Having recently floated the idea of visa auctions, I now see that Matt Yglesias made the case for selling access to the U.S. labor market almost a year ago. And he had a smart idea about how to distribute the revenue:
For logistical reasons, it might be better to organize payments the other way around—have Congress set a number of slots, and then auction them off. This way we could start with the kind of small-scale program people are likely to be more comfortable with and see what happens. Turn the 50,000 diversity slots into an auction (or several separate regionally segmented options) and then decide based on the results whether we want to expand our offerings. My guess is that when the revenue starts flowing in, people will be surprised by how high the bids are and public support for immigration will increase. Revenues could be split between the federal government and whatever local jurisdiction the immigrant moves to. [Emphasis added]
This last part is actually very important. One of the underlying themes of the immigration debate, particularly in the 1990s but it’s still there, is that the federal government’s failure to enforce U.S. immigration laws has created an uneven burden, as state and local governments in some regions are forced to carry much of the social services burden that results while other regions are left largely untouched. As immigrants have spread from a small set of immigration gateway states to states in the interior, this issue has changed, e.g., jurisdictions that had been unaccustomed to meeting the needs of large numbers of less-skilled non-English-speakers now find themselves obligated to do so. There is also, from the other direction, a growing recognition in economically depressed regions that immigrants, including less-skilled immigrants, can bring with them some measure of economic vitality.
Regardless, the idea of a revenue split between the federal government and the local jurisdiction in which immigrant settle creates interesting dynamics. It is common for state and local governments to use “one-off” revenue sources — the sale of public assets, the windfall from an IPO, etc. — to meet budget shortfalls. The prospect of a steady stream of revenue from immigrants would potentially lead local jurisdictions to become more welcoming. A finer point is that local jurisdictions might be keen to attract immigrants who will provide not just a one-off revenue boost, but who will have a positive net fiscal impact on local coffers. Imagine Orange County, California advertising in foreign periodicals aimed at affluent readers.
One wonders what would be the right revenue split between the federal government and local jurisdictions. Unfortunately, we’re probably going to wind up with an immigration policy that is much worse than what Matt proposed back in February.