How Market-based Visas would change Houston and Texas

Texas is currently taking the brunt of the asylum seekers' onslaught, and Texans are looking for alternatives which could help. Market-based visas are the best way to turn around the situation in the Lone Star state.

Market-based visas (MBVs) envision allowing background-checked Mexicans and Central Americans to enter and work in the US on demand in return for a fee which we calculate at about $3.50 / hour, an effective 35% tax rate. This would keep migrant numbers about the same as they would have been before the asylum crisis. In this system, if we wanted to reduce the number of migrants, we would raise the visa price; to increase the number of migrants, we would lower the price, but a migrant could buy a visa on demand at any time at the prevailing price, just as you can, for example, buy gasoline at any time at the market price. There are, of course, many caveats and conditions, but that’s the program in a nutshell.

Closing the Southwest Border

With this, the US could close the unsecured southwest border without the need for enforcement. People come through the desert because there is no timely, legal way in otherwise. Under an MBV system, a migrant can come anytime they want — at a price. Indeed, anyone caught coming through illegally would lose the right to buy a work visa, and that’s a very, very valuable right that one would not want to risk. If the visa volumes are properly set, this will close the southwest border. Why come through the desert when you can hop a flight to Houston as easily?

Houston will become the capital of Central America

Air Traffic

Much as Miami is the unofficial capital of South America, a market-based approach would make Houston the unofficial capital of Central America. Even today, most of the flights from the Northern Triangle countries of Guatemala, Honduras and El Salvador enter the US at Houston. Those who now come across by foot would fly in, mostly through Bush International Airport. A legalized system would see the air traffic from the Northern Triangle countries increase by 30-40%, with about two-thirds of this channeled through Houston. Therefore, “going to the US” would mean principally “going to Houston” for shopping, doctors visits, and banking (not to mention the seafood gumbo at Pappadeaux).

Business and Investment

The price Central American governments would have to pay for participation in this program is a range of pro-business policies, mostly notably related to finance, telecommunications and air travel — as these are desirable to insure the MBV program’s smooth functioning. Real estate would be another area of interest, with the intent to open these countries to US retirees where they can live in comfort and convenience — and then go to Houston for their doctors and shopping. There is more here, but in essence, Central American leadership would be highly incentivized to promote sustainable economic growth — the best defense against illegal immigration. Much of the related business would ultimately be conducted out of Houston.

Improve the Condition of Hispanic Communities, Increase Confidence and Pride

A large portion of Houston’s Hispanic population lacks legal status, and this is reflected at times in the condition of the undocumented community.

Could use an upgrade

Could use an upgrade

In a market-based system, the vast majority of migrant Hispanics will be legal, and they will pay twice your rate of taxation to do so. But in the process, they will know they are in the US legally, legitimately and in control of their own destiny—and frankly, that they are tougher than you are. (For the record, Mexicans are the hardest working people in the OECD. They work 10 weeks per year more than the average American.) A legalized system will create Hispanic confidence, pride and dignity—perhaps as important an achievement as any other in the program.

It will also allow investment in physical assets — stores and malls, for example — serving the Hispanic community. For me, an enduring memory of Houston is the run-down strip malls on the western side of town, with washaterias, Western Unions and pawn shops, a string of worn storefronts affixed with fading Spanish-language signage. Now, Houston has its share of ugly strip malls all over the city, but these gave an unsettled feeling of people living on the edge, hanging on for dear life. In a market-based system, a lot of this goes away, and migrants will look, act and feel much more like ordinary residents of the city. They will have as much a right to be there as anyone else, and to be treated as a customer demographic just like any other.

Thus, a market-based system will uplift Houston’s currently undocumented Hispanic community, better integrate them into the city, and encourage increased investment in the physical and intangible assets which underpin migrants' social progress. In the process, it will make Houston a better city to live in.

Federal Funding

We estimate that a market-based visa program would swing the Federal budget by about $30 bn / year. A portion of this gain would be shared with the states, in the case of Texas, probably something north of $1 bn / year. This is not going to revolutionize the situation, but it’s a handy bit of change for addressing schooling and health-related issues. In addition, migrants would have to obtain barebones healthcare coverage, which would also reduce some of the pressure on local budgets.

An MBV system strongly discourages bringing dependents, because the visa price will be set by those with the lowest costs, ie, those migrants who left the kids at home. (Again, bear in mind that migrants can come and go as they please in an MBV system. With lots of discounts flights out of Houston in particular, they can go home and return anytime they please—this is how we close the unsecured border.)

Nevertheless, some may wish to bring children. The conditions for doing so belong more in the realm of politics than policy, but here is an illustrative proposal. In this system, we never say ‘no’, but everything has a price. For example, the US could charge $5,000 / year per dependent child. This amount, matched by the US government, could be used as a tuition voucher at any public, parochial or private school. Thus, a migrant could pay $5,000, which would generate $10,000 from the federal government to pay, for example, tuition in the Houston public school system. This would take pressure off the local community and in some sense nationalize the education costs of migrant children. It would also provide school systems a tangible incentive to insure their student body is properly documented. Finally, it would allow the injection of private money to cover migrant costs. For example, if the Gates Foundation wants to cover migrant dependent visa costs, then the Federal government would match that amount. Whatever the Gates Foundation does, you can be assured they will seek the highest quality education for migrant children—and that’s good for everyone.

The Next Step for Houston as an International Gateway

For both Houston and Texas more broadly, market-based visas would prove transformative. MBV’s would establish Houston as the de facto capital of Central America even as it closes the unsecured border and takes the pressure off of the long-suffering US population in south Texas. It would bring safety, conformity, propriety, transparency, and dignity, as well as ensuring proper compensation for providing access to US labor markets. It would take Houston to the next level, no longer just an oil town or a major US city, but an international gateway in its own right.