The four leadership power sources of population, wealth, military strength, and foreign reach work both independently and synergistically to generate leadership power for a society. This week, we examine the synergy between population and wealth through the lens of immigration.
Immigration is a sensitive subject. Many people see immigration as a way to depress wages and keep existing Americans from having a reasonable standard of living. However, Professor Benjamin Harris, Executive Director of Northwestern University’s Public-Private Initiative sees it differently: “When you take Economics 101, you learn that the shift in the supply curve that comes with immigration should push wages down. But then you take Economics 102 and realize that we’re not talking about the same type of workers. Immigrants tend to have really different skills than native-born Americans, so they end up being more complements than substitutes.”
Recent research from MIT, the University of Pennsylvania, and the US Census Bureau goes a step further. It found that regions with higher immigration levels saw the greatest rises in per capita income. Immigrants, on average, start more companies than do native-born Americans (about 80% more); this in turn creates jobs for the entire region. The presumed reason is that anyone willing to leave everything and start over in a new country is enough of a risk-taker to start a company.
When considering a society’s long-term leadership position, governments would be wise to craft policies that effectively manage immigration. “It’s almost impossible to imagine our country’s economy growing the way we would like to see it grow without a suitable immigration system,” says Harris. The US simply does not have enough people to fill roles in software development, for example. Harris promotes a plan that calls for floating immigration limits, determined annually based on economic needs rather than a flat quota imposed by Congress: this would better serve business interests. Since America’s long-term leadership position may be impacted, it will pay to get this right.
Reference:
Jessica Love, “Immigrants to the US Create More Jobs than They Take,” Kellogg Insight, 5 Oct 2020, accessed from https://insight.kellogg.northwestern.edu/article/immigrants-to-the-u-s-create-more-jobs-than-they-take
Jake L Smith, “The Business Case for Comprehensive Immigration Reform,” Kellogg Insight, 14 Aug 2019, accessed from https://insight.kellogg.northwestern.edu/article/economics-business-bipartisan-immigration-reform
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