An alternative to the immigration cap

The Conservative policy of having an immigration cap to limit the number of people coming into the country is hitting the reality that some of that immigration is a good thing. The problem with the cap is that it is difficult to judge which people we have a genuine need for (like high value employees for businesses) and which people add less than their cost to society.

In this weeks economist there is an article about a proposal from Gary Becker that could help solve this puzzle while at the same time help the country out of the deficit.

Gary Becker's idea is to apply market principles to immigration. Instead of letting people into the country until an arbitrary limit is reached, the idea is to charge people for the right to come into the country. He uses America as an example: if each immigrant (or his/her sponsor for job seeking immigrants) paid $50,000 and 1 million people entered the country then it would earn $50 billion.

To a certain degree, the USA already does this. The cost of getting a visa is a few thousand dollars which covers the cost of processing the visa as well as a small amount that goes into the education system.

Taking this proposal and adapting it to the UK, if we targeted the number of immigrants at, say, 50,000 and charged them £20,000 then it could earn £1 billion for the treasury. This money could then be used to offset cuts in the education budget, which would help reduce the need for future immigration by increasing the skills of the locals.

One key difference with the cap policy is that you can let the system find the true number of economic migrants needed. Instead of changing the cap to change the amount of immigration you would change the price charged. If we want less immigration we put the price up, if we want more we reduce the price.

This system still allows high value immigrants, such as scientists, engineers or dare I say it, bankers to enter the country, as long as their value to the sponsoring (i.e. employing) company is high enough.

This policy has the advantage that it would reduce opposition to immigration because the immigrants could be directly seen as contributing to the economy instead of just adding more strain on resources.

A policy like this would be sure to cause alarm to those on the left who do not like to equate monetary value with people. To allow for this, a small number (5000?) non economic immigrants could still be allowed into the country using a lottery system, like the American green card lottery.

The policy could also help reduce illegal immigration. If a person is found to be working illegally their assets and income could be seized to go towards the immigration money they would have paid had they entered legally.

Another way of earning money from immigrants that would add money from existing immigrants as well as new ones would be to have an 'immigrant tax' on top of existing income tax. One down side of this is that it would be complicated to collect. Another is that the new tax could be seen as unfair because the existing tax pays for future services (like pensions) that the immigrant does not receive.

1 comment:

  1. The trouble I have with the system above is when we'd have to use different monetary values for people from different countries.

    Eg, Romania, Bulgaria, etc (£0)

    vs

    Australia, India, US, New Zealand, Japan (£20,000, as per your example above).

    ReplyDelete