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September 17, 2007

Richard Florida

Immigration Absurdity

« The (Financial) World is Really Spiky | Main | Talent, Talent, Talent »

Read this incredible interview with British economist Philippe Legrain, author of Immigrants: Your Country Needs Them. Legrain points out the economic value of immigration and of diversity and of the absurdity of current US policy.

I certainly agree that the US immigration system is absurdly restrictive in granting visas to highly skilled foreigners, and that US companies suffer, or shift operations overseas, as a result. If you think that Google, Yahoo!, eBay were all co-founded by immigrants, and that nearly half of America's venture-capital-funded start-ups were founded by immigrants, keeping out foreign brainpower is a remarkably stupid policy.

But I disagree with the notion that the US only needs highly skilled immigrants, still less that they can be selected through a points system, as proposed in the immigration reform bill earlier this year. Bureaucrats cannot possibly second-guess the requirements of millions of US businesses, let alone how the fast-changing economy's employment needs will evolve over time. In effect, the points system amounts to government officials picking winners--a notion that is rightly criticized in industrial policy and elsewhere. And it allows nothing for serendipity: that people end up contributing to society in unexpected ways. Who would have guessed, when they arrived in the US as children, that Jerry Yang would one day co-found Yahoo! and Sergey Brin Google?

In any case, the US does not just need highly skilled workers, it still relies on low-skilled ones too. In fact, they account for over a quarter of US jobs. Every hotel requires not just managers and marketing people, but also receptionists, chambermaids and waiters. Every hospital requires not just doctors and nurses, but also many more cleaners, cooks, laundry workers and security staff. Many low-skilled jobs cannot readily be mechanized or imported: the elderly cannot be cared for by a robot or from abroad. And as people get richer, they increasingly pay others to do arduous tasks, such as home improvements, that they once did themselves, freeing up time for more productive work or more enjoyable leisure. Thus as advanced economies create high-skilled jobs, they inevitably create low-skilled ones too.

The economic benefits to diversity are two-fold. First, a greater variety of products and experiences for consumers, such as ethnic restaurants, fusion food, R&B music, or new holistic therapies that blend Eastern and Western influences. Second, and perhaps most importantly, diversity stimulates innovation.

As John Stuart Mill rightly said: "It is hardly possible to overrate the value, for the improvement of human beings, of things which bring them into contact with persons dissimilar to themselves, and with modes of thought and action unlike those with which they are familiar... it is indispensable to be perpetually comparing [one's] own notions and customs with the experience and example of persons in different circumstances... there is no nation which does not need to borrow from others."

It is astonishing how often the exceptional individuals who come up with brilliant new ideas happen to be immigrants. Twenty-one of Britain's Nobel-prize winners arrived in the country as refugees; nearly half of America's venture-capital-backed start-ups have immigrant founders. Perhaps this is because immigrants tend to see things differently rather than following the conventional wisdom, perhaps because as outsiders they are more determined to succeed.

Yet most innovation nowadays comes not from individuals, but from groups of talented people sparking off each other--and foreigners with different ideas, perspectives and experiences add something extra to the mix. If there are ten people sitting around a table trying to come up with a solution to a problem and they all think alike, then they are no better than one. But if they all think differently, then by bouncing ideas off each other they can solve problems better and faster. An ever-increasing share of our prosperity comes from companies that solve problems--be they developing new drugs, video games or pollution-reducing technologies, or providing management advice--and research shows that a diverse group of talented individuals can perform better than a like-minded group of geniuses.

The value of diversity comes into its own in societies at the forefront of rapid change. When countries are technologically backward, they can make huge leaps forward simply by copying what more advanced economies are doing. They may benefit from being culturally uniform, since this makes it easier for everyone to move forward in unison. Likewise, in periods when economic change is slow, more homogeneous companies and countries may find it easier to organize themselves efficiently than more diverse and fissiparous ones. But in advanced economies in periods of rapid economic change such as now, the value of diversity and the creativity it spurs comes into its own. That's why, as China catches up, America needs to open up further to foreigners in order to stay ahead.

Diversity also acts as a magnet for talent. People are drawn to places such as New York, Silicon Valley or London because they are exciting, cosmopolitan places. It's not just the huge range of ethnic restaurants and cultural experiences on offer, it's the opportunity to lead a richer life by meeting people from different backgrounds: friends, colleagues and even a life partner.


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Wendy Waters

Has any country figured out a good immigration system? Certainly, the US seems overly restrictive. But I haven't heard of any really workable systems.

Allowing corporations more control wouldn't necessarily create a workable system either -- some would abuse the system to either import cheaper skilled (or unskilled labour) or to "trap" a workforce in an indentured servitude type situation (whereas national employees could leave, and would in an employees market if conditions were not great).

There is also the issue of recognizing foreign credentials. Canada has a points system that takes into account industries with talent and labour shortages, but then the individuals struggle to have their degrees and experience recognized. So, doctors, engineers, etc. are driving cabs and washing floors. They got into the country because of their advanced education, but then cannot use it. In most cases the government cannot control whether a medical association or society of professional engineers will recognize foreign credentials.

The country or region (like a state or province) that can figure our how to harmonize workforce needs, credential recognition and broader immigration policy could do really well in the 21st century.

Michael Wells

Legrain makes an excellent point about the problems with trying to pick & choose among immigrants, or cherry picking the advanced degrees. Many of the most creative don't show up in a point system.

We just came back from South America and were told in both Peru & Equador about the value to their economies that remittances from their citizens working in the U.S. This may be more effective than foreign aid because almost all of the money goes directly to families who spend it in their local economies, building homes and starting businesses. It bypasses the clepto-elites and government bureaucracies.

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