In this article, the magazine argues that the key ingrediant for long term success of any Ponzi - that is "new investors" - is the key reason the U.S. can keep the balls juggling for a very long time. (Investors = Immigrants, in this case) One might take issue with this thesis as many policies of the past decade, along with the associated future costs (higher taxes in the future without associated "benefits" many Western European socialist countries may offer) might make the US less appealing of a destination. Not to mention the dearth of job opportunities outside of the public and pseudo public (healthcare, education) sectors. [Sep 21, 2009: USA Today - More of the World's Talented Workers Opt to Leave USA] [Dec 23 2009: WSJ - With US Opportunities Dim, Expats Return Home] But it's good food for thought and one should always look at both sides of the story, as circumstances in 5-10 years could be different than today.
Via The Economist:
- Joshua Lee sits on a sofa and explains why he likes living in America. He grew up poor: his father was a day labourer. He did his military service on an American base in Seoul, where he polished his English and learned to like hot dogs. He moved to America in 1990, when he was 27, to study theology in Kentucky. He painted houses to support himself.
- He met his wife, a Korean-American, and moved to northern Virginia, home to a hefty cluster of Korean-Americans. Eventually, he found a job writing for a Korean-language newspaper about Korean-American issues.
- When he arrived, Mr Lee was astonished by how rich nearly everyone was. He recalls his first dinner with Americans: the huge bowls and immense portions. He was startled to see lights left on in empty rooms. He is still impressed: “The roads are so wide, the cars so big, the houses so large—everything is abundant,” he says.
- Yet this is not why he came, and it is not why he stayed and became a citizen. For Mr Lee, America is a land that offers “the chance to be whatever you want to be”. More prosaically, it is a place where nearly any immigrant can find a niche.
- ....he never liked the way his neighbours in Korea stuck their noses into each other’s business. Everyone knew how you were doing in school. You could not get a good job without connections. There was constant social pressure not to lose face. When Mr Lee went back to visit, he remembers slipping into the old straitjacket. He wanted to pop out to the corner shop, but realised he would have to put on a smart shirt and trousers, despite the intense humidity. What would the neighbours think if they saw him in shorts and flip-flops? In America, no one cares. In Korea, he says, to express an unusual opinion is to court isolation. In America, you can say what you think.
A nation of immigrants:
- Because America is so big and diverse, immigrants have an incredible array of choices. The proportion of Americans who are foreign-born, at 13%, is higher than the rich-country average of 8.4%. In absolute terms, the gulf is much wider. America’s foreign-born population of 38m is nearly four times larger than those of Russia or Germany, the nearest contenders. It dwarfs the number of migrants in Japan (below 2m) or China (under 1m). The recession has dramatically slowed the influx of immigrants and prompted quite a few to move back to Mexico. But the economy will eventually recover and the influx will resume.
- Nearly all Americans are descended from people who came from somewhere else in the past couple of centuries. And the variety of countries from which immigrants come—roughly all of them, and usually in significant numbers—is unmatched. No matter where an immigrant hails from, he can find a cluster of his ethnic kin somewhere in America.
- In a European country, if you want Korean food and a particular denomination of Korean church, you might find it in the capital but you will struggle in the suburbs. In America, it is easier to find just the niche you want: Polish or Vietnamese, metropolitan or exurban, gay or straight, Episcopalian or Muslim, or any combination of the above.
- People move for a variety of reasons. Alejandro Mayorkas, the head of the United States Citizenship and Immigration Services, cites two. People come to America, he says, either because they yearn for freedom or because they are fleeing something. That something could be a civil war, or it could be a culture that irks them.
- America has 50 states with 50 sets of laws. In America, people with unusual hobbies are generally left alone. And power is so devolved that you can more or less choose which rules you want to live under.
- If you like low taxes and the death penalty, try Texas. For good public schools and subsidised cycle paths, try Portland, Oregon. Even within states, the rules vary widely. Bath County, Kentucky is dry. Next-door Bourbon County, as the name implies, is not. Nearby Montgomery County is in between: a “moist” county where the sale of alcohol is banned except in one city. Liberal foreign students let it all hang out at Berkeley; those from traditional backgrounds may prefer a campus where there is no peer pressure to drink or fornicate, such as Brigham Young in Utah.
While I agree with the premise below what it does not point out is as manufacturing leaves the US much of the R&D has recently left to go with it; especially in lower cost locales teeming with engineering talent (Chindia):
- Migration matters. Economic growth depends on productivity, and the most productive people are often the most mobile.
- A quarter of America’s engineering and technology firms founded between 1995 and 2005 had an immigrant founder, according to Vivek Wadhwa of Harvard Law School. (something those declaring we need to "keep out immigrants" should consider)
- A quarter of international patent applications filed from America were the work of foreign nationals.
- And such measures ignore the children of immigrants. Jeff Bezos, the founder of Amazon, is the stepson of a man who fled Cuba at the age of 15 and arrived without even a high-school diploma.
- Richard Florida, the author of such books as “The Flight of the Creative Class” and “Who’s Your City?”, argues that countries and regions and cities are engaged in a global battle for talent. The most creative people can live more or less where they want. They tend to pick places that offer not only material comfort but also the stimulation of being surrounded by other creative types.
This used to be the situation among cities in America - trying to create an atmosphere to attract this type of person (Austin, Bay Area/San Francisco, Boston). Now I believe it will turn into a global competition. Can Shanghai or Sao Paulo offer all these things today? Perhaps not - but in 5, 10 years? [Nov 13, 2009: Sao Paolo, Mumbai, Shanghai to Join New York, London, Paris as World's Dominant Cities by 2025] What about Hong Kong? Seoul? Perhaps already.
- This makes life more fun. It also fosters technological progress. When clever people cluster, they can bounce ideas off each other. This is why rents are so high in Manhattan. Robert Lucas, a Nobel economics laureate, argues that the clustering of talent is the primary driver of economic growth.
- So a country’s economic prospects depend in large measure on whether it is a place where people want to be. Desirable destinations draw talented and industrious migrants. Less desirable ones suffer a brain drain. Desirability is tricky to measure, however.
The Economist believes that America will remain at the top in this competition... an interesting take actually as it cites religious networks as a hidden ace.
- People cannot vote freely with their feet. No rich country allows unlimited immigration, and the rules vary a lot, so it is impossible to know which country is the most attractive to the largest number of people. But there are reasons to believe that America ranks at or near the top.
- Mr Florida and Irene Tinagli of Carnegie Mellon University compiled a “Global Creativity Index”, which tries to capture countries’ ability to harness talent for “innovation...and long-run prosperity”. The index combines measures of talent, technology and tolerance. America comes fourth, behind Sweden, Japan and Finland.
- You could quarrel with the methodology. America comes top on certain measures, such as patents per head and college degrees, but it is deemed less tolerant than other countries in the top ten. This is because the index rewards “modern, secular” values and penalises Americans for being religious and nationalistic.
- Michael Fix of the Migration Policy Institute, a think-tank, observes that religion has a strong effect on who comes to America. Churches create networks. Migrants typically go where they already know people, and often make contact through a church.
- It is also a mistake to rate Americans as less tolerant because they are nationalistic. Americans may have an annoyingly high opinion of their country, but theirs is an inclusive nationalism. Most believe that anyone can become American. Almost nobody in Japan thinks that anyone can become Japanese.
Will tough economic times, and the associated anti-immigration political dogma hurt America's ability to attract talent? Once more, The Economist argues "no".
- Not everyone thinks that immigration makes America stronger. Most of the Republicans who ran for president in 2008 promised a tough line on the illegal sort. Tom Tancredo, the angriest of them, describes America’s porous borders as a “mortal danger”, though he is the grandson of immigrants from Italy. Pat Buchanan, another former presidential candidate, wrote a book subtitled: “The Third World Invasion and Conquest of America”.
- Some fear that open borders make it easier for terrorists to sneak in. Others worry that immigrants overload schools and hospitals, or drag down the wages of the native-born. Environmentalists fret that immigration drives population growth, which aggravates urban sprawl, pollution and global warming.
- The argument that stirs the hottest passions, however, is cultural. The late Samuel Huntington, a Harvard academic, argued that Hispanic immigrants, because they are so numerous, will not assimilate. Rather, they threaten to “divide the United States into two peoples, two cultures and two languages” and “[reject] the Anglo-Protestant values that built the American dream”.
- Mark Krikorian, the author of “The New Case Against Immigration: Both Legal and Illegal”, points out that modern immigrants can call home every day. This, he says, means they are less likely to give up their old ties and become American. He complains that the American elite no longer thinks American culture is worth preserving, and therefore no longer insists that immigrants imbibe it. He also predicts that mass immigration from poor countries is incompatible with the welfare state—too many newcomers will bankrupt it.
- Nearly all this gloom is misplaced. It is possible that unskilled immigrants hurt the wages of unskilled locals. George Borjas, a Harvard economist, estimates that native workers’ wages decline by 3% or 4% for every 10% increase in immigrants with similar skills. But others, such as David Card of the University of California, Berkeley, have found little or no impact. Gianmarco Ottaviano of the University of Bologna and Giovanni Peri of the University of California, Davis, find that nearly 90% of native-born American workers actually enjoy higher wages because of immigration. Many immigrants bring new skills and ideas, spend money, pay taxes and employ natives.
- In America it is hard for an able-bodied adult male to do anything more than subsist on welfare. So immigrants work, which means they are seldom much of a drain on the public purse, and they have no choice but to assimilate. People who work together need to get on with each other, so they generally do.
- Because immigrants have to work, America does not have ghettos full of permanently jobless and alienated young immigrants, as in France, for example. This is perhaps why, although America has a high murder rate—three times that of Britain—its immigrants rarely riot. They are too busy earning a living. (interesting points)
- Some of America’s talk-show hosts are quite vicious, but no openly xenophobic politician can attract the kind of support that France’s Jean-Marie Le Pen did in 2002, or that Austria’s Jörg Haider did before he got drunk and killed himself in a car crash. Political rhetoric in America is often heated but almost never leads to violence.
- America is a uniquely attractive place to live: a lifestyle superpower. But it cannot afford to be complacent, for three reasons.
- First, other places, such as Australia, Canada and parts of Western Europe, have started to compete for footloose talent.
- Second, rising powers such as India and China are hanging on to more of their home-grown brains. There is even a sizeable reverse brain drain, as people of Indian or Chinese origin return to their homes. But neither India nor China attracts many completely foreign migrants who wish to “become” Indian or Chinese.
- Third, since September 11th 2001 the American immigration process has become more security-conscious, which is to say, slower and more humiliating. Even applicants with jobs lined up can wait years for their papers. Many grow discouraged and either stay at home or try their luck somewhere less fortress-like.
- The stakes are high. Immigration keeps America young, strong and growing. “The populations of Europe, Russia and Japan are declining, and those of China and India are levelling off. The United States alone among great powers will be increasing its share of world population over time,” predicts Michael Lind of the New America Foundation, a think-tank.
- By 2050, there could be 500m Americans; by 2100, a billion. (I am not sure how Earth would support 500M or 1 billion Americans consider 300M use 25% of all it's resources!) That means America could remain the pre-eminent nation for longer than many people expect.
- “Relying on the import of money, workers, and brains,” writes Mr Lind, America is “a Ponzi scheme that works.”