By William Reinsch
In the past I have written passionately about immigration, because I believe immigrants are America’s future just as they have been our past. Virtually all of us came from somewhere else, and it was those forebears whose hard work and love for America made our country what it is today. Our newest arrivals continue to stir our melting pot, and it is their work ethic and their inspiration — as well as that of their children and grandchildren — that will keep us strong. Restricting immigration is like restricting trade. It cuts us off from the new energy and new ideas that historically have made us who we are and which we need to keep us competitive in the future.
Of course, those are long-term results that often get ignored in the debate about the short term — something I wrote about last week. It turns out, however, that there are also short-term consequences to short-sighted actions.
One likely outcome of the president’s recent order on immigration (if it is sustained) as well as anticipated further orders, will be the emigration of research and development to other countries. The reality of a global economy is that companies have choices. If we close off access to foreign talent, they can move to where the talent is just as easily as they can try to find talent here in the U.S. We saw this on a small scale after 9/11 when the crackdown on visas prompted some companies to shift functions outside U.S. borders, and I expect to see it on a much larger scale if the new administration carries out its threats.
Another likely outcome is a missed opportunity and an example of the principle that demography rules. A few weeks ago, I talked about the irony of complaining about the decline of manufacturing jobs at the same time that there were literally hundreds of thousands jobs going begging. The rest of that discussion was about the mismatch between the unemployed and the available jobs and what could be done to narrow that gap. Another piece of that puzzle, however, is the overall decline in America’s population growth and what it means for the economy.
The Census Bureau reported late last year that America’s population growth rate had declined to 0.7%. We have not yet reached the point of countries like Japan and Italy where the population is actually shrinking, but the trend line is in that direction. The rate has fluctuated over the years, so it may be too early to spot a long-term trend. The only time in the last 100 years the growth rate was negative was in 1918, and most of the time since it has fluctuated between 1 and 2%. During that 99 years, there have been three periods of sustained slow population growth: during the Depression years of 1931-1941, in the 1980s where it hovered just a bit below 1%, and starting in 2001 and continuing until now — the longest sustained period.
There is a debate about what this means for the economy, but I think it is not a good sign. If you look at data over 300 years, you see a long-term trend in favor of fewer children. As public health improved and people moved off the farm and into cities, the need to have large numbers of children to compensate for high death rates and to provide workers on the farm declined, and a lower growth rate became associated with economic development and prosperity. Even today, the highest rates tend to be in the poorest countries.
The experience of Japan and some European countries, however, is beginning to suggest that if the rate is too low, it hurts economic growth. Low population growth means fewer workers and also fewer consumers and therefore less demand, and after 16 years of slower growth in the U.S., we may be beginning to realize those economic effects. We may well be able to bump along at low economic growth levels for some time, as Japan has done, but that is not a way to increase our wealth and prosperity. It’s merely taking the slow road to decline. Unfortunately, the iron laws of demography don’t provide a rapid solution. Everybody in the work force of 2030 has already been born — we can’t have babies retroactively. Stephen Mihm, a professor at the University of Georgia, suggested, not entirely facetiously, that perhaps our new national slogan should be, “Make America Mate Again,” but that is obviously not a short-term remedy.
But there is one way to offset the decline in the short-term. We can welcome more workers into our country through rational immigration policies. They become workers, consumers, and taxpayers and add to our growth and national wealth. That adds a practical note to my more emotional plea at the beginning of this column. It appears that immigrants are not only good for our national soul, they’re good for the U.S. economy because they provide an expanded work force and consuming force that will boost our economic growth rate. Keeping them out, therefore, is an enormous missed opportunity.
William Reinsch is a Distinguished Fellow with the Stimson Center, where he works principally with the Center’s Trade21 initiative.