America Doesn’t Need More Immigrants, We Need Fewer (Despite What the New York Times Claims)
In 1014 AD the Byzantine Emperor Basil II defeated the Bulgar hordes at the Battle of Kleidion. To ensure the Bulgars would never again rise up against him, Basil blinded the survivors—leaving every hundredth man with a single eye. The one-eyed led their brothers home, but mostly the blind led the blind.
How many Bulgars were separated from their kin on their anabasis? How many died in the Thracian wilderness—food for worms and wolves? A hand slick with blood loses its grip, and in the frantic search for fingertips a dozen followers are led astray. Those behind don’t panic. They don’t know—East or West all steps are the same. Only when it’s too late do they realize they’re lost.
What happened at Kleidion—tragic though it was—serves as a powerful allegory. It reminds us that the blind lead the blind, and that most are blissfully unaware of this fact. We assume our leaders have eyes to see, that they know where they’re going. Often they don’t.
Nowhere is this more true than when it comes to economics. People instinctively follow the expert: “because Milton Friedman said so” is a powerful argument in any economic debate, despite being an overt logical fallacy (a call to authority). Who cares what Friedman thinks? What does the data say? Where does the logic lead us?—that’s what matters.
Nevertheless, the sycophantic worship of credentialism is pervasive, and persuasive. “Expert” opinions are the lifeblood of liberal publications like The New York Times and the Washington Post. It’s to the Times that I’d like to turn your attention.
Last year The New York Times published an articled by Ruchir Sharma called To Be Great Again, America Needs Immigrants. The premise is self-evident. Although the article was factually false, Sharma’s opinion was given credence because of his prestigious job as Morgan Stanley Investment Management’s chief global strategist—he is an “expert”. People instinctively believe him. They shouldn’t.
Sharma may be accomplished—he may even be an expert—but he’s blind. In this article I’ll point out the major flaws in his argument, and explain why mass immigration is actually crippling America’s economy.
Does America Need Immigrants? No.
Ruchir Sharma’s argument in favor of more immigration is a logical syllogism that runs as follows:
Premise 1: More people (input) means more production (output).
Premise 2: More production (economic output) means a bigger economy (GDP is measured in terms of output).
Conclusion: Therefore more people (input) means a bigger economy (output/GDP).
Both premises are obviously true, and therefore the conclusion must be true—this is the beauty of syllogisms. So what’s wrong with Sharma’s argument?
There are two main problems. The first is that Sharma’s understanding of economic growth is misguided, and based on an antiquated model: growth per person is what matters, not overall growth. Secondly, Sharma assumes that economic growth is an end unto itself—it’s not. Economic growth is a lesser means to a greater end.
1. Productivity, Not Population, Drives Long Run Economic Growth
Sharma begins by asserting that population matters more than productivity when it comes to economic growth:
The underlying growth potential of any economy is shaped not only by productivity, or output per worker, but also by the number of workers entering the labor force. The growth of the labor force is in turn determined mainly by the number of native-born and immigrant working-age people. . .
What makes America great is, therefore, less about productivity than about population, less about Google and Stanford than about babies and immigrants.
This is nonsense (and Sharma knows it). Long run economic growth is driven by advancing technology, not expanding populations. The explanation as to why is somewhat lengthy, but I think it’s worth it—if you’d like more detail, feel free to read my full article on exogeneity and economic growth.
Immigration & the Archaic Growth Paradigm
Economic growth occurs when, and only when, either more stuff is made, or better stuff is made. For example, America’s economy grows when it produces more cars, or (all other things remaining equal) more fuel-efficient cars. This logic applies to all types of production, whether goods or services. This serves as the axiomatic starting point.
The next question is this: how to make more stuff? There are two options. First, work harder. For example, want more wheat? Plant more fields. Need more legal research? Work overtime. In all cases the common variable is to add more labor.
This is known as the archaic growth paradigm, and it boils down to the simple maxim: more input, more output.
The archaic growth paradigm is, unsurprisingly, how ancient civilizations (and more surprisingly, Ruchir Sharma) understood economic growth.
For example: when Roman emperors needed more swords, the only solution was to add labor (train more blacksmiths). Of course, doing so displaced labor from elsewhere in the economy, and this caused a cascade of labor scarcity.
To end said scarcity, the Romans, like all ancient societies, ended up waging war to capture slaves and tribute—thereby adding exogenous (non-citizen) labor to supplement their economy. Basically, places like Egypt were forced to ship grain and wine to Rome, so that Romans could focus on war, art, and architecture. This labor made the Romans richer, at their foes’ expense.
The problem with the archaic growth paradigm is that it is zero-sum: Rome only got richer if Egypt got poorer.
Technology & the Industrial Growth Paradigm
A much better way to grow the economy is to, instead, increase productivity; that is, make more stuff in the same amount of time. This is called the industrial growth paradigm. It’s how countries truly get rich. Why?
Because industrial growth breaks the link between population and production, and allows economies to grow exponentially—it increases the size of the pie and the slices, not just the pie.
The best example of this is what happened at the dawn of the Industrial Revolution. In 1785 Edmund Cartwright invented the power loom, which made British textile workers forty-times as productive. By the 1820s, after power looms were widely adopted in British mills, Britain produced as much cloth as the rest of Europe combined.
Not only did this invention make the British exceedingly rich on a per-person basis, but it also changed the way people thought about economic growth: the paradigm switched from being population-driven to productivity-driven. This continues to be true to this day.
Where does immigration fit into all this?
For the most part, immigration falls under the archaic growth model: more immigrants means more people, and therefore more production. Therefore, more immigration will undoubtedly grow the economy, but it will not necessarily make it more productive (richer).
A tale of Two Cities: Comparing the Economic Growth Paradigms
Suppose there are two cities, Rome and Syracuse. Each grows by 10 percent per year, Rome via the archaic growth model, Syracuse via the industrial growth model.
For Rome to grow by 10 percent per year its population must expand by 10 percent every single year. At first accepts immigrants, like the Sabine women. Next it grants citizenship to its allies at Veii. Soon after it conquers Sicily, and then Carthage. Eventually, Rome grants citizenship to all the peoples of the known world—everyone is Roman. In this scenario, Rome’s economy grows by 10 percent annually. But when there are no people left to conquer, the growth stops (childbirth aside). Where economic growth depends on population growth, its potential is limited—no more immigrants, no more growth.
It’s also worth noting that during this period the average Roman never got any richer—simply becoming Roman did not make the Sabine women more productive. Think of it like this: Rome weaves 100 cloaks, the Sabine women weave 10. The immigration of the Sabine women to Rome means that Rome weaves 110 cloaks, while the Sabine homeland now weaves 10 less—only 110 cloaks are produced in either case. Their immigration to Rome produces no additional global wealth, it simply reallocates it.
Compare this to Syracuse, which grows by 10 percent every year because of technological improvement. The first year Syracuse adopts crop rotation, improving its farm’s fertility. Next it invents the scythe, making harvests easier. Then the plow. In this case, not only did Syracuse’ economy grow by 10 percent per year, but it did so with the same number of people. This means that each citizen got richer too. Perhaps each citizen initially produced 100 bushels of wheat, after crop rotation they produced 110, after the scythe they produced 120 and so on. Productivity improvements create new wealth.
The example may be crude, but I hope it adequately conveys this lesson:
Real economic growth happens when the pie gets bigger because the slices get bigger, not when the pie gets bigger because more slices are added.
Sharma knows this, which is why he recognized from the outset that productivity grows the economy. However, his argument that population expansion (via immigration) is the primary engine of long-run economic growth is wholly asinine, and typical of the propaganda published by The New York Times.
2. Economic Growth Isn’t Everything
Sharma’s second flawed assumption is that economic growth is an end unto itself. It’s not. Unless you’re Scrooge McDuck, wealth is a means to an end and nothing more. Sharma notes:
In the past decade, American population growth has averaged 0.8 percent a year, eight times faster than Europe’s, and Japan’s population has not grown at all. Increasingly, then, the underlying difference between the fast- and slow-growing economies is explained more by the differences in population growth than by productivity. . . In the past decade, population growth, including immigration, has accounted for roughly half of the potential economic growth rate in the United States, compared with just one-sixth in Europe, and none in Japan.
I don’t dispute Sharma’s facts or conclusions. He’s right: countries with larger populations tend to have larger economies, and adding more people undoubtedly grows them. But who cares? There’s more to America than its economy.
GDP Doesn’t Matter—GDP per Person Does
First let’s deal with the economics of it. I can make my point with one simple question: would you rather live in India or Denmark? Denmark has a tiny economy, but the average Dane is fairly wealthy. Conversely, India’s economy is large, but most Indians are poor. Given the choice, most (reasonable) people would pick Denmark. The size of the pie is irrelevant, what matters is how big your slice is.
And of course, the relationship between immigration and economic growth per capita is spurious at best. Consider the below graph, which compares the GDP per capita of the US (high immigration) and Japan (almost no immigration). If immigration drove economic growth as Sharma claims, America’s GDP growth per person would have surpassed Japan’s—but it didn’t. Curious.
Looking beyond mere correlative data: a recent, and extremely comprehensive study produced by the National Academies of Sciences, Engineering, and Medicine looked at the impact of mass immigration on America’s economy. The study is the most authoritative of its kind, and found that nearly 100 percent of America’s immigration-driven economic growth accrued to the immigrants themselves—the pie got bigger, the slices did not. This is consonant with the above logic and comparative data.
The study also found that nearly half of all immigrants to America were a net drain on the economy (they are roughly balanced out by the other half). Specifically, most of those who arrived to America via the process of chain migration, as well as asylum seekers, cost a net present value of $170,000. Net present value simply means how much money the government would need to invest today, at a yield of inflation plus three percent, to pay for said immigrant’s tax deficit over the course of their lifetime.
Of course, the government does not do this—it spends only as it receives. Therefore, net present value generates an artificially low estimate. According to the Heritage Foundation, each non-economic immigrant more realistically costs a net of $476,000 in welfare payouts. This is a massive drain on America’s financial resources, and just goes to show that immigration isn’t as economically robust as Sharma implies.
There is one major caveat worth mentioning: a relatively small proportion of immigrants into America are highly likely to contribute to developing new technologies (scientists, engineers etc.), and therefore improve America’s productivity—they make America richer. This caveat is well-attested to in most policy debates, and easily predictable by anyone familiar with the Pareto Principle. But even importing too many skilled workers can be detrimental. For example, America’s medical schools are atrophying due to easy access to foreign physicians.
To summarize: mass immigration grows America’s economy, but does not make American citizens any richer. Immigration doesn’t cause economic growth. Sharma and The New York Times are wrong.
Money Isn’t Everything
Assume for a second that Sharma is right, and more immigration will grow America’s economy. Even so, it still doesn’t follow that we should open the borders. I’ll repeat for you the conclusion of my piece rebutting The Economist‘s article on open borders, as it articulates this point perfectly well:
Economics is an intellectual tool that can help us make better decisions, but it should not make these decisions for us. There are many rational reasons to sacrifice economic expediency for principles of far greater value—things like family, freedom, art, science, nature, or God.
One of the reasons Singapore is so rich is because political dissent, and the uncertainty it creates, is extirpated. Likewise, China’s economic rise was made possible, in part, due to its ability to bulldoze villages, pollute rivers, and silence critics—all in the name of “progress.”
Economically justified? Certainly. Rational? Perhaps—for Bentham’s most ardent acolytes.
But for those who, like Edmund Burke, see the nation not as an assorted collection of atomized individuals, seeking pleasure at the expense of their fellow man, but as a people inseparably bonded to one another through culture and language, and to the past and future through art and blood, sacrifices laid at the altar of economics are of little value. Far more important is the preservation of our nation, be it wilderness or artifice, duty or liberty.
America isn’t a place, nor an idea—it’s a people. Simply crossing the border doesn’t turn someone into an American. There is no magic soil. Likewise, the Constitution is powerful without a people who live and breathe its precepts. Our many failed attempts at nation-building should have taught us that American values can’t be imposed by fiat. America is bottom-up, not top-down.
We should be mindful of this before letting millions into our nation without adequate time for assimilation, as we run the very real risk of changing our nation’s character—forever.
Other Sundry Problems With Sharma’s Piece on Immigration & Economic Growth
Sharma Ignores Natural Resources in His Assessment of Growth Potential
Sharma’s piece is full of self-contradicting facts. One of which is his false attribution of economic growth to immigration where there are better alternative explanations:
Since 2005, per capita gross domestic product has grown on average by 0.6 percent a year in the United States, exactly the same rate as in Japan and virtually the same rate as in the 19 nations of the eurozone. In other words, if it weren’t for the boost from babies and immigrants, the United States economy would look much like those supposed laggards, Europe and Japan. . .
In the United States, immigrants have accounted for a third to nearly a half of population growth for decades. In other countries with Anglo-Saxon roots — Canada, Australia and Britain — immigrants have accounted for more than half of population growth over the past decade. Those economies have also been growing faster than their counterparts in the rest of Europe or Japan.
Here Sharma notes that countries like the US, Canada, Australia, and Britain grew faster than those in Western Europe or Japan. He says this is because of immigration. Three points: first, the GDP per person hasn’t grown faster (as Sharma, bizarrely, notes), meaning that immigration hasn’t stimulated real economic growth. Second, these countries have freer markets (lower taxes, fewer regulations), and we would expect them to grow faster regardless of immigration. Third, the US, Canada, and Australia have massive natural resource deposits to exploit (in contrast with Japan or Germany), and should therefore be growing rapidly—the fact that they’re not suggests that something is holding them back.
This something is immigration.
I won’t reference all of the studies here (in the interests of brevity), but you can find a detailed survey of them in my article on how mass immigration hurts the economy. Suffice it to say that Sharma’s evidence that immigration speeds economic growth actually suggests the opposite. Rookie mistake.
America’s Labor Market is Nowhere Near Saturated
Sharma also argues the classic “we need immigrants to do jobs Americans won’t or can’t”:
In the long run, governments have limited avenues to increase the growth rate of the labor force, which is unaffected by short-term fluctuations in unemployment. Even enticing the “forgotten men” — those no longer looking for work — back into the labor force can have only limited impact. The main reason fewer Americans participate in the labor force is not because they are discouraged, but because they are getting older.
This isn’t really true—at least not yet. There are some 23 million “forgotten men” looking for work in America, which is more than enough to grease the economic wheels for the next decade at the very least.
Beyond that, automation is making many low-skilled jobs redundant at a startling pace. Why import millions of laborers when we are currently losing millions of these jobs to machines? Insanity.
Right now, immigrants directly compete with Americans for jobs. This causes wage stagnation (see adjacent graph).
Likewise, competition with immigrant workers is also a big reason why the labor force participation rate is declining. America lost 8.7 million jobs between 2008 and 2010, during the period of the Great Recession, and yet, in that period we accepted over 3 million immigrants. Do you think that helped or hurt American workers?
What do you think happens when the economy loses jobs, but imports workers? Wages decrease and labor force participation declines. This is born out in the data (see below graph).
Sharma Assumes America Can Assimilate Even More Immigrants
Finally, there is an often unspoken assumption that pervades all liberal arguments surrounding immigration: they assume that America can absorb more immigrants. That is, there will be no issue assimilating them into our way of life (if not our culture, then at least the 9-5 work schedule). Conservatives don’t often challenge this assumption, for fear of being called a “racist”—this is a mistake. Undermine this assumption and the liberal argument melts away.
To his credit, Sharma acknowledges that some level of assimilation is necessary:
In recent decades nations from Australia to France to Singapore have foreseen the looming economic impact of slower population growth, offering families “baby bonuses” to have more kids — but typically with little impact on the birthrate or the economy. The impulse to procreate may be one of the few areas of human endeavor that remains beyond the reach of government mandarins. In contrast, regulating immigration remains a relatively simple task, and if immigrants are properly assimilated, they can have an immediate impact on the size of the work force.
As Europe’s recent wave of immigration shows us, this is a big if. The simple fact of the matter is that a large percentage of immigrants aren’t interested in assimilating.
A relatively recent study found that some 48 percent of white Americans agree with the statement “things have changed so much that I often feel like a stranger in my own country.” Meanwhile 68 percent believe that the US is in danger of losing its culture and identity, and the same proportion also believe that “American way of life needs to be protected from foreign influence.” Additionally, 52 percent believe that anti-white discrimination is now as bad as discrimination against blacks, or other minorities.
No matter your personal feelings on “multiculturalism”, the study is important because it shows that a large chunk of America’s population doesn’t think assimilation is actually happening, and this is changing the American way of life. If it’s this bad now, imagine how this number will grow as millions more come to America every year.
I also think it’s worth mentioning that assimilation takes time, a very long time. Sometimes it takes generations, as was the case with America’s Chinese and Italian populations—sometimes it never happens, as in the case of Europe’s Roma people. We need to be cognizant of this fact. Consider that there are 45.6 million immigrants living in America today, this is not only the highest raw number, but the highest proportion of our population in history. How many have fully assimilated?
Many, but certainly not all. Consider that 67 percent of (legal) Hispanic immigrants to the US are functionally illiterate upon arrival, and the majority remain so after 15 years living in America. Assimilation’s not happening—if it were, they’d be learning English (our Lingua Franca).
The problem is that once the density of a given minority group passes a “tipping point” the incentive to assimilate disappears, since said group can form insular communities (only interacting with others of their group). The Institute for Fiscal Studies recently published a paper called Melting pot or salad bowl? The paper looked at how the number of immigrants relates to the level of assimilation.
The researchers found that people naturally “self-segregate” according to their ethnic, cultural, religious, and linguistic backgrounds. The larger the “cultural gulf” between the immigrant group and the host nation was, the fewer immigrants were needed to form insular communities—this “tipping point” marks the difference between a melting pot (immigrants assimilate) and a salad bowl (immigrants retain their own culture). Given that America’s already turning into a salad bowl, the idea that we can accept more immigrants without assimilation issues is laughable.
The New York Times Gets Immigration Wrong: America Needs Fewer Immigrants
The Empire that Basil II defended against the Bulgar hordes out-lasted him by another 439 years, but eventually it too fell. In 1453 the capital city of Constantinople was taken by the Ottoman Turks, the decedents of nomadic horsemen from the Eurasian steppes. After their conquest, the Ottomans claimed to be the inheritors of Rome’s ancient glories (as had the Byzantine Empire they conquered)—after all, they ruled from the city Constantine made, lived in its grandest palaces, and worshiped in the halls of the Hagia Sophia.
But they weren’t Romans. They were Turks. Although they lived in Constantinople alongside the Greeks, they spoke Turkish, ate Turkish food, and worshiped Allah. They were conquers, yes, but they were also migrants to a new land—migrants who refused assimilate. And why should they? They had no need of the Greek language or Christian religion.
The Ottoman conquest, and resettlement, of Turkey is a powerful reminder that immigration will change America—for better or worse. But to deny this fact, or to accept it without consideration in the name of “economic growth” is madness. Money isn’t everything, and Ruhir Sharma is a fool for thinking so.