Over at Modeled Behavior, Adam Ozimek has an interesting piece about one way to save Detroit: Increase the city’s depleted tax base by letting hundred of thousands of immigrants in with Detroit-specific work visas. He writes:
So how can we selectively allow in immigrants to Detroit? I and others have argued for regional visas. This would give states or regions their own visas to issue how they see fit. The state of Michigan could issue tens of thousands of worker visas for Detroit. The demand is there, all the government needs to do is find a way to let them in.
Importantly, immigrants who located in Detroit under this visa should be able to choose any employer in Detroit. This would provide compensating flexibility relative to existing employment visas that tie workers to a specific employer. Yes, an immigrant is made worse off by forcing them to go to Detroit rather than anywhere in the U.S. they want. But right now visas already only allow immigrants to go places where they can find an employer prior to moving here, and then they are effectively tied to that employer. And you don’t have to actually restrict the movement of these immigrants; they should be free to travel throughout the country. They will simply be restricted to working in Detroit. Again, visa holders are already effectively tied to working in a particular city as a result of being tied to an employer within that city. Paired with a plan to help regional visa workers who prove themselves get normal green cards also should help reduce concern about limiting mobility.
He notes that while it may sound like “a radical experiment in ‘foreignizing’ a city,” it really isn’t. Other cities have large foreign-born populations (New York, for instance, is over 36 percent immigrant). He concludes:
Immigration is an economic development policy that is currently largely ignored. A city like Detroit could be a symbol and demonstration project to show other cities the huge potential for this. If this works, it will mean more political demand for immigrants and ultimately raising our overall immigration levels, which is an important goal in and of itself. A regional visas should be created that let’s cities experiment and choose their own path in this way. It’s the only free market plan out there with any chance of making a serious impact in Detroit, and it’s consistent with America’s spirit of federalism. And unlike just about every other plan you see, like bailouts or tax cuts, this has the advantage that it doesn’t require other people’s money.
Being a big believer in the idea that immigrants create a lot of economic value, I like the suggestion. It’s not a completely new idea. For instance, a few months ago, the Wall Street Journal had a piece about how rust-belt cities were putting a lot of effort these days into trying to attract immigrants in the hope of reversing their long-term population declines. It was obviously missing the visa component of Ozimek’s policy recommendation, but relies on the same way of bringing more people to Detroit and other places.
However, there is, I think, a limitation of this idea as explained by Ozimek: It seems to me that it won’t work if the city of Detroit and its government officials don’t address the reasons why people left in the first place. Immigrants, even more than other people, are attracted to jobs, not high taxes and high unemployment. If Detroit’s natives are leaving for lack of jobs, it’s unlikely that immigrants will settle there. And if they do, they may not stay if they can’t find jobs (especially if other cities that are more appealing jobwise also put in a regional visa system). Therefore, a single policy of just bringing in more people won’t be enough (let’s not forget that the region has seen large waves of immigration, and most of those immigrants left).
What is required here is immigration and fundamental labor-market reforms. That probably means getting rid of rules and regulations, various union requirements, cronyism and corruption of city officials, and all the things that get in the way of having a flexible labor market and dynamic economy. I would also argue that if and when such regional visas are created, which I hope they are for many cities in the U. S., Detroit city officials should refrain from putting in place public jobs programs and other government-created jobs. It would only add to the fiscal problems of the city without creating the kind of economic growth that the city needs to escape its current economic problems. Finally, bringing immigrants in, even if they can find jobs and create growth, shouldn’t distract city officials from addressing the city’s debt and pension system, since a new tax-paying workforce alone won’t be able to shoulder the current size of unfunded liabilities.