Immigrants Are the Lifeblood of Economies

We all know U.S. wealth derives from immigrants, but a reminder is timely.

Posted Jul 10, 2018

Immigrants have always represented a transfusion of human capital, dynamism, and creativity to the receiving country, despite heated political rhetoric to the contrary.

Episodes of ecological disaster, and civil war can cause entire populations to leave for another country to save their lives. More commonly, though, immigrants leave home because they make a voluntary decision to improve their lives by emigrating.

The Best Workers for the Lowest Investment

There are several good reasons why immigrants are such a bargain for the recipient nations—and a disaster for the sender country.

The first is that they are not a random selection from their home countries. It has long been known that the loss of residents constitutes a brain drain. In other words, those who go are the best and brightest whereas those who stay are less enterprising and ambitious.

For example, research on high achievers in American arts and sciences are more likely to be foreign born. Some scholars estimate that immigrants are about five times as creative than those born here (1). Immigrants, or their children, founded 43% of Fortune 500 companies.

Another significant advantage of welcoming immigrants is that we obtain their useful work lives at a bargain price. Once again this phenomenon may be understood by considering the loss experienced by sender nations who bear the entire cost of raising children to maturity and educating them to the point that they can earn a living as adults. As if this were not bad enough, their departure constitutes a brain drain of talent and skills similar to that experienced by rural areas whose youth seek better jobs in cities.

In some cases, immigrants support their families of origin through regular remittances but most of an immigrant's earnings are spent in their new countries where they pay for housing, food, and the great expense of raising children of their own

This economic stimulus is maximized when immigrants arrive as young adults whose age of peak spending is ahead of them

The Life Cycle of Spending

Immigrants may be unusually motivated to work hard to improve their own lives and those of their families. Their extraordinarily stimulative effect on the economy is also a function of their youth.

This has two key effects on the economy. First they are more likely to reproduce. Immigrants also have larger families reflecting generally higher fertility of sending countries.

Second, immigrants are stimulative to economies because they are at a point in their lives when they approach their peak spending years. In addition to the expensive project of raising children to maturity, they are likely to purchase vehicles, homes, furniture, electronics, and other big-ticket items. At the same time, they are heavy users of services, such as education, childcare, medical services, restaurant meals, and home security. They are likely to spend a great deal in groceries, maintenance, and all kinds of taxes, including income taxes, sales taxes, and property taxes that keep government employees paid.

While most people accept that American prosperity is rooted in various ways in the efforts of immigrants, this is more than just political happy talk. If we became hostile to immigrants, the golden goose would become petrified in her nest. This phenomenon is illustrated by the modern history of Japan whose hostility to immigrants exacted just this price.

Perils of the Japanese Model

Three decades ago, Japan's economy was so dynamic that Americans were afraid the country would soon displace us at the top of the global heap.

Since then, Japan's economy has grown little, if at all. What happened? The basic problem was declining fertility, a problem that Japan shares with the entire world of developed countries.

A shortage of babies brings down the average age of the population in a pattern known, ominously, as “demographic winter.” This is very bad news for the national population that continues to shrink from generation to generation so that Japan's cities are liable to lose half their populations by century's end.

It is also bad news for the economy because the number of young, economically dynamic residents contracts as the number of retirees soars.

Consequently, the number of workers relative to retirees declines with deleterious consequences for government finances. Already, Japan is deeper in debt than any other developed country and makes the U.S. look like a model of fiscal rectitude.

Why did Japan decline relative to other economies while the U.S. mostly continued its trajectory of steady growth? The answer is simply that Japan discouraged immigration, evidently wishing to preserve the homogeneity and consensus that had marked their community life.

Meanwhile, the U.S. accepted a steady stream of immigrants, an economic transfusion that invigorated our economy, although some want to cut off the flow based on prejudices that were thoroughly discredited but rise anew like some vampire leaving the tomb at nightfall.

Why We Should Encourage Immigration

While some right-wing individuals vilify immigrant populations as having low skills and bringing violent crime, the truth is very different. Many of them are victims of political persecution and violent crime themselves.

Although many immigrants lack higher education, most are willing to work hard and they imbue a strong work ethic in their children. We can never question the great gifts that immigrants bring to the arts and sciences.

Without the expertise and drive of Werner Von Braun, for example, there would never have been a moon landing. Imagine turning away scientists of the caliber of Albert Einstein!

Immigrants are less likely to commit felonies than native-born Americans. States having large immigrant populations are more prosperous.

To summarize, immigrants work harder, are more creative, more entrepreneurial, and most contribute far more to this country than they receive from it. It is no exaggeration to conclude that they ate the life blood of our economy.

References

1. Murray, C. (2004). Human accomplishment: The pursuit of excellence in the arts and sciences. Harper Perennial.

2. Kotkin, J. (2012). The rise of post-familialism. Singapore: Civil Service College. http://www.cscollege.gov.sg/Knowledge/Pages/The-Rise-of-Post-Familialism.aspx