Remarks (as prepared) by Bush Institute Executive Director James K. Glassman, keynote at the Immigration and Economic Growth Conference on December...
Remarks (as prepared) by Bush Institute Executive Director James K. Glassman, keynote at the Immigration and Economic Growth Conference on December 4, 2012.
Thank you, Mark, for your leadership. And thanks to the Dallas Fed for hosting this conference. Texas ranks third, after California and New York, as a home for immigrants. One in 10 immigrants in the U.S. lives here. And, thank you, Amity, for letting me give this speech. Wow. All the conferences we’ve held in the past three years, and finally, one of the directors has invited me to speak. Well, we’ll see if I get invited to do this again. This is a treat for me. Like many of you – probably most of you – in this audience, I am practically fresh off the boat. I am only the third generation of my family to call myself American. My paternal grandfather, the youngest of 13 children, coming over from Russia to escape the pogroms, in small batches. He just devoured America. Loved it. Took it for all it was worth. He joined the cavalry at 15, lying about his age and was sent south to fight Pancho Villa with Pershing, fought in World War I, joined the Washington, D.C., police force, and then became a serial entrepreneur, owning hotels, taxicabs, and a company that made little green chewable mints. He was a rough guy, and his businesses had ups and downs. What would have happened if he had stayed in Russia? We don’t get the chance to live two lives, but I suspect nothing much good. He was an American because he chose America. One of the pleasures of reaching the third anniversary of the George W. Bush Institute is that we have a real history. We can refer back to things that happened before. I remember this one clearly. On April 12 of last year, at our first conference on how to achieve 4% growth. (Today’s conference, by the way, is our fourth.) A panel had concluded, and it was time for questions from the floor. Imagine my surprise – and delight – when Gary Becker stood up. He is University Professor in Economics and Sociology at the University of Chicago, won the Nobel Prize in Economics in 1992 and was awarded the Presidential Medal of Freedom by President Bush in 2007. So I paid attention. We all did. The panel had been discussing the role of human capital in growth. Now, the human capital of a nation is the store of knowledge, skills, and experience its population has acquired. This is an asset as important as oil under the ground. Oil was there forever until human beings used their human capital to bring it to the surface, refine it, and put it to use. Singapore, with virtually no natural resources and one-thirtieth the population, has a higher GDP than Nigeria, which is rolling in natural resources because of human capital. Gary Becker is the king of human capital. He wrote the book – many books. So the panel had been talking about boosting human capital through education. We believe in that at the Bush Institute. Education reform is our largest area of engagement. But here is what Gary Becker said: “You can‘t only have human capital, but if you don‘t have human capital, you‘re not going to develop, particularly in the modern world. Now, immigration has a great advantage over other changes in our human capital. You can do that pretty immediately. We can change the law and admit a lot of highly skilled people, and we‘re getting them in within the year. As we think of reforming education, that‘s a long-term process. That question – a statement really – lit up the room. For me, it was the most important revelation of the conference. If we want America to grow at 4%, we need to do a lot of things. We may be on the brink of a tax reform, for example, that encourages growth by reducing the constraints that high rates put on investment and work. Innovation is leading to more abundant and affordable natural gas, which in turn is leading a manufacturing revival, starting with the chemical and steel industries. Reforming entitlements can remove the burden of debt that is weighing down the economy. All well and good. But what Gary Becker said is undeniable. If we get immigration policy right, we can boost our supply of human capital quickly – and invest that capital for growth. In other words, put those immigrants to work building businesses, employing people, providing vital support, paying taxes, balancing the demographic imbalance that is crippling Social Security and Medicare. We should heed President Bush’s passionate words this morning. America was built by immigrants. I BELIEVE WE HAVE NEVER NEEDED IMMIGRANTS MORE. If America is to grow at 4% — or even our average post-World War II rate of 3% — we need an immigration policy that encourages the best and the brightest to settle here, and gives a chance to others who want to become Americans to thrive and BECOME the best and the brightest. I am sorry that Matt Denhart of the Bush Institute could not be here today. We are distributing copies of his excellent Handbook of Vital Immigration and Growth Statistics. Some of those facts: The U.S. is enjoying an immigration renaissance, but with 13% of Americans foreign-born, we are still behind the levels of 1870 to 1910, which, not coincidentally, was a period of enormous growth. Again, we need more immigrants Marriage is good for the economy, and a higher proportion of immigrant households are headed by a married couple than native-born households. Immigrants work. While they are about one-eighth of the population, they’re about one-sixth of the workforce. An amazing statistic. Between 2003 and 2012, the U.S. added about 8 million workers. More than half of them were immigrants – even though native-born Americans outnumber immigrants by nearly eight to one. Despite the stereotype, very few immigrants are children. Only 7% of the total immigrant population is under 18, compared with 26% of the native-born population. Also, fewer immigrants are older. But the most stunning facts about immigrants concern businesses – starting them and nurturing them. Forbes recently related the story of Christian Gheorghe, a Romanian son of a lathe operator who migrated to the U.S. at age 23 in 1989 and worked as an unskilled laborer for $100 a week, hauling plywood. He earned extra money driving a limo and wrote computer code at night. He met a limo passenger, and the two teamed up to start Tian Software, sold it for $30 million, and went out to build a larger analytics company, Tidemark Systems. That’s an American immigrant story. So is this one: Sergey Brin, whose family fled Russia when he was six. He co-founded Google 19 years later. Liz Claiborne emigrated from Belgium and built a $5 billion clothing company. Andy Grove left Hungary after the uprising against the communists was crushed in 1956 and helped co-found Intel 12 years later, eventually becoming CEO. Jeong Kim emigrated from South Korea to the U.S., worked his way through college at a 7-11, joined the Navy as a nuclear sub officer, earned a PhD, and started a telecom company he sold to Lucent for $1 billion. Here are some you might not recognize: Instagram, the fabulous social media app for sharing photos, founded by an immigrant from Brazil. Skillshare, a community marketplace to share skills and services, founded by two Indonesian immigrants. Udemy, an online learning platform, founded by an immigrant from Turkey. A 2007 study by Vivek Wadhwa and two other researchers found that 25% of the nation’s start-ups – and 52% of those in Silicon Valley – were founded by immigrants. Leading the way by far are immigrants from India, who outnumber immigrants from the next seven countries combined for Silicon Valley start-ups. This is a relatively new trend: As Matt’s handbook shows us, 25% of all venture-backed publicly traded firms were founded by immigrants, compared with just 7% before 1980. And it’s not just high-tech. Some 40% of Fortune 500 companies were started by an immigrant or a first-generation American. 18% of immigrants own a small business compared with 13% of native-born Americans. Immigrant college graduates are granted patents at twice the rate of native-born Americans and nearly twice as likely to have published six or more scholarly works. There is a clear pattern here. As Gordon Hanson of the University of California at San Diego wrote recently in the Cato Journal: “Each year, U.S. universities conduct a global talent search for the brightest minds to admit to their graduate programs. Increasingly, foreign students occupy the top spots in the search. Data from the National Science Foundation’s Survey of Earned Doctorates show that between 1960 and the late 2000s, the share of PhDs awarded to foreign students rose from one fifth to three fourths in mathematics, computer science, and engineering; from one fifth to three fifths in physical sciences; and from one fifth to one half in life sciences. H1B visas, aimed at professionals like these graduates, are capped at 65,000 a year. A three-year visa, it is renewable just once. Our competitors around the world, like Canada, are trying to attract these smart folks – these walking stores of human capital – while we tell them to go home and start their businesses there. The problem is that once WE get them here and educate them, we chase them away. Gordon Crovitz wrote on Monday in the Wall Street Journal that an antiquated quota system, aimed at countries like China and India out of bigotry, limits visas for technologists from any one country to just 7% of the total. That’s a huge mistake, and it is costing us growth. “Just as the free movement of financial capital funds growth, free movement of human capital brings innovation. The U.S. should staple a green card to every advanced technology degree earned by a foreign student at an American university.” I say amen to that. Currently, the vast majority of visas go to family members – often tenuous family members – of current immigrants. That is a mistake. The bulk of visas should go to people most likely to boost America’s human capital – through their accomplishments, not through their family ties. But low-skilled immigrants are important as well. One major contribution they make, as Hanson says, “is to make it possible for high-skilled workers to spend more time on the job and less time doing non-work related chores,” especially with women accounting for an ever-increasing share of the U.S. high-skilled workforce. Total 54% of currently enrolled undergraduate students are young women. “Low-skilled immigration,” writes Hanson, “indirectly contributes to productivity growth by raising the effective supply of high- skilled labor.” Today, you’ve heard lots of ideas for changing immigration policy to promote growth. Let me offer three general recommendations: First and foremost, America needs more immigrants. More immigrants mean more human capital, which in turn means more growth. Second, there’s a competition for the best minds in the world; we need to join it. We should be trying to recruit smart, energetic foreigners to come here the same way we try to recruit profitable foreign businesses. Third, this country has to do something about undocumented immigrants. There are probably 11 million of them. As Gary Becker writes in his chapter in our book “The Four Percent Solution,” the numbers of undocumented Mexicans coming to the U.S., especially, are slowing significantly as Mexico’s economy improves relative to that of the United States. But for the people already here, we need a compassionate solution. During his second term, President Bush’s proposal for a path to citizenship nearly became law. That is not the only answer; I am sure there are others. But the impasse must end.
