I was telling a friend today about my recent blog post titled “A Friendly Amendment on the Border Wall.” He hadn’t read the post but quickly understood my point. His reaction: Almost no property owner would take that deal. Of course, whether the owner would take the deal would depend heavily on how much was offered. Make it high enough and many property owners would take the deal.
This suggests a valuable use of the GoFundMe moneys used to pay for the border wall: Offer various amounts of money to various property owners for their allowing a wall on their property. My friend is implicitly speculating that the amounts would be high. (By the way, the amount of money raised on the GoFundMe site is now $17.6 million.)
Then we could estimate the cost of building the wall across the whole border. I suspect that the cost is much higher than Donald Trump and other believers in the wall think.
Isn’t it interesting that a number of conservatives support the wall but don’t seem to be at all aware of or, if they are aware, don’t seem to care much about, the extensive violation of property rights that building such a wall using eminent domain would entail?
READER COMMENTS
Jon Murphy
Dec 27 2018 at 8:23pm
I imagine the costs would grow, perhaps exponentially, as the sales were made. The last guy, essentially being a monopolist, could charge a very high price for his land since the thing about walls is they need to be continuous to work.
Alan Goldhammer
Dec 28 2018 at 8:16am
Jon, I thought the same but then gave it more thought. It could be that the last person’s property might never be needed since it would be very easy to patrol given the small area in question. The pricing of acquisition is going to be complex depending on whether and how many adjacent properties are sold/leased to the government.
OH Anarcho-Capitalist
Dec 28 2018 at 8:27am
Indeed, the “last monopolist” at the end of the line might just decide to build his own wall, assuming the flow of immigrants goes to the spot of least resistance – his property. He could hire security to thwart trespassers, but why have an ongoing cost and not simply a 1 time capital addition?
Jairaj Devadiga
Dec 28 2018 at 9:20am
Good point, Alan. There is also the possibility that the inconvenience caused to the last property owner by people coming and going at all hours might be so great that he might even agree to sell his land at a lower price.
Thaomas
Jan 2 2019 at 4:32am
He could charge admission. 🙂
Jon Murphy
Dec 28 2018 at 9:48am
Good points, gentlemen. He might still be able to charge a higher price but not significantly higher. It’d depend on the size of his property, I would think.
Jairaj Devadiga
Dec 27 2018 at 8:26pm
There are also conservatives who try to invoke property rights as the very basis for the wall. They say that free migration is a violation of property rights since foreigners use public property, such as roads, without having paid taxes for them.
Of course this is not true; in so far as tariffs exist and foreign investment is subject to taxation. Moreover, it would follow that native-borns who don’t pay taxes (such as the disabled) should be expelled from the country to prevent them from using roads as well.
Then again, partisan politics requires participants to engage in all sorts of doublethink.
Matthias Goergens
Dec 27 2018 at 11:57pm
That would however suggest a simple way to reorganize legal immigration:
Just figure out how much money the immigrants allegedly cost the tax payer, and then just charge that as an admission fee for a permanent residency. Payable upfront (if you need financing, the private sector can provide).
Of course, any realistic proposal couldn’t really be higher than what the median resident pays in taxes (at least if using public good without paying is your justification). And access to the American labour market is probably worth more than that.
Jon Murphy
Dec 28 2018 at 12:17am
Indeed, Matthias. One could even make it payable over time so as to prevent people who cannot pay upfront from being rejected. Like, if the government were to deduct a certain amount from each paycheck.
john hare
Dec 28 2018 at 4:27am
Deduct from paycheck as in taxes, makes sense. What if the immigrant saves the tax payer money instead of costs them, do you add to the paycheck to keep it even?
Thaomas
Jan 2 2019 at 4:34am
The average immigrant probably is a net benefit, not a cost to taxpayers. We should be actively recruiting immigrants.
gda
Jan 5 2019 at 6:59pm
Well the average (legal) immigrant is probably a net benefit to Canada. But that’s because we have at least a semi-rational immigration system.
Sadly, this is not true in the US, so I doubt the average immigrant (even the legal kind) are a net benefit.
But I’m always willing to change my mind if you can provide unbiased sources to support your statement.
David Seltzer
Jan 4 2019 at 7:20pm
Matthias. Good point! Gary Becker explains the benefits of setting a price for immigration. The article is posted on the Becker Friedman institute for Economics at The University of Chicago.
RPLong
Dec 28 2018 at 8:45am
Of course, there is nothing to stop pro-immigration activists from launching a similar GoFundMe campaign to pay private property owners to keep their land open for border-crossing purposes. It would be interesting to see whether the market equilibration for border walls/border crossings resulted in many cheap access points or only a few, very expensive crossings.
Dylan
Dec 29 2018 at 7:03am
Cards Against Humanity did essentially this as a holiday promotion in 2017. They bought a piece of land on the border and say they have retained a lawyer specializing in eminent domain to make it as time consuming and costly for the government as possible to seize the land to use for a wall.
Handle
Dec 29 2018 at 10:40am
I heard about this one, but despite the claims, I don’t think they actually went through with it and bought any land. Every time some journalist tries to contact the company about it, they get radio silence, and the website’s “illustrated map” is clearly a joke. Even if they did purchase some land “on the border”, to make their claims technically true, that doesn’t mean it’s even where wall construction is planned to occur.
Dylan
Dec 29 2018 at 11:22am
Good point. I briefly tried to find an update on this before posting, but didn’t see anything one way or the other, so just stuck with the original story. Appreciate the clarification.
Handle
Dec 29 2018 at 7:48am
Different guesses about market prices for land just don’t matter very much when it comes to wall costs.
During the last major round of border land acquisitions per the Secure Fence Act of 2006, about 10-20% of private parties came to voluntary sales agreements with the government. Acquisition of the remaining plots required exercise of eminent domain and pursuit of condemnation actions, and in about two thirds of those actions, the parties and the government were able to come to an agreement regarding value, the rest taking their chances in court. Both types of voluntary deals help to inform the courts’ judgments in their determinations of just compensation for the involuntary deals.
Yes, all those deals with the government are negotiated under the shadow of its eminent domain power, but local county appraisals / assessments and comparable private sales are also part of the evidence.
Still, one has to keep some perspective regarding the issue. The CBP estimates put wall construction costs at anywhere from $20-40 Million per mile. If you secure a strip of border land about 150 feet thick, then that’s about 18 acres per mile, and at a pretty generous valuation of this largely remote and barren land at around $50K an acre, it would still come in at under a one million dollars per mile, so just a few percent of construction costs, and in the “rounding error” range.
Furthermore, that’s for permanent, total acquisition, and sometimes acquiring mere building or access easements is even cheaper.
Thaomas
Jan 1 2019 at 7:11am
It is not at all surprise that “conservatives” have not applied cost benefit analysis to the Wall. Cost benefit analysis of investments and regulations is a neo-Liberal idea. Not only is the cost of the Wall likely much higher than stated, but the benefit of marginally reducing the flow of immigrants who are at the present margin probably adding to the incomes of residents would be negative.
john hare
Jan 1 2019 at 2:22pm
Aside from my thinking the wall is a stupid idea applied to the wrong problem set, the projected cost is out of line with what I see as reasonable construction cost. $20M-$40M per mile works out to about $4K-$8K per linear foot. It takes extreme problems to drive costs that high with most of the construction methods I am aware of. And I could think of several construction methods for getting it much lower, especially in the quantity of work involved.
Handle
Jan 5 2019 at 11:54am
Oh come on. There is nothing remotely stupid about the idea of constructing physical barriers around boundaries as a way to impede unauthorized entry. It is pretty much the universal approach to that abstract ‘problem set’, and has been deployed effectively all over the world, in every possible context, since the dawn of civilization.
As to the cost estimates, they are certainly and unarguably obscene, but at the same time they are also simply a manifestation of the widespread inflation of costs associated with the ordinary, everyday scandal of government procurement and contracting in practically every domain. American Government Cost Disease is terrible and severe, but hard to avoid.
These higher costs don’t usually represent windfall profits or higher than market rates of return, and instead reflect the truly immense compliance burden and need to insure against special business risks that the government usually imposes on its counterparties.
After all, if someone doesn’t believe that’s true, they have an easy way to get rich quick via an obvious arbitrage opportunity. Wall construction is procured via an open bidding process where contractors put in estimates based on government requirements, and if you think you can do better, go ahead and beat the lowest bid by 1%, and the gap between actual costs and your bid should be many millions of dollars!
Of course, it raises the question: why wouldn’t your subcontractors just compete to put in those lowest bids themselves? Turns out the answer is that doing even ordinary construction work for the government is more of an egregiously expensive hassle than people suspect.
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