9.7.04

INDUCED INNOVATION IN SMUGGLING? Interesting post by Bob at Truck and Barter about the effect of stronger border enforcement on illegal-immigrant smuggling.
Unfortunately O’Reilly has failed to take into account the fact there will still be millions of people who want to cross the border. Think of immigration as a market. Safe border-crossings are the commodity, “coyotes” are the suppliers, and those who wish to come into America are the buyers. The National Guard may reduce the amount of safe crossings that are produced in the short-run. However, given the huge demand for safe crossing, “coyotes” are more likely to innovate new ways to sneak across undetected than they are to quit altogether. Furthermore, while I have extremely little knowledge of oceanic smuggling operations (about as much as O’Reilly, I’d guess), I know that if the price people are willing to pay is high enough, someone will figure out how to make it worth the costs. Remember, 70 years ago commercial air travel was thought to be unfeasible too.

Trying to reduce the incidence of a specific transaction, if both parties are voluntary participants, is pretty darn close to impossible. We can see that fact in the market for illicit drugs. America has focused on reducing the supply of drugs. Yet considering the quantity of the resources devoted to stopping the supply, most experts would agree that we don’t capture even half of the drugs that are sold in America (I believe 10%-15% is a more accurate estimate). Similarly, even if we reduce the supply of safe border-crossings we have done nothing to decrease the desire of people to enter the United States.

This is true, up to a point. The demand by illegal immigrants to enter the United States is a derived demand, in this case derived from the willingness of employers to pay for illegal immigrant services. To be sure, any interdiction of the supply of illegal immigrants will raise the wages that successful entrants receive. But those migrants might also be motivated by the possibility of a subsequent regularization, with the accompanying opportunity to participate in the legal economy. More stringent border controls have the effect of inducing migration by individiuals who expect to do better in the legal market, holding the expectation of regularization constant. Details here, or just read the abstract.

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