• Jake

Immigration: Imagining a Market System

Updated: Apr 6


At the Gordian Knot, we look for issues fraught with problems which can be solved simply by heading straight for more obvious answers, which somehow get ignored. What better topic than immigration? Our system is, and always has been, an absolute mess. Fortunately, we no longer let people in based on whether they are a race we like. As another spot of sunshine, there are no longer riots and mobs protesting Catholics arriving on our shores. Indeed, all of this is cause for some optimism.

After that embarrassing period of history, our nation started to operate a per-nation cap in a token attempt at fairness. This cap is essentially the same for giant nations like China and India, little nations like Luxembourg, and local allies like Canada and Mexico.

Last time I looked, the waiting time to enter the US for children of US citizens who recently immigrated, was over 90 years. I’m not sure if the Immigration Department is aware of how children work, but I have heard this can actually be enough time for them to both grow old and die.

Let’s start by addressing the many good things immigration can bring us if the system functioned well. Then we will honestly examine the downsides. With everything on the table, a new system will be presented that will maximize everything we like and carve out much of what we don’t. Scroll to the end and you will find a question and objection section; as usual, if you have an objection that you can state clearly and convincingly, email me. I will both answer it and add it to the article.


Why Immigrants Are Good:


Economic Impact:

  • 45% of Fortune 500 companies were founded by immigrants or their children

  • First generation immigrants contribute over $2 trillion towards US GDP

  • More likely than natives to be net taxpayers

  • Twice as likely to start businesses

  • Increase productivity in a labor market through complementary skill sets


Social Impact:


  • Lower crime rates than natives

  • Lower divorce rates than natives

  • Immigration keeps the US population from aging and shrinking

  • New foods, cultures, and ideas are introduced


Without immigrants coming to our nation, we would be much poorer, have more crime per capita, and, like most of Europe, we would have a rapidly aging population in decline each year. Anyone who has worked side by side with immigrants knows these hard-working people often have a complimentary skill set to our own. The grit and determination it takes to leave your own country and set up a whole new life is a fantastic screening process for new citizens or workers. It is no wonder the US, a nation of immigrants, is such a wealthy and powerful force in the world.

Why Immigrants Are Bad:


Economic Impact:


  • Supply shocks, particularly in low-skilled labor markets, depress wages

  • Population increase creates infrastructure strain on things like schools and roads

  • Those who are sick or disabled may seek to use our generous welfare, but never pay into it


Social Impact:


  • These people are leaving their nation for a reason and we don’t want the corruption, socialism, or lack of morality that destroyed their nation to destroy ours, too

  • They don’t speak the language

  • They don’t assimilate into our culture

Supply shocks are a real problem in certain areas. No bones about it, this can be painful for current native workers. These workers bear all of the cost in the form of lower wages, unemployment, worsened working conditions, or reduced hours. The rest of the nation benefits from lower prices. There is a real fairness problem here that a better system ought to remedy.

Considering immigrants are better taxpayers than natives, I think arguments from infrastructure cost or welfare scamming are weak. That said, the latter does need to be better policed. Just because on average they are less likely to abuse the system, doesn’t mean there is no need to take steps to prevent it.

The culture of immigrants is a real concern. If their values caused the collapse of a nation and they are going to replicate the same in our nation, this is a valid fear. In general, it seems immigrants are at least as morally upright as the current population. If anything, their bravery in leaving their place of origin, their low crime rate (despite a younger average age), their optimistic and entrepreneurial spirits, and their lower divorce rates would indicate immigrants, on average, are more virtuous than natives. However, virtuous people can still have stupid and destructive ideas. To sum up, the people aren’t the problem, but the ideas might be.

I never understood why people were upset immigrants don’t speak our language. How on earth does that affect you? If you went to a foreign nation, you, too, would struggle with their language and prefer your own. If you have a problem with our government funding ESL programs, then this is a more legitimate concern. I may argue such programs are very cheap, and likely pay for themselves in the form of higher productivity for those people, who can later better enter the workforce. Nevertheless, yes, this is a cost footed by taxpayers in general, and a benefit that only goes to immigrants.

Finally, we reach the assimilation question. France truly has an assimilation problem. There are no-go zones in France where Sharia Law is in place and cops get burned alive in their cars. It is totally wrong to lose sovereign control of a section of your nation. However in the US, we have things like “Chinatown” and “Amish Country”, where American law is still in place. It is common to find neighborhoods that are predominantly Latino, and that, too, is just fine. In the early days of our nation, we had Italian, Irish, Polish, and German neighborhoods. If immigrants choose to retain their culture by living in community, that is not a problem. That said, if the culture involves ignoring our laws, killing our cops, or seizing control of land from proper jurisdiction by the legitimate government, this becomes very wrong. Bottom line? Assimilation to our laws and general cultural norms is necessary, while assimilation into the rest of our culture is discretionary.

The Solution:

In a global poll, people around the world were asked if they would immigrate to America if given the chance. Of those asked, 700 million people said yes. Of those who said yes, 100 million of them said they have the resources to do so. I think even the most open border fanatics would agree it would be impossible to allow everyone in at once. Remember, our nation currently has the infrastructure, jobs, and social safety nets in place to support 330 million people. Letting in 100 million people at once would balloon our population by roughly 30%, adding significant strain to these systems.

We are left with a problem: how do we choose who comes in? Currently, it has a lot to do with family relations. However, due to caps being the same for each nation, ease of entry has a lot more to do with the population of your nation. This seems a bit arbitrary.

Here is what I propose. First off, we want the best immigrants. This means those mix of factors like being entrepreneurial, hardworking, and law-abiding, ought to determine if they come in. These factors are the reason we like immigrants in the first place, so let’s get more of it.

We start by making an immigrant scorecard which will be filled out as we track the outcomes of various immigrant groups living in our nation. The scorecard for each national group would include things like net taxes paid, crime rates, divorce rates, average wages, entrepreneurial activity, and, dare I say, a basic grasp of economics or historically American civic values. Let’s say immigrants from Nigeria turn out to be excellent on all measures and immigrants from Columbia (the murder capital of the world) end up murdering lots of people. This would cause the cap for the Nigerians to rise dramatically and the cap for Colombians to fall... sorry, Colombians.

This is how the relative amount of immigrant groups are decided. The total caps will compare the average scorecard of all immigrants to the same scorecard if applied to the native population. If, on average immigrants are less successful than natives, we don’t want as many. Therefore, we will reduce the cap and only take the best ones, so that each new addition to our nation is a benefit. If immigrants continue to outperform natives, the cap will continue to increase, relative to the difference between the two scores.

I have heard objections to systems like this accusing this process of being racist. No, this has literally nothing to do with race. If a nation sends us excellent immigrants, regardless of whether they are black, white, or even green, we want more of them. If we are sent bad immigrants, then we want less of them. Race never enters the calculation, but maybe for the first time, common sense would. If you think such a fair and meritocratic system will end up benefiting one race over another, may I suggest, you are the racist.

With this system, we don’t need to ever figure out how many total immigrants we want. We begin with a cap that is in proportion to the population of each nation. The sum of these caps will equal our current immigration numbers. If a nation outperforms the average by say, 10% on the scorecard, their cap increases by 10%. Likewise, if a nation under-performed by 50%, their cap is slashed in half. With time, those nations that always send excellent immigrants will have ever growing caps, and those who under-performed will send fewer immigrants.

I suggested a simple formula for changes in cap size, but we could imagine making a formula that also looked at median outcomes, tail events, projected trends of each scorecard category, and more. Furthermore, cutoffs could be in place for scores that are below a minimum. For instance, if Colombians rank at the top of every metric, but can’t kick that nasty murdering habit, their high average score might not reflect our willingness to have more enter our nation. A possible rule could be the cap will only be able to increase if the average crime rate is less than or equal to the native crime rate when demographics are held constant. I would even support direct voting for dictating which categories ought to be weighted higher or lower. After all, the American people should have a direct voice in who comes to live in their society.

All of this is the supply side of the equation, but the plan does not end here. These slots are not given away. Instead, they are sold. The price will be determined by the demand to enter the US and the supply of spots, which is determined in the way sketched out above. Each market will be unique to that nation. We will likely choose to break the market into submarkets for citizenship and guest worker status, with each having a unique cap (obviously the caps will remain unlimited for those legitimately seeking asylum and these vulnerable groups will not be charged to enter. Refugees will likewise remain in a different category).

Why would we charge these people for entry? First off, we, as a nation built all of the infrastructure, wrote the laws, paid generations of tax bills, crafted the culture, fought for independence, started and staffed our businesses, and created our great wealth. People who enter the US as immigrants enjoy the fruits of generations of our labor from day 1. A price to immigrate either as a guest worker or a citizen would represent paying back some of what they will immediately benefit from.

Furthermore, there are real costs that need to be paid for, like ESL programs, safe transport through the border, vetting processes, paperwork and processing, tracking outcomes for the scorecard, running the immigration marketplace, and even compensating workers subject to labor supply shocks.

How much would they be charged? One way of estimating that would be looking to the black market price of illegal immigration. Currently, immigrants are paying “coyotes” to smuggle them over the border. Here are some average prices:


Mexico: $4,000- $9,000

Central America: $7,000 – $19,000

Asia: $27,000 to $75,000

Europe: $5,000- $8,000


Remember, these coyotes often double as human sex traffickers. On the Mexican border, it has been estimated that 1 in 3 women who illegally cross the border will be raped. I heard the story of one woman who paid $18,500 in smuggling fees (a sum not out of the ordinary) to come from Honduras, who ended up spending years in a Mexican brothel before finally getting to the US.

Prices to immigrate into the US are already being paid. The problem is they are paid to the worst types of degenerate human filth imaginable. It is about time immigrants can pay for a legitimate service to transport and integrate them into the US, safely and respectfully, where collectively they can demonstrate by their hard work and civic character they ought to enter in even greater numbers.


Questions and Objections:


Question: Will this system result in more or less immigration?


Answer: We don’t know for sure. Based on the formula for increasing and decreasing caps, it could go either way. That said, it looks almost certain that total numbers would rise, at least at this time. Even if some caps grow, this doesn’t mean all of the spots will be purchased. I would suggest we maintain at least enough open and low price spots, starting with the highest scoring nations, that our population age stays reasonably young and our population size remains stable or growing. As far as an upper limit? I see no need to impose one, because the system described ensures each immigrant, on average, increases the overall success of the nation, as described by the scorecard categories. Furthermore, if demand were super high, the price per immigration would be high enough to fund a robust vetting process that would further guarantee excellent new citizens or workers.

Question: How would the workers who experience a supply shock be compensated?

Answer: If time-series data show that in a given labor market, compensation drops by over 10% relative to the trend, the income from the immigration market that relates to the local supply shock will be used to fund a tax credit for those workers who saw their compensation fall until that time wages have been stable for 3 years. Of course these numbers could be adjusted, but that would be the general flavor of such a solution.

Question: How does this system keep bad immigrants and criminals out? It seem like a terrible person could just pay their way in.

Answer: Is this market system perfect? No, but it is certainly better than what we have now. Right now, a terrible person can just walk in after some paperwork. In this system, if a nation continually sent criminal immigrants, for example, in the following year less will be allowed. The ones who are allowed later on will face a higher price, because the supply of spots was been reduced. This higher price can fund better vetting to remove potential problem people and better integrate those who pass the vetting process. If this is successful in increasing the score of that group, then in subsequent years more people from that nation will be allowed in, until the number reaches some sort of equilibrium.

Question: If the cap starts as a percentage of the nation’s population, doesn’t that mean Chinese people would be able to arrive in massive quantities?

Answer: Yes, and if they are good immigrants, then we will be happy to have them and will want even more. If they are bad immigrants, we will get