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By Philippe Legrain ADD COMMENTS

Immigration reform is finally back on the agenda in Washington, DC. That is something to celebrate: a system that traps 11 million people outside the protections of the law while denying businesses the workers they need to grow is clearly dysfunctional. But while it’s great that there is a real prospect of bringing people who lack proper documents out of the shadows, there is so far no debate about the root-and-branch reform America really needs.

To grasp the absurdity of the current system, consider what would happen if each U.S. state tried to regulate people flows in the way that the 50 states do collectively. Minnesotans would need a visa to study in Massachusetts. Internet companies in California could recruit only a handful of Coloradan graduates among those who met an elaborate set of bureaucratic criteria. If an oil-and-gas boom in North Dakota led to a shortage of all sorts of workers, local laws would prevent people from out of state from filling those needs legally. And so on.

Clearly, under such a system pretty much everyone would be worse off. The people denied opportunities to study or work across state lines, as well as their would-be classmates and colleagues whose thinking and lives would have been enriched by interacting with them. The universities and businesses deprived of talent and therefore less able to grow and create jobs for local people. All the small businesses in North Dakota that might have sprung up to satisfy local needs, but couldn’t. The people living and working outside the law. More generally, every citizen would suffer from the decline in respect for the rule of law, just as Prohibition did far more to undermine law and order than drinking booze ever has. If you step back a little and think through the consequences of each state restricting mobility in this way, it ought to be clearer why America’s immigration system doesn’t work – and why tinkering with an intrinsically flawed system will go only a little way toward making things better.

More from GPS: What America can learn from Britain

From an economic – and a moral – point of view, it would be best if everybody could move freely, as they could in the 19th century, when the United States had more or less open borders. That may seem like a dangerous fantasy, yet recent experience in Europe suggests otherwise. People can now move freely across the 27 member states of the European Union – from Lithuania to Leipzig and on to London and Lisbon. Far from causing European societies to collapse, this new mobility has better matched people to jobs, reinvigorated local communities and sparked dynamic new businesses.

So why not do the same in North America – between the United States, Canada and Mexico? Contrary to the fear that everyone in Mexico would move to the U.S. if they could, experience in Europe suggests otherwise. Across the EU, only a small fraction of the population from poorer countries has moved to richer ones – mostly temporarily, to work. And since the difference in income levels between the U.S. and Mexico is smaller than that between Sweden and Romania, why should things turn out differently in North America? In fact, people moving south to Mexico now outnumber those moving north to the United States.

Insofar as allowing people to move freely is not politically possible for now, America could still greatly improve its immigration system by making this less complicated, arbitrary and discriminatory. Why not replace all the different classes of work visas, with their arbitrary numerical limits and devilishly complicated eligibility criteria, with a simpler and more sensible system like Sweden has? There, businesses of all kinds can hire workers of all skill levels from around the world on two-year renewable visas if they can’t find suitable local recruits. Market-friendly reforms like that would do far more good than fiddling with bureaucratic controls.

America’s hidebound immigration system needs to adapt to a new global economy where people are increasingly on the move in all directions, east as well as west, south as well as north – and where those who have a choice often move repeatedly.

Often, opportunities now lie outside America; for Americans (and Africans) heading to Shanghai to try to strike it rich, the Chinese dream is more alluring than the American one. As Asia rises, entrepreneurs who might have gone to Silicon Valley are heading for Bangalore or Beijing. To compete in this new world, America’s immigration system needs to be much more flexible, focusing on making it easy for people to come and go and attractive for valued people to stay, rather than trying to keep people out.

Posted 23 Feb 2013 in Published articles

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