The EB-5

I had never heard of the EB-5 until I got into startups.  It’s a backdoor way to bring citizens to the US.  Back when I first heard about it, everyone I interacted with that held the keys to doing something with the EB-5 was pretty sleazy.  The ideas that were being batted about were sleazy too.  It wasn’t about bringing people to the US to do work but more about figuring out ways in the program to enrich themselves.

Congress created the EB-5 Program in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. In 1992, Congress created the Immigrant Investor Program, also known as the Regional Center Program. This sets aside EB-5 visas for participants who invest in commercial enterprises associated with regional centers approved by USCIS based on proposals for promoting economic growth.

The cost of an EB-5 at the time was $500,000 per person.  Now the cost is going to $1.35MM

With all the haranguing about immigration, I only see a lot of whining, finger pointing, virtue signaling and no real solutions other than a wall.  A wall won’t be an end-all cure.  It’s just a barrier.   As a country, immigration is essential to the long term success of the United States.  Of course, what we need is immigrants who are productive and not a drain on resources.  Many of the controversial immigrants of today wind up on government programs.  Yet, it’s stupid to demonize immigrants because they are a continuous addition to the fabric of America and bring growth.  There are also network effects that arise from immigration.

The EB-5 program is a reminder that there is a cost to immigration.  Years ago, the late Professor Gary Becker proposed charging for US immigration and the EB-5 recognizes that. I have posted this video before, but if you are interested in the topic of immigration you ought to watch it and see what you think. It’s a pretty elegant solution to a thorny problem which takes a lot of the politics out of it. It also eliminates winners and losers and that’s probably why no one wants to adopt it. The alternative is too important a political pawn to play.

There is no doubt that we need to redo our immigration policies in the US. To me, there is no doubt that we might want to end “birthright” citizenship which was part of our nation’s founding. Remember, back then we really needed citizens and there were no government transfer payments that taxpayers supported that went to immigrants. Supply and demand curves work. Marketplaces allocate capital and make decisions better than centralized authorities. Bringing a marketplace to immigration will ensure that the US gets a steady stream of people and that our society can absorb them with no problem.

Heck, one of the best ways to “win” the immigration battle is to let any foreign student who graduates from college with a STEM or Business degree to stay and be put on a quick path to citizenship-provided they abandon their prior countries citizenship.  Hence, you come from China and study here.  Stay.  But, you can’t go back.  Burn the boats.  Getting the best human capital from other countries to reside and be citizens here will keep America in the lead.

Here’s the back of my head at a recent Canada Independence Day party a friend of mine had. The face painter lady saw me and said it was a canvas that she could not pass up.