1. PALESTINIAN RESETTLEMENT

Tyler Cowen notes in the Volokh Conspiracy that

George Liebmann has a provocative idea for making the Middle East a more peaceful place: Offer Palestinians the chance to emigrate to the United States and other Western countries.

That's the way to go. The idea needs fleshing out, though. There are about 2 million Palestians in the West Bank and 1 million in Gaza (does this include non-refugee descendants too?). First, we might need inducements to Palestinians to emigrate, even after we force their terrorist leaders to give them a free choice. I bet $10,000 per person (including children) would do it easily, for a total cost of $30 billion. Liebmann says the present value of our cumulative aid to Israel is $100 billion (though I'm not sure what he means by that). At any rate, compared to our aid to Egypt and Israel, $30 billion isn't much, and, for the economists, it's a transfer, not a real cost. Second, we would need to induce countries to accept the Palestinians. The U.S. could shoulder the entire burden, but a better way, especially given the pro-Palestinian stance of so many European countries, would be to hold a negative-price auction.

Here is how the auction would work. Each country bids a price at which it will take each Palestinian. The lowest bidder wins, and is paid that price. The money comes from a pool of cash which is provided by all the countries involved. What fraction to tax each country is, of course, a big issue, but this could be allocated by population or GDP or something like that. Thus, if there were just two countries and one person, it might happen that France bids $3,000 and Britain bids $12,000 for Mr. Abbas, so France wins, and if they had agreed to a 50-50 split beforehand, France would get the $3000 and Mr. Abbas, and Britain and France would each chip $1500 into the pot to pay for it. This scheme ensures (a) that the immigrant goes to the country that least dislikes having him, and (b) that whichever country bears the burden of immigration, gets compensation.

A full analysis could be done in the style of the excellent cost-benefit on the Iraq war by Davis and Murphy and Topel of the University of Chicago.

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