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Laughing and Crying with Thomas Friedman

By John E. Tamny - June 1, 2007 12:00 AM

In a recent New York Times piece, Thomas Friedman laid bare the absurdity of American immigration laws. While our best-in-class universities educate students from around the world, immigration rules make it hard for them to build professional careers stateside. To Friedman, the "idea that we actually make it difficult for them to stay is crazy."

The barrier to their staying is the economically illiterate view broadly held by the political class that skilled immigrants steal the jobs of qualified American workers. What politicians and immigration activists misunderstand is that without capital, there are no jobs. If the best and brightest work elsewhere, the capital meant to fund their endeavors will likely follow. Venture capital is not a birthright.

That Intel co-founder Andrew Grove dodged Russian shells during World War II so that he could eventually make it to the US did not mean that his arrival here meant a native-born American went wanting in his or her job search. Instead, the brilliant entrepreneurial skills he brought with him were a magnet for capital in such a way that his being able to seek his fortune here served as a job multiplier.

To the extent that immigrants at the low and high end of the skill spectrum enable native-born Americans to be specialized in their various work endeavors, the impact is a positive one. If barriers to immigration serve to stunt our efforts to specialize, we will as Friedman notes, "not maintain out standard of living."

Where Friedman misses is in assuming that the flight of high-skilled workers to less xenophobic countries necessarily means our future is a less prosperous one. The latter is only true if, in addition to closing our borders to workers, we also close them to foreign technologies and goods. In suggesting that success elsewhere will make us worse off here, Friedman lends credence to the false view that we should measure economic growth and innovation in terms of country borders rather than in world terms.

In truth, knowledge and innovation circulate with ease. That Google was created in northern California does not mean southern California faces lower living standards due to the geographic desires of Google's founders. Instead, southern California and the rest of free world will benefit from the profit motives of Google's workers who will only be enriched if their productivity-enhancing innovations reach as many as possible. Much the same, Oregon and the rest of the world weren't impoverished for Bill Gates choosing Seattle as the headquarters for Microsoft; instead the U.S. and the rest of the world were enriched by Microsoft's desire for profits that led to the democratization of software applications that made all manner of business activities more productive.

In the future, if engineers in India create software that trumps the Microsoft product, the latter might be hurt, but if our markets are open and free, Americans will see their living standards rise as though the new software were made next door. Just the same, if Chinese minds find the cure for cancer, it will be a world advance for the desire of Chinese scientists to grow wealthy off of an advance the world desperately needs.

It should also be remembered that while Michael Dell did not invent the computer, he perfected the distribution of same such that Dell is a world brand, and Dell himself is one of the richest men in the world. Entrepreneurialism is decidedly something that cannot be taught, yet exists in the United States in spades; arguably due to the immigration that Friedman correctly desires. While not always the inventors, Americans have proven more adept than anyone at taking an existing idea, and perfecting it.

Americans are a remarkably self-selected group; either immigrants themselves, or the descendants of those who had the courage to leave families and the "known" for the economic and personal freedoms offered in the US. This feeds the entrepreneurial mindset so important to our vibrant economy and high living standards.

So while the departure of high-potential immigrants doesn't necessarily spell our economic doom, to the extent that it's driven by law rather than economics should concern us. Innovation that occurs elsewhere in the world won't harm us, but if economic opportunity is lower and capital less available elsewhere than in the states, our living standards will fall for the brightest minds being unable to achieve their economic potential; potential that will flow our way in order to become wealth for its creators.

The above is what should have Friedman and others crying. While economic advances are almost by definition world advances, the capital environment that incubates those advances is less developed around the world than it is stateside. In short, the location of wealth creation cannot impoverish us, but if it doesn't occur at all, Americans and the rest of the world will see their living standards decline.

John Tamny is the editor of RealClearMarkets. He can be reached at jtamny@realclearmarkets.com


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8 Comments

Entrepreneurship due to immigration?
"Entrepreneurialism is decidedly something that cannot be taught, yet exists in the United States in spades; arguably due to the immigration that Friedman correctly desires."

Please explain this.

I support 'open borders' but how did immigration create entrepreneurism in the USA?

I suggest it is our Constitution which protects entrepreneurs.

entrepreneurship
I think it has to do with attitude.
Immigrants have already shown that they are willing to take risks. (At least that used to be the case.)

Back asswards -- Immigration is due to entrepreneurship
If not for free-enterprise and capitalism, why would so many migrate here? It isn't the free emergency medical care or promise of welfare. You can get that in Cuba or Venezuela.

Hong Kong
That's how Hong Kong did it.

Capitalism unleashes black swans
American-style capitalism's dynamic forces create far more lousy entrepreneurs than they do great ones. Further, no one can predict who the great entrepreneurs will be or how they'll make the rest of us better off. Due to this uncertainty, we can only bet that the more entrepreneurial types we let loose in America regardless of their national origin, the greater the chances are that America and the world will enjoy more great entrepreneurs whose efforts will make us all better off.

I imagine the next Bill Gates standing in line for hours outside the U.S. consulate in Bangalore to get a work visa, dreaming of his future entrepreneurial greatness in America but worrying that his chances of getting there are slim, even though he graduated top of his class at MIT. Although we can never identify him in advance, we must make it possible for him and everyone like him to thrive in America.

thriving
people like the man in your example, are going to thrive wherever they wind up.

Thing is, do we want them to thrive here in the US, where their skills can benefit all of us?
Or do we want them to thrive somewhere else, and benefit the citizens of that country?

Not sure what you mean.
I visited Hong Kong several times in the late 60's and it was teeming with 100,000's of refugees from PRC. Don't think that had anything to do with free medical or welfare or entrepeneurship -- I'm thinking it was 10% political and 90% raw survival.

Freedom
Would refugees flee to a more oppressive state?

Hong Kong combined the labor of those refugees with a tax and legal structure creating the most prosperous economy on earth.

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