Hey, what other laws should we just give up on because enforcement is too nasty or politically uncomfortable? Let's legalize drugs, prostitution, etc. We should not look for tax evaders or cheaters because we don't have the resources to investigate the millions of cheaters or to enforce the law against those we catch. We should eliminate all other laws against unfair business practices while we're at it.
The rest of your post is crap (well all of it, actually). We would not need a draft, prison camps, etc. to enforce the current immigration laws.
If they are willing to continue illegal activity, we'd be much the better if they did go out of business.
"(b) move overseas"
They are just short of doing that anyway. If they could, they'd jump the border faster than an Illegalien on a moonless night because there is no incentive from the FedGov for them to stay, no penalties when they do, and Illegaliens are part of the problem. Simply put, if laborers are paid more, they'll be abled to pay more.
"or (c) if it is the kind of business that cannot be replaced by overseas competitors (restaurants), raise their prices enormously and thus shrink their business."
Illegaliens and those that hire them contribute to a false standard of living by keeping wages and prices of goods and services artificially low. Many of them and others affected by their impact on the economy have to resort to some taxpayer funded support program at some point because their low wages prevent them from acquiring those goods and services on their own. The net effect is lower paid laborers pay less in taxes which increase the tax burden on the middle class and businesses. That in turn, causes many more into assistance programs, further increasing "entitlement" spending when there's no room in Governments' budgets to do so.
In short, there is nothing but economic disaster by having low-wage, underpaid labor illegally within our borders.
The other posters have addressed your (a) and (b) concerns. Let me address your (c) concern. I spent 14 years in Japan whose illegal alien problem is miniscule, compared to our. I worked about half that time in Tokyo's ritzy Ginza District, equivalent to Park or Madison Avenue of New York.
During a 45 minute lunch-break, I could go (in the most expensive real estate of the most expensive city in the world) to at least a dozen places which served a fairly decent sit-down meal for about $8.
Try doing that in New York and you'll be lucky to buy a stand-up hot dog, soda and chips from a street vendor. What's more, the manager of one of the restaurants lived in my very middle-class neighborhood about 50 minutes away by train. In addition, tipping was neither expected nor wanted. Service ranged from excellent to fairly good. So the food was not only reasonable, but the "help" was paid a living wage.
So what was Tokyo's advantage over New York? Everything from the food to the labor was more expensive, but the meals were cheaper . . . as were the taxes . . . and the regulations. Go figure.