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Greg Siskind on Immigration Law and Policy

NOBEL PRIZE WINNER BECKER: CHARGE $50K FOR IMMIGRATING

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Gary Becker, the Nobel Prize winning economist from the University of Chicago (go Maroons!) came out of left field and proposed charging a $50,000 fee to immigrate, an amount he believes would generate $50 billion per year. Professor Becker made the remarks in a lecture he was delivering in the UK. According to the Daily Telegraph:

Having inspired a generation of economists with a new approach to the discipline, he is seen as the forefather of the "Freakonomics" movement and was in London last week to deliver a controversial lecture on immigration.

Becker himself is the son of an immigrant - his mother's family emigrated to New York City from eastern Europe when she was six months old. He argues that as immigration is one of the biggest challenges facing rich countries such as Britain and the US, radical solutions are needed. Current policies are not working, he says, so governments should consider charging immigrants for the right to settle. He suggested in the 19th Institute of Economic Affairs Annual Hayek Memorial Lecture last week that if each immigrant were to pay $50,000 (34,000), the US could raise $50bn a year.

"A lot of people don't want to talk about it because you look like you're discriminating. But people feel very strongly about immigration. So I think it's a good time now to be proposing a more sensible policy than what we've seen in any country.

"It's an important political issue in the United States as well as the UK. I'm not saying it's going to be adopted overnight, no, I think it will be a fight to get it, but I think in the long run it has some chance at least of being adopted." 

The proposal is sure to generate discussion and plenty of opposition from both pro-immigration and anti-immigration circles. But the fact that new ideas are being discussed is encouraging.

UPDATE: I read Adi's comment and thought a bit more about Becker's idea. I think replacing our system with something like this is bad for a lot of policy reasons. But for the same reason I support the EB-5 program, a program like this IN THE MIX of the various other immigration programs might make some sense. Every immigrant coming to the US should ideally be providing a benefit to the country either directly or indirectly. The EB-5 rewards people who make investments in enterprises that generate jobs. And that helps the economy. The Becker idea is simply another way that people can benefit the country. I have no idea what the correct number is, but I like the idea of more avenues for people to contribute in exchange for gaining residency in the US.

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  1. Adi's Avatar
    Add to that fees of govt agencies, lawyers, travel, settling in a new country etc and you are looking at >$100k investment. Who cares about family values and brain values? Lets sell passports.

    Just to add to Becker's proposal, start taxing all immigrants with tax rate upto 75-90%. It will bring in more revenue as well. Make them work 8hrs of community service in addition to regular job and 16hrs on weekends. This will result in reduced state/city deficits. On second thought lets just bring back slavery.
  2. USC's Avatar
    This is a good idea but I think the amount should be higher at $250,000 or so. Only the really successful would be able to afford that and we need more successful people in this country.
  3. USC's Avatar
    "UPDATE: I read Adi's comment and thought a bit more about Becker's idea. I think replacing our system with something like this is bad for a lot of policy reasons. But for the same reason I support the EB-5 program, a program like this IN THE MIX of the various other immigration programs might make some sense. Every immigrant coming to the US should ideally be providing a benefit to the country either directly or indirectly. The EB-5 rewards people who make investments in enterprises that generate jobs. And that helps the economy. The Becker idea is simply another way that people can benefit the country. I have no idea what the correct number is, but I like the idea of more avenues for people to contribute in exchange for gaining residency in the US."

    Right on the beam. There should absolutely be more avenues. Let's retain the current system. Perhaps, additional numbers could be provided for this category, say EB6. Not only do you get the 250K but these folks will bring their skills to the US and be paying taxes on their worldwide income here.
  4. George Chell's Avatar
    As an economist I think Becker is becoming senile. His proposals would send more jobs abroad and lead to further decline in tax revenues and cuts in social security, medicare and other govt. services. If you support more jobs moving to Singapore or China, higher unemployment and lower tax revenues support the Becker proposal!
  5. George Chell's Avatar
    http://www.thejakartaglobe.com/home/cant-buy-love-indonesia-thinks-foreign-men-should/378091

    Something similar has been proposed in Indonesia. If both laws went into effect American men marrying an Indonesian would pay $55,000 and then will have to pay another $55,000 to settle in the US!
  6. Legal and no longer waiting's Avatar
    Well, I am an economist (at least by education), and I think, it is a bad idea.

    If you look at a life of human being you notice that from the age of 0-25 and 65-90 they are generally money pits - need to be taken care of medially, educated, fed, etc. So, if you want to economically benefit from immigrants, you need to grab them early in the productive years, because even if you wait until they are 35, you have lost one quarter of their best years. Thus, economically optimal immigration policy should encourage immigration between the ages of 20 and 30. People of that age do not have that sort of money, and moreover, may never have they if they are not given an opportunity to make the best of their talent. Given that making best of their talent is the primary reason why people move to the US, I think the such policy is counterprodutive. My conclusion is that this policy will encourage immigration of older people and children of wealthy foreigners who probably are already at the top of the social ladder in their own country. Like this country needs more spoiled entitled brats ;-)
  7. marcelo's Avatar
    It sounds as if Becker isn't aware of how much money Immigrants already generate for the US in immigration costs, investments, buying homes, starting businesses, paying social security and medicare, etc.
    So many people erroneously see immigrants as a drag to the economy, then feel like they need to come up with ways to monetize and offset the drag. Hopefully Becker is not coming at this from that perspective.
  8. George Chell's Avatar
    The more I read I think Becker is a senile old man who is loosing his mind! And the clown also says the center of gravity is moving to Asia...with his dumb ideas it will move to Asia sooner. Brits seeking jobs are found everywhere in Singapore. Some even work at the Borders and the Singapore Tourism Board. Everywhere I turned, I found unemployed Brits looking for work.
  9. Adi's Avatar
    "Everywhere I turned, I found unemployed Brits looking for work."

    On lighter note, do you work for unemployment agency or recruiter's office?

    Just kidding ofcourse.
  10. USC's Avatar
    "The more I read I think Becker is a senile old man who is loosing his mind!"

    I think the above statement goes to far. By all means disagree with Becker but the above is a personal attack on someone who is not here to defend himself. BTW, I looked up his CV, needless to say it is impressive:

    http://home.uchicago.edu/~gbecker/Becker_cv.pdf

    The point of Greg's posting (Greg, please correct me if I have misinterpreted your post) is that new ideas represent a healthy change in the immigration dialogue and that additional avenues of immigration are a good thing. I happen to agree with that wholeheartedly.

    Ideally, like the UK, we shouldn't have quotas. Since, we do we should always be on the look-out for better ways of allocating them. As an economist, you should know that the worst way to allocate a quota is via lottery or via a First Come, First Serve system. The, irony is that the US Congress has adopted both these as the cornerstones of the US immigration system.

  11. My 2 cents's Avatar
    LNLW, Canada's immigration is based on the getting most productivity so anyone between 25-45 get max points. The Feds have no clue about the purchasing power of the legals. The economy could even show a turn around if GC's are issued to everyone in line. This is by turning the housing market (once stable read LPR they would buy homes) which in turn would revive the economy & the credit freeze.
  12. Legal and no longer waiting's Avatar
    My 2 cents, again, speaking like an economist, it is incorrect to assume that if you have money in the bank, it is not working for the economy. Your money is being lended, invested, and otherwise engaged in the economy. Unless by "spending power of legals" you mean money that can be transfered from abroad (I don't know about you, but I have none stashed abroad), the money is not incremental to the US economy and thus has no incremental power. If anything, it is better for the US economy to have more savers right now, as most Americans are leveraged to the hilt. Again, spending is not the only way the economy grows.

    Don't get me wrong, I am all for getting immigrants safety of the green card and integrating them better into the economy, but economically speaking, your argument does not hold water. Not that I believe you can't convince people with an argument that is invalid, Republicans do it every day...
  13. Adi's Avatar
    "If anything, it is better for the US economy to have more savers right now, as most Americans are leveraged to the hilt. Again, spending is not the only way the economy grows."

    Spending from consumers (legal immigrants) where demand is genuine and backed up by financial assets will always help economy. These savers will need to be turned into spenders to spur economy. Federal reserve has enough money to lend (all they need to do is print) but banks are not ready to lend due to lack of worthy consumers. Industries are not in need of capital to expand since consumer demand is low hence money from banks is not being invested. Hence money sitting in banks is not doing anything. It will be better for money to be spent in economy rather than being saved and sit in bank. Saving although good is not necessarily good for economy. Just look at Japan. In today's economy lack of demand is more of a problem than savings.

    Money from immigrants sitting in banks is not doing a whole lot when there are not enough worthy consumers. To counter this lack of worthy consumer demand problem, immigrants present unique oppurtunity for banks to lend as these immigrants have enough money saved in banks and have decent jobs. Very few of them are overextended. However little, these consumers can help spur economy.

    But they are being held back due to artificial backlog created by USCIS and/or Congress. If these worthy consumers are given green cards, they will undoubtedly help economy. They will buy houses, home improvements, generate employment to maintain homes, cars, electronics etc. When given flexibility of GC, they will travel more and will take more vacations. Many of us will start our own business when we get GC and will help generating jobs. Those waiting in line for GC do not have million dollars needed to get EB5 green card but they do have some money and excellent skills to start small firms.
  14. USC's Avatar
    "My 2 cents, again, speaking like an economist, it is incorrect to assume that if you have money in the bank, it is not working for the economy. Your money is being lended, invested, and otherwise engaged in the economy."

    Ronald "Starwars" Raygun (yes, the second smartest President who also believed that light years was a measure of time) virtually eliminated the reserve requirement. In simple English, for the non-economists if the Reserve Requirement was 20% a $100 deposit by "My 2 Cents" would enable $500 of money creation by his bank. Since, there is no longer a reserve requirement banks can indulge in unlimited money creation (ie, they use their balance sheets). This is one of the reasons for the collapse of the banking system. Your argument would hold water if Reserve Requirements were a significant percentage but given they are extremely low or non-existent (depending on the type of account 2c opens) I do not think you can claim 2c having money in the bank is as beneficial if he were to go out and buy a house.

    Nice article on the Reserve Requirements in case you are interested:

    http://www.federalreserve.gov/monetarypolicy/0693lead.pdf

  15. George Chell's Avatar
    "I think the above statement goes to far. By all means disagree with Becker but the above is a personal attack on someone who is not here to defend himself. BTW, I looked up his CV, needless to say it is impressive:"

    The CVs of Robert Samuelson and Bertil Ohlin are impressive as well, but they are dead. The CV of Larry Summers is impressive as well..but there is a tendency to be a loose cannon and sometimes not sure what he is talking about..need I talk about Nouriel Roubini who was right once, and has been wrong since then, particularly on Asia. Joe Stiglitz runs off his mouth as does Kenneth Rogoff. Niall Ferguson does not have a PhD in Econmics...a Professor of History but poses himself as an economist..a quack literally. If you want to read good works on the economics of immigration, read the works of David Card, Giovanni Peri and even George Borjas (as much as I strongly disagree with his modeling techniques). I am not very happy with my profession.

    May be the Prof may not be senile...he may have ulterior motives..probably has a lot of stocks in Asian corporations and US corps which do business in Asia. He also says that the center of gravity is moving to Asia. The best way to try and cut entitlements is to make sure that we have a big hole in the budget. The best way to do this is to charge a prospective skilled immigrant $50,000, so that the immigrant does not come and the jobs move to the immigrant..which means tax revenues are paid abroad...which means a hole in the SS budget, which means cuts in entitlements...indeed the adoption of his proposal would make it easier to achieve his goal of cuts in entitlement spending!
  16. USC's Avatar
    "The best way to do this is to charge a prospective skilled immigrant $50,000,"

    BTW, for the record if the idea is to up the prospective FB or EB fee to $50,000 I think almost everyone would be opposed to that including me.

    If the idea is to sell a green card for a fee (which in effect is what the EB5 Regional Center does) then I think that is a good idea because it gives a new category of desirable immigrants a path to making the US their home.

    Lastly, if the idea is to use payment of money as a way of allocating the quotas that I think is an interesting idea and merits discussion. There also other ways the quotas could be allocated (ie type of school, grades etc).
  17. USC's Avatar
    Sorry, I should have cited George's entire quote as my original cite might misrepresent George's position:

    "The best way to do this is to charge a prospective skilled immigrant $50,000, so that the immigrant does not come and the jobs move to the immigrant..which means tax revenues are paid abroad...which means a hole in the SS budget, which means cuts in entitlements...indeed the adoption of his proposal would make it easier to achieve his goal of cuts in entitlement spending!"
  18. CB's Avatar
    I am a hispanic female and I think this porporsal could end up being really bad for the U.S. crime rate. The people who are the issue of immigration do not come from wealthy backgrounds. These are people from third-world countries, who might never see $50,000 in their life. How does anyone expect people who don't have the money or any education to come up with that amount? I am a hispanic female, but I am not from Mexico, I am from the U.S. And I'm just voicing my opinion.
  19. Legal and no longer waiting's Avatar
    "Spending from consumers (legal immigrants) where demand is genuine and backed up by financial assets will always help economy."

    Macroeconomically, it does not matter who spends, those with borrowed assets or those with savings. What matters is total earnings of the economy, and how they are split into savings and spending. So, no, it does not make a difference.

    "These savers will need to be turned into spenders to spur economy. "

    Again, incorrect. Savings fuel long term growth while consuption fuels short term growth. Macroeconomics 101. This country is suffering from an imbalance of consumtion, which is overtaking savings, thus choking long term growth. This country needs more savers.

    Did not you argue that tax cut increase tax revenue? Well, great economist you ain't. Just saying...
  20. Adi's Avatar
    "Macroeconomically, it does not matter who spends, those with borrowed assets or those with savings. What matters is total earnings of the economy, and how they are split into savings and spending. So, no, it does not make a difference."

    Well spending is important for an economy, 70% of which is based on spending. In today's condition, there is shortage of worthy borrowers. Borrowing is slow and not giving much needed boost to economy. In such case immigrants with good cash balance sheet will help banks lend in this economy and spur growth.

    "Again, incorrect. Savings fuel long term growth while consuption fuels short term growth. Macroeconomics 101. This country is suffering from an imbalance of consumtion, which is overtaking savings, thus choking long term growth. This country needs more savers."
    Nobody is talking about long term growth based on immigrant's cash flow. We are talking about much needed short term growth and that too to satisfy genuine need of immigrants. Good borrower and good supply, only lack of GC stopping that from happening.

    "Did not you argue that tax cut increase tax revenue? Well, great economist you ain't. Just saying..."
    I don't remember arguing for tax cuts. I can say that certain kind of stimulus can help in tax revenue in long run. As in case of cash for clunkers last year, it helped sell more cars, generate more employment, get rid of gas guzzlers etc. It helped in generating cash revenues for all forms of govt and people. Govt investing in clean energy, highways, home weatherizing etc is very good for economy in long run and helps bring in revenue more than investment itself.

    PS: I am no economist let alone great one. I just talk common sense.
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