Review of Gary Becker’s Radical solution to immigration issue Introduction Everywhere in the world, there are large sum of people willing to move to more developed country. Thus, immigration is always one of popular topics in the world. Those who seek to immigrate legally face huge barriers to entry in certain countries. Entry barriers have various forms like immigration quota, skills and language proficiency tests, business and investment threshold, and so on. Overall, “more people want to move to rich countries than are able to”.
For these receiving countries, most of them are well-developed countries, especially for those countries facing population declines and labor shortage, the presence of immigration contributes to current expenditure and the gross national production growth, and also serves as a potential source for skilled workers to fill the skill shortages in labor market and changing the demographic structure of society. How to make appropriate immigration policy to attract most desirable people?
Gary Becker, a Nobel laureate who pioneered the application of economics to areas such as discrimination, crime and the family, proposed a “radical solution” to this problem. His idea is simple but quite brilliant. Mr. Becker argued that immigration policy should involve the market mechanisms and simply using economic principles such as price to allocate visas. For examples, auctioning immigrant visas or selling the right to migrate at a desirable price that called forth a desired number of migrants. The paper will make a quick review about Gary Becker’s point of view, then discuss some main points and finally give a conclusion.
Gary Becker’s point of view In the book entitled The Challenge of Immigration: A Radical Solution, Gary Becker argued that immigration issue could be considered as excess demand. It went out of balance just because of the absence of a price that would match supply and demand. To solve these problems, he suggested Governments could use economic principles to allocate visas. Thus the visa would be allocated to those who desired the immigration most through market mechanisms. As a result, both the successful migrants and the government of receiving country would be better off.
For the successful migrants, they can enjoy the privilege they had paid for and don’t need to worry about a set of complicated visa requirement and barriers. For the governments of receiving country, they would have a very strong tool to control the quantity of immigrants. They even can adjust the price annually according to labor market situation. Moreover, more government revenue would fund the public finances. Throughout history, in spite of the economic growth in developing countries, there are still huge differences in income levels between developing and richer countries.
Meanwhile, those developed countries suffer from low fertility, especially countries in Europe. This is part of the reasons lead to the fact that net migration has grown dramatically in recent years. In late 19th century, to deal with huge migration flows, the US government imposed harsh restrictions and those restrictions always involve bureaucratic controls. Given the extent of welfare states in countries with higher incomes, it would be difficult to go back to a policy of free migration.
Becker believes migrants would take advantage of an open-borders policy to scrounge off the state. According to Gary Becker’s point of view, there would be many advantages to charge immigration fee. This method would be much more efficient in controlling economic migration than the use of quotas and other bureaucratic systems of control. It could ensure those most attracted active migrants who had a real commitment to the country enter the US to fill the skill shortages. This fee could also be used to reduce other taxes.
The US government would gain $50 billion revenue if they charge $50,000 for the right to immigrate. Even for people from relatively low earnings countries, a fee of $50,000 would be still acceptable and such a fee could be paid back after a few years’ working due to level of wage difference. Certain kinds of migrant might be allowed to benefit from a loans system to enable them to pay the fee over a period of years like a student loans system in higher education. Another advantage of using a fee rather than administrative controls is reducing the illegal immigration.
Those immigrants who likely attempt to immigrate illegally would have a strong incentive to regularize their status and would be allowed to do so legally. Gary Becker also points out that he calls the ‘better’ type of immigrants to come in. These more desirable types of immigrants including 3 categories: skilled, young and committed immigrants. Those people are considered have more desirable qualities than others. Firstly, skilled workers are fully able to earn more than they would at home countries and could pay back the charge quickly.
The kind of innovative or hard-working skilled workers are always highly welcomed. Secondly, the young would be more favorable than the old because in the long run they’d benefit from social welfare system and they have longer period of time to work to serve the country. Young labor could be very attractive for a rapid ageing Europe. Lastly, the committed would pay up because they would genuinely want to become a part of the country they’re moving to. Discussions Gary Becker’s “Radical solution” is very good thinking but to some extend it is very simple almost naive.
Some of the ideas could be still debatable. Gary Becker points out that charging immigrant fee could free the authority from the responsibility for trying to determine who ought to be allowed to enter. In Gary Becker’s view, it seems that the role of government was doing “centrally planning” in terms of immigration issue. Those are always been mentioned with incentive and knowledge problems, inefficiency, abuse, corruption, unavoidable errors of judgment and so on. Government decides how many immigrants is the right number, rather than leaving this to the market.
Thus he thinks the free market mechanism is the solution to this problem and the role of government would be diminished. Although it might not be ideal it at least does reduce the necessary bureaucracy. Responses to the level of the immigration fee set could be made public and as a way to use market data to adjust the number of immigrants, then determine the price through the quantity. Instead of government, market mechanism naturally sorts out the wheat from the chaff through the price. Gary Becker suggests that government should charge $50,000 for the right to immigration. Some supporters argued that this is reasonable and make sense.
They think Becker’s system would indeed be better than the current policy. They mentioned that currently many illegal aliens are paying substantial sums of money to have someone slip them over the border. The current cash price of an illegal immigrant to run across the Mexican border illegally is over $10,000. Some other factors like risk of death, injury, or theft, and factor in the income and status lost should also be taken into consideration. Immigrants are already paying a high price, but it’s mostly going to middlemen, criminals, and generating great deadweight losses.
If the money could be transfer into fee to the US government, then immigrants could walk across the border in dignity and safety while government could also enjoy higher revenue. The proposal creates an incentive for illegal immigrants to regularize their status. To this extend, Becker’s proposal might be a way of reducing some of the illegal entrants and making things more attractive for the potential legal immigrants. On the other hand, this method lacks the consent of the citizenry and a respectful consideration of their desires.
Also, it doesn’t consider the case of market failure. If the demand of immigration is still remain too high, the excessive demand will push the market price to an unaffordable high level. As a result, only rich people can afford the price of immigration. But on the other hand, rich people have less incentive to immigrate. Some people criticized that this method might only result in immigrants to be economically stranded and lack concern of dignity of the human race. For example, Someone entered the US legally and work honestly.
Should they have to pay 150000 dollars for someone like this and one’s children to be citizens? Consequently, these methods might successfully keep large sum of potential immigrants in their home countries, like Asia. Some people believed that, Asia might be the center of economic power in the future. Those countries need to keep more high-level labors remain in home countries rather than immigrant. Moreover, the high price level of immigration fee could lead to increase of illegal immigration. As mentioned before, one of the advantages of charging immigration fee is to reduce illegal immigration.
However, the higher the fee would more likely to deter legal migration, leaving the majority potential migration two options, which are not to migrate or to migrate illegally. Besides, according to Gary Becker’s method, the immigration fee would be paid to the government and would become a new source of revenue. The substantial revenue from immigration fee could balance the government budget deficit and reduce some taxes. This argument remains questionable because the government will most likely simply expand its commitments to include the revenue and finally it will simply fuel the expansion of government.
Once the government treats the immigration issue as a profitable industry, the most likely result could be very harmful. This proposal only considered the situation of increasing government revenue, regardless of the redistribution of the revenue gained from immigration fee. For this proposal, one of the big problems is how to keep the expanded revenue out of general revenue. A more detailed circumscribing of the use of this money could make it much more favorable. Lewin(2011) suggested that the extra revenue could be used for a comprehensive education voucher program.
In the high welfare states, like California, the extra revenue will most likely be used to pay for health-care and education of immigrants. But for immigrants, they might prefer to pay for them themselves in their taxes. Conclusion Immigration issue is much more complicated than something to be determined by only foreigners or governments. It is one more policy that ought to be subject to the desires of the citizenry and labor market situation. Overall, Gary Becker’s Radical Solution to immigration issue follows penetrating simplicity and compelling logic. This proposal is a huge improvement over the current situation.
It provided a new perspective to solve the immigration problems among the world, especially to developed countries. But it is not that practical yet since there are still many problems remained to be settled. Further research and a truly “radical” solution are needed. Reference Becker. G. (2011). The Challenge of Immigration – a Radical Solution The Economist, (2010). The price of entry–A new proposal from Gary Becker to make a market in immigration. The Economist,7. Lewin, P. (2011). Immigration at a price? http://plewin. blogspot. com/2011/05/immigration-at-price. html
