“Free Cities” - An Economic Alternative to Illegal Immigration?
At least in this political climate, legislative solutions to the problem of illegal immigration do not appear to be working. At its root, illegal immigration represents a complex problem, including an economic dilemma of multiple dimensions.
The Mexicans crossing border seek jobs and then often send a portion of their incomes back home. One estimate is that illegal aliens sent $24 billion back to Mexico in 2006 (an increase from the estimated $20 billion in 2005). To put that in perspective, Mexico’s revenues from tourism in 2005 were estimate at $12 billion, while revenues from their oil production reached $35 billion. Thus, the importance of inflows from Mexican immigrants (legal and illegal) sending money from Estados Unidos de América to Estados Unidos Mexicanos cannot be understated.
While it remains a difficult task to stop U.S. employers from hiring illegal immigrants, when you look at the economic contribution of all immigrants to the U.S. economy, a recent study by the Council of Economic Advisors estimated the current contribution to the U.S. economy was roughly $37 billion per year. To get an idea of the impact of Mexican immigration as a whole, a March 2006 study by the University of California, San Diego and the National Bureau of Economic Research, Illegal Migration from Mexico to the United States concluded that 56% of Mexican immigrants appear to lack permission to be in the country, compared to 17% of all other immigrants. This is also discussed in the Council on Foreign Relations paper, The Economic Logic of Illegal Immigration
The Pew Hispanic Center estimates that in 2005 80 to 85 percent of Mexican immigrants who had been in the United States less than ten years were unauthorized. Illegal immigration thus accomplishes what legal immigration does not: It moves large numbers of lowskilled workers from a low-productivity to a high-productivity environment.
Additional discussions of the economic impact of illegal immigration from Mexico can be found here .
Regardless of the actual numbers, it could be concluded that there aren’t sufficient economic disincentives on or from either side of the Mexico-U.S. border to stem the tide of illegal aliens. Late last week, an associate alerted me to a recent article in the Weekly Standard that raised an interesting concept. Even if it is a “thinking out of the box,” the alternative suggested was to create a series of Hong Kong-like “Free Cities” that would create freedom and opportunity for illegal immigrants in their own countries. The premise?
The desperation that drives millions of illegal immigrants into this country will never subside as long as there are no jobs and no opportunities in their stagnant homeland economies. Fortunately, there is a way the United States could jump-start vibrant, non-corrupt, globalized economies inside otherwise destitute third world countries. We could do it soon, and we could do it for a lot less than we'd have to pay to assimilate millions more illegal aliens. The solution is to adapt and propagate the free market model of post-colonial Hong Kong.
The concept is to establish free market cities in which taxes can be kept low, import/export restrictions limited or non-existent, and where the society would be “democratic” and “free of corruption.” Essentially the recommendation is to “create treaty-based cities that would be joint ventures between the United States, an international financial institution like the World Bank, and the host governments, and would become safe havens for investors and entrepreneurs. They'd allow citizens to raise capital, attract the skills they need from abroad, and create thousands of new jobs where there are none today.”
As idealistic as the concept of “Free Cities” sounds, at a time when the political will appears lacking in the United States to solve the illegal immigration problem, and when opposition to building the border wall continues, it might not be all that “hair-brained” after all. However, among my very serious questions are identifying where to locate these free cities and the willingness of the host countries (like Mexico, Guatemala, Costa Rica – pick another) to participate. Additionally, how would “we” (the partners of the joint venture) induce immigrants to go to the free city instead of continuing to flow across the Rio Grande River to reach the “promised land?”