People-smuggling and the market

By Tim Worstall | 12 October 2005

An excellent idea is put forward in a leader in The Economist. There is a large amount of people-smuggling going on, run by those known as Coyotes or Snakeheads, bringing illegal immigrants from poor countries to rich. This partly caused by the fact that we only have two (and even then not perfectly) of the three pillars of free trade, in goods and capital, but not yet in labour. That people are willing to pay $5,000-$10,000 to be smuggled from Pakistan to Europe shows that the demand is certainly there.

So why should the profits go to the smugglers? Why not, as suggested by Michael Jandl of the International Centre for Migration Policy, take the market away from the smugglers? Charge the same as they do in their main markets, issue a working visa for say three years, then repay 30% of that fee when the (temporary) immigrant leaves? As long as the rules have been obeyed, multiple consecutive visas would be allowed.

Astute economics types will have noted at least one problem, that there are certainly people who would be happy to pay this price but would not do so illegally. So the demand for visas at these prices is very probably higher than the illegal market would suggest.

Which is why the actual suggestion for action is an agreement between a small country like, say, Albania, and the EU. Try it out and see what happens. Well, why not? As The Economist reports:

Border crackdowns and mass deportations have populist appeal, but the are clumsy, costly and cruel. Mr Jandl's proposal relies on economic logic, not bureaucratic brawn.

That has to be better, hasn't it?