TCS Daily


A Market for Citizenships

By Dwight R. Lee - January 2, 2007 12:00 AM

Immigration has become an increasingly divisive issue and chronic homelessness and panhandling are our plaguing our cities. I have a modest policy proposal for addressing these problems that would increase immigration and improve the well-being of all Americans including the panhandlers. Relying on politically determined quotas to address immigration and bureaucratic compassion to help the homeless and panhandlers has clearly failed to solve these problems. The time has come to increase our reliance on the problem solving power of individual freedom and market exchange.

First consider the fact that America's homeless and panhandlers (who are often different people—some homeless don't panhandle and some panhandlers aren't homeless) are actually quite wealthy. Almost all own an asset—their United States citizenship—that is worth several hundred thousand dollars. The problem is that they are denied the right to sell that asset.

Citizenship in the United States is a highly valuable asset because it gives its owner enormous productive potential. American citizens are able to take advantage of the opportunities to combine their ambition, ingenuity and labor with an unparalleled capital base and other hard-working and talented people to create wealth. The homeless and panhandlers in America have clearly failed to use their citizenships as productively as many non-U.S citizens could, and would, if they became citizens. This is where freedom and market exchange are relevant. When people are free to buy and sell, markets do an impressive job directing assets to those who will make the most valuable use of them.

The suggested policy is straightforward. Simply give Americans the right to sell their citizenships to non-Americans, with the sellers having to leave the country and the buyers allowed to move in with all the rights and opportunities of any other U.S. citizen.

Obviously almost all those who sell their citizenship will be poor. But this is not a policy that discriminates against the poor. The choice to sell their citizenship and leave the country is entirely up to them, and it is an option that many poor will refuse. Those who do take advantage of the option, however, will receive far more money than they are ever likely to win buying lottery tickets, and will have no problem getting permission to settle in another country with a much lower cost of living than America's.

Obviously some restrictions would be imposed on a market in U.S citizenships. For example, no one would be permitted to sell her citizenship to Osama bin Laden or anyone else who is considered a terrorist threat to America.

One can object that many panhandlers and homeless are mentally ill and not competent to exercise the freedom to sell their citizenships. This is no doubt true in some cases. But the burden of proof should be on those who are quick to conclude that few of us are smart or informed enough to make important decisions without the assistance of a government bureaucracy. If someone is too mentally incapacitated to make a free choice in a market for citizenships, should she be considered competent enough to choose a life on the street rather than being institutionalized?

Obviously, some who sell their citizenships will spend their money in ways that most of us consider wasteful. But that objection applies to giving the poor the freedom to spend their money on lottery tickets in the hope of improving their lives. I have yet to hear this freedom being criticized by any of my fellow professors at the University of Georgia. Just maybe this has something to do with the fact that, as opposed to the money raised from selling citizenships, much of the money raised from lottery sales ends up in the pockets of teachers and professors.

Those foreigners who buy U.S. citizenships will be far more educated, ambitious and productive than those who sell them. Yet many will not be as well off as most people in America who are considered poor. But poor immigrants will be able to borrow the money needed to purchase citizenships based on their earning potential as Americans, and with those citizenships as collateral.

Except for those who spend too much time worrying about the mistakes others might make, it is difficult to imagine who would lose from a market for citizenships. Those who are so poor that they are resorting to panhandling and living on the streets are unlikely to object to the option of receiving several hundred thousand dollars and a greatly increased standard of living in another country. The ambitious and talented from other countries attracted by the enormous opportunities of living in America legally would hardly lose. And the rest of us will benefit from more productive Americans working hard to increase their wealth and ours.

No one would argue that all the problems with immigration, homelessness and panhandling can be eliminated by a market for citizenships. But it would do more to solve these problems than the policies we have been following.

The author is Ramsey Professor of Economics and Private Enterprise, Terry College, University of Georgia.


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36 Comments

great idea, if you don't think about it too much - - - -
Ransey gets an A or originality, and and F for thotfulness. I'm sure Osama's minions would be investing heavily in the NYSE Co. trading in these 'properties'.

Our forbearers, who were much wiser than we, had vagrancy laws and poor-farms. Folks who broke these laws and used public property for other than its designated purpose could be arrested, jailed and tried. No one was allowed to abuse the public's property any more than they were allowed to abuse others' private property. Makes a lotta sense.

Then, liberal judges exceeded their authority, again, and legislated that these laws into oblivion. They thereby created today's sicko culture of "the homeless", presented as heroes and vitims by the Leftwingmedia. The true solution is to fire the judges; and reinstate the laws.

Zero Sum
If 20 million illegal immigrants can help to make the US economy more productive, how much more productive would it be with 20 million MORE LEGAL immigrants from countries that speak English or have English as a second language?

And I wonder how those countries who would loose those 20 million respond? Would they try to prevent their best and brightest from leaving? Maybe they might change policies at home to make it more attractive to be a citizen of Mexico or India or Philippines or China or...

Treating citizenship like a membership in an exclusive country club (pun intended) will lead to some nasty unintended consequences.

Great Idea
I've never thought of something like this before, but I think it's a great idea, actually. As for Osama and his minions getting in the U.S., I don't see any increased risk with this idea as long as the same security procedures for immigration are followed.

It's a vacuous idea
for two reasons. The first and least important is because Dwight only addresses half the issue. Why does he imagine that any other countries would want America's castoffs? Moreover,for the second reason, if intangibles such as citizenship are for sale, what's next? The right to vote? Sure, you can auction off your voting privilege to the highest bidder. What Dwight fails to understand is that fundamental rights such as citizenship are inalienable, hence not for sale or purchase.

The problem with economists such as Dwight is the old joke: when the only tool you have is a hammer, all problems seem to be nails.

If citizenship is for sale, so is the right to vote.
Why couldn't someone like Soros buy up shares of US citizenship?

Conversely, why couldn't the USA issue shares of citizenship stock for sale to the highest bidder. (Some might say we have that now.)

I like Heinlein's idea of earned citizenship. One must work for the country for a period of time to earn your citizenship (Starship Trooper).

Citizens of Nowhere
I've often joked that the biggest disadvantage being American is that you can't run away to the United State if you're already here. Truth be told, as bad as our legal immagration hurdles are, most of the other desireable countries make it almost impossible. Typically, you need to bring a lot of cash along, so that you can prove you won't be taking jobs away from the natives.

For instance, if you just want to attend college in Canada, they are going to demand proof that will be paying all your tuition with US Dollars, so you don't try taking any work away from a Canadian. I'm pretty sure they want to see a large cash buffer too, so you don't seek work to cover your incidental expenses. It even tougher to make a case for getting Canadian citizenship, because they don't let just anybody reap the bounty of their socialized medicine.

So, unless you had a carefully monitored transfer of the citizenship away from the new Ex-Pat that included forced purchase of some other country's citizenship, it wouldn't do a thing. After the ex-citizens blew through their cash, they'd still be on the same corner panhandling. If the government wanted to deport them, where would they go? If you force the transfer of these people to a host country that's still going to leave them some cash leftover, it's going to be obvious what a bad deal it is. Certainly, any country that would willfully take our rejects would be a country where poverty is still real - lack of food, clothing and shelter. Anybody who would actually take that kind of deal, would have to have misunderstood what it was.

I'm pretty sure this article is just a joke meant to teach appreciation for how good we have it here. Even our most wretched poor have it a lot better than most of the rest of the world. As a joke, it's funny, but as an actual plan, the only people who would really benefit would wealthy, willful ex-pats, going off to live in some tropical paradise as a retirement.

Earning is one thing
but selling is something else.

I mostly agree
except for the part about Canadian tuition in U.S dollars. It's not about job protection. It's about the fact that Canada runs a balance of payments deficit with the U.S. for which it has to counter with a balance of trade surplus.

I agree with you, this article is a joke, and I can't imagine any self-respecting nation putting their citizenship up for sale. It would be a little much wouldn't it? Thousands of men died at Iwo Jima, and the beaches of Normandy and Belleau Wood, and at Gettysburg and a host of other places in defence of rights and freedoms just so they could be marketed away and sold like a box of cheap knicknacks.

Great idea but who'd accept our panhandlers and homeless?
I'd rather have productive people in the USA but so would most nations. A sudden change in the economic status of these neer do wells would be at best temporary. Besides the dhimmiecrats would find some way to engineer an amnesty in the future to swell their voter ranks.

Rather than gained the old fashioned way
Get a travel visa once you're pregnant or sneak in, wander into an emergency room to have the baby on Uncle Sam, and *poof* your the primary care giver of a brand new US citizen.

Much better than buying it.

Non sequitur
We're talking about what is recognized and legal, not the abuses of the law and the immigration system.

OK...I'll play...
So let's price this citizenship property as an income producing tangible asset as the author suggests.

The Net Present Value of 50 years with a $50,000 average annual income would be $1.5 million calculated at a 6% discount rate and a nominal inflation rate of 2.2%.

However, a $1.5 million alternative investment yielding 6% with $30,000 of the principal taken out each year for 50 years (and running to zero at the end) would yield an additional average $32,500 of interest payments, front-end loaded to equal a $120,000 payout in the first year. A reinvestment of such excess income in the early stages of this projection would substantially upgrade the portfolio value of this alternative. This constitutes a measurably better investment than buying citizenship. And without factoring in the risk of dying young compared with the security of holding onto the $1.5 million in your hands today. Very, very silly.

Further, any motivated foreigner with $1.5 million and (living in a place where the US looks really great to him) should have the opportunity to participate in his own more rapidly developing (than America's) economy by launching or buying into an operation converting cheap labor into high margin exports. Such markets are chronically short of investment funds and a high quality investment opportunity over there should outperform any similar business here.

Therefore, the author's original assumption that such an income producing asset (citizenship) should have market value (related to the NPV of its projected future revenue stream) as a tangible property is terribly flawed.

If there could be any market value then supply and demand fundamentals would drive the price point down ruthlessly. Our potential sellers do not highly value their citizenship or their freedom. Many of our citizens actually forfeit their rights of citizenship by landing themselves in prison as the result of some foolishness.

Nevertheless, the author thought about this article enough that he is only half kidding (about the tangible asset value part) and some of the people here seem to take him seriously.

Let's all get over this sense that we are entitled to certain unfair advantages as Americans solely because of our citizenship. The pity is not that many of our citizens fail to fully exploit their own opportunities. That sort of behavior is typically human. The pity is that we have not yet expanded the wealth creation mechanisms of financial capitalism into the rest of the world.

But we are working on this, it is succeeding all over the globe and that is no joke!



A modest proposal: privatized immigration
I posted a longish entry in my blog on April 2nd, 2006, titled A modest proposal: privatized immigration.

Unlike Mr. Lee's zero-sum citizenship proposal, I propose a citizenship pool that grows every year, by some consensus value (right now we're accepting about 1 to 1.5 million immigrants a year; use that as a baseline). Divide the number of legal immigration slots by the population of existing citizens, and hand out vouchers. Using some default numbers, every citizen gets about 1% of an immigrant voucher per year.

Then, let the market decide how much these vouchers are worth. If nativists want to limit immigration, they can buy up vouchers and burn them. If naturalized immigrants want to bring their family members across, they can save their own vouchers and buy more. If rich foreigners want to become citizens, they can buy vouchers on the open market.

Go read the blog post for additional details.

Your suggestion could very well make the problem worse.
Your idea provides no guarantee that the sellers of citizenship will leave the country, once the sale is completed.
And, not spend the money received (wastefully) and return to their favorite crossing/underpass/park, sign in hand.

Not April 1
The idea of April fools day is harmless spoofs of somebody else-in this case, the author proposes, from the "my only tool is a hammer so I'll call this problem a nail" perspective a harmful idea on EVERYBODY.

There's more to citizenship than detachable, marketable rights. There's also responsibilies- and should citizenship be a tradable commodity-easy come, easy go. Money can't buy fidelity. Citizenship should define the person. This is political simony, pure and simple from a perspective that reduces humanity to "homo oeconomicus". (sp?)

I think I hear something about sunshine soldiers and summer patriots and a bow-tied financial commentator saying-in financial markets today, the US Citizenship price dropped 4 percent on news that unemployment was up..

Truer than people can imagine..
Take it from a former MA auditor.. caseworkers who find an unemployed illegal about to give birth.. just about reach erotic ecstasy on such a case.. its gives them a chance to play Santa Claus with every toy in their bag of welfare goodies.. TANF, MA, foodstamps, subsidized day care, housing assistance, legal services, interpreters..

Watching them talk about such a case .. is scary.. they get this goofy excited glare...

I take it
that both of you find this idea as distasteful (to say the least) as I do.

Quite Important
If you can do an end run around the legal system, because of poor enforcement..you have what we have today, people disregarding the law.. changing citizenship to a cash payment, rather than a waiting period and a fidelity oath.. isn't going to make anybody any less likely to enter illegally IF THEY CAN.

But what's far worse
is putting citizenship up for sale. In neither case is illegal immigration affected. Those who are illegal immigrants today will be illegal tomorrow because the vast majority of them could not afford what the market rate might be.

So let's see. We sell citizenships, thus debasing every principle on which the country was founded, and we would still have just as many illegals. Sounds like a plan to me.

Does Distasteful= Stupid, Repellent, Myopic?
Then Yes.

I find this analysis as sound as the one that led Ford not to fix the gas caps on Pintos.

(If you aren't old enough to remember-they estimated the cost of wrongful death actions against the cost of fixing the little crap mobiles and rolled the dice-people burned alive)

When the memo was discovered, well the calculation changed.It was elegantly reasoned immoral stupidity and immoral stupidity is the important part.

Why Not Medical Licenses- Reductio Ad Absurdum
Healthcare has become an increasingly divisive issue and chronic untreatedness and panhandling are our plaguing our cities. I have a modest policy proposal for addressing these problems that would increase Healthcare and improve the well-being of all Americans including the doctors. Relying on politically determined quotas to address Healthcare and bureaucratic compassion to help the doctors has clearly failed to solve these problems. The time has come to increase our reliance on the problem solving power of individual freedom and market exchange.
First consider the fact that America's healthcare doctors (who are often different people—some doctors don't practice medicine and some medical providers aren’t doctors) are actually quite wealthy. Almost all doctors own an asset—United States medical license—that is worth several hundred thousand dollars. The problem is that they are denied the right to sell that asset.
Medical license in the United States is a highly valuable asset because it gives its owner enormous productive potential. American doctors are able to take advantage of the opportunities to combine their ambition, ingenuity and labor with an unparalleled capital base and other hard-working and talented people to create wealth. The doctors in America have clearly failed to use their medical licenses as productively as many non-U.S doctors could, and would, if they became doctors. This is where freedom and market exchange are relevant. When people are free to buy and sell, markets do an impressive job directing assets to those who will make the most valuable use of them.
The suggested policy is straightforward. Simply give American doctorss the right to sell their medical licenses to non-Americans, with the sellers having to leave the practice of medicine and the buyers allowed to move in with all the rights and opportunities of any other U.S. doctor.
Obviously almost all those who sell their medical license will be less wealthy. But this is not a policy that discriminates against the poor. The choice to sell their medical license and leave the practice of medicine is entirely up to them, and it is an option that many less wealthy will refuse. Those who do take advantage of the option, however, will receive far more money than they are ever likely to win buying lottery tickets, and will have no problem getting permission to settle in another practice of medicine with a much lower cost of living than America's.
Obviously some restrictions would be imposed on a market in U.S medical licenses. For example, no one would be permitted to sell her medical license to Osama bin Laden or anyone else who is considered a terrorist threat to America.
One can object that many doctors are mentally ill and not competent to exercise the freedom to sell their medical licenses. This is no doubt true in some cases. But the burden of proof should be on those who are quick to conclude that few of us are smart or informed enough to make important decisions without the assistance of a government bureaucracy. If someone is too mentally incapacitated to make a free choice in a market for medical licenses, should she be considered competent enough to choose a life on the street rather than working long hours and obtaining an upper decile income and community respect?
Obviously, some who sell their medical licenses will spend their money in ways that most of us consider wasteful. But that objection applies to giving the poor the freedom to spend their money on lottery tickets in the hope of improving their lives. I have yet to hear this freedom being criticized by any of my fellow professors at the University of Lunacy. Just maybe this has something to do with the fact that, as opposed to the money raised from selling medical licenses, much of the money raised from lottery sales ends up in the pockets of teachers and professors.
Those foreigners who buy U.S. medical licenses will be far more educated, ambitious and productive than those who sell them. Yet many will not be as well off as most people in America who are considered poor. But poor immigrants will be able to borrow the money needed to purchase medical licenses based on their earning potential as Americans, and with those medical licenses as collateral.
Except for those who spend too much time worrying about the mistakes others might make, it is difficult to imagine who would lose from a market for medical licenses. Those who are so poor that they are resorting to panhandling and living on the streets are unlikely to object to the option of receiving several hundred thousand dollars and a greatly increased standard of living in another practice of medicine. The ambitious and talented from other countries attracted by the enormous opportunities of living in America legally would hardly lose. And the rest of us will benefit from more productive Americans working hard to increase their wealth and ours.
No one would argue that all the problems with Healthcare and medicine can be eliminated by a market for medical licenses. But it would do more to solve these problems than the policies we have been following.

Yes, it equals all of those
and yes, I remember the Pinto gas tank horror. It never ceases to amaze me how individuals and corporations both together and separately fail to learn time and again how taking slipshod shortcuts always results in more pain and loss to them, and to the rest of us, in the long run than having done things right in the beginning. There is often a complaint now about how litigious American society has become and how punitive the civil decisions have become. That may be true, but all I can conclude is that the Ford Pinto was the poster child case in the 1970s of why it is so.

This proposal is so repellent to me. At one time the belief in America was "we welcome anyone, rich or poor, skilled or ignorant. All that we demand is that you share our values of freedom and individual self worth and equality of opportunity". Now it seems this author is saying "we only value the contents of your wallet".

Faugh!!! We need better than prostitution as an immigration policy.

Quite right
Citizenship is a privilege that conveys rights. It is not transferrable and can only be conveyed by either birth or granting through an established immigration process.

And responsibilities
As quaint as the idea of responsibility or obligation may seem today..

Hear, Hear!! An Idea worth consideration
Only i think the judges need to be arrested for violating their oath of office.

No, Joanie, it's not you
This forum was supposed to be about technology and society, but it's been sliding away from that for over a year now steadily down into increasingly political topics that have little or no relevance. At least that's my view. Just look at the number of authors that used to appear here, say three years ago, and do not appear now.

The quality of the writing is way down.

I suspect
it's going to get worse as we get closer to the 2008 elections, i.e. more political rhetoric and less technology and commerce. Just look at the writers list, many of whom had interesting and thoughtful positions on technology and its role in society and now no longer appear. Look at how TCS has abandoned any pretence of covering topics outside the United States, perhaps reinforcing the impression that U.S. conservative thought is indeed parochial and geocentric.

LOL!
Only problem: entrepreneurs harvesting U.S. citizens and then farming new ones once the easy pickings are gone.

Assuming a market value...
Each of us would get 1% of a voucher per year? And we could sell it on the open market? Give me a range, then, boy. What is the most it might be worth and what is the least?

People would indeed pay to come here and if your voucher system was the only legal way to do it then how much would they pay? And then divide by 100. (No American is going to be burning money, just because he hates foreigners, by the way. Ignorance only gets you so far down that road.)

If your voucher is worth 1% of the author's "several hundred thousand" dollars then let's just say $7,500 per voucher. Given to each citizen. Each year.

Open the maternity wards! And short-sell any pharmaceutical company making contraceptive pills! Can you say Nuevo Baby Boom?

Rather, the market value would more likely fall to match supply and demand fundamentals. What would be the lowest price required to clear 80% of each year's vouchers (supply)? What should be the largest amount that each one of 800,000 foreigners would be willing to pay to come here (demand)? Not the amount the richest guy would pay (he would love to wait until prices come down). The amount the poorest guy could somehow manage to pay (he would need to wait until the price came down to that).

Some of our citizens would immediately take $20 (cash on the barrelhead) for their vouchers. One-hundred of those and your overseas foreigner is in here for $2,000 plus a plane ticket.

There are 300 million of us. If only 1% of us went for the $20 then 30,000 immigrants would show up legal the next day. Lots of them would already be living and working here. They would simply take a weekend off in TJ and walk back in legal "like a virgin" with a brutal tequila sunrise headache.

Brokers would whisper $10 (and that the government might be going to change its mind) and the market would clear quickly for $50. Some guys would go long and wait. But when the next year's 300 million vouchers went out the market would collapse. Ever stand outside a rock concert, that did not sell out, just before the main act went on stage and watch the scalpers lose their minds?

Great plan there, Travis. You're thinking! Keep thinking.

Bios and Junk Science
I know some of the BIOS have been rather sketchy.

I generally disagree with Nathan Smith when he equates those opposed to illegal immigration with those opposed to legal immigration.

When one looks at his BIO, all that is displayed is list of articles. Who is he? What is he?

At least the author of this piece has a one line reference.

The Junk Science web site has been revised to allow comments. Looks like I will be spending more time there.

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