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A better way
Oct 31st 2002
From The Economist print edition


Managing the market
Panos
Panos

Just one chance, please

HOW can governments develop immigration policies that reap the potential gains without incurring too many political costs? The challenge is to manage the market, not to strive vainly to shut it down. Voters may not like immigration any more than other aspects of globalisation, but they are more likely to tolerate it if policy appears to be orderly rather than chaotic. Legal immigration is easier to regulate than illegal, and more likely to bring benefits in the long term. The thousands of people who today immigrate illegally are condemned to a shadow world of lies, fear and powerlessness. No liberal democracy should tolerate that.

Winning consensus for an orderly policy may mean trying to pick the migrants most likely to bring economic and social gains. For the host country, this means choosing the skilled. It may also mean (although liberal democracies detest the implications) choosing those whose education and culture have prepared them for the societies in which they will live. In Europe, that may mean giving preference to white Christian Central and Eastern Europeans over people from other religious groups and regions.

What about asylum-seekers and family reunion? The main convention under which asylum-seekers claim rights of entry dates from 1951, when Soviet border guards shot people who tried to leave, and the West could afford to be magnanimous. Now, settling asylum-seekers has become vastly expensive: for example, the cost to British taxpayers last year was at least £1 billion ($1.5 billion), the equivalent of one-third of the country's official aid budget. Is that money best spent on the 76,000 people a year who ask for asylum in Britain, or on the millions in refugee camps in countries such as Pakistan and Uganda? And are those few who make it through the Channel tunnel really the ones most in need of protection, or are the people in the refugee camps at greater risk?

As for families, it may be hard to deny somebody who has become a citizen the freedom to choose a spouse from anywhere in the world, or to invite an elderly parent to move in. But countries could at least insist on a working knowledge of their language, and could give priority to adult relatives with skills.


Legalise and regulate

Wherever possible, policy should be guided by three main principles. First, it should be multilateral, or at least bilateral. Immigration policies drawn up by rich countries without the active co-operation of poor countries are unlikely to work. Second, it should apply economic instruments. Whereas trade restrictions have shifted from quotas and bans to more transparent tariffs, no such change has taken place in immigration policy. Third, it should aim for the maximum freedom of movement, but encourage temporary more than permanent movement.

Migration, like other aspects of globalisation, is more manageable when countries work together. Some argue that migration policy should resemble trade policy in other respects too: it should have a central rule-setting body, like the World Trade Organisation, and should be made on a most-favoured-nation basis, so that countries do not offer one partner concessions they are not prepared to extend to all. This would be hard for voters to swallow. The experience of the European Union shows that countries find it almost imposible to arrive at common immigration rules, even when free movement of labour among their own citizens makes such rules essential.

However, countries could make a number of reciprocal concessions, such as removing all controls on the movement of labour among countries with similar levels of income per head. The fastest growth in foreign trade has been among countries with similar levels of income; the same may well turn out to be true of the movement of labour, although not of permanent migration. Certainly, it makes no economic or social sense for Canadians to stop Australians or New Zealanders from looking for jobs, or for Europeans or Japanese to put obstacles in the way of Americans. Nor does it make sense for developing countries to keep out each other's would-be workers. By removing travel and work restrictions on each other's citizens, developing countries would be enriched, not impoverished.

Wealthy host countries also need to talk to their poorer neighbours whose workers try to cross their borders. Joint solutions have a better chance of success than unilateral ones. So George Bush has been unwise to leave Mexico in limbo, instead of completing the deal he had begun to hammer out with Vicente Fox. “We want to regularise the Mexicans who have already gone to the United States, and channel future flows,” says Gustavo Mohar, who heads negotiations for the Mexican Ministry of Foreign Affairs.

One possibility that Mexico has discussed with the United States is that of imposing a fee on temporary workers: “Pay, and go legally,” suggests Mr Mohar, pointing out that the services of a trafficker can now cost up to $1,000. Mr Massey's book suggests a $300 fee per visa for a temporary worker. Financial incentives are rarely considered as part of migration policy. Yet the sums that people pay to travel illegally, and the fact that most benefits of migration accrue to the individual, strongly suggest that such devices should have a role.

For instance, a fiscal instrument might replace the economic needs test, so often used to keep out immigrants whose skills are already available locally. That test, says Mr Winters in his paper for the Commonwealth Secretariat, is like the crudest form of protectionism: prohibiting imports of goods where local supplies are available. Given the lack of evidence that immigration harms jobs, such tests are pointless. They are also cumbersome to administer.

In fact, the best judge of economic needs is the market. But, to reassure the hesitant, all employers might be asked to pay a levy—perhaps in the form of a higher rate of payroll tax—to employ foreign-born workers. A scheme of this sort has been suggested by Senator Phil Gramm, partly in order to pay for immigrants' health costs. Some money might equally well go into the social-security funds of immigrants' sending countries. After all, emigration leaves them with fewer workers to pay for supporting the elderly.

Many of the economic gains from mobility do not require migration to be permanent. Indeed, if workers leave only temporarily, the sending country gains the stimulus that they bring on return; the host country avoids the fiscal and social costs of assimilating their families; and the migrants may be more likely to continue sending money home while they are away. America's H1-B visas for skilled workers might serve as a model: they can run for two three-year periods, giving both workers and employers time to decide whether they would prefer a permanent arrangement.

Cheap international transport and communications make it easier for workers to go abroad for short spells. Salah Bariki, a community organiser in Marseilles, describes what happens in his local barber's shop. “The guy who runs it comes from Algeria,” he says, “He has a different bunch of lads every couple of months. They come over from the same village on tourist visas and take it in turns.” That pattern fits the lives of many migrants, and especially the unskilled.

However, as the example of Mexico's immigrants demonstrates, the tougher border controls become, the less likely migrants are to go home when their work is done, and to incur the expense and danger of another crossing. When governments design immigration controls, they should bear such perverse effects in mind. They might also ask immigrants to buy a bond—priced slightly above the smuggler's going rate—to enter the country legally. The bond would be repaid to the migrant on return to his own country. The governments of sending countries might play a role too: Harvard's Mr Rodrik suggests giving them a quota for migrants that is reduced by the numbers that fail to return on time.

Such policies may not end illegal immigration, although they would certainly remove some of the pressure. Nor will they stop all temporary workers from staying on. Past experiments with guest workers should restrain expectations: “I would be satisfied with a 65% return rate,” says Mr Rodrik. But they offer hope. They hold out the possibility that the poor might earn money in the job markets of the rich, to the benefit of both, without creating all the social problems that the past half-century of immigration has entailed.

Just as reducing the constraints on trade in goods made the world richer in the second half of the 20th century, so reducing the constraints on the movement of people could be a powerfully enriching force in the first half of the 21st. But in democracies, governments cannot force policies on resistant citizens. Some countries will always try to minimise immigration, and will be the poorer for it. Conversely, countries that accept change will be rewarded with a more vibrant and better-off society, even if they have to accept social changes that they may not welcome. Immigration is always a gamble. But when it goes right, everyone wins.



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