The first is allowing more legal immigration. This point is obvious but worth emphasizing. The United States has an illegal immigration problem because it restricts legal immigration. So long as large wage differences persist between the U.S. and other countries, especially Latin America, the desire to immigrate will persist and occur illegally if it is not permitted legally.
Legal migration, moreover, is good for America and rest of the world. Immigration allows people in poor countries to seek a better life here, bringing ideas and energy with them, and it shows the world that many people still regard America as the land of opportunity. Many immigrants are far poorer than the poorest Americans, so helping them makes far more sense than operating a generous welfare state.
Restrictions on immigration are also costly, since they create black markets, generate violence, and spawn corruption. Fences and borders patrols are expensive, and they do not seem to reduce the flow of illegal immigrants. So any attempt to reduce illegal immigration should eschew enhanced enforcement and instead increase legal immigration.
The second way to reduce illegal immigration is to expand free trade. If goods can move freely across countries, the demand for low‐skill labor will shift from the United States to poorer countries, raising wages there relative to here and reducing the incentive to immigrate. NAFTA and CAFTA, while steps in the right direction, still contain substantial impediments to trade between the U.S., Mexico, and Central America, and broader free trade agreements with South America do not yet exist. Since free trade makes sense independent of immigration concerns, this policy change is a no‐brainer.
A more controversial way to shrink illegal immigration is de‐escalate the war on drugs. Many Latin American economies are dysfunctional in part because of the corruption and violence that the war on drugs generates, and residents of those countries cross the U.S. border in part to escape that violence. Full legalization would be the most effective response, but even a major reduction in enforcement would shrink the violence significantly. Mexico’s drug trade has been violent for decades, but the explosion in deaths resulted from Felipe Calderon’s misguided escalation beginning in late 2006.
A further policy that might reduce immigration is scaling back the U.S. welfare state, although the impact of any such change is unclear. Despite common perceptions, immigrants do not make especially high use of the social safety net or migrate mainly to collect these benefits; most come to the United States seeking work. If immigration were substantially more open, however, large‐scale migration in response to generous benefits would plausibly increase. So it makes sense to either reduce that generosity or condition benefits on legal residence for a significant number of years.
The policies that will do little to shrink illegal immigration are increased border enforcement, stiffer punishments for employers who hire illegals, or aggressive arrest policies such as those adopted in Arizona. These measures are ineffective because they do not change the fact that wages in the U.S. are attractive compared to wages in poor countries. And, for centuries, immigrants have endured amazing hardships to seek higher income or a better life in America. Longer or higher fences will not change that.
Instead, stepped‐up enforcement will drive more activity underground, generate more violence along the border, impose costs on law‐abiding employers, and embitter residents of poor countries toward the United States. Ramped up enforcement is a feel‐good gimmick that allows politicians to claim they have done something about illegal immigration, even though they know the reality is different.
None of the options for addressing illegal immigration is perfect; each generates significant losers as well as winners. But the changes advocated here all improve the U.S. economy by reducing or eliminating policies that impose significant costs independent of immigration. So the U.S. should abandon its obsession with the anti‐immigration policies of the past and instead address the real causes of illegal immigration.