Unlimited Immigration is the Enemy of Freedom and Prosperity

The most recent winner of the Nobel Prize for Economics is Angus Deaton, a British-American Princeton economist known for his focus on data to explain sources of economic growth.  In his book, The Great Escape, he attempts to explain why some nations escaped the grinding poverty that has been the condition of most of mankind since the dawn of history.  In my opinion, part of the trick is asking the question properly, not "Why are so many nations so poor?" but "What sets the rich nations apart that they escaped poverty?"  In The Great Escape he summarizes the answer:

Perhaps the best answer is that poor countries lack the institutions—government capacity, a functioning legal and tax system, security of property rights, and traditions of trust—that are a necessary background for growth to take place.

Ronald Bailey notes in his review that this explanation, while well supported by the facts, doesn't explain why some countries have these institutions; just that they are important.  I believe that the European culture which combined both Greek and Christian tradition provided the societal stability and freedom of inquiry to produce a stable society that valued the innovation adequately to reap its benefits.  Whether or not I am correct, we can still look at the world and see which countries have adopted or are adopting similar cultural values to ours which allowed us to escape poverty.

This matters to the immigration and refugee questions.  As a nation, it is our right to ask for and the duty of our leaders to implement policies that benefit the citizens of our nation.  Unrestricted immigration from countries that don't share our values undermines our prosperity.  When I look at the so-called "Syrian" refugee crisis; I see two key sets of facts.  First, the refugees seem to be neither Syrian nor refugees, in large part.  Second, even when legitimate, they come from a society that doesn't share our values.  Contra Obama, there are no shared universal values.  If there were, there would be democracies all over the Arab world.

With regards to immigration from Latin America; the main sources of migrants continue to be from countries with little respect for the rule of law.  It is not coincidental, that as Mexico has improved its internal governance through reform, the number of migrants from Mexico has declined.  Now, dictatorships trans-shipping people through Mexico are increasingly the problem.

On twitter, someone compared the so-called Syrian refugees to the Jews we admitted during World War II.  For brevity, my response was that the Jews were culturally European and therefor worthy of admission.  In other words, they were ready to support and understand our institutions, security of property rights and "traditions of trust" in ways that Syrians are sadly incapable of.

We should limit immigration based on country of origin in order to not dilute the cultural underpinnings of our society.

Cap Fab - The Utter Fabulousness of Our Capitalist System

Is capitalism and American ingenuity so utterly fabulous that even dedicated redistributionists like the President won't be able to kill it off?  This week's issue of The Economist answers with a resounding YES!  The headlines are dominated with one sort of fiscal cliff story after another, and pressing problems that are within the province of the federal government are going unsolved, but in the states and private industry, great change is afoot that bodes well for our future.  In the leader and a series of articles, the magazine outlines reasons to believe that the American economy is set to grow again despite the dysfunction in Washington.  The bonanza of plentiful natural gas, for example "has largely happened despite Mr. Obama and his tribe of green regulators."  At the state level, to improve their economies various schemes to deregulate are afoot.  (California is not mentioned in the leader, of course.)  

One of the interesting tidbits from the special report on America's competitiveness included the prediction by a number of economists that the cheap energy from natural gas from shale is worth a half-percent per year in GDP growth.  We are still the biggest investor in R&D in absolute terms.  Even the government schools run by the states area undergoing significant change, although, agains, California is not mentioned. 

Seventeen now offer vouchers for use in private schools to some students or give tax breaks to people who donate to scholarship funds. Thirty-eight are experimenting with new pay structures for teachers or principals, often with a performance-related element. 

Because immigration law is fully in the hands of the feds, it is not a bright spot.  I have covered the idiocy of our current policy in this space many times.  The absurdity of a very low limit on H-1B visas (85,000 per year), one of my major complaints, is highlighted in this series.  

In her dystopic novel Atlas Shrugged, Ayn Rand touched on this theme, but imagined a world where those responsible for the dynamism of capitalism gave up.  What she didn't considered in that novel was that technology and innovation might outpace government's efforts to screw things up, making government increasing irrelevant.  If you we buy into the latter thesis, then we see rearguard action, like limiting the intrusion of the ACA, as helpful. Such actions give the private sector enough breathing room to invent a better solution to delivering health care.  Potentially, the delivery of health care under an alternate model might become so economically attractive that people would forego the need for anything but catastrophic health insurance, mooting the entire effort of controlling medicine by controlling the health care insurance industry.  If such an event happens, it will start with the well off experimenting with alternate means of receiving health care and might spread to most of society.  Then government regulators will be off in search of something else to kill off, even if they are never fully successful.  

Disagreeing with Glenn Beck on China

Glenn Beck has been claiming that China is overtaking the United States as a global economic power. While he makes a number of good points he and his panel of experts have missed some key issues that will inevitably hold China back. Beck's experts, Jim Rogers, global investor, and David Buckner, economist, opine correctly that future national economic trends can be traced to people and capital. They then proceed to focus on capital and forget about the people. The fear that we are being overtaken is nothing new, in the 1980s there was widespread fear that we were being overtaken by Japan; then "Japan, Inc." tanked. Before it did, I remember reading a quote in Reason from Thomas Friedman's book The Lexus and the Olive Tree, "I am not afraid of Japan or the other Asians. Our Asians will beat their Asians any day." The quote was ascribed to a Silicon Valley entrepreneur, who was making the point that we are the only country attracting brain power through immigration. It is a source of strength not matched by our Asian competitors. So while our public education system isn't really building the home grown talent we would like, a point made repeatedly by Beck, it is not the only source of human capital for our nation.

My second objection is that the demographic trend line for China is following that of Japan's, which will cause domestic tension and considerably raise their labor costs as they bear the burden of an aging population. Consider the following demographic profiles from Simon Bond's blog:


Because of its one child policy, China is following Japan in having an aging population that lacks younger workers to support the pension benefits of their forebears. The United States has a problem, but not nearly as severe. Note too that India, with its English speakers, flatter population profile and commitment to education is a much greater long term threat to our economic supremacy. Note too, that their is a large gap between the male and female populations in the 20-24 age group, with a deficit of about 4 million against 65 million males. This is certainly going to cause societal problems.

Next, China's lack of regard for the environmental effects of its industrial policy will come under pressure as its workforce becomes wealthier. This is not a pretty picture:


Two final thoughts. First, China's investment is heavily directed by the central government. Beck professes belief in the superiority of the free market system over and over on his show, but loses his mind when it comes to China. "State capitalism" will prove no more robust than socialism in the long run as an economic system. The ability of a free market economy to outmaneuver other models is already proven. The question for America is how will we preserve the light regulation needed for capitalism to work, and not allow the heavy hand of government to strangle free enterprise. Second, China is still a repressive regime, which is incompatible with the agility of mind and freedom of choice necessary to a culture of free enterprise. Without those strictures, the party loses its power. With them, it will always be chasing countries with free markets.

Personally, I think we should be more concerned with India in the long term. They are a democracy and working through their problems slowly but effectively. I wish we would be allowing their best and brightest to immigrate to our country in much more massive numbers than we currently allow, to give us a head start on the inevitable economic competition.

Death of Capitalism?

Pop quiz, what do Paul Krugman, Ariana Huffington and Mahmoud Ahmadinejad have in common? Answer: They all have been gleefully trumpeting the death of capitalism. Dean has some thoughts on why the reports of capitalism's death may be premature.

By the way, leftists agreement with Ahmadinejad and Hugo Chavez and other assorted butchers and dictators on economic issues are all you need to know about the direction they wish to take our country.