America’s Secret Growth Weapon: Why Immigration Really, Really Matters

The United States, like almost every other rich country in the world, is getting older and slower. But we have a natural advantage over the rest of the world, if only we’re wise enough to use it

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When countries get rich, they can get predictable. They live longer. They get older. They use their wealth to pay for the insurance and security of the elderly. As the workforce moves away from farms into factories and cubicles, working parents tend to have fewer kids. Fewer children grow up to become fewer workers. And fewer workers paying into expensive programs ironically puts strains on the very wealth that made this all possible, in the first place.

An aging country faces three deficits. First it faces this entitlement deficit. Second, it creates an creativity deficit, as a declining share of working-age people are finding and tweaking smart ideas. Third, it creates a savings deficit. Broadly, young people save for retirement and retired people spend down those savings. 

We see this hydra of deficits inflicting pain in Japan, whose the working-age population has already peaked and debt-to-GDP is the highest in the advanced world. We see it in Europe, where the ratio of working-age adults to seniors is poised to fall by 38 percent in the next two decades. We see it in Taiwan, and South Korea, and Hong Kong, where birth rates are below 2.1, which is commonly considered replacement level. We see it in China, where rapid aging and a bizarre one-child policy has created a “4-2-1 phenomenon,” where one child’s income supports two parents and four grandparents. We see it across the developed world, where the 60+ population will be growingmore than three times as fast as the general population by 2030.

We also see it in the United States, which faces the strains of an older population demanding expensive medical services from a slower-growing workforce. But the U.S. has a trump card that makes us different from Europe. Fareed Zakaria calls it our “secret weapon” in his book The Post-America World. It’s immigration.

People want to move here, and we can take them. That’s why, if you’ll permit a bit of futurism, we’re projected to have a lower share of seniors than most of the developed world by 2050.

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Immigration is a big part of what distinguishes the U.S. from, say, the EU. Immigration makes us younger. That’s what you see from the graph above. Immigration makes us smarter. Half of all Silicon Valley start ups have a co-founder no more than one generation separated from an immigrant. Immigration makes us work. The U.S. fertility rate is below 2.1, so it’s immigration that pushes us above replacement level growth.

But don’t gloat. There are cracks our armor.


One in three U.S. immigrants today was born in Mexico, making it the “biggest wave of immigration in history from a single country to the United States,” according to the Pew Hispanic Center. But that wave hit a wall. Thanks to a weak U.S. economy, a growing Mexican economy, and a handful of other policies, net flow of Mexican immigrants to the U.S. has possibly reversed for the first time in several decades.

At the same time, “highly educated children of immigrants to the United States are uprooting themselves and moving to their ancestral countries,” the New York Times reported just two weeks ago. The factors aren’t all the same, but they rhyme. India is getting stronger relative to the United States, and, once again, public policy is getting in the way of immigration. We don’t block foreign-born students at the Texas border. We kick them out if they can’t marry, find a job, or snag one of a limited number of visas. In the race for human capital, this is a deliberate losing strategy.

There are reasonable arguments for using government laws and resources to limit immigration and protect jobs for American-born workers. But the broader picture is that the U.S. is failing to recognize a free and automatic virtue of being America: People want to move here and work in exchange for money.

More people working in exchange for money is what makes an economy go. Consider that in the 1990s, a remarkable 67% of the country (16 and over) was working or seeking work thanks to the Boomers entering their prime working years. But as those 80 million Boomers move into retirement, a smaller share of our population will be working, and a rising share will be seeking increasingly expensive medical attention.

A couple centuries ago, Thomas Malthus might have looked at stalling populations and cheered on behalf of limited wheat supply and other precious crops. Today we know better. The precious stuff that matters is people, especially smart people. That’s the resource we need to replenish.

Demography isn’t destiny. It’s more like gravity, a relentless force that demands counter-action. Policy makers shouldn’t use aging societies as a get-out-of-jail-free card for letting bad policy rot an economy. They should recognize that, if people are the precious resource of the next phase of the industrial revolution, we should have industrial policies to replenish our workforce and import the best ones. You need only look at Japan and Europe to see that a society that wins the battle to keep out immigrants winds up losing a much bigger war.

Source :  America’s Secret Growth Weapon: Why Immigration Really, Really Matters


*Related article*

Excerpts :

Lately, I’ve been thinking about how the United States is different from Greece. One of the biggest differences that sets the United States apart from every other rich country in the world is that America is demographically vibrant.

Almost every rich country in the world faces problems of the welfare state which are technically fixable by reducing entitlements, raising retirement ages and working healthcare costs.  But the one thing you can’t change is demographics.

Almost every rich country in the world is going to get older and older and older.

All these older people are going to have to draw benefits and pensions.  Even more importantly, this means fewer young workers will be on hand to pay taxes. 

At the end of the day, this is why the Japanese system has found it so difficult to get growth back. It is the first major country in the world that is experiencing actual population decline. Italy is next on that list. Germany is not far behind. Even China is going to face a demographic challenge.

Excerpts :

American demographics remain very healthy. While all the other countries go through this ageing cycle when they grow rich, America is the exception.


It’s entirely because of immigration.

There are two things that set the U.S. apart:
One is we still take in more immigrants legally than the rest of the world put together.
Two is that our immigrant population tends to reproduce at a slightly higher rate (they are still somewhat old-fashioned, if you will).
So those two things mean that our country is going to be demographically vibrant.

That has huge implications. Business people will tell you that one of the reasons they still look at the U.S. as a very attractive market for the future is it will have lots of young worker, producers, consumers, investors and spenders.

We have this huge strength in immigration.  But are we managing it well?

Excerpts :

‎”We think we have all the time in the world to play around with this issue because we are so far ahead of the rest of the world. We think we are so enlightened and that we do immigration so much better than the rest of the world. And it’s true, but only as a backward-looking statement.

Look at what the Canadians are doing today. The Canadians have created a set of smart immigration laws that are much more welcoming to new immigrants and that focus on skill-based immigration. They allow people to self-apply for immigration so you don’t even need a company to sponsor you. The result is Canada is getting much more ethnically diverse and vibrant.

Look at Australia. Fifteen years ago, Australia was convulsed by a huge anti-immigrant tide. There was a serious political movement that was talking about deportation. Now about a quarter of Australia’s population is foreign-born. This is one of the highest percentages in the world and as a result Australia is booming.

Look at what Singapore has done in its ability to attract the best and the brightest. It’s turning itself into a financial capital.”


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