Day: January 7, 2004

Hmm… the immigration piece below seems to have triggered a bug that we’ve seen before in Manila, the software that Harvard runs for its blogs.  Comments go into the database somewhere but they aren’t linked.  So I’ve cut and pasted a couple of my favorites here and anyone who wishes to comment on the piece below can do so here…

Matthew T: A more significant difference that will prevent the US from going into Argentine-style collapse in the near term is that US debt is designated in the US currency. As the dollar falls, US foreign debt doesn’t grow, the trap that Argentina fell into. In the longer term, foreign trade will be conducted in a strong currency from a large economy: if the domestic plan is to inflate away the deficit, the Euro will usurp the dollar’s central role.

John: According to Philip’s logic, the great depression should have never happened. Was the US substantially different in 1929? It had tons of smart immigrants from all over the world, and yet the economy suffered a total collapse.

On my way back up towards Boston from Miami I sat next to an Argentine who had been living and working in Washington, DC for many years, lured by a plum job at an international organization.  We talked about the parallels between the current U.S. economy and the Argentine economy circa 2000, i.e., just before their currency collapsed 3:1.  Both economies had been losing manufacturing jobs as goods were imported from China and other centers of cheap highly skilled labor.  Both economies therefore had been running large trade deficits.  Both governments had been pandering to voters with massive spending programs and paying for them with budget deficits and therefore borrowing.  What would, she asked, save the U.S. from suffering the same fate as Argentina?  Esp. now that so many white-collar jobs could be exported to India?

My answer was “People like you! Smart immigrants.”  The U.S. has the world’s brightest academics, many of them who are themselves immigrants, in its universities.  This lures the brightest young people here to Stanford, Harvard, University of California, Caltech, et al.  Once they’ve spent 6 years in the U.S. getting a PhD they find that the U.S. offers the best opportunities for building a company or a group within a university and they stay, thus luring the next generation.  Susumu Tonegawa is a good example of the process.  Born and educated in Japan, one of the world’s most sophisticated nations, he nonetheless chose to come to the U.S. for a postdoc.  He eventually ended up as a professor of biology at MIT and won the Nobel Prize in Medicine in 1987.  Tonegawa remains at MIT and any young Japanese biologist who wants to learn from him must come to the U.S.  A country that has collected all of the world’s smartest people should always be able to do something new, interesting, and profitable.

(A somewhat funnier way to look at the issue is Greek syllogism:

1. every American president must be native-born
   
2. Americans are smart and therefore always choose the best person to be president, from among the pool of qualified people
   
3. ergo, George W. Bush is the finest example of a native-born American

And that’s why we need to bring in foreigners…)

A sadder way to look at the issue is one that I’ve brought up before in this blog.  We don’t bother fixing inner-city neighborhoods and schools or trying to integrate the poorest Americans into our economy because it is cheaper to bring in immigrants who already have a good education and work ethic.  George W. Bush seems to be expressing this idea in a proposal discussed in today’s New York Times:  “Bush Would Give Illegal Workers Broad New Rights”:

“… Under Mr. Bush’s proposal, which effectively amounts to an amnesty program for illegal immigrants with jobs in the United States, an undocumented worker could apply for temporary worker status here for an unspecified number of years, with all the employee benefits, like minimum wage and due process, accorded to those legally employed.

“Workers who are approved would be permitted to travel freely between the United States and their home countries, the officials said, and would also be permitted to apply for a green card granting permanent residency in the United States.

“Administration officials said that Mr. Bush would also propose increasing the number of green cards issued each year, which is now about 140,000, but they did not provide a specific number. …

“Mr. Bush’s proposals apply to all illegal immigrants in the United States, which officials estimate at 8 million to 14 million people. About 60 percent are thought to be Mexican. No one is certain how many undocumented workers there are among all illegal immigrants, but Mr. Fox has said that some 3.5 million of the workers are Mexican.”

So circling back to the original question…  We can be sure that our currency won’t collapse because all the world’s smartest people live here and also many of the world’s hardest-working.  So we can rest easy and take a vacation even.  But perhaps not in Europe where their currency has become 50% more expensive in the last 1.5 years for those of us who hold dollars…