Who Can Cross Our Borders?

A new solution to the immigration problem

The United States has acquired an enviable reputation as a haven for refugees. The adventurous and the skilled have gravitated to its opportunities; the victims of political or religious repression and economic hardship have sought and found sanctuary on its welcoming shores. Until the Immigration Acts of 1921 and 1925, few were turned away, and those who were admitted generally found a better life than they had left behind.

This "open door" policy has for the most part become a matter of historical curiosity, however. US immigration policies are increasingly complex, often arbitrary, and frequently discriminatory on either a racial or educational basis. They leave the United States (and other wealthy nations following similar policies) open to the charge of exploiting the limited skilled-manpower resources of poorer countries. Yet the conventional wisdom is that there is no alternative, that the more desirable countries must close their doors if the well-being of their own citizens is to be preserved.

But suppose there were an alternative immigration policy that would eliminate the problem of determining desirable quota allocations and devising fair criteria for selecting amongst applications for entry visas. Suppose that at the same time every living United States citizen would be given the opportunity to improve his economic well-being, that all Americans would be able to enjoy the benefits of an improved standard of living, and that poorer Americans would in principle gain most of all, and at no cost to the taxpayer. Within the United States, average productivity would rise and economic growth would be stimulated.

Nor would the benefits of the proposal be confined to residents of the United States. Abroad, relatively skilled and hard-working people in foreign countries would gain immediately. And foreign governments, by adopting a similar scheme, would be able to assist their own poorest citizens in the same way.

Does it sound too good to be true? Then read on:

THE PLAN US citizenship is a desirable asset, otherwise there would be no "immigration problem." Unlike other desirable assets, however, it is not transferable. Only the right combination of genes and geography will win you that coveted citizenship. But is there any reason why this should be so? Why not let a US passport be marketable? The purchaser of an American passport would be entitled to live and work in the United States. The vendor would be required to leave and live in a foreign country. Foreigners could buy their way into paradise. And it would have all the good effects proposed above.

Consider why there could be a "market in nationality." Any child born within the political boundaries of the United States is the immediate recipient of significant advantages. Average incomes are high. Every citizen is the beneficiary of social assets that are entirely independent of his own efforts—in addition to such obvious factors as transport services, communications, and good drainage, other features that are often ignored, such as an established body of law, a free press, the English language, and the right to leave the country. In addition to these assets, he may have or acquire specific skills. His lifetime earnings are strongly dependent on both these ingredients.

An accountant in India earns less than an accountant in the United States. If he moves from India to the United States he increases his lifetime expected earnings—not only because he becomes a better accountant, if he does, but because the cooperating and complementary factors offered by the American economy serve to increase his personal productivity. As elsewhere, however, these advantages are not equally distributed in America, and many poor Americans are less well off than rich people in poor countries. A market for passports would offer Americans the opportunity to realize in cash terms the value of all the social assets they presently enjoy.

THE PRICE As a first approximation, let us suppose that in a free market the going price of an American passport is the present value of the median US lifetime income (with the anticipated growth in real earnings included). The citizens most likely to sell their passports will be those whose income in the United States is below this level. They may choose to sell at this price and leave for, let us say, Poland. With the kitty they take along, they need never work again. They will be able to live at the average American standard of living—a standard of living higher than it would have been in the United States—for the rest of their lives. And in relative terms it will be much higher, since average incomes in Poland are below those in the United States.

The purchaser of the passport will also benefit monetarily if his anticipated US earnings, less the price of the passport, are higher than they were in his original country (or higher than his original earnings less the price his own passport will fetch, if his country also allows their sale). He will only move if he expects to be made better off by the transaction. Since his earnings must exceed those of the person whom he has replaced, average productivity in the United States has increased.

The effects of the transaction are more far-reaching than this, however. The supply of low-paid (unskilled) workers in the United States is reduced, thereby tending to increase relative returns to this group of workers. Conversely, relative returns to skilled workers fall. There is a tendency toward income equalization in the United States. There is also a tendency toward equalization of incomes internationally. Poorer nations that allow a market in their passports will find it easier to attract skilled personnel than at present. A skilled person in a richer nation could sell his existing passport at a premium (because he earns more than the median income) and purchase the passport of the poorer nation relatively cheaply.

THE PRACTICALITIES Before such a system would work smoothly, certain practical matters would need to be cleared up.

• Time dating. At present, US citizenship has an expiration date. It ceases to exist when the passport holder dies. Under the scheme proposed here, however, the number of American passport holders would then tend gradually to approach the total number of Americans who have ever lived. In effect, American passports would be subject to continuous inflation at a rate governed by the birthrate of American citizens, with a corresponding decline in their relative value. If passports had an expiration date, this wouldn't happen.

The expiration of any passport purchased could be governed by a simple actuarial calculation of the life expectancy of a person born on the date indicated in the passport. Take a man born on January 1, 1922, who on January 1, 1982, has a life expectancy of, let us say, 15 years. If someone purchased this man's passport on this date, he would acquire rights of US citizenship for 15 years. On January 1, 1997, he would have the choice of purchasing another passport or leaving the United States.

• Women and men. Since women have a higher life expectancy than men, the actuarial calculations would tend to increase the value of their passports. On the other hand, it is possible that the social assets available to women are different from those available to men. In general, the expected earnings of women are lower than those of men. Nevertheless, it is relative positions that are important. Women in the United States are probably advantageously placed relative to the position of women in most other countries. On this basis, it may therefore be anticipated that the price of a female passport would be closer to that of a male than average earnings would suggest.

But there seems no reason why the sex of the purchaser should correspond to that of the vendor. If not, since women live longer than men, on average female passports would command a premium in the market compared to the passports of males of the same age.

• Children. A strong incentive would exist for foreigners to move into the United States, produce a child, and then leave, thereby making a capital gain on the child's American citizenship. This would artificially inflate the US birth rate and place a burden on maternity services. No doubt numerous schemes can be devised to discourage this practice. One suggestion is that parents taking their children out of the United States should pay a tax based on some portion of the value of the mother's passport.

Alternatively, children under the age of say 10 years should be exempt from the scheme entirely. Children born in the United States would not be entitled to a passport until they have lived in the United States for 10 years.

THE PROFITS The proposal offered here invites immediate comparison with the suggestion made by some that migrants from poor countries (LDCs, for less developed countries) to rich countries should pay a surcharge on their incomes in the host countries, the revenue from this tax to be channeled back to the LDCs as compensation for the loss that they have (arguably) suffered as a result of the emigration. But the passports-for-sale proposal would achieve the same objectives with fewer of the difficulties: compensating the poor country while providing some disincentive to skilled migrants.

The disincentive of the market scheme is that a new passport allowing a move to a rich country will be costly to acquire. In addition, however, the sending country will receive compensation, not in the form of government money, but in the form of new immigrants. The difficulties that poor countries at present experience in attracting and keeping skilled personnel will be significantly reduced. Under the present quota arrangements, the principal cost of acquiring US citizenship is that of waiting. Since this cost is minimal, there is every incentive for an LDC physician, for example, to apply for entry into a more prosperous country. Equally, there is no financial incentive for a physician in the latter to leave.

In addition, the free market solution has features that make it more attractive than a surcharge. It does not require international agreement. Any country could adopt the proposal unilaterally. It does not require a definition of which countries are poor and which rich. It would have the enormous economic advantage of increasing mobility. Passport brokers would exist. One could leave the United States for a few years, renting out one's passport, and return later. Poor families in LDCs could combine to send one member to the United States. Unemployed Americans could leave the United States for a few months or years and live in comfort overseas while their places were taken by others prepared to work at lower wages or skilled in other occupations.

It may be argued that this proposal is undesirable because it still discriminates against the poor, who could not afford entry into prosperous countries. It provides cold comfort to the huddled masses. Still, it is superior to existing arrangements. Further, it does not, of course, preclude the possibility of acts of compassion. Indeed, it makes them easier to achieve. Although the US government under the present system often remains unmoved by appeals for mercy, with a market in passports, the way is open for caring US citizens to purchase the salvation of foreign refugees.

David Rees is a senior lecturer at the University of Cape Town in Rondesbosch, South Africa.