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>no borders means no state which means no handouts
No state equals anarchy for a week before breaking down into feudalism. South Africa proved that. You'll have bigger problems then.
>Remove financial incentives and the problem stops immediately
I agree, it's the main reason why they come. I don't believe removing borders will solve this for the same reason why most aren't interested in politics; you will push an expectation that people will need to give a damn about issues that may start affecting them personally (usually after something's already happened, whether trivial or malignant). I'm also concerned about the non-economic aspects, especially child and women's safety, if we start allowing people with no cultural proximity to freely enter.