USA: Citizenship for Sale

On the US business immigration program. Similar issues as in the previous Canadian program:

Now let’s turn to the United States. Under the EB-5 visa program, foreigners can obtain a green card and then citizenship by making a small investment—$1 million, or $500,000 if it’s in an area with high unemployment—that will create or preserve 10 jobs for U.S. workers. Foreign investors can funnel their funds through “regional centers,” which are private organizations that finance commercial projects. These centers spare investors the trouble of figuring out for themselves whether an area suffers from high unemployment and whether a specific investment would generate the requisite 10 jobs.
The program is a mess. The government “is unable to demonstrate the benefits of foreign investment into the U.S. economy” under the program, in the words of the Inspector General of Homeland Security. Among other things, it’s almost impossible to figure out whether a specific investment generates jobs rather than reshuffles them from one place to another. There have also been examples of outright fraud and political cronyism. Part of the problem is a lack of documentation but the real problem is that the program is misconceived.
When we think about investment, the starting point is that investors don’t need citizenship or any other inducement to put money into a project when they will earn higher than the market rate of return. So given the risk and other opportunities, someone will invest $1 million or more in a mall complex or housing development if the expected return is, say, 10 or 15 percent. Many foreigners make such investments, and the vast majority of them make them not to obtain citizenship but to make money. In 2013, they ponied up $236 billion. Meanwhile, Americans invested another $2.5 trillion in the economy. At most $10 billion can be attributed to foreigners who seek visas, and probably a lot less.
The EB-5 program, then, just pumps up aggregate foreign investment in the United States by a few tenths of a percent per year. Given the size and liquidity of capital markets, the program has reduced the cost of capital by an infinitesimal amount, basically zero. A tiny reduction in the cost of capital might produce a tiny increase in the number of jobs, but most likely it will produce a tiny increase in profits for other investors or tiny reductions in price for consumers. It’s a bit like saying that you can immigrate to the United States if you buy a few cars from a domestic auto dealer at a price slightly higher than what the dealer is charging.

http://www.slate.com/articles/news_and_politics/view_from_chicago/2015/05/eb_5_visa_program_for_immigrant_investors_this_path_to_citizenship_is_a.html