I saw Michael Clemens talk yesterday about his research on migration and the trillion dollar bills lying on the sidewalk. It’s a paper I’ve blogged about before, but it’s arguably the most underdiscussed issue in economic policy so it’s worth reiterating. His point is that the typical worker in a poor country can massively increase his earnings by moving to a rich country, while the wage impact on native born workers of high levels of immigration looks to be approximately zero. Under the circumstances, there’s such a wide array of win-win arrangements that could be made that the failure to implement any of them boggles the mind. Basically we should be allowing many more people to move here, and mildly clawing back their massively increases earnings through some kind of fee, and then using the fee revenue to make everyone better off.
His argument is so persuasive that there was really not much to talk about except politics. So one point that I think doesn’t get made about this enough is that obviously there’s a strong nationalist current in American public life that cuts against the cosmopolitan sentiments that drive pro-immigrant sentiment. But there’s also a nationalistic “greatness” case for more immigrants. Consider yon world population density map:
You’re looking at a map of the world’s three great powers — Europe, China, and India — with Japan, Indonesia, Nigeria, Mexico playing significant roles as secondary regional forces. Meanwhile, places like Australia, the Persian Gulf, Canada, Russia, and Norway are sleepy natural resource exporters. You have this intriguing United States of Acela on a splotch of North America, but the majority of it is in sleepy resource exporter territory.
Now of course in the real world, China and India are poor. And Europe’s not a great power, it’s a confederation with shaky macroeconomic management. But China and India won’t be poor forever. And while the five-year Euro-forecast is very uncertain, these countries aren’t going to halt the process of economic cooperation. But you’re still left with the question of why the United States isn’t more like Canada or Australia — a pleasant, prosperous, well-governed natural resource exporter. Why are we a major power? Well it’s because of the people. For the majority of our history we had some meaningful barriers on the importation of foreign goods, but were extremely welcoming to foreign people. More recently we’ve flip-flopped. If you can pack it up in a box and float it across the ocean, we’re happy to take whatever you’ve got. Unless it’s people! God forbid the people come to cooperate with Americans on the joint production of goods and services. But over the long-run, America’s status as a major power is dependent on America’s ability to get more people to sign up for the American project. Amazingly, we’ve done all the hard parts of this. People want to come to America! People still think, for all our problems, that this would be a great place to live and work. But instead of investing some time in thinking up a system to let more of them do it in a way that meets our infrastructure and local governance needs, we’ve investing more and more money in stopping them at gunpoint.