Captive Citizens

The left and right's plan to create fortress America

If there was ever any doubt that the totalitarian temptation identified by economist and Nobel laureate F.A. Hayek in his brilliant tract, The Road to Serfdom, is alive and well, even in the sweet land of liberty, two current crusades of the left and the right ought to put it to rest.

The restrictionist right is deploying ever more draconian methods to chase prospective Americans out of the country, including imposing what some call a "business death penalty." And the tax-and-spend left is devising ever more punitive ways to prevent existing Americans from leaving the country, including imposing a rather ominous exit tax.

Hayek's genius was to recognize that eliminating feudalism and monarchy didn't mean that the West had eliminated the danger of tyranny. Modern-day central planners restricting the peaceful, voluntary activity of individuals in the name of achieving some grand collectivist end open up new dangers. Since their plans inevitably leave individuals worse off, people find ever-new ways to circumvent them.

But the government doesn't take its failure as a sign that there might be something wrong with its ends—that perhaps they are out of sync with the normal aspirations of people. Rather, it blames the failure on an insufficient use of force. Thus an initial round of coercion inevitably spawns subsequent, even harsher rounds, putting the country on Hayek's "road to serfdom."

It is exactly this logic that's unfolding in the right's crusade to get rid of illegal Mexican labor in the name of national sovereignty—and the left's crusade to redistribute wealth in the name of social justice.

The illegal immigration "problem" is wholly and solely the product of America's post-1964 immigration policies. That's when America suspended (due to labor union opposition) the bracero program, a federal policy that made it easy for American businesses to hire guest workers from Mexico. This program was replaced with a hyper-restrictive, hyper-onerous quota system that has turned landing a temporary work visa—such as an H-2A or H-2B—into the equivalent of winning the lottery.

The upshot—predictably—is widespread flouting of the law, with Mexicans entering illegally and American employers hiring them illegally.

But instead of re-examining these policies, the restrictionist right has been systematically escalating its war: militarization of the border; electric fences; deportation; E-verify. The latest step is the "business death penalty." This measure was initiated in Arizona (under the Democratic governorship of Janet Napolitano), blessed by the Supreme Court, and is fast becoming the tool of choice for states everywhere seeking to become illegal-free.

Under it, a business that is caught employing illegals a second time is forced to give up its licenses to operate in the location where the violation occurred. One more infraction after that and its license to operate anywhere in the state is revoked, forcing it to shut down—or go illegal, just like its Mexican workers. How long will it be before they start arresting owners? And all of this not for defrauding customers or selling dangerous products, but simply for hiring people who can help them make a buck. This should be unimaginable in a country founded on a commitment to liberty. Yet here we are.

A government that is powerful enough to stop people from coming into the country is, of course, also powerful enough to stop them from leaving. And Sen. Chuck Schumer's Ex-Patriot Act takes a giant step in precisely that direction. It was inspired by Facebook's Eduardo Saverin, a Brazilian émigré who renounced his American citizenship to adopt Singapore as his country ahead of the company's IPO to (allegedly) avoid paying capital gains taxes on his new-found wealth.

This drove Schumer into paroxysms of rage. "Saverin has turned his back on the country that welcomed him and kept him safe, educated him, and helped him become a billionaire," he roared. "This is a great American success story that has gone horribly wrong."

A question, Senator: Are the California businesses and residents leaving in droves for low-tax Texas also "success stories that have gone horribly wrong"? Or is it California that has "gone horribly wrong"? And if capital gains taxes are driving rich Americans out of the country, isn't that an indication that perhaps these taxes are too high?

Not to Schumer, it seems. He wants to increase America's exit taxes to twice the current capital gains rate. (America, incidentally, is one of the very few countries that has exit taxes.) But his plan would put unacceptable burdens on the exercise of the right to exit. This right has been enshrined in international law ever since Nazi Germany and the Soviet Union tried to abrogate it by imposing similarly onerous exit taxes on fleeing Jews to use them as cash cows to finance the state's aims. Without this right, individuals have no safe hedge against tyranny at home. Nor can they vote with their feet on government policies—the main reason, remember, that America's founders guaranteed complete mobility between states.

A free people interested in keeping their government accountable can't let a politician violate this right to indulge his abstract ideas of social justice. Otherwise, the same walls that the right wants to use to stop poor people seeking to become wealthy from getting in could well be used by the left to stop wealthy citizens from getting out.

The Totalitarian State of America, anyone?

Reason Foundation Senior Analyst Shikha Dalmia is a columnist at The Daily, where this column originally appeared.