Immigration: Anu Bradford's Creative Suggestion
By David Henderson
One of the biggest issues separating those, like Bryan Caplan and me, who want to allow much more immigration and those who want to limit it to its current level or lower is the issue of the welfare state. Even Milton Friedman, as various commenters have noted over the years, had doubts about legal immigration because of his concern about the United States being a welfare magnet.
Co-blogger Bryan has been a strong advocate of betting, often quoting Alex Tabarrok’s claim that “betting is a tax on bulls**t.” Is there a way to use betting to resolve the welfare magnet issue? Yes, there is. Although she doesn’t quite state it as a bet, Anu Bradford, a professor of international economic law at Columbia Law School, proposes such a bet. She calls her proposal “reversible bonds,” and gives the following example and explanation:
For example, if an American company wanted to hire a Colombian worker, it would post a bond, the amount of which the US and Colombia had set. If the worker later became unemployed, the bond would be released to the US to cover welfare benefits. Likewise, if the worker committed a crime, the bond would cover deportation costs. If, however, the migrant remained an employed and law-abiding resident for a specified period, the bond would be divided between the company that had posted it (as a reward for having screened a productive foreign worker) and the Colombian government (as compensation for productivity loss and the costs of educating and training the worker).
Finally, if the migrant returned to Colombia after a specified period of working productively in the US, neither country would need compensation. The US and the employer would have benefited from the employee’s labor and tax revenue, while Colombia would benefit from the worker’s return, presumably with more money and enhanced skills. In this case, the bond would be released to the worker, creating an incentive for return migration and cultivating “brain circulation” instead of brain drain.
Being a libertarian and, frankly, being in the mainstream on the issue of freedom of emigration, I would change her proposal in an important way. Sorry, Colombian government; if someone leaves your country, you get nothing. In “Liar, Liar,” a lawyer played by Jim Carrey gave blunt advice to his thieving client, “Stop breaking the law, a**hole.” I think readers can see the connection. You don’t want people to get “free” education and then leave your country? Then don’t pay for their education.
I would also change it in another important way: there’s no reason why the entity posting the bond couldn’t have been the immigrant. If the U.S. government had given this option to me in 1977, when I was immigrating, and required a bond of, say, $20,000–that’s $77,000 today–I would have said “Done.” Although the number is inherently arbitrary, one way to generate the “right” amount is to take the present value of average welfare payments for an 8-year period and then have the bond returned in 8 years. I think the U.S. government would have millions of takers–or, more accurately, payers.