Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast which covers economics, finance, politics, and sports. I give each speaker just six minutes to make his opening argument.
Today’s topic is Who Should We Let Into the US?
Our speakers will be economists Ran Abramitzky from Stanford and Garett Jones from George Mason. Ran is the author of Streets of Gold: American’s Untold Story of Immigrant Success and Garett wrote the book The Culture Transplant: How Migrants Make the Economies They Move to a Lot Like the Ones They Left.
Both speakers are pro-immigration, but Garett wants us to focus our efforts on recruiting immigrants with skills. Garett believes that the success of immigrants’ descendants is a function of the culture imbued from the old country. In addition, the immigrants social and cultural mores will affect America’s social mores as well, so be very careful who you let in.
There is much to cover so buckle up.
I make this podcast to learn, and I offer it free of charge. If you enjoy today’s podcast, please subscribe from our website for weekly emails so that you can continue to enjoy this content.
Ok, let us begin with Ran’s opening six-minute remarks.
Topic: Immigration in the US
Bio: Author and professor of economics at Stanford University
Reading: Streets of Gold: American’s Untold Story of Immigrant Success is here
We often hear this nostalgic view that past European immigrants came to the United States with nothing and moved very quickly from rags to riches in contrast to immigrant groups today that come from different countries that aren't making it and don't assimilate.
This is where the phrase streets of gold came from. It was this idea that this is a country where you can arrive without anything and make it. But we chose the title of our book Streets of Gold for a very different reason. An Italian immigrant in the early 1900’s said, I came to America because I heard the streets were paved with gold. But when I arrived, I found out three things, the first one was that the streets were not paved with gold.
The second is that they were not paved at all. And finally, I was the one expected to pave them. This immigrant knew that immigrants had to pave the way.
In this research that Leah and I have been doing over the last 15 years, we build data on millions of immigrants’ lives to reassess the common myths about immigration and the American dream over the last one and a half centuries.
Is it true that immigrants today are less successful than past immigrants? Is it true that they are less economically mobile than past immigrants? Is it true that immigrants today are making less of an effort to become Americans and to integrate culturally into the US?
Is it true that immigrants’ success come at the expense of the US born, and immigrants steal jobs and reduce the wages of the US born?
You can think of us like the curious grandchildren searching in the historical records for their grandparents and their great-grandparents and multiply these efforts by millions. We create genealogies of millions of millions of immigrants. We can follow them and their families over time.
Once we have this data set, we can ask questions like, is it true that they moved quickly from rags to riches? How are the children doing? Who did they get married to? How did they name their children? Did they live in immigrant neighborhoods? Did they crowd out the US born?
What we find is that the American dream for immigrants is just as alive now as it was a hundred years ago.
Immigration has never been a short story. It's always been a novel. The first part of the novel, immigrants leave poor countries, and by doing so, they at least double their income. You cannot find any policy that will alleviate global poverty as much as allowing people to move across borders.
Then the second chapter, no rags to riches. And if they came in rags, they did not move to riches very quickly. Many of our immigrants who came poor continue to be relatively poor throughout their lives, work in manual jobs, never made it to white collar occupations.
The third part of the novel is the children of immigrants. And they're incredibly successful and incredibly upwardly economically mobile. Consider what happens when we compare the children of immigrants who grew up in poor families. For example, let's think about children growing up to parents in the 25th percentile of the income distribution. Today that will mean that they grew up in families roughly equivalent to $30,000 per year. Think about it as both parents work for minimum wage jobs. When we do this apple-to-apple comparison and look at the children growing up to equally poor families, what we find is that both today and in the past, the children of immigrants are very economically mobile more so than the children of US-born parents.
This is true for families from nearly every sending country and in every historical period we look at. When immigrants come today from very poor countries like El Salvador, Laos, it is equally true as it was in the past. The children of poor immigrants are doing just as well as the children of poor Danes and Swedes and Norwegians a hundred years ago. When you try to ask a question of what explains that the children of immigrants are doing better than the children of the US born? And how come they are so economically mobile? Some of it is that immigrants are motivated.
Those who make the move, they are risk-taking, entrepreneurial, they instill values in their children. They care more about the education of their children. But what we find in the data is strong evidence for a more mundane explanation. One that has to do with location choice. Immigrants tend to choose to live in the United States in places that offer high economic mobility for everyone. In the past, immigrants were very unlikely to settle in the US South, which was a place of low economic mobility. In contrast, the US-born are more rooted in place because if you are born in the United States, moving to opportunity often means moving away from home.
You don't just think about what are the economic returns from various parts of the United States? You think my parents are here, my grandparents were born here, my network is here, my connections are here, my job is here. I love the food here. It's moving away from home. It's hard. Whereas immigrants are more foot loose. They are already revealed by moving across the Atlantic that they are willing to move away from home. Once they come to a place where they have relatively very little connection, they may as well settle in places that offer upward mobility for them and their children.
Immigrants who just arrived to the country a few years ago, you don't see that they are doing very well. Maybe they are more likely to use the welfare state. They are not catching up very quickly to the US-born. But when you take a longer-term perspective, and you look at the children of immigrants and at past immigrant groups that are here for a hundred years, then you realize that immigrants are doing very well. And in this sense the American dream for immigrants is just as alive today as it was in the past.
The big debate about immigration policy today is whether we should use scarce immigration slots primarily for the high-skilled worker. Why do you also want to encourage low-skill immigration?
I think reasonable people can reach different conclusions from the data when it comes to what kind of immigrants we should accept. Immigrants tends to come in two groups: high-skilled and low-skilled. The very high-skilled ones create jobs. They are more likely to start-up businesses, more likely to invent. They are creating jobs to the US-born. The less-skilled ones tend to work in construction, in landscaping, taking care of the elderly and jobs that US born workers do not do at the going wages.
There are services that exist because immigrants are here. If your goal is to have high-tech people start-up businesses and you have a limited number of immigration visas, it is reasonable to conclude that you want to prioritize high-skilled immigrants. But we should not worry that much about accepting less-skilled immigrants because they do services that are very useful for us, and their children end up doing very well.
Tell us about the history of US immigration as our policies shifted from open borders to restricted access.
In the Ellis Island era, European immigrants could come to the United States without a green card, without visas, without showing that they have a job or family member waiting for them. Open borders for European immigrants. Some countries lost a quarter to a third of the population to the United States during this period.
The 1882 Chinese Exclusion Act was the first act in the United States that excluded a certain immigrant group based on their country of origin. Followed by the 1907 Gentleman Agreement with the Emperor of Japan to stop bringing Japanese immigrants to this country. Then quotas set in the 1920s heavily favored immigrants from Northern and Western Europe over immigrants from Southern and Eastern Europe. And then immigration declined from about a million per year to about 125,000 per year that heavily favored Western Europe.
In 1965, the borders were opened again, immigration visas increased from about 150,000 to 675,000 legal immigration visas per year. Because the demand for immigration today is larger than the number of visas produced, this gave rise to undocumented immigration, which is a concept that did not really exist because in the past everybody was allowed to enter legally to this country. The lottery visa is a more of a curiosity.
Two-thirds of immigrants come here through family reunification. The other third is mostly visa sponsoring high-skilled immigrants. Universities take H-1B and a trickle of refugees and the lottery visas that are allowed to enter.
What we are saying is that we do not need to do that much micromanaging because even people who arrive from relatively poor background eventually end up doing well.
How critical were the changes to immigration policies that the US adopted in the 1920s?
Without the historical restrictions we will have different people coming here. It was clear in the past that there was immigration open to the United States but only if you are a free white person. Even when Italians were starting to come, they were not considered white. If you think today people say shocking things about immigrants, you should listen to Henry Cabot Lodge, a senator with a Harvard PhD in history in charge of the Commission that opened the borders in the first age of mass migration. “Immigrants are from the lowest classes and lowest races.”
And he was referring to the Italians!
We find, over and over, in this research that people forget that they were immigrants once upon a time, and they voice the same complaints only targeting different immigrant groups. Immigration in the US is a function of immigration restrictions.
What data informed you that immigrants who earned at the 25th percentile in income had descendants that were at the median level of income?
Data is based on IRS records linked to census data. People write their children as dependent when they file their taxes that way you see the person when he is a child, you see what the father is doing and how much he is earning and then you can see the child 30 years later when they fill their own tax returns. It is based on IRS data tax records of the entire US population.
We focus on a group of exceptionally low income, there is no way for them to move down. So, most of the people move up to some degree, and this is already being noted by Raj Chetty that the mobility of US born people is relatively limited. And that the mobility of the children of the immigrant is higher.
If on average somebody grows up to US born parents in the 25th percentile is reaching on average the 45th percentile of the income distribution. And I am focusing here on white, because I don't want to conflate it with the black-white differences in the United States, moving to the 45th percentile. The immigrants on average move to the 51st percentile.
If you ask the question of what is the probability that somebody from the very bottom will move to the very top? Immigrants are twice as likely to become rich relative to the children of the US born. This is based on statistics. Same thing for the immigrants in the past, we link people across population census. And that way we can see children growing up in their parents' homes, and then we can see them again when they have careers of their own.
Why did you conclude that immigration of low-skilled workers would not reduce wages of US born low-skilled workers?
We talk about it in the book, what happened when the border closed in the 1920s, it closed asymmetrically for people from Eastern Europe versus Western Europe.
We can compare two different places one mostly German and the other mostly Italians. One of them will receive fewer immigrants. And what we find is that it is not the case that when fewer immigrants come the wages of US born increase. And the reason for that is that firms have other options beyond just replacing immigrant workers with US born workers. They can mechanize, they can shift crops that require more machines than labor. The adjustments that happen in the market are not such that they benefit the US born.
A substantial number of immigrants who were unsuccessful in the US returned home to their original country of origin. Do you think that there is a selection bias by focusing on the successful immigrants who remain in the US? And do you think that going forward, the unsuccessful immigrant will stick around and not go home, especially if there are attractive welfare alternatives here?
I do not view it as a bias. People who come here are the ones who self-selected to come here and to stay here. The evidence supports in every immigration wave about 30% of the people go back home and did not make it. The immigrants who come here and stay long-term tend to be the ones who are more successful.
How did refugees compare to those immigrants who came for economic reasons?
If you go to Ellis Island you can listen to these immigrants speaking about, why did they come here?
They have about 1500 interviews that they did later in life with people who passed through Ellis Island, and we digitized and transcribed those. We can hear and see how well they speak English. We can compare people who came because they said, “I just wanted better economic opportunity” versus the ones who said, “I came because there was a war, a revolution, I was kicked out, antisemitism and so on.”
People who came as refugees end up having better English later in life and earned higher wages in the United States. Refugees have nowhere to go back to. They try to make it in the new country. Whereas if you are an economic immigrant, if it does not work, you go back.
On a previous podcast for What Happens Next, I interviewed a former Mexican Presidential Candidate Jorge Castaneda. Jorge described Biden’s Infrastructure Act as the Great Mexican Employment Act because American firms would hire Mexican citizens to do this work. How do economics and government spending drive immigration?
I am not here to advocate for a particular policy. I will say this did not happen. For example, we had the Braceros, they came here, they worked in farms. And then in 1964, the program stopped. And it was not the case that American workers started to replace the foreign workers. Many farms closed, so apparently it was not profitable enough for them to increase the wages and keep the farm.
There is a mechanization and closing of farms, and you do not see a lot of increasing wages. Firms were very flexible.
Similarly, the famous paper of David Card and the Mariel boatlift. Many people came to Miami, did the wages of US-born increase when they came to Miami? Not really. What happened was Miami was quicker to mechanize. You do not often see the wages of the US born unskilled increase.
Is it misleading to consider today’s immigrants as a single group? For example, do we see similar economic results from Indian and Chinese immigrants versus Latin Americans?
The children of low-income immigrants from India and China are doing way better than the children of US born. Whereas the children of Mexicans and the Dominican Republic are just doing a little bit better than the US born. What explains this is something that goes a little bit beyond what we can do with big data. We have some ideas, a lot of the immigrants from India and China are not very poor.
If you are very poor immigrant from China and India, you likely know somebody from China or India that is not very poor and that might be helpful. Whereas a lot of the immigrants from Laos and the Dominican Republic tend to know poor ones.
The other thing that can explain it has to do the way the visa works. Only up to 7% of immigration can come from an individual sending country. That is not binding for Luxembourg and for Israel, but it is very binding for China and for India. The ones who end up making it are so good even if they are poor.
What we can largely rule out is that there are some cultures that will always stay a permanent underclass that just are not making it. Out of the 50 sending countries of relatively poor immigrants, 47 of them are doing better than the children of the US born. It is interesting to ask what are the three countries that are doing worse than the US born? Those are immigrants from poor majority black populations. More research is needed.
Next topic is the sociological impacts of immigration.
Many Americans like America the way it is. They prefer the near universality of English as the dominant language. They want to practice democratic norms. They love our culture: apple pie and baseball. They are tolerant of immigrants and foreign cultures up to a point. They love Tex-Mex, but they do not want Mexican-style law enforcement or a substantial number of non-Christians. They want to live in America and not a country that has culture and mores of Mexico, China, India, or Nigeria.
Many Americans believe that we can assimilate a limited number of immigrants at any given period, and that to add substantial numbers who cannot assimilate is dangerous to our society.
Let me tell you two aspects of our research that talks to that. The first is we look at congressional and presidential speeches from 1850 until today. How do attitudes towards immigrants change over time? And what we find is that the attitude towards immigrants today is as positive on average as has ever been in the history of the United States.
It is polarized by political party. Democrats are more likely when they talk about immigration to mention family and community, and Republicans more likely to mention crime and illegality.
When they speak about the economics of immigrants, they speak in similar voices. But the polarization is when they speak about cultural stuff. You came to the country illegally, they are more likely to commit crime, drugs and so on. In the book, we try to look at cultural assimilation. For example, we can see the tendency of how well they speak English.
Do they marry within their own culture, or do they marry outside their culture? Do they give their children more American sounding names? We can look at the propensity to move away from immigrant neighborhoods. What we find is that immigrants do not completely converge to the behavior of the US born. They give more American sounding names, but they do not give American names as the Americans.
They tend to marry outside the group but they are still more likely to marry inside the group.
Immigrants retain some of their own original identity while assimilating. After 20 years in the US, they are still different than the US born, but that seems to be the margin that divide people in the United States about how immigrants contribute in terms of culture.
Topic: Immigration in the US
Bio: Author and professor of economics at George Mason University
Reading: The Culture Transplant: How Migrants Make the Economies They Move to a Lot Like the Ones They Left is here
What's the best immigration policy? Here's my proposal: Admit anybody from China who wants to move to your country and stay there. This is a promising policy because countries across Southeast Asia that have had large numbers of Chinese migrants have better governments, less corruption, higher levels of income, and widely shared prosperity. And this matters for human wellbeing.
Why should one believe that migration from China would make poor countries richer? Notice the pattern across Southeast Asia. These market dominant minorities have a disproportionate share of billionaires, and leading positions across the economy. It's about building productivity that is shared widely across the entire country. This happens because migration creates a culture transplant, making the economies that migrants move to a lot like the economies that migrants left.
The performance of the Chinese economy before the age of Columbus is a golden age of government administration and of innovation. China has had very difficult times in the intervening centuries, and now China is getting back to its long-run destiny. China is the world's poorest country made up of people from China.
Singapore, Hong Kong (rest in peace), Taiwan, these are countries that are quite prosperous by global standards, and they're all made up of disproportionately of Chinese migrants and their descendants.
My book shows that attitudes toward trust, frugality and the proper role of government seems to persist across generations. My book isn't about first-generation migrants. What I'm interested in is whether second, third, even fourth generation migrants, carry values and economic attitudes that are like the attitudes in the nations that their ancestors came from.
If I'm right, then full assimilation is a myth. That can be good news and bad news but paying attention to that news is going to be important for shaping the wealth of nations.
I visited a history museum in Killarney Ireland. 90% of its citizens emigrated to the US during the potato famine. And I wondered who stayed? Who lacked the grit and determination to try a new life outside of Ireland during a famine? Migrants vary with educational credentials and entrepreneurial spirit. Why do you suspect that each wave of immigrants will be similar?
People who migrate are different on average than people who don't, and there are going to be a lot of idiosyncratic reasons. Elena Ferrante’s excellent novel, Those who Leave and Those who Stay, captures a version of this for Naples. People who stay in Southern Italy versus those who migrate to the North for economic prosperity, there's a difference between them. But there are a lot of family ties and that hold you back sometimes. There's an interesting study by a young Harvard professor that finds that the Swedes who left Sweden to come to America tended to be economically quite different. The people who left had more unusual names than those who stayed behind.
And if you have unusual names that correlates somewhat with openness, being willing to take new risks. Maybe the people who stayed behind were more conformist than those who left.
One of the great things that America has going for it is that the migrants who come here chose to make a long and difficult journey. We definitely have a selection mechanism that probably matters 2, 3, 4 generations as those traits are passed on. And people who go back tend to be the weaker performers. For every migrant coming to the US from Italy, a third went back to Italy. That’s selection as well.
The UCSD economist Gregory Clark wrote a book called The Son also Rises and he spoke at my book club. In 1750, the King of Sweden knighted 250 successful people and scientists, like Lord Celsius. The descendants of the 250 noblemen are doing much better financially than the average Swede named Anderson nearly 300 years later, which means despite the regression to the mean in intelligence, these descendants have other attributes that lead to their continuing success.
Clark's work is really great. I've been reading his stuff since the nineties. He documented a new way to find evidence for intergenerational persistence by looking at unusual names and how they're transmitted over time. He was able to start off doing this in England because churches were careful about keeping records of who was born and who lived in the parish. This record keeping meant it was possible to see not just how economic success is transmitted from one generation to the next but across multiple generations. We have this meme that's floating around of reversion to the mean, or three generations from shirt sleeves to shirt sleeves.
If you go up, then your grandchildren are just going to go right back down. And Clark has done a really good job demolishing that simple story because he has data across multiple generations. Clark's multi-generational, even centuries long evidence shows that people don't revert to the national mean very much. They tend to revert to a mean that's their family heritage, their own lineage.
Professor Clark was disappointed that there was not a reversion to the mean because he was hoping for intergenerational equality. But he found across countries in the US, Sweden, the UK and China, that success continues across generations, and even the cultural revolution in China did not hold back the previous elite’s offspring.
People do revert to a mean, but the mean that migrants revert to is an average of two means. Let me be very simple in my statistics. I'm of Irish descent, so I'm guessing my attitudes have converged, 50% to the average of the United States and 50% of the average attitudes in Ireland.
I have a Norwegian friend and he told me that when there was a mass migration from Norway to the US over a 100 years ago that the Norwegians that moved to the US were much more religious and that the atheists stayed home.
This reminds me of George Borjas' work about ethnic capital, which is that the process of migrating is frightening. I come from a Mormon background, and Utah is formed by people who wanted to move to a place in the late 1800s where people shared their religion. And that shared religious tie gave people a safety net that made them willing to take this ridiculous journey across the American plains dying at high rates to get to the promised land.
Your colleague at George Mason, Tyler Cowen did some work on migration within the US, and he believes that internal migration is a sign of economic success as individuals move to cities where their skills are most useful like insurance in Hartford or film in Hollywood. Tyler is worried that internal migration is declining in the US.
When you're migrating, as you point out, people can pick the place they want to go to. And one of the great things about cities is that cities are a portfolio of alternatives. We know from other research partly from Ed Glaeser at Harvard that job market dynamism is a lot more robust in cities. There could be a trade-off between your family ties and the best economic prospects. I'm a big fan of the research on amoral familism where family values can be a chain that holds people down from their economic potential.
Wanting to be close to your family can keep you from taking on the most innovative, riskiest, highest performing economic prospects. This is something that you can see most clearly in sort of the comparisons between Northern and Southern Europe. Southern Europe, strong family values, Northern Europe, more individualism, more of a nuclear family. As a result, people in Southern Europe are less likely to move a long way for a job because it's important to take care of your mom and that that can have economic consequences for the entire society.
In 1998, I was transferred to Salomon Brothers Tokyo for a year. I was one of only a few migrants to this wealthy country. Salomon excelled at technology transfer within its branch offices. Our proprietary trading department shared information and trading methods with our London and Japanese colleagues. But away from my work, I don’t think that Japanese society benefitted at all from my presence, and frankly my attitudes and values were little changed from my living in Japan other than my interest in Japanese food.
As your example illustrates, one year is next to nothing. Assimilation is overwhelmingly partial and tends to take a couple of generations. On many measures, Europeans have found first-generation migrants assimilate more than second generation migrants do. There's a backlash, a sort of spring-boarding effect among second generation migrants. I spent two semesters at George Mason's Korea campus. I've been able to visit Japan for a few times to visit my sister-in-law's family over there.
And you're right. Japan is a country that has not decided to take the path of mass low-skilled migration that the United States has. It's a culture with high entry barriers. There's extreme politeness. At the same time, there's a huge entry barrier to being treated as fully Japanese.
Our next topic is Howard French's book about Chinese migration to Africa that highlights the lack of assimilation with Chinese migrants. Howard French gives an example of a Chinese migrant who opens a convenience store that does very well. He expands it into a gas station and before you know it, he's doing auto work. And very quickly, the Chinese migrant is one of the most prosperous men in town. He's brought with him not only his knowledge, but all those soft skills like grit, frugality, and academic achievement.
The Chinese migrant will succeed and likely so will his progeny. But it also breeds resentment and animosity. Who are these Chinese guys doing better than us? We should confiscate his gas station. In a world where property rights are problematic, I'm not so sure I would recommend to Chinese migrants that consider Africa as their home. Nobel Prize V.S. Naipaul wrote a fabulous book entitled The Bend of the River and it tells the story of an Indian community that had lived and prospered in Uganda for generations and then given a week to settle their affairs and leave the country.
Howard French's book China's Second Continent is excellent. You're right, migrating is high risk. My policy advice is not that people from China should move to Africa in large numbers. It was the opposite. Poorer countries in the world should welcome Chinese migrants and create incentives for people to stay there for a long time.
There's a more general lesson that having people move from richer countries with folks with higher levels of education is going to have some positive spillover effect. It's in the interest of poorer countries to find ways to welcome those Chinese migrants, create a hospitable environment for them, because it will yield large benefits for their current residents and for the descendants of their current residents.
Let’s discuss importing high quality institutions. In your book, you mention that British colonialism was superior to the Spanish and the French. One possible explanation for this was the strength of British institutions: democracy, rule of law, courts, and universities. The China example is the opposite–their institutions are weak, but migrants don’t seem to bring them along to their newly adopted country. Chinese migrants did not bring with them authoritarianism, tyranny, cultural revolutions, but instead you're finding democracy, frugality, and entrepreneurship. What do you make of that?
I'm sympathetic to the idea that British colonial experience transplanted some good institutions that lasted. It's hard to tease out causation there.
I will say that China isn't just the poorest majority Chinese country in the world. It also has the worst institutions of any majority Chinese country. When we see Chinese migrants moving to new places, they are generally not bringing the worst parts of China to these new homelands.
They're bringing something much more like the best prospects of Taiwan, Singapore, and Hong Kong. People who are living in China right now are being held back by this crummy communist oligarchy. North Koreans are being held back by an even crummier communist oligarchy. So, it's not current China that people should be trying to replicate around the world. It's the excellence of the Ming Dynasty.
America has four major immigration programs, skilled HIBs, family reunification, lottery, and refugees. What do you make of these four different immigration silos?
The question of what's the best migration policy for a country like the U.S. is probably to do what a lot of folks have been saying the last few year years, which is to place a disproportionate emphasis on high-skilled migration. It's something around which there's already nascent consensus. Having a lot of STEM immigrants seems to be a good way to do this.
I think that every rich country in the world should find a way to welcome some refugees who are coming from the most horrifying circumstances imaginable. I think that's part of how we embrace our humanity.
But, if we care about America's institutional quality, and if we care about America's ability to innovate and come up with new ideas that matter for the whole world, we should be focused on high-skilled immigration policies that will build our cognitive skills and help our institutions function better.
The U.S. population is about 330 million people. So, if you think migration policies that welcome 2% of the population in a year, that'd be 6 million new people coming to America. If I were giving advice on how to help both America and the world over the next century, I would try to find a way to make sure that much of that hypothetical 6 million migrant allocation would be coming from that H1B highly skilled migrant category. There's certainly room for refugees that's important. But finding ways to shift the numbers dramatically toward highly skilled immigration is probably going to be not just good for America but good for the world 50 to 75 years from now.
Next topic is refugees. I visited Wausau Wisconsin which is near where my son went to summer camp. It turns out that many Hmong people from Laos resettled in Wausau and they are young and have had lots of kids. The residents were unhappy paying for the Hmong’s kid’s schooling and other social services. How should local communities handle the unequal requirements for paying for refugees and their descendants?
Americans have long been upset about migrants who have had some transition cost. The Chinese Exclusion Act was a horrifying example of this. I am enough of a utilitarian to say, yes, we should redistribute. And I'm enough of a libertarian to say, what do we owe to strangers? I don't know if there's any true owing, but I do think there's a certain generosity of heart that we should welcome another human being.
I thought that the key insight of your book is that America is an entrepreneurial success story and that ideas that are invented here benefit the world. Some migrants enhance American productivity and improve our institutions but others will undermine them so be very careful who you let into the US.
Migrants seem to make the countries they move to a lot like the ones they left. Countries that choose migration policies that end up having the net effect of bringing in folks from cultures that have higher levels of trust, higher levels of frugality, more laissez-faire market friendly attitudes toward government, they're going to have better prospects over 2, 3, 4 generations. The more theoretical argument is whether migrants from less successful cultures, countries with what I call lower SAT scores, whether their descendants are likely to lower institutional quality.
Can you define your concept of a SAT score?
S is state history. It's your ancestors’ experience living under organized states, and in some parts of the world that's gone on for many thousands of years. The Fertile Crescent would be a key example of that. Iraq would be a key example of that. A is agricultural history. It's how much experience your ancestors have had living under settled agriculture using modern farming techniques. T, the most important of the three, is your technological history score. What fraction of the world's available technology were your ancestors using in 1500? So together, state history, agricultural history, tech history, these are measures which combined together, I call your nation's SAT score. And they seem to be very important predictors of your nation's prosperity but much more so when you adjust for migration.
Let's apply this to a real-life example. There has been a surge in immigration in the last dozen years into Germany from both Syria and Ukraine. Both are failed states. How would you use your tools and framework to make a prediction as to which immigrant group will be more beneficial to the German economy a generation from now?
That's a tough one, because Eastern European countries, they aren't great on these trust measures and some other measures of market friendliness. And around 1500 Eastern Europe was a technological backwater. Syria, of course has much higher S and A scores, state history, agricultural history. So, neither of these countries are at the lower end of the global scale of SAT scores. But on average, you would expect them to be a little bit lower than the current values in Germany. Especially on T. And T is the best predictor of the three. So, one would expect a slight tax, two, three generations from now. Not a disaster, but a slight tax on national productivity, on institutional quality, on social capital, the smooth functioning of government.
I end each episode on a note of optimism. Garett, what are you optimistic about?
I am optimistic about the prospects for prosperity across many countries in Southeast Asia. I think institutional quality like Singapore, South Korea, and Japan, these countries are going to be important in the economic order of the world. Globalization has made it much easier for people to learn about the great things that are happening in these countries.
The rise of South Korean pop culture on the global stage is going to be a gateway drug to let a lot of people know all the excellent things that South Korea's doing. South Korea's level of innovation is valuable to the entire planet. The entire world should learn about the excellence of South Koreans rebuilding process after the horrors of the Korean War. It's a model that all of us should learn from.