offenses committed by immigrants will also give some “deep pockets” for enterprising plaintiffs lawyers to attack, so I would expect a lot of activist lawsuits aimed at bankrupting the companies facilitating mass immigration. Depends on how good their screening process is, though. If they strictly screen out radicals, fraudsters, and people with violent propensities, there won’t be much grounds for such suits.
Floccina
Jul 21 2018 at 9:18pm
What if USA citizens could lease out their right to work in the USA.
Comments are closed.