Guest, who is the business editor of The Economist, has written a marvelous book that fills in a lot of the empirical gaps in the case for more-open immigration. It is brimming with insights and important facts about the movement of people across borders. Guest has covered these issues for a number of years and it shows in the book’s thoughtful content and extensive footnotes. He makes a heavily documented case for, if not totally open borders, borders that are much more open to immigration than they are now. Along the way, he also makes the case that the most wealth-destroying regulations in the world are those that prevent or deter immigration. Guest does all of this in a colorful way, as the subtitle suggests.
Helping back home | His basic argument is that migration of people across borders creates, in the United States particularly, not so much a melting pot as a “rich stew.” (This is not a quote from the book; it’s actually from Cato Institute senior fellow Tom Palmer, but I think Guest would like it.) Immigrants to the United States also benefit the countries they left—in two ways. The first way is that immigrants collaborate with people in their home countries, giving them access to technology that the immigrants have discovered in their new, wealthier country. Guest’s best examples are of achievements of emigrant Indians—in particular, the “Indian fridge” mentioned in the book’s subtitle. A Mumbai-based manufacturing firm, he writes, “has developed a $69 refrigerator—the world’s cheapest.” The breakthrough occurred because three emigrant Indian engineers, visiting their home country, wangled an invitation to see an official of the Indian firm so that they could show him their new technology.
The second way immigrants help their kinsmen is by sending them money. Guest notes that remittances to people in poor countries surged from $31 billion in 1990 to $316 billion in 2009. He quotes the finding of the World Bank’s Dilip Ratha that remittances are now larger than foreign direct investment and more than twice as large as foreign aid. Because almost all foreign aid is from one government to another, most of it is wasted. Remittances, on the other hand, are typically sent directly to relatives. Guest writes that it is common for an engineer whose annual income is $5,000 in a poor country to move to a rich country, make $30,000 a year, and send $5,000 of it back home. Guest writes, “His homeland is substantially better off, since when he lived there, he spent much of that $5,000 on himself. Now all of it goes to others.”
Getting rid of all immigration restrictions worldwide would approximately double world GDP. This one reform would dwarf any other measure to help people in poor countries.
When I’ve told similar remittance stories to non-economists, they often worry that the money goes “over there” and doesn’t help people here. I’m assuming that Guest thought the objection so transparently weak that he didn’t need to counter it. Still, I wish he had; countering it is easy. Much of that remittance money will flow back to its country of origin as investment or payment for exports. But what of the money that doesn’t return? That’s even better. We Americans got valuable services—in the form of the immigrants’ labor—in return for that money. If the money doesn’t return, the effective money supply may fall, but it costs the federal government less than 30 cents to replace a $100 bill with a new $100 bill and even less to print smaller bills. Getting valuable goods in return for paper money that sells for dollars on the penny is a fantastic deal for Americans. Jay Leno, in a 1980s ad for Doritos, said: “Crunch all you want. We’ll make more.” Similarly, if people in other countries hold on to their paper U.S. bills, the Federal Reserve can make more.
Today’s immigrants | When economists see items selling for $5,000 in one market and $30,000 in another, as in the above example of engineers’ services, they expect arbitrage. In this case, the arbitrage takes the form of migration. The huge differential in wage rates is both a strong incentive for the engineer to move to the market where his services are valued more and an indicator of just how inefficient restrictions on immigration are. Guest cites a finding by Harvard University economist Lant Pritchett that if rich countries allowed just a 3 percent increase in their labor force through immigration, the world’s “have-nots” would benefit by $300 billion a year and the residents of the rich countries by $51 billion a year. In a later study that Guest doesn’t cite, economist Michael Clemens finds that getting rid of all immigration restrictions worldwide would approximately double world GDP.
This one reform would dwarf any other measure economists have considered to help people in poor countries. Consider microcredit, the lending of small amounts to small businesses. Guest notes that Mohammed Yunus, whose Grameen Bank pioneered microcredit in Bangladesh, won the 2006 Nobel Peace Prize for his efforts. How effective is microcredit? Guest quotes Pritchett’s observation that the average gain from a lifetime of microcredit in Bangladesh is about the same as the gain from eight weeks of working in the United States. Pritchett, after calculating the total benefit that Grameen Bank confers on its clients, asks, “If I get 3,000 Bangladeshi workers into the U.S., do I get the Nobel Peace Prize?”
Guest has grasped the fact that because of the low cost of transportation and communication, today’s immigrants behave differently from those of a century ago. Virtually all immigrants now keep in touch with their home country, and many return. The fact that many do return is what gives Guest hope for China’s government to become less oppressive. More than half a million Chinese people, he writes, have returned from foreign countries—most in the last decade. These people, whom he dubs “sea turtles,” are largely people who have studied abroad, and many of them end up in positions of power in the Chinese government. One statistic: The number of sea turtles on the Communist Party’s Central Committee had risen from 6 percent in 2002 to 10.7 percent by 2007 and is expected to hit between 15 and 17 percent this year. Most of them studied in the United States, Britain, Germany, and Japan. Guest wryly notes, “Somehow, they figured they wouldn’t learn as much in North Korea or Cuba.”
Guest notes another hopeful sign for China: We in the West often hear how strictly the Chinese government has censored the internet. But Guest points out that creative Chinese journalists have found ways around this censorship. Deng Fei, for example, a Chinese journalist who investigates government corruption, “micro-blogs to 2.45 million readers—more than the paid circulation of any American newspaper.”
Guest also notes the huge possibilities for “medical tourism”—that is, people from rich countries traveling to poor countries to get cheap but high-quality medical care. Migration of talent has facilitated this by allowing entrepreneurs in India to hire Indian doctors who have worked or studied abroad. Guest highlights Fortis, a private health care company in India that copies the best practices of U.S. doctors and then frees Indian doctors from bureaucratic hassles so they can focus on specializing in particular health care services. A surgeon at a Fortis hospital in India performs 1,200 surgeries a year, about four times the number of a U.S. doctor. Fortis, he notes, “is building a gleaming new hospital close to Delhi’s airport.” Guest ends the discussion by noting that Asians are eager to learn from the West and that “it’s time for Westerners to return the compliment.”
Many Americans worry that the United States will lose its dominant place as an economic power. Not Robert Guest. He celebrates the wealth that the average American has compared to even the average German or Frenchman. Moreover, he notes, Americans welcome foreigners more than pretty much any other country. Virtually anyone can find a niche, “whether she is a socially conservative Arab or an ostentatiously gay Nicaraguan.” One of our greatest strengths is religious tolerance. Former Dutch citizen Hirsi Ali, for instance, who took great risks in the Netherlands to make a film critical of Islam, moved to America to be safer from Muslim threats. Ali reports that when American Christians find out she is an atheist, “They don’t try to kill me. They say they’ll pray for me.” Although many Americans now worry that the United States will become like France, Guest doesn’t, pointing out that the United States doesn’t have ghettos “full of permanently jobless and alienated young immigrants.” Immigrants to America are too busy making a living.
Terrorism | But can Americans adopt such an accommodating immigration policy in this age of terrorism? Guest acknowledges this concern, especially in regard to Islamic terrorism, and I have little to dispute in his account. It was disappointing, though, to see that he gave little attention to the legitimate grievances that Muslims have against the United States: the U.S. government has a long history of intervention in their part of the world, whether it be the Central Intelligence Agency’s contribution in 1953 to the overthrow of Mohammed Mossadegh, the democratically elected president of Iran, or the 1990s U.S.-led sanctions on Iraq that killed thousands of innocent people. Guest does mention one of those grievances, but he writes about it in a way that casts doubt on its legitimacy: “They see that the United States (in their view) favors Israel over the Palestinians.” In their view? Is there any doubt about which side the U.S. government favors?
To his credit, Guest does note one other cause of Muslims’ anger: “Obama’s copious use of drone-fired missiles to assassinate suspected Taliban leaders in Pakistan, a tactic that kills hundreds of innocents.” He also criticizes the TV series 24 for popularizing the idea of torturing alleged terrorists. The most cryptic comment in the whole book, though, is his statement that 24 “popularizes the notion that American presidents just pick up the phone and have people murdered.” Is it a bad idea to popularize “notions” that are true? President Obama has claimed, and exercised, the power to kill Americans abroad whom he suspects of being terrorists. On Obama’s orders, suspected terrorist Anwar al-Awlaki was killed in a drone attack last fall, and his 16-year-old son Abdul-Rahman was killed in another drone attack a couple of weeks later. The father may well have deserved to die (although I’m less sure of the son’s desert), but it is difficult to square a presidential order that they be killed with the rights that they supposedly hold as U.S. citizens. I admit that I don’t know whether Obama gave the order over the phone.
Oversights | I have three other criticisms of Guest’s book. One is that, in a book that highlights the role of the overseas Chinese in world economic growth, Guest makes no mention of earlier work on this issue by Hoover Institution economist Thomas Sowell. This is a disappointing omission.
My second criticism is Guest’s inclusion of this sentence: “Even a totalitarian state like the Soviet Union could not prevent its people from emigrating.” That statement would surprise the millions of Soviet citizens who wanted, but found it impossible, to get out.
My third criticism is that in highlighting the poverty-fighting work of Massachusetts Institute of Technology economist Esther Duflo, Guest loses the perspective that he earlier had in comparing the tiny gains from microcredit with the large gains from immigration. Duflo’s contributions, while technically sweet, are all about “controlled trials” in poor countries. Even if all her work led to big improvements, people in those countries would still be miserable compared to their lot if they could immigrate to a rich country.
Still, these are relatively small criticisms of a great book that, I hope, will help bring down regulations that are making almost everyone poorer.
