Immigration Wars: Forging an American Solution (8 page)

O
NE OF THE INVARIABLE RULES
of economics is that if government erects an obstacle to goods or services that people desire, the market will find a way around it.

So it is that two young entrepreneurs—Dario Mutabdzija, an immigrant from Sarajevo, and Max Marty, the son of Cuban immigrants—came up with the idea of Blueseed, taking aim at the inadequate supply of American visas for enterprising foreigners.

Blueseed’s object, as the
New York Times
describes it, is to “create a visa-free, floating incubator for international entrepreneurs off the California coast near Silicon Valley.”
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The idea is to anchor a large ocean vessel twelve miles offshore—just outside
U.S. territorial limits—where foreign entrepreneurs who are unable to obtain one of the few American visas available every year can transact business with Silicon Valley firms and investors. The venture is backed by PayPal cofounder Peter Thiel, among others.

Mutabdzija and Marty say their business is a response to overly restrictive immigration laws that make it extremely difficult for foreign talent to enter the United States. “The ship may sound like a crazy idea,” says John Feinblatt of the Partnership for a New American Economy, “but it illustrates how seriously flawed the immigration system here is.” Bob Dane of the Federation for American Immigration Reform adds that “the whole thing is a perfect metaphor for how in corporate America the practice to grow talent and incubate business locally is drifting away—quite literally.”
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The floating entrepreneurial fortress may never lay anchor. But the fact that enterprising minds came to float such an idea speaks volumes about the disastrous state of American immigration policy. Historically a beacon of unfettered opportunity, our nation now turns away in epic numbers the world’s best and brightest. In the process, we are systematically laying waste to our economic future.

America is different from any other country on earth in many ways, but most significant is that our national identity derives not from a common ethnicity but from a set of ideals—not just life, liberty, and the pursuit of happiness, but individualism, faith, family, community, democracy, tolerance, equal opportunity, individual responsibility, and freedom of enterprise. Those ideals are set forth in our nation’s founding documents and enmeshed in its institutions.

But though our nation was founded on those ideals and continues largely to hold fast to them, America does not hold a monopoly over them. Quite to the contrary, millions of people around the world cherish those ideals and strive toward becoming Americans. Immigrants created our nation and immigrants throughout our history have reinvigorated our ideals.

Immigration is an integral part of America’s lifeblood, no less today than in years past. Almost by definition, people who move to another place not through compulsion but by choice are more fervent about their destination than many of those who were born there by chance. That is especially true of America, whose
principal beacons are freedom and opportunity. Newcomers who are drawn by those beacons tend to value them—not unlike religious converts—with the great passion that derives only from past deprivation. Immigrants are unlikely to be complacent about the freedom and opportunity that for them previously was only a dream and was gained only through great effort and sacrifice. Our nation constantly needs the replenishment of our spirit that immigrants bring.

Our current immigration policy, however, does not fully reflect the importance of immigration to our nation. Our immigration laws are so complex, cumbersome, and irrational that millions of people have circumvented them and entered our country illegally, inflicting grave damage to the rule of law that is our nation’s moral centerpiece. Others have given up and either tragically abandoned their hopes of becoming Americans or have gone home, and we have lost their energy and talent forever.

Debates over immigration policy are older than our nation—and the arguments pro and con have not changed much over the centuries. Traditionally, our immigration policy has been premised on the belief that there are an unlimited number of people around the world who want to come here, so our policy primarily needed to address who and how many would be allowed to come.

But today there are two conditions that are unlike any other before in our history, and each will exert a significant impact on American immigration going forward.

• America’s population is no longer growing on its own, so that most if not all of our future population growth for the foreseeable future will come from immigrants. Indeed, immigrants already make up half of all growth in the American workforce.

• For the first time, America is being forced to compete with other countries for immigrants and the needed skills they bring. Those two realities require a significant rethinking of the premises underlying immigration policy.

Our nation’s future depends in no small measure on fixing our immigration system. Left to its current path, the American economy will continue to decline. Since World War II, the United States’ gross domestic product (GDP) has averaged 3 percent annual growth—enough to sustain great prosperity, upward mobility, and a generous social welfare net. But the Congressional Budget Office projects that future GDP will average between 2 and 2.4 percent
annual growth. In fact, that projection may be far too generous. Given the anemic GDP growth of the last several years, by fall 2012 a 2 percent annual growth rate—50 percent lower than normal—was viewed as reason to celebrate.

The ominous decline in economic growth is attributable, among other factors, to fewer workers supporting more retirees, an increasing regulatory burden that stifles hiring and enterprise, the lack of a coherent energy policy, an education system that produces insufficient numbers of skilled graduates, and a massive debt that weighs heavily on the economy.
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If we could increase GDP growth to 4 percent annually, it would lead to greatly increased economic opportunities and prosperity and sharply reduced deficits.
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To put that into perspective, doubling our growth rate from 2 to 4 percent would create more than $4 trillion in additional economic activity over ten years—more than the entire current GDP of Germany. And it would generate $1 trillion in new tax revenues.

Restoring economic growth will require a number of policy changes, including a greater emphasis on free markets, free trade, entitlement reform, and education reform. But a critical component of future economic growth is immigration reform. “Immigration increases a country’s human capital,” explains Nobel laureate
economist Gary S. Becker. “That is to say it increases the number of workers available to help businesses expand or innovators make that next big breakthrough. By increasing the size of a country’s workforce, immigration can also increase a country’s gross domestic product. And because many immigrants are young, a healthy inflow of them can provide the economic growth and tax revenues that older and retired workers depend on.”
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Indeed, over the past twenty-five years, the countries that have experienced the greatest economic growth also have had the highest rates of immigration.
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But instead, our immigration system is dysfunctional. Immigration for skills and labor represents only a small fraction of the people allowed legally into our country every year. People who enter on temporary student and worker visas often have to return to their native countries because there are insufficient “green cards” for them—the authorization of permanent residency leading to citizenship. Meanwhile, millions of immigrants are lawfully admitted under an overly broad concept of family reunification and may not contribute as much to economic growth; millions of others are in the nation unlawfully because insufficient avenues exist for lawful immigration.

To meet America’s economic needs, we must have a complete
overhaul of our immigration policy. That in turn requires political courage and leadership. But instead, our political system in recent years has responded to the immigration challenge with paralysis. Democrats and Republicans, liberals and conservatives, are equally to blame.

We believe the chasm over immigration policy can be bridged by recourse to two fundamental values: recognizing the central role of immigration in America’s identity and prosperity, and at the same time adhering to the rule of law in enforcing our immigration policy.

If we embrace those core values in deed as well as word, we can formulate a fair and effective immigration policy that will help restore American leadership in its third century.

It is perhaps more essential than at any previous time in American history that we bring in adequate numbers of young, energetic, hardworking, and talented immigrants. As in other industrialized nations, America’s birthrate has fallen below the level needed to replace the current population. That phenomenon is placing enormous strains on our social welfare system, as fewer and fewer
workers are sustaining an ever-expanding elderly beneficiary population. The Nobel Prize–winning economist Milton Friedman, whom we both greatly admired, once famously remarked, “It’s just obvious you can’t have free immigration and a welfare state.”
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Actually, the converse is true: we cannot sustain a generous social welfare program (or even one that is less generous than the current version), a system upon which millions of Americans depend, if we do not increase the numbers of productive, contributing participants in our workforce. And given very strong population trends, the only way we can do that is through immigration.

The birthrate numbers are sobering throughout most developed nations. It takes a reproduction rate of 2.1 to sustain population, but nearly half the world’s population has lower than replacement birthrates.
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Western Europe is suffering enormous declines, with Germany, Spain, and Italy producing fertility rates of only 1.4—two-thirds of the rate necessary to sustain population. The Asian economic giants—Japan, China, Singapore, Hong Kong, and Taiwan—are even harder hit, with birthrates only half the level necessary to replace current population.
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As Ben Wattenberg explained in the
Wall Street Journal,
“The math is simple. Birth rates have fallen so far and so fast that the thinning ranks of the young can no longer support the burgeoning numbers of retirees
in country after country. Greece and Spain are already going over a demographic cliff.”
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The declining birthrates are particularly threatening to China’s growing status as an economic powerhouse. Due to its horrific one-child policy, which has led families to take drastic measures to ensure male rather than female births, China now has 20 percent more young adult men than women, an unprecedented social condition. Economic expansion in turn has led to women delaying marriage and childbirth, thus producing a sharply lower fertility rate and a rapidly aging population. Yet China holds to a fortress mentality that is hostile to immigration. China’s disastrous policies and their effects point to a high-speed economic train wreck.

The United States has not yet suffered as steep a decline in reproductive rates as other industrialized countries, but the numbers are alarming. Between 2007 and 2009, the United States sustained the biggest birthrate drop of any two-year period in thirty years.
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As of 2010, the fertility rate dropped to 1.9, significantly below the population replacement level,
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and it has continued to fall since then. The declining birthrate extends across all racial and ethnic groups.

Fertility typically declines during economic recessions, but the
current U.S. birthrate is lower than it was even during the Great Depression. Moreover, lower birthrates are likely to endure, given the dramatic increase in women pursuing careers and participating in the workforce. Women outnumber men in college, and male-dominated jobs have been particularly hard hit during the current recession. As a result, many couples are postponing families and having fewer children.

Those dynamics are placing enormous stress on federal entitlement programs.
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The plunge in birthrates has led the Social Security Administration to project that trust funds will be exhausted sooner than earlier predicted, with Social Security Disability Insurance running out of money in 2016, Medicare by 2024, and Social Security by 2033. If the birthrate continues to fall, the trust funds will be depleted even sooner.

Demography can dictate our destiny—unless we change it.

When a nation’s dependency ratio increases—that is, when the number of people depending on social welfare benefits rises in proportion to the number of workers supporting those benefits—it has only four possible policy options. It can increase taxes (which likely will reduce productivity, thus exacerbating the problem), it can increase the retirement age, it can decrease benefits—or it can increase the number of immigrant workers.
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Compared to other industrialized nations in Europe and Asia, the United States enjoys a potential competitive advantage in meeting demographic challenges due to its openness to immigration. Certainly China and other closed societies are not going to open themselves to significant immigration anytime soon. Similarly, many countries with strong racial and ethnic national identities are resistant to immigration, and often have difficulty assimilating newcomers. By contrast, immigration is a dominant feature of the American identity. Not only can we more easily assimilate newcomers, we have a long and successful history of doing so—and of immigrants playing an absolutely vital role in our economy.

What has worked so well in America’s past is critical to its future. As former Federal Reserve chairman Alan Greenspan has observed, immigration could provide a “potent antidote for slowing growth in the working-age population.”
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The numbers bear him out. New immigrants tend to enter the United States in their prime working years, during which they are much more likely than native-born Americans to be net contributors to the economy and tax revenues rather than consumers of social services. In 2002, 79 percent of foreign-born males in the United States and 77 percent of females were between the ages of 20 and 64, compared
to only 57 percent of native-born males and females.
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Darrell M. West, author of
Brain Gain: Rethinking U.S. Immigration Policy,
notes that “the virtue of this distribution is that it enhances the economic benefits of immigration.”
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