Is citizenship a Public Good or a Cartel?

Is citizenship a public good or a cartel?  I am not sure there is a right answer, but it seems worth asking.  In the U.S. there are three basic ways to become a citizen: birth, marriage, naturalization.  For the overwhelming majority it is birth that grants citizenship, so this is a quasi-involuntary act of exchange; you are given citizenship in exchange for certain rights and obligations, which represent the benefits and costs of citizenship, respectively.  It is my opinion that detailing the benefits of citizenship are much more difficult than detailing the costs, so let’s start there: what are the costs? 

First, as a U.S. citizen you must abstain from accepting citizenship in another nation (no dual citizenship recognition), serving in a foreign army that is at war with the U.S., committing treason, and accepting a political office in another nation that requires you to swear an oath of allegiance.  All of these represent opportunity costs to you (maybe you could make a lot money as a foreign politician, a traitor or a mercenary).  But you can always renounce your citizenship to the U.S. Attorney General or any Consular Office so if you are still a legal citizen you have made a demonstrated choice that you place a higher value on your U.S. citizenship than on any of the alternatives.

What about taxes then?  Some have argued that taxes are a “patriotic” cost to your citizenship, but this doesn’t seem logical since you would have to pay taxes anywhere (except for maybe Andorra, the European ski town/tax utopia where there are no explicit taxes) but again, if you really valued the savings a specific country offered you could simply renounce your citizenship and move there, and probably even pay for the process with the saved taxes.  So for me taxes represent a sunken cost to citizenship; you pay them anywhere and even if you renounce your citizenship the IRS is not going to return them.  But what about national debt? This seems to be a clear cost, since it directly affects the economic conditions of your life, especially if you are going to be among the generation that finds it can no longer deficit finance.

What about the specter of conscription?  For virtually all of America’s history conscripts filled the armed forces during times of war.  Only recently has there been an aversion to the system (due in large part to its association with an unpopular war and a socio-political movement that abhors any war, justified or not).  So is this a cost?  I think so, but considering how well the all-volunteer system is working (and the economic arguments against conscription) it is hard to imagine that it would return as anything less than a last resort (does anyone else remember all the claims that it would have to be reinstated for Afghanistan and Iraq way back in 2003/2004?  It couldn’t be that it was just a political maneuver during a campaign year, could it?).  So while it is a very real potential cost, its present value must be heavily discounted given the future expectations of its likelihood.

While there are certainly other potential and real costs to citizenship, these seem like the most obvious, and so I want to return to my original question: is citizenship a public good or a cartel?  The markings of a public good are that once it has been created the consumption (or possession in this instance) does not simultaneously prevent another person from possessing it (i.e. it is non-rivaled).  Similarly, for it to be a public good you cannot exclude those who have not “paid” for it from enjoying its benefits (non-excludable).  Of these two criterions citizenship clearly meets the first, but the second is less clear. Noncitizens in the U.S. are often granted some of the same rights and protections as citizens based on one reading of the 14^th amendment; as were enemy combatants in 2004. However, there are also extensive measures in place that seek to limit entry to the country to noncitizens, which is a hallmark of a cartel.

Well then, which is it, a public good or a cartel?  I think it is both.   The government “of the people” erects fences, monitors the boarders, places restrictions on passports, and weighs down the visa and naturalization processes with a torrent of paperwork and long timetables as a means of limiting entry.  Similarly the INS is in place to deport those “free riders” that are in violation of immigration law.  These are analogues to the types of collusive restrictions that cartels place against new entrants.  Similarly, the U.S. government holds a monopoly on legitimate violence and can use it to punish violators with impunity, thereby enforcing the collusion. 

So while you are allowed to voluntarily withdraw from the collusion, to do so you must abandon your rights and privileges.  This begs the question: are they really yours?  Stated another way, do you actually own your citizenship?  My Micro Theory 1 professor, Walter Williams, once said that the true measure of ownership is the ability for you to sell something.  So can you sell your citizenship?  The answer is absolutely not.  But why not, if it is in fact yours?  One counter argument could be that your act of selling jeopardizes the value of everyone else’s citizenship, but this doesn’t hold since the same argument can be made about homeownership.  If I sell my house at far below the “market value” then I drag down the price for the next seller, since realtors use previous sales as a measure of “comparability.”

Furthermore, there seems to be a strong economic argument in favor of selling citizenship, which would allow the most productive individuals to move to a society that values them most, as expressed by their respective prices (see the work of Gary Becker for more on this point).  The driving force behind globalization, free trade and today’s higher standard of living is the opening of markets to transfers of capital (physical as well as financial).  Yet capital is only one of the inputs of production.  Why shouldn’t we allow the creation for a similar market that exchanges the more important factor of production: labor?  So long as it is a voluntary system, who is hurt by this market?  Each individual chooses their citizenship in the world and is free to purchase or sell accordingly.  Do guest-worker programs or free trade zones accomplish this already? I would argue that they do not, and that they are simply a half measure, which is inherently less efficient than an open market.

So the system of citizenship seems inconsistent. A citizen can voluntarily withdraw without any compensation, but to stay they must burden the associated costs.  As I claimed before these costs include opportunity costs and the possibility of being called to sacrifice your life in protection of the state (among others).  But these costs are not adequately signaled by a price that could be earned by selling their associated benefits.  If citizenship were free to be sold we could obtain a single measure that explicitly stated these costs and benefits.  Furthermore the implications of the system are intriguing; consider how such a market would affect wars given that individuals could engage in citizenship swaps before any major conflict, giving some ex ante measurement of its anticipated costs.  But it wouldn’t just affect war; such a market would affect every aspect of the system.

This last sentence raises another important question: what would be some potential consequence of such a market?  Certainly there would be a strong incentive for nations to sure up their boarders as a means of protecting the value of their citizenship, which could be a good or bad thing based on your immigration philosophy.  Similarly, we can expect that a black-market in counterfeit citizenship would plague the most valued nations where the prospective payoffs are high.  But such illegal markets already exist for high value goods (caviar and U.S. dollars are the most obvious examples). And human trafficking is already a problem for the U.S. and many western European countries, so black-markets should not preclude legitimate market exchange. Furthermore, it would break the cartel of citizenship and reduce the problems associated with free riding, since entry and exit are allowed.

By now you are probably wondering if I would sell my citizenship given the opportunity?  I seriously doubt that any price could entice me to sell, given that most of the benefits I derive from being an American are non pecuniary.  First off, my family is here so a life of isolation abroad does not seem to have a reasonable pecuniary compensation.  Second, I place a lot of value on the protections granted to me by the U.S. constitution and its arm of enforcement, the U.S. military; placing myself on the potential receiving end of America’s military might cannot be offset by money (even if I felt I was moving to a staunch ally of the U.S.).  Finally, I have a nationalistic attachment to the U.S., even if that is simplistic, irrational or economically counterintuitive.  But just because I wouldn’t sell my citizenship that doesn’t mean I want to limit someone else’s ability to sell theirs.