Economics of Immigration

A reader writes:

I quite agree with you that immigration is not a source of prosperity, except perhaps when the immigrants are superior in technical skills and economic virtues to the natives.

The immigrationists got it backwards. Countries aren't prosperous because they take in immigrants, but they take in immigrants because they are prosperous. Japan, South Korea and Taiwan are there to prove that countries can become prosperous fast without benefit of immigration.

Brazil and Argentina demonstrate that countries can take in a lot of immigrants without attaining great prosperity. Between 1880 and 1960, Brazil received about 4 million immigrants. (Two of those immigrants were my Dutch parents who emigrated from the Netherlands to Brazil in 1953.)

In fact, as you pointed out, countries can grow economically while exporting people. Between 1840 and 1965, there was both a lot of emigration from Europe and rapid economic growth there. ...

One historical fact overlooked by the immigration enthusiasts is that before 1914 the main immigrant-receiving countries were also big importers of capital. Canada, the US, Brazil, Argentina and Australia were all big recipients of foreign investment before 1914. Moreover, in many of these countries there were untapped natural resources. One example of that were the pampas in Argentina. In the later decades of the 19th century, Argentina started to open these pampas for cattle-raising. The cattle was slaughtered in plants often financed by British capital and transported on railroads also often financed by British capital. The simultaneous arrival of immigrants and foreign investors meant that wages were going up as immigrants were streaming in. The Argentinian population went from 1.8 million in 1870 to 7.8 million in 1914, but people were richer on average in 1914 than in 1870.

It hardly needs to be pointed out that today's situation is quite different. True, the US is the worlds biggest borrower, but this borrowing is not used to finance capital accumulation but to pay for the consumption of imported goods. It is happening because American households save so little and because the plutocratic Republicans are unwilling to tax the rich more heavily and at the same time unable to slash social programs for electoral reasons. The low savings rate of the US may have something to do with the stagnant wages of so many Americans, which in turn may be caused by competition from immigrants.

My published articles are archived at iSteve.com -- Steve Sailer