GAME CHANGER
BUsiness Horizon Quarterly
!"#$%&'#(&)*+, (&)-+./0#*1(1#&).2!3/#-4#&-223/&3#4-*$5.6%-$
!""!#$%&!'()$*+'$"
W
ith the U.S. economy continuing to be stuck in
For the United States to continue to grow rapidly, it
idle and unemployment trapped at alarmingly
must advance that frontier. Aspiring nations can grow
high levels, it’s a good time to look for game
by copying or adopting the best technologies, as well as
changers—events, policies, and people that might
methods developed by other nations—practicing what
significantly disrupt the status quo and propel the
Brink Lindsey calls imitative growth. Often that means
American economy forward.
imitating what the United States has done in the past.
To unearth those game changers, it helps to consider
By definition, the United States can’t imitate itself.
some of the nation’s history as a guide. As with earlier
The United States has to keep pushing forward—it must
disruptive periods in America’s long-unfolding economic
practice what Lindsey calls innovative growth, which
story, the game changers often come from beyond our
comes from developing and deploying ideas in
shores. Simply put, we need to bring more of the world’s
original ways.
most talented people to the United States.
For this reason, talented immigrants—brimming with
To understand why a new wave of skilled immigration
fresh perspectives and human capital—can play a vital
might fundamentally change the game here at home, it’s
role in helping the American economy push forward
important to understand what makes the U.S. economy
through innovative activity.
unique. After all, a game changer for America might not work for a country like Japan, Sweden, or India. Three things, when combined together, make the United States almost uniquely suited to benefitting from a wave of skilled immigrants.
america is at the technology frontier The United States is the dominant nation today at the technology frontier. Given its size, the diversity of its work force, and its unrivalled research universities and technical institutes, American innovators are always pushing the technological envelope. This is true in areas as diverse as information systems and communications, biotechnology, manufacturing, energy, pharmaceuticals, and more.
america has a history of successfully integrating immigrants and unleashing their talents It’s difficult to overstate the importance of immigrantentrepreneurs to American political, economic, and technological success. Think of Alexander Hamilton, the nation’s first Treasury Secretary; or the industrial giant Andrew Carnegie, who came from Scotland and remade American business and philanthropy; or Intel’s Andy Grove, who fled communist oppression and found a safe haven the United States and went on to build what some regard as the most important technology company of the
// I M M I G R A T I O N R E F O R M : F U E L F O R A N I D L E E C O N O M Y !"#$
GAME CHANGER
BUsiness Horizon Quarterly
20th century; or Elon Musk, the serial entrepreneur who is breathing new life into America’s electric car industry and private-sector space enterprise. No other nation of comparable size can boast a record of welcoming immigrants and providing an ecosystem within which they could flourish. That ecosystem consists of many interconnected and self-reinforcing parts—a system of private property rights; deep and varied capital markets; a tolerance of risk-taking and failure; an openness to new ideas
america has an enormous, dynamic marketplace of goods, services, and ideas One of the many things that attract aspiring entrepreneurs to the United States is the breadth and variety of its marketplace. The United States offers a continental economy with
and new business models; a culture of “venturesome
a huge, educated, and growing population. This gives
consumption” in Amar Bhide’s phrase, that yields a
aspiring immigrant entrepreneurs a higher degree of
market of buyers willing to try new technologies and
confidence, such that their innovative ideas might find
models of commerce and enterprise.
that critical initial niche to get off the ground.
It is not as if there aren’t other countries that are technologically sophisticated. Consider Japan, one of the great technological and industrial success stories. Unlike the United States though, Japan does not have a rich tradition of welcoming immigrants and permitting them to reach for the stars.
!"#$#B U S I N E S S H O R I Z O N Q U A R T E R L Y // I S S U E 7
Smaller nations, or countries with a less dynamic and free consumer sector, understandably hold less appeal. In addition to being large, the United States economy is quite competitive. Firms large and small compete with one another vigorously for market share. A primary
!""!#$%&!'()$*+'$"
way of innovating is by adopting new technologies to
rethinking of its approach to immigration. As Pia
get a leg up on their competitors. This competition
Orrenius of the Dallas Federal Reserve recently noted,
dynamic ensures that entrepreneurs will be confident that
“The United States issues about 1.1 million green cards
innovations they develop will at least get a hearing from
a year and allocates roughly 85% to family members
private firms looking for advantages in the marketplace.
of American citizens or legal residents, people seeking
America clearly offers so much potential to skilled immigrants; what might America receive in return? Fortunately, there is ample research documenting the enormously beneficial effects of skilled immigrants on the American economy and the U.S. labor market.
humanitarian refuge and ‘diversity immigrants,’ who come from countries with low rates of immigration to the United States. The remaining 15% go to people who are immigrating for work reasons—but half of these are for workers’ spouses and children, leaving a mere 7% for so-called principal workers, most of whom are highly
Madeline Zavodny of Agnes Scott College and the American Enterprise Institute recently studied the effect of skilled immigrants, such as those with science, technology, engineering, and math (STEM) degrees, on the job market. She found that adding 100 foreign-born workers in STEM fields with advanced degrees from American colleges was associated with more than 250 new jobs for native-born Americans.
skilled. No other major Western economy gives such a low priority to employment-based immigration, and for good reason: these immigrants are the most skilled and least likely to be a burden on taxpayers.” Here’s the kicker. Changing our approach to immigration costs the nation absolutely nothing. As Washington debates various trade-offs between spending cuts and revenue enhancements, changing the game
Temporary foreign workers also have a beneficial effect on the job market. For example, for every 100 holders of H1-B visas, Scott found an associated increase of 183 jobs for U.S. citizens.
on immigration offers something for everyone. It’s a blessing to those many aspirational immigrants, to be sure. Yet, it also boosts the American economy and boosts job prospects for the native-born. Moreover, it doesn’t require raising taxes or cutting cherished spending programs.
Skilled immigrants are more likely to start new businesses, something an economy at the technology frontier needs in order to catapult forward. Skilled immigrants are also disproportionately represented in
Most game changers in life are hard. This one is easy. There’s no time to waste. Q
our high-growth sectors, such as telecommunications,
Nick Schulz is a former scholar with the U.S.
biotech, and health care. They are also more likely than
Chamber of Commerce Foundation as well
natives to file patents, a sign of their importance in an economy built on human ingenuity, science, and technological advance.
as the former DeWitt Wallace fellow at the American Enterprise Institute. He has been a frequent contributor to the Business Horizon Quarterly from its beginning. Schulz now serves in the private sector.
So what part of the American game needs to change? The United States would benefit from a fundamental
// I M M I G R A T I O N R E F O R M : F U E L F O R A N I D L E E C O N O M Y !"#$