I'm late to this party, so some general comments. In my view, it's entirely possible that RB and those who disagree with him are both right. I see the following arguments as all persuasive:
1. It is unconscionable that Europe as a whole continues to operate such a haphazard refugee settlement system given the scale of the crisis. The perverse incentives in place for refugees and migrants to make perilous journeys at substantial risk to their lives are only made worse by the impression that obtaining asylum is easier if they can only reach Germany. It feeds demand for the traffickers and is likely to further increase the migration.
2. Simultaneously, the scenes of destitute refugees from war-torn regions including Syria, Iraq, and Eritrea desperately trying to find a home in Europe are equally wrenching. It is unconscionable for European nations - whether a part of Schengen or not - to stand idly by and ignore the problem inside their own countries and on their borders. Much greater numbers of refugees must be given asylum, and those who will not be given asylum should be speedily processed and returned home. The current 'passing the buck' where Germany is one of only a few countries taking in substantial numbers is unreasonable.
3. The conditions in Syria-adjacent countries - notably Jordan and Lebanon, given their size relative to the refugee population - are dire, and more funds must be found to feed and shelter these refugees while their asylum applications and resettlement plans are processed. This is one of the largest refugee crises in modern memory, and the countries adjacent to Syria are groaning under the strain. The West can and must do more to improve conditions.
These can all be simultaneously true without giving us a good idea of where policy should go. I'm inclined to argue for a mix of policies - refugees already in European countries should be rapidly processed and resettled according to some sort of quota system. It will be hard to keep them in one place if they end up in Estonia and would much prefer to be in Germany or France, but it's possible you could tie benefits etc. to their resettlement location to keep the burden from growing too heavy on the most attractive nations in Schengen. Migrants who don't qualify for refugee status should have applications processed rapidly and be returned to their place of origin - importantly, this rapid and uncompromising review should be made clear to the many economic migrants (esp. those in the Balkans and N. Africa) to discourage further migration.
Importantly, though, things need to be done to stem the flow of migrants along unspeakably dangerous routes. The West should set up asylum processing centers in common ports of departure - Libya, Turkey, etc. - to discourage the use of traffickers. Furthermore, these applications should be given priority and expedited processing over those from migrants who illegally enter Europe in order to provide further incentive. To make this work, the West - not just Europe - needs to formally agree to take in far greater numbers of Syrian/Eritrean/etc. refugees than they have done until now - the US is, sadly, a bit of a laggard here, and I think we could easily handle 100k refugees over the next few years, quite possibly more. The combination of a safe route to resettlement that includes a reasonable probability of success in a short time frame should help stem the demand for traffickers from legitimate refugees.
Of course, that doesn't stem the flow of economic migrants, who will continue to use traffickers and dangerous routes, even with better processing of asylum applications and rapid repatriation of rejected applicants. To address this, there are two solutions, each imperfect. First, traffickers are the real evil here, and their networks should be aggressively hunted down using the not-inconsiderable tools at the disposal of the EU. That likely includes some level of cooperation/strong-arming/ignoring of the local governments, especially in N. Africa, but the EU has the muscle to do it, and they should absolutely do so. Thousands of people are dying trying to get to Europe, and that is unacceptable (there are similar problems with Central American migration routes into the US, though at least US interdiction has gotten pretty good and there isn't the same omnipresent risk of drowning). Deal with trafficker scum, and you'll at least slow the tide. It does nothing to address the demand-side of trafficking, though. For that, you'll need the painful long-term solution of improving conditions - economic, political, etc. - in the countries of origin for economic migrants to make a risky and illegal trip to Europe less enticing. This takes time and requires lots of money, but RB is correct that the vast majority of Western countries fall far short of their proposed development aid goals. Europe can and should share a small portion of its wealth with her neighbors from a moral perspective, but also to reduce the migration pressure.
The point is that we can't ignore either RB's points of those of everyone else - any solution needs to address them all simultaneously to try to find an optimum solution.
Oh, and Loki - about Palestinian 'refugees', remember that they are the only people in the world with their unique, idiosyncratic definition of the term to include not just actual refugees, but also all of their descendants without end. The actual number of legitimate Palestinian refugees is quite small (and getting smaller by the year), and most of those have long since been resettled in their current countries, though they often continue to suffer from political and economic discrimination in places like Jordan, Syria, and Lebanon (that, under some definitions, might qualify them for asylum in Western countries, but not because of a 'well founded fear of persecution' from Israel, but rather their current host countries). Interestingly, I'd bet that the largest current population of bona fide Palestinian refugees would be Palestinian-identified Syrians who have fled the civil war and are seeking a new haven.
