Adam Ozimek
The bankruptcy of Detroit has brought renewed focus on plans to turn the city around. Unfortunately, I think free market types are going to struggle for any ideas in their existing policy platforms that are up to the task. Cut taxes and make the government as lean as you want, this isn’t going to turn Detroit around. The city suffers from a population crisis, and taxes simply can’t go low enough to lure enough people in. According to the U.S Census, there are currently 99,000 vacant housing units in the city right now. To make a serious dent in this tax rates would need to be below the zero lower bound, if you will. For liberals this isn’t a problem. There are a variety of big government ideas to get people to move into Detroit. But we should be skeptical of the government’s ability and willingness to commit enough subsidies to convince enough people to move that it turns Detroit around in any significant way.
But that doesn’t mean all hope is lost. The good news is that unlike other areas of the world that are struggling to reverse a development decline, there are millions of people who would love a chance to move to Detroit: immigrants. Rather than focus on the sisyphean task of convincing people who currently don’t want to move to Detroit, we should focus on how to allow in those who do. This is a far easier task for the government, even if it too requires significant policy change. What’s more, letting people from around the world move to where they want also happens to be the closest thing to a free market plan that could actually make a big difference.
So how can we selectively allow in immigrants to Detroit? I and others have argued for regional visas. This would give states or regions their own visas to issue how they see fit. The state of Michigan could issue tens of thousands of worker visas for Detroit. The demand is there, all the government needs to do is find a way to let them in.
Importantly, immigrants who located in Detroit under this visa should be able to choose any employer in Detroit. This would provide compensating flexibility relative to existing employment visas that tie workers to a specific employer. Yes, an immigrant is made worse off by forcing them to go to Detroit rather than anywhere in the U.S. they want. But right now visas already only allow immigrants to go places where they can find an employer prior to moving here, and then they are effectively tied to that employer. And you don’t have to actually restrict the movement of these immigrants; they should be free to travel throughout the country. They will simply be restricted to working in Detroit. Again, visa holders are already effectively tied to working in a particular city as a result of being tied to an employer within that city. Paired with a plan to help regional visa workers who prove themselves get normal green cards also should help reduce concern about limiting mobility.
Many will think this is a radical experiment in “foreignizing” a city, but this is not the case. Detroit will not become Beijing or some radical experiment of a wholly foreign U.S. city. In fact it can help make Detroit more similar to successful U.S. cities. Right now, the population of New York City is 36.8% foreign born. In comparison, Detroit is only 5.1%. foreign born. This means Detroit would have to let in around 360,000 immigrants just to reach the percent foreign born of New York City. However many immigrants they let in, it’s not likely to approach this. But even if it did, it would not be unprecedented by U.S. city standards. More modestly, increasing the foreign born population to 20% would fall far short of New York City standards, but would still mean 133,000 new immigrants. This would go a long way towards sopping up the 99,000 vacant homes that are plaguing the city.
Even for the city of Detroit itself, a large increase in the immigrant population wouldn’t be a huge departure from history. While the percent foreign born is very low in the city now, it wasn’t always this way. The 20th century wasn’t just a period of declining population for Detroit, it was also a period of declining immigrant influence. The following graph shows that Detroit is near the historical bottom in terms of the percent foreign born. Even while it represented a drop as a percent of population, the period from 1910 to 1930 saw the immigrant population of Detroit increase by 248,348.
Detroit is a city that has had a healthy immigrant population before, and it could be again. If it returned to it’s 1960 foreign born percent it would mean an increase of 57,000 immigrants. This would help make it more similar to economically successful cities like New York City.
Immigration is an economic development policy that is currently largely ignored. A city like Detroit could be a symbol and demonstration project to show other cities the huge potential for this. If this works, it will mean more political demand for immigrants and ultimately raising our overall immigration levels, which is an important goal in and of itself. A regional visas should be created that let’s cities experiment and choose their own path in this way. It’s the only free market plan out there with any chance of making a serious impact in Detroit, and it’s consistent with America’s spirit of federalism. And unlike just about every other plan you see, like bailouts or tax cuts, this has the advantage that it doesn’t require other people’s money.