Europe is rich in migrants, so why isn’t it rich?

“Europe Has Fallen Behind the U.S. and China. Can It Catch Up?” (New York Times, June 5):

Europe’s share of the global economy is shrinking, and fears are deepening that the continent can no longer keep up with the United States and China. … Beijing and Washington are funneling hundreds of billions of dollars into expanding their own semiconductor, alternative energy and electric car industries, and upending the world’s free trade regime

The secret to wealth is government spending and European governments aren’t big enough.

Private investment lags as well. Large corporations, for example, invested 60 percent less in 2022 than their American counterparts, and grew at two-thirds the pace, according to a report by the McKinsey Global Institute. As for per-capita income, it is on average 27 percent lower than in the United States. And productivity growth is slower than other major economies, while energy prices are much higher.

The journalists ask us to contemplate an unimaginable horrible scenario:

Imagine if every state in America had national sovereignty and there were only limited federal power to raise money to fund things like the military.

In other words, imagine if the U.S. Constitution were followed and the federal government’s powers were limited to those spelled out in the document.

The news isn’t all bad:

For more than a decade, Europe has been falling behind on several measures of competitiveness, including capital investments, research and development, and productivity growth. But it is a world leader in reducing emissions, limiting income inequality and expanding social mobility, according to McKinsey.

Europe could be leading the leaders in leading even more if governments would hire leading consultants at McKinsey more frequently. Speaking of leaders, the leaders in journalism don’t ask what seems like an obvious question: Science proves that low-skill immigrants make societies rich. Europe is rich in low-skill immigrants, while China is impoverished in low-skill immigrants. “China has the smallest number of international migrants of any major country in the world. Compare its 0.1% of immigrants with near 14% in the U.S. and 18% in Germany.” (Texas A&M, which also notes that immigrants are “very productive”). Shouldn’t Europe’s economic growth be higher than in the U.S. and China?

The NYT article doesn’t mention immigration, except to point out that only a “far-right” political party could question the wisdom of open borders.

Separately, I wonder what would happen if we subtracted out NVIDIA, Facebook, Apple, Google, and Microsoft from the U.S. economy. Maybe without Big Tech, the U.S. and Europe would be roughly comparable.

Speaking of the U.S. economy, here’s a chart from zerohedge showing that the number of native-born workers in the U.S. is unchanged compared to 2018:

To find the promised economic enrichment from the presence of migrants we would have to look at the extent to which real wages for the native-born have increased. If we adjust for inflation under the old formula, real wages are likely lower than in 2018. That’s certainly true here in Palm Beach County, Florida.

33 thoughts on “Europe is rich in migrants, so why isn’t it rich?

  1. So many movies would be made in China nowadays. Au Pair, Home Alone, were big ones that used the european vacation to convey wealth. The big question is Europe was always portrayed as clean while China has a reputation for being dirty.

    • Last time I was in China, it was very smelly, but not particularly dirty. (about as clean as Manhattan or S.F.) I think they have some plumbing stuff to work out.

  2. In the long term, IQ matters more than skills in predicting economic outcomes. What’s the average IQ of immigrants being allowed into Europe (and USA)?

  3. Excess immigration is rapidly changing the demographics of Europe. In England, a resident of Leicester recently complained that the UK is letting in so many people from Africa and Ukraine that his city doesn’t even look like Pakistan anymore.

  4. To test your hypothesis that economically Europe = US – FAANG corporations substract California from US and compare with EU. Or compare bottom income tiers in absolute income.

  5. The word “migrant” is too generic. The issue is not the number of migrants, but their quality and their participation in the work force. A migrant who works makes the country richer, an immigrant on public assistance takes away resources. My general impression is that the migrants in Europe are going to find it more difficult to integrate into the societies of their new countries than the ones arriving in America. Many of them are from societies that are very different and America is generally more welcoming of foreign born people (that has been my experience). For America, health care costs are a much, much bigger problem than immigration. Migrants are not going to bankrupt the US the way health care costs already have.

    When comparing the economies of Europe and the US is important to consider GDP per hour worked. Some European countries have productivity per hour worked rates that are higher than the US, and most are not that much lower. We should remember that most European countries don’t have much in terms of natural resources to sell, Norway is an exception, that is why its GDP per hour is very high. It is easy to be very productive when you are pumping oil from the ground in the Permian Basin.

    Europeans, in general, value quality of life more than money. And they don’t have health systems that take 20% of their GDPs. Europeans work less and live longer. In my opinion, if you want to “do things” (you model your life after Elon Musk), America is the place to be. If you work long hours as and accountant for a large time share company in Indianapolis…. no so much so. Thinks change. People who migrated to Argentina one hundred years ago did make a rational choice. Their grandchildren are searching for their birth certificates now.

    • Anon: “work” and “public assistance” are not mutually exclusive. A low-skill migrant might work at minimum wage and also receive public assistance, e.g., public housing, Medicaid, Obamaphone, SNAP/EBT.

    • Your statement “an immigrant who works makes the country richer” is deviously true while being wrong. An immigrant who works may make the country richer financially, yet worse technically and also makes the country’s PEOPLE poorer.

      Consider the H-1B program. Estimates are that each H-1B displaces between 0.3 and 0.6 natives. In many counties, foreign labor has almost completely replaced natives, according to Census records[1]. The foreigners have no qualms about forming tight ethnic monopolies, which are impenetrable to natives. Additionally, these additional workers simultaneously drive down wages and drive up the cost of housing.

      Technologically, the country is weaker because it is now almost entirely dependent on foreign nationals to perform engineering and science, often under the guise of foreign consultancies. Already there are plans to staff the CHIPS Act factories with almost entirely foreign labor (despite the Act being sold as a jobs program).

      There is probably an American family somewhere where grandfather worked on Apollo and the F-15, father worked on Oracle and SPARC, and the son works fast food because he doesn’t speak Telegu.




    • Faucian Bargin, when I was in grad school, the US citizens were generally the weakest students. Just take a look at the author lists in academic journals and you will how few of the authors are US citizens. I am sure this trend is getting worse as educational standards drop. For semiconductor plants, you need high quality labor simply because the equipment is so expensive so companies have no choice but to use talented H1Bs because young talented American engineers don’t exist and talented American engineers are nearing retirement.

    • Semiconductor chip fabs, where everything is automated, do not need geniuses or even highly skilled workers. R&D labs need them. Semiconductor fabs need loving corporate tax regime and the cheapest workers who are not under influence of alcohol or pot.

    • @”Anon”
      “Faucian Bargin, when I was in grad school, the US citizens were generally the weakest students.”

      Many high-potential citizens forgo graduate school, in part due to the high cost of a bachelor’s. Especially at second tier schools and below, the students are almost entirely cash cows seeking OPT.

      “Just take a look at the author lists in academic journals and you will how few of the authors are US citizens.”
      The reasons for this are covered by Matloff[4, 5]; the US government deliberately made advanced degrees less feasible for citizens based on a severely flawed predictions in the 1980s (see [4] p. 898 ff).

      “I am sure this trend is getting worse as educational standards drop.”
      Tell me about “educational standards” in India (which dominates the H-1B and OPT programs): How many of the top 50 global universities are in the US versus India[1]?
      How is India doing in the PISA tests[2, 3]

      For semiconductor plants, you need high quality labor simply because the equipment is so expensive so companies have no choice but to use talented H1Bs because young talented American engineers don’t exist and talented American engineers are nearing retirement.

      “talented H-Bs” This is complete BS. There are a handful of talented H-1B’s, but as was amply demonstrated over 20 years ago in the Michigan Journal of Law Reform[4], especially section E. “Claims that H-1Bs Are ‘the Best and the Brightest'”: the overwhelming majority are average at best (as indicated by their low pay).

      “young talented American engineers don’t exist”
      Post this on LinkedIn but substitute “Negro,” “Hispanic,” and “female” for “American.”

      “India participated in the 2009 round of testing but pulled out of the 2012 PISA testing, with the Indian government attributing its action to the unfairness of PISA testing to Indian students India had ranked 72nd out of 73 countries tested in 2009…India did not participate in the 2012, 2015 and 2018 PISA rounds.”
      [5] [see page 214]

    • @Faucian Bargain, thank you for your detailed post. Appreciate the links. A lot of semiconductor companies like Intel, TI and others insist on hiring PhDs for their fab related engineering roles. Based on your research, os your sense that if they hired US citizens with BS degrees and trained them for a year, they would outperform some of the PhDs (at least the US citizens$?

    • @Anon
      I’m not exactly saying that BS Citizens can replace foreign PhD’s, although:
      1) A BS graduate from a top 10 program probably can outperform a lower-tier PhD within a year. Our gracious landlord made major contributions to PA-RISC / Itanium project with “only” a SB in mathematics. (And the famous SICP videos were the result of HP hiring Ableson & Sussman to train their employees, which was far more common when employees were not disposable aliens).

      2) Regardless of absolute technical skill, FOR THE PURPOSES OF THE CHIPS ACT, the companies should be forced to “make do” with “mere” US citizens (i.e., the descendants of the inventors of the transistor and microprocessor): the Act was designed for a) national security and b) jobs. There’s little point in hiring Chinese and Indian nationals any more than it would make sense to hire German nationals on temporary work visas to staff the Manhattan Project (NB: the project succeeded). THIS IS NOT THEORETICAL OR PARANOID: Canada has long been held to have roughly identical national security interests to the US, which is why many so many of the men you would see photographed inside NORAD had maple leafs flag patches on their uniform, and Canadians have had high-level Pentagon positions. Just this month a massive investigation by Canadian intelligence identified the #1 and #2 threads to Canada as China and India: the same countries which supply almost all H-1Bs (over 85% of petitions in 2019[1]. India is also a political threat in the US [2, 3] in addition to its economic attacks.

      Specifically, if you are looking for quality, it’s almost entirely Chinese, as Indian H-1Bs come almost entirely from shit-tier schools in southern India[4]. Since the CHIPS Act was almost entirely created to respond to the threat of China, does it make sense to you to respond to the threat of China by spending public tax dollars to create infrastructure staffed by Chinese nationals?

      3) It’s facile and disingenuous to look at just one aspect of this in isolation, rather than taking a systems perspective. The semiconductor industry has a reputation for ultra-high educational requirements, low pay, and bad WLB. Matloff has established that government policy and actions have INTENTIONALLY made PhDs unattractive to US Citizens by degrading pay and working conditions for graduate students as well as the labor market for PhDs. The solution is to reverse those policies, of which immigration is the most powerful.

      Arguendo, assume a Southern state in 1860 had a legal system which barred any non-white person from voting, owning any real estate, owning any professional tools even as minimal as a shoeshine kit, marrying, working as a sharecropper, learning to read or receiving any other form of education. Your position is basically “Emancipation is cruel, because otherwise they’ll just starve to death!” In real life, the 13th Amendment was accompanies by the 14th and 15th, and about 100 years later, the Civil Rights Act.

      Likewise, the Chips Act was intended as a first step toward disengagement with China and toward re-creating a domestic industrial base for the US. The country’s long-term strategic interest would be better served by repealing the H-1B program and severely restricting OPT. A “domestic” industrial base staffed with foreign labor is the height of foolishness.


  6. That is a good point. I guess a working migrant can still get services and goods payed by the natives. You have to consider the average net contribution. For example, Spain is going to receive 100 million tourists this year (13.5% of Spain GDP). Some of them will get free health care in Spain, and the Spanish taxpayers will have to pay for it (in the case of tourists from countries outside the EU). As a whole, foreign tourists are a good thing. Permanent “tourists” who receive on average about 2,700 euros/month from the Spanish taxpayers are not. Some do a lot better than that. One guy from Senegal managed to steal more than one million euros from the Basque government using 62 false identities. See the headline below (in Spanish).

    • Faking 62 identities very much makes him a “skilled” immigrant!
      I’m European myself, I don’t think the money going to migrants is the problem . Integration, especially of children, is the main hurdle. It’s hard/impossible to really integrate unskilled, unmotivated adult migrants. So let’s make sure their children are.

  7. I don’t get how low-skilled illegal migrants is good for ANY country. Those who support it and say low-skilled illegal migrants are good for the country, have they not looked at their existing, native low-skilled citizens? Why haven’t those native low-skilled citizens made it up the ladder? What is stopping the government from training them so they don’t flip buggers all their lives, or depend on welfare programs generation after generation?

    Welcoming low-skilled illegal migrants is not compassionate — you are giving the migrants false hopes, and you are creating a burden for the middle-class — thus destroying your country.

    • At the time, manual labor was in high demand. Today machines do a lot of that. One wants high added value, otherwise theres bo breakeven, only net loss.

    • Nione: I can’t find the reference right now (it might be the always-interesting Gregory Clark), but apparently automation, perhaps as far back as the industrial revolution, has actually lifted wages MORE for manual labor compared to desk work. Certainly there are fewer manual laborers compared to in the past, but those who are willing to do it can get paid more (maybe a lot more if not for the flood of competition due to our open border system).

  8. Europe is rich in migrants, so why isn’t it rich? Because there is no correlation between being rich and having migrants.

    • There is direct logical line from country being relatively richer to people wanting to migrate to richer country. Especially if richer means being richer in lower income bracket. I do not believe that working age people without any officially confirmed disabilities dependents are guaranteed reliable income in the USA but apparently they entitled to 2700 EUR / month in Spain.
      I believe that after 3 decades of working and each year making money in the top quartile of all earners and paying often maximum social security contribution my tentative disability benefits, should I became disabled, have not yet reached 2700 EUR after translating from USD.

  9. That interpretation of that graph by zero-hedge doesn’t pass the sniff test.

    Do we think the native-born working population is growing faster than jobs, leaving a bunch of native-born people out of work?

    As people should have noticed, the labor market is super-tight, and people who would have been unemployed in past times are now swimming in job offers. This is why every low-skilled job has been raising wages and the people you see in service jobs seem a cut below.

    Also, the pandemic caused a huge number of near-retirement people to retire, partly because being out of work caused their skills to suffer, and because the huge stock market run-up gave people the money they needed to retire.

    • Does it really make sense? Labor participation rate remains low, stock market dropped during pandemic, real household income stagnated and fell, jobs pay less in inflation-adjusted money and during pandemic service jobs competed with government payouts that added trillion dollars in debt. And why would workers who “forgot” skills be replaced with workers who do not have skills in the first place?

    • Anonymous — For workers in prime working years (25-54), workforce participation is at a 20-year high.

      And total jobs at an all-time high:

      Real wages had a crazy spike during covid (when people got money for doing nothing), then took a tumble when inflation hit, but after pay increases took effect, we’re still near all-time highs:

      Here’s the month-vs-month changes:

      The inflation-adjusted wage of the guy making my burrito bowl is likely higher than it has ever been.

      To summarize:

      – Highest labor participation in 20 years
      – Most jobs ever
      – Highest real wages ever
      – Highest stock market ever (even after adjusting for inflation)

      Bidenomics is killin’ it! Hope Joe has room on his mantel for the Nobel.

      If you listen to right-wing podcasts or twitter, you’ll think we’re in the depression that makes 1929 look like an easy summer afternoon. People taking expensive trips to Italy in crowded airports can’t stop talking about how tough they have it.

    • David, I want to note that even accounting for fake inflation rate that understated by over 100% based on real estate, grocery and services inflation, cumulative effect of inflation under Biden still outweighs wage growth, which as you noted concentrated at low income jobs that are mostly taken by recent arrivals. Hope you can integrate.

      Labor participation – not a Biden special campaign selection, for labor force over 20 (should be over 16) – at worst Obama year low, worst in 70 pre-covid years

      Jobs to population ratio – a lot worse then pre 2008 and worth then pre-pandemic under Trump –

      Stock market returns are surprisingly at regular levels , 9% to 11% annualized, not really anything special to retire on, even though it includes covid slump recovery. And worse then 14% to 16% annualized from time of Trump election to beginning of fearendemic in January 2020.

      So here is my rating to your summary:
      – Highest labor participation in 20 years – fake news
      – Most jobs ever – fake news.
      – Highest real wages ever – fake news
      – Highest stock market ever – correct, but nothing special, it has been growing since end of Great Depression. (even after adjusting for inflation) – fake news, real cumulative inflation over Biden years is over 100%, stock market not even close to 100%.

    • @David, is that you Paul Krugman? Wow, welcome! Who knew we’d have an economic celebrity on phil’s blog!

    • Anonymous,

      CPI is cumulative, so weekly pay / CPI is a number that can be compared over time. This is that graph:

      For participation rate, I’ll argue that 24-54 is the right age range.

      If prime-aged people are swimming in jobs and people over 55 have retired early because their assets are at all-time highs, it’s hard to argue that’s a sign of economic failure.

      Here’s what’s happening to the olds:

      Re: stock market at all-time high. I don’t put much value in this as well, but it’s worth adding to the list because Trump spent years highlighting the stock market as one of the key barometers of his performance. Funny how this stopped being a thing once Biden surpassed him.

    • David,
      I hope that you are not a political campaign AI trained on NYT with reinforced biases. Do not have much time now but planning to respond in more detail, think your argument deserves discussion.
      CPI is another selected statistics that selectively excludes everyday expenses but even it shows over 41% increase in 3 years between 2020 and 2023, while CPI increase in previous 9 years between 2010 to 2020 was under 30%. So based on flawed statistics we have over 3 times higher CPI growth under Biden. And 2010 was diflationary due to economic slump while 2020 was inflationary fueled by $4billion covid handouts, thus logically we could expect lower CPI after 2010 – 2020. In case you are AI – CPI growth is a bad thing.
      Retirement at 54 due to built wealth is a laughable idea. Age 55 to 65 are primary earning years for any worker except pre- electrical age longshoremen, 1950th – style iron smelters and 1910th – style coal miners. Every financial adviser, either human or software, include social security into total wealth building plan. Retiree at 54 needs to be a multimillionaire, because he/she not even eligible for social security benefit, nor for Medicare. Whoever works from age 25 till 54 not even get optimal.percentage of their social security benefit when they become eligible, due to how it is calculated. It is based on top earning years, which depend on work experience. Bulk of early retirees are probably moving onto disability due to lousy economy.

    • Anonymous,

      Where did your 41% number come from?

      (Seriously wondering who told you that.)


      Cumulative inflation between Jan 2020 to Jan 2023 -> 15.97%

      Cumulative inflation between Jan 2020 to Jan 2024 -> 19.55%

      That’s definitely high, the highest in over 40 years, but less than half of what you mention.

      Important to note that inflation is a world-wide phenomenon.


      Should be hard to blame Biden when the same is happening in other countries as well, right?

    • David, switching notions on the fly? CPI or inflation? If inflation then by what measure? cooked or real? Here is CPI data Save your ire for muppets.
      41% considering 1982 100%
      2010 219.2
      2020 258.0
      2023 299.2
      I made typo, under 40%, not 30%, for previous ten years but x3 rate of increase is approximately correct.

      USA used to be 40% of world economy in 1960.
      After many economical successes US GDP is 12.7% of word GDP in 2023 (other sources say 24%, but the way US treated by enemies and former allies say otherwise)
      People used to aspire to be like US. Now you find silver lining that US still better then Venezuela. But it seems that Argentina set to better US on inflation in few months the longest. Probably already has better non-cooked numbers.

  10. The US is about to get EXPONENTIALLY RICHER if Trump is elected:
    “[What] I want to do, and what I will do, is you graduate from a college, I think you should get, automatically as part of your diploma, a green card to be able to stay in this country. That includes junior colleges, too,”
    “Anybody graduates from a college, you go in there for two years or four years, if you graduate, or you get a doctorate degree from a college, you should be able to stay in this country,” he continued.

    Yeah, “the Best and the Brightest” are getting associates’ degrees at Jones County Junior College in Mississippi.

    • FB: a few years ago I would have said that it doesn’t matter if a candidate talks like this because only Congress can radically change the U.S. and U.S. immigration law. But Obama (with DACA) and Biden (with the open border and “asylum for everyone”) have proved me wrong! (I would also have said that only Congress could transfer the burden of college loan repayment onto the working class, but Biden has proven me wrong there.)

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