What a mess asylum seeker policy appears to be. I say, appears, because there has been so little clear articulation of what it is in the context of other options that existed. To proponents, it is all about looking “tough”. To opponents, it is all about a disproportionate response with high costs in terms of moral authority. It is just hard to know what to make of it all.

What I want to do here, and I am not sure how far I’ll get in a single post, is to try and understand the policy trade-offs and also the constraints on policy choices. But I will start by being up-front about my position on immigration. Immigration is undoubtedly a good thing —  for society and the economy. I think of the freedom of the movement of people to be as desirable, if not more so, than the free movement of goods and capital. It is the ultimate in respecting that people have different views and aspirations and that their lives may be more suited to one region or culture than another. My only caveat comes from the notion that short-term crises can cause mass migrations and that it may be better for everyone concerned to manage those incidents in a coordinated fashion (although I note that the case of Israel and migration after the fall of the Soviet Union demonstrates how it can be done).

The Prime Minister’s speech to the Lowy Institute was actually quite good in positioning the debate as she currently sees it. The issues with asylum seekers are as follows. First, Australia has immigration but it is not unfettered and there are areas where migrants can fill economic gaps. Second, when people are fleeing from political oppression, they should be able to jump the queue. Third, the problem is screening for those people. Fourth, that the demand for migration to Australia is fuelling crime against would be migrants — namely, people smuggling. Fifth, some people are racist but that there is an alternative anti-migrant argument based on congestion of public infrastructure.

I want to start by dismissing the last issue as a legitimate anti-migrant concern. Here is what the PM said:

“In many faster-growing parts of Australia — like western Sydney, south-east Queensland and the growth corridors of my own electorate in Melbourne’s west, Wyndham and Melton — people would laugh if you told them population growth was intended to improve living standards. People in these communities are on the front line of our population increase and they know that bigger isn’t necessarily better.””

Note, however, that this is an anti-population growth argument and not an anti-immigration argument. Our birth rate is twice our net migration rate (which itself is about the same is our death rate). What is responsible for strain on resources is the fact that the government has not been keeping up with needed infrastructure investing. What is more, natural population growth does not add to the tax base as quickly as migration. So if you are worried about strain on public infrastructure, it is clear where you should direct government policy.

The asylum seeker issue is, of course, not related to the population issue at all. The PM agrees with Julian Burnside that “at the current rate of arrivals it would take about 20 years to fill the MCG with boat people.” Indeed, humanitarian migration is a small fraction of total immigration. The asylum seeker issue stems from the fact that we do not have unfettered migration. Instead, we have a quota and the issue is whether asylum seekers should move up in priority. To be sure, if we want to get rid of the asylum seeker problem, the easiest way is to get rid of the quota or to increase it. We surely have to ask ourselves why that is not a seriously discussed policy option. And those politicians need to recognise that not doing so only adds to the perception that they are pandering to interests who oppose immigration on racial grounds.

But let’s take as given the present constraint on immigration. The evidence points squarely to the fact that those asylum seekers who choose to enter Australia outside the official process (that is, on boats) are doing so because they are fleeing political oppression. The PM thankfully acknowledged this. Now that should give us pause. We are trying to work out when an application for asylum seeker is legitimate or not. And by legitimate, we mean that it is not migration for economic improvement (not that there is anything wrong with that) but against political persecution. So surely, the fact that a person or family is willing to subject themselves to the cost and danger of an ocean boat trip to Australia is surely itself a credible signal that they are fleeing something serious rather than looking for some potential economic improvement. The evidence certainly supports that notion.

From a game theoretic perspective, this leads to an interesting notion: that the people smugglers are, in a sense, providing a service. The more exploitative they are, the better is the screen they are performing. It also automatically puts us in the position of wondering whether there could be a better legitimate screening device — and certainly one over the threshold of moral acceptability — than that being provided by people smugglers. I’ll come to that in a moment but first, let’s consider the impact of interventions that have been deployed or suggested.

First, the “turn the boats around” option. This one — even if it were feasible — is basically a policy of  you use legitimate channels or don’t bother. It shares that in common with the “sink the boats” option and its variant. This is a policy intending to shut down people smuggling and it certainly raises its cost. But we have to remember that people smuggling occurred precisely because the legitimate channels were not working for some set of asylum seekers. This doesn’t change that and unless it is 100% effective, it won’t even achieve the result of stopping people smuggling.

Second, the “move the boat people into the legitimate process” option. The Pacific Solution at a bit of this to it with a “punishment” phase of what amounted to incarceration. The new East Timor notion of a regional processing centre is the latest version hopefully without the punishment phase. The idea of this policy is to say to asylum seekers: you have a choice between (a) participating in the legitimate process or (b) dealing with people smuggling but ending up in the legitimate process anyhow. Of course, like the “turn the boats around”option, we have a group of people who have already found very sizable fault with the legitimate process — enough to risk everything on a leaky boat. So unless capturing the boats is 100% effective, this option raises costs but cannot be expected to shut down people smuggling when the demand for it is at its peak.

The problem with all of the present solutions is that they give people only one option — the official process — when the entire issue arises because that option was not acceptable. Moreover, by opting for the official process, there is no other means of signaling your legitimacy to be an asylum seeker. You are pooled into a lower cost process with many others who do not have the political claim to priority and as a consequence, the risks of errors are that much greater. When you are fleeing for your life, do you really want to have a single review option?

What we are looking for is a mechanism that can perform the wisdom of Solomon. Now I don’t mean that asylum seekers should be given the option of just sending their children to Australia (i.e. dividing the family) although that might be a credible signal. But surely we need to think of ways of separating out the claims that allows a greater pool of information and signals to be sent.

So here is my proposal: we need to outsource the review function to Australian government recognised aid or philanthropic agencies. And here is how we do it. The government sets a fee per asylum seeker for entry into Australia — I am going to suggest $20,000 for the sake of argument (but I could also imagine $50,000). Enough to justify any costs to the country that could conceivably arise but more as a means of presenting an opportunity to signal. Now that fee is not something that would be paid by asylum seekers as, by definition, they don’t have that money. Instead, it is a fee that would have to be paid by their sponsoring agency. The idea is that the agency would go out and raise funds with the view of finding asylum seekers and getting them to Australia. They would raise the funds from the community and people who would want to contribute to a fund to allow people to escape political impression. My guess is that that community is substantial enough for this to work. They would then screen and sponsor asylum seekers, make their case and pay the fee.

The idea here is to provide a diversity of options. There would still exist the official process and, indeed, the agencies would be encouraged to assess claims and if they are strong with verifiable information, they can use the official process and save the money. Otherwise, if they meet a set of minimum criterion — essentially, sworn statements of validity — they can pay the fee and move around the official process. The idea of using accredited agencies is that they mission and values could be monitored so that no economic motivated immigrants can use the process. This is also critical as they will be raising charitable contributions to fund all of this.

Basically, I am suggesting that we allow Australian charities and similar organisations to enter the people smuggling business. The numbers of asylum seekers are not so high that they can’t manage it and the fee provides  a means of generating a signal as well as a way of placating political tensions in Australia. We shut people smuggling down by creating a market alternative.

This first appeared on the Core Economics blog here.