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Contrarian Thought: We Need MORE Immigration in the U.S., Not Less

January 26, 2009

Contrarian Thought: We Need MORE Immigration in the U.S., Not Less

Call me crazy, but I think it is dead wrong to restrict immigration into the United States on the grounds that we are somehow "protecting" American jobs. In contrast, I think a better way to create jobs in the US is to encourage MORE immigration, from a much wider variety of countries.

The idea that immigration somehow deprives current Americans of their jobs stems from a mistaken interpretation of how the economy really works. You really can't think of our economic system as some type of pie that can only be cut up and divided in so many ways. It is not a static "thing," but a vibrant, growing, inter-connected system.

Actually, our economy is more like an ice cream soda than a pie. In the ice cream soda model, ice cream represents the supply of land, natural resources, and productive assets, while the soda pop you add represents the capital and labor deployed to create more value from these resources. And, as anyone who has ever made an ice cream soda undoubtedly knows, for every extra teaspoon of soda pop you put in, you get two or three more teaspoons of foam and froth, which represent the output.

This is more analogous to our economic system than you might think. In general, the more capital and labor you employ against a fixed amount of resources, the more value you can extract from those resources. But the latest economic thinking regarding innovation and technology implies that when we deploy intellectual and creative inputs (i.e., human brainpower), the innovations generated tend to reduce the actual costs of production, which increases the returns on these fixed resources.

This is important: the more brainpower we employ, the more prosperous our economy will be.

Some will argue that this means we should JUST allow immigration of smart, creative, and ambitious workers and, in fact, the country does have special rules for highly talented immigrants. But what a lot of people don't fully appreciate is that when we allow the immigration of many different types of workers, all with different skill levels, even the work they do at lower wages will still "free up" other people (i.e., those of us already here) to work in ever more productive jobs, with ever greater "brainpower" productivity. In other words, we can pour one teaspoonful of Mexican laborers or Jamaican nannies into the ice cream soda and we're still likely to get more than a teaspoonful of additional output.

This isn't to deny that there will be economic friction, as the best companies grow even faster, while the least productive ones have to scramble even harder. There will always be economic dislocations, but the best defense against the hardship that these dislocations cause is not xenophobia, but easily accessible training and re-training programs. I also believe it's important to encourage English language skills, not just to speed cultural assimilation but also to insure more frictionless economic interactions (that's a topic for another blog posting).

The U.S. is a great and vibrant country, full of industriousness and entrepreneurial energy, and one of the primary sources of our strength, as a country, is our melting-pot heritage.



2 Comments

Tim, while I agree almost completely with your point of view, I think your point on the current slack in employment here (which I read as: larger than usual unemployment levels) is indeed a cyclical economic issue. Yes, we have people looking for jobs, and that's always a painful situation, but putting aside the cyclical nature of current unemployment levels, a certain amount of this pain is necessary.

I know this sounds cruel and heartless of me, but the simple truth is that economic changes are rarely painless. Good companies win and bad ones lose. Innocent people lose their jobs simply through the unforeseeable misfortune of having chosen the wrong company to work for. But the alternative to this is a more rigid and less flexible economy, which will cause a lot more pain in the long run.

Frankly, what we OUGHT to do is concentrate on getting people who are made jobless back on their feet with retraining and a better configured unemployment package. For instance, rather than pay someone 24 weeks of unemployment insurance, one week at a time (as long as they don't work!), maybe we ought to offer laid off workers a single lump sum - say, 20 weeks of payments all at once - and let them get another job the next day if they can (or even start their own small business).




A further economic advantage of allowing additional immigration is that it stands to rejuvenate the age curve profile of the U.S. As the baby boomers move into retirement and the funding of our social security system comes under pressure, allowing youthful immigration populations into the country shores up the taxpayer base. Further, the coverage ratio of taxpayers to retirees improves under such a scenario.

On another matter, the article seems to put forth the argument that additional immigration allows for the deployment of our existing population's full capabilities. This argument presumes that opportunities exist within the workforce for the uptake of these capabilities. Unfortunately, our current economic crisis is leaving a plethora of wasted talent in its wake. The large amount of talent slack needs to be redeployed and our labor market tightened up before we can realize the benefit of the described trickle-up effect.

Critical to our efforts (and, fortunately, a proudly prevalent trademark of our society) has to be our workforce's ability to be flexible, to educate itself, to retrain, and to redeploy. If we can succeed in this regard, we will be able to rebuild, resume growth, and reap the benefits of additional immigration into this country.




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