The Economic Case for Immigration

Were it not for immigrants, our population would be in decline, the price of housing would be in secular contraction and social security would be bankrupt.

Full disclosure: I am for immigration – filtered and fettered, mind you – and for reasons that are perhaps atypical. My enthusiasm for immigration is grounded in a very simple concept: America needs immigration for our sustained economic health and our continued position as a global power. Framed thus, I find the case of immigration simple: we allow judiciously regulated immigration  or else our children and our children’s children will live in a society in decline.

Our finest import

Consider the irreplaceable talent that can come from foreign countries. Steve Jobs once described the chasm between an average software developer and the very best developer as “50:1, maybe even 100:1”. What do you do if that one-in-a-hundred great engineer, programmer or scientist currently lives in South Africa or Kazakhstan?  You “import” the talent, of course!

In cases where foreign talent is denied migration  to the United States, expertise will use their learned-on-the-job powerful skills to start a company in their home country. A company that will create more jobs and wealth for others. Too bad you missed out, Uncle Sam.  

BRAIN-DRAIN ECONOMICS AND STUDENT DATABRAIN-DRAIN ECONOMICS AND STUDENT DATA

A similar “brain drain” is replayed tens of thousands of times every year at our universities, where, according to the federal government, we now educate over 1 million foreign students. Among them are students who concentrate their studies in sought after STEM programs. Sixty-six per cent of these students are pursuing a master’s degrees and  higher certifications.

Data released by the Department of Homeland Security indicates that the number of foreign students studying in the U.S. dropped for the first time in five years (after achieving a previous zenith). Pundits hypothesize that this downturn correlates with the 2016 election campaign and Trump’s (anti) immigration platform.

This decline in foreign students has unfavorable economic consequences, as many universities and colleges nationwide rely on full fee-paying foreign students for revenue. A downturn of several hundred thousand students, each paying tens of thousands of dollars in tuition for mostly upper level degrees (not even taking into account the money they spend while in America) makes a significant financial impact. Especially in our climate of declining enrollments across the board.

Some of our country’s immigration policies can be described as “schizophrenic catch-and-release”: We recruit and attract great brains from around the globe, then educate them with the help of even greater and more experienced brains… and then finally our policies force them back to where they came from.

Imagine if our biggest businesses and corporations operated in the same erratic “catch and release” fashion? What would Goldman Sachs or McKinsey look like if they spent vast sums of their dough competitively recruiting, refining, training and grooming employees, only to send them packing before they could bestow their greatest contributions?

The rhetoric around immigration (both for and against) is part of America’s heritage. The more immigrant-friendly refrain goes: We are a nation of and built by immigrants, and to deny other members of the “poor and huddled masses” (both of present and future generations) an opportunity to build and contribute to the United States is simultaneously hypocritical and self-denying.

Birth Rates and Power

Putting all of this aside, let’s turn to the cautionary tale of Japan. Like most developed countries, Japan has a lower-than-replacement birthrate, but in their case far lower. Demographics and actuarial tables have two noble qualities: One, they don’t lie and two, they are forecastable to forever. Barring alien invasion or a catastrophic event, Japan’s fate is national dotage: by 2050, 40% of its population will be over 65 years old.  Its contribution to world GNP will shrink almost two thirds from its zenith to just 3% – relegating it to an inconsequential power.

Without immigrant labor to augment and regenerate Japan’s aging population, this demographic shift will completely shrink its economy. It will cause “native” or non-immigrant Japanese citizens to suffer. This is a clear example of how immigrant labor can come in to save the day – and rather than “taking” jobs, would actually build and create jobs and opportunities for the general populace.

Twinkies and Bankruptcy

I can empathize with the opposing point of view. A counter-narrative might be, for example, the tale of union workers at the Twinkies plant. Many lost their good paying jobs when Apollo (a private equity giant) bought Twinkies out of bankruptcy and then replaced old labor with less costly (often immigrant) workers. Such instances are bound to jangle jingoistic nerves.

To adopt this narrative as “part of the economic circle of life” seems wrong-footed and harsh. However, without an intervention into its march towards extinction, Twinkies would have found itself on the same historical scrap heap as the Edsel – the famous Ford that “flopped”. By buying Twinkies and replacing some of its labor force with foreign workers, Apollo saved some American jobs and some pay. Which is better than none, one might argue.

America, despite its own below replacement birth rate, will escape Japan’s fate. Because we import and assimilate people – arguably better and in bigger numbers than another country in the world. Were it not for immigrants, our population would be in decline, the price of housing – which represents two-thirds of consumer assets – would be in secular contraction and social security would be assuredly bankrupt.

Loeb Enterprises, the company I founded with my business partner, Richard Vogel, and our venture and startup arm, Loeb NYC, proudly includes in its ranks experts and talent from countries such as Australia, the United Kingdom, Guyana, China, France and others. This diversity has enriched our company culture and boosted our bottom line. The energy and sense of community that we try to foster is a microcosm for our broader New York City context. We have given foreign workers and first generation Americans the opportunity to contribute, grow, work and thrive. And we are the ones who are richer for it.


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