Speaking as a geek, I'm interested (maybe that's the wrong term) in how a high-tech internal passport would technologically work.

Using current technology, GPS (or "AGPS"/cell tower triangulation) requires an active device with a power source, not to mention that wrapping your passport in aluminum foil would disable this "feature".

Another possibility is a transponder like is found in SunPass no-stop tolling. Your passport would essentially function as a SunPass, and the toll "points" would be major intersections. As you drive/walk/ride transit pass these points, your motions would be tracked. Again, a foil wrap defeats this--there are even special foil SunPass bags to block your SunPass from being charged.

Then we have the technical issues of how to enforce a must-carry passport law. Will police do random enforcement and replace their speed guns with passport detectors, stopping any pedestrian, cyclist, or vehicle that doesn't produce a transponder blip? Will passports be required to board mass transit?

Good luck enforcing it in a pedestrian-heavy area like NYC, but random no-documentation arrests would get the point across.

FWIW, internal passports would be my cue to start being really nice to my relatives who live in Europe and could help me navigate the whole employment-for-expats thing...