Monday, May 07, 2007

Immigrant Friendly

I have read two articles recently that inspire me to be more immigrant friendly. Gunnar Myrdal Was Right, by James C. Capretta, noted that the fertility rate of a country tends to decline as its government's responsibility for taking care of its aged population increases. The other article (paid subscription required) sought to raise an alarm about the substandard academic performance of Latino students, noting that the recent influx of mostly Hispanic (and mostly Mexican) immigrants will make Latinos increasingly responsible for the success or failure of the economy.

For those of you who like figures, the first article noted that US fertility peaked in 1955 at around 3.5 children per couple and reached its nadir in 1975 at around 1.8 children per couple. Even though the fertility rate has risen to 2.0 in the US, we still rely on immigration to make up the slack. And even with immigration, we still have a declining ratio of workers to retirees (owing to the retirement bulge of the baby boomers -- that would include me around about 2027).

I realize, of course, that only non-Democrats are reading this as Democrats, punished by fate and genetics with a complete lack of understanding and interest in math, stopped reading at the last paragraph. However, since I began the paragraph with the phrase, "For those of you who like figures...", some may have merely skipped the paragraph. C'mon now, kids. Go back and read the paragraph. You won't understand the rest of the essay without it. And do try to stay awake.

The upshot of the fertility argument is that Social Security programs have an innate contradiction, prominently noted by economist Gunnar Myrdal in the 1940s. People used to have big families because they knew that they would need their children to take care of them when they got older. More children = more people obliged to keep you from starving.

But with the advent of Social Security, reliance on one's own children declined. This seems a boon to those unlucky enough to not be able to have children. No longer would the maiden aunt be dependent on staying in the good graces of her more reproductive siblings. For that matter, one need not have as many children since one could rely on one's neighbors to populate the nation with a teeming mass of worker bees. Thus, one can conserve the resources of one's own family, no longer having to split it amongst a larger brood.

It's a kind of freeloading, in a way, although the effects of the freeloading are not apparent until quite a long ways down the road. It is not unpredictable, however, and here is where I begin to lament the inability of Democrats, who insist on forcing socialism down our throats, to grasp fairly simple math concepts. When we have fewer workers per retiree, we cannot provide the same level of benefit to retirees, or we have to place an unduly heavier burden on those workers who fund the system. It is a sad, but inevitable truth.

Of course, one way out of this is to import new workers. And owing to our wonderful way of life (secure property rights; highly functional, albeit imperfect, rule of law; mature economy; highly capitalized businesses; fairly low tax rate; not to mention a host of "quality-of-life" advantages guaranteed by the Bill of Rights), millions of people from just about every country on the planet are very eager to come here. We can import our worker bees to make up for our slacking fertility rate.

The irony, however, is that nearly every worker could easily provide for his own retirement through a forced savings program. The only thing Social Security really secures is a future where the vast majority of workers will remain poor and retire poor. It is really just a means of taxing the people so that politicians can decide how our resources are spent instead of the people themselves. If gov't in its various forms demonstrated honorable frugality, one might not begrudge this taxation. Sadly, it does not. It never has. The temptation to overspend the taxpayers' resources is irresistible to elected lawmakers. Hence, money that you might invest wisely if you were to pay it to a broker or banker instead of to FICA, is loaned without exception to the Federal Gov't at a rate that favors the big spenders and favors Social Security recipients very little. Oh, sure, it's 100% guaranteed by the full faith and bla bla of the US of A -- but it is still a crummy return on investment.

And, as stated earlier, this return is dependent on one of three outcomes:
  • a reversal of the current declining ratio of workers to retirees
  • a reduction of benefits from their current rather paltry level, or
  • an influx of highly productive workers from abroad.
And here, I come back to the second article, Boomers' Good Life Tied To Better Life for Immigrants, by Miriam Jordan. What constitutes a highly productive worker? According to this article, the children of immigrants are underperforming their "white" counterparts. Here are some more figures (and, Democrats, no cheating, no skipping).

In Georgia, for example, minorities accounted for two-thirds of the population growth between 1990 and 2000. Between 2000 and 2005, they represented 80% of that growth. Yet, only 12% of black fourth-grade students and 17% of Hispanic fourth-graders are proficient in reading, compared with 38% of whites, according to a report by the Center for American Progress, a public policy think tank.
The first thing that strikes me about those figures is that 38% is nothing to write home about. As a proud member of the white race, I am rather embarassed that two out of three of the white children attending school with my daughters cannot read all that they are expected to read. If twice that proportion of Hispanic fourth-graders cannot read properly, I am inclined to hope that it is because they come from bi-lingual or Spanish-speaking households and that a part of their difficulty comes from confusion between English and Spanish. As for African-Americans, I don't know what their excuse is. Their ancestors have been in the country long enough to have figured out the language.

Think this is just a problem for so-called dumb Southerners in Georgia? Nope. Turns out California is even worse.

In California, already a majority minority state, 11% of African-American and 9% of Hispanic fourth-graders are proficient in reading, compared with 36% of their white peers.
The striking thing about this number is that Hispanics in California score way lower than Hispanics in Georgia. I wonder what is the average per-student cost in Georgia vs. California. Less, I would think. And yet, Californian Hispanics trail way behind their Georgian counterparts. Why?

One guesses that it has something to do with California Hispanics...
  • Living amongst a larger population of Spanish speakers
  • Having spent a shorter average time in US, having immigrated later
  • Having been handicapped by a well-meaning, but misguided attempt at bi-lingual education.
As I said, these are just guesses. I would not be surprised to be contradicted. And, as before, 36% for whites and 11% for blacks! -- nothing to be proud of, folks.

The author of the second article sees this as cause for alarm, since we cannot build a great economy on the backs of people who cannot read. We need architects and doctors, not fruitpickers and construction workers, is her point.

There might be merit in that, but except for the mass migration of British Americans who replaced the indigenous population of North America, the pattern for immigrants coming to America has been to take less skilled jobs. It is the successive generations, the descendants of those immigrants, who have moved up the economic ladder. And this is a rule that has yet to fail -- except in the case of those African Americans who continue to languish, for reasons I cannot fathom, generation after generation (one can blame skin color prejudice for some failure to advance, but that explains nothing of the gap in reading proficiency -- go ahead and call me a racist, but I note this is not a substitute for an explanation).

My take on the immigration problem is that we are not taking in enough immigrants and that those we do take are not those we select. We let people slip in undetected, unselected and demonstrating their willingness to break the law. I know that they are almost universally eager to work. I covet that productivity. But that distinguishes them not a whit. Plenty of people from Russia, China, India or Iran, and a host of other countries, are willing to come in as well. We should let more of these people in and select those we want. For example, we could expand and streamline visa programs such as the H1-B that are geared to bring in highly educated people. But we could also expand the number of visas granted to family members as these people arrive with a built-in network of support.

And as for the solution to Social Security, although immigration would help, there is no reason to allow the pay-as-you-go system to continue stripping us of our savings. We should put an end to the gov't pillaging of the working people through this awful socialist program. In the retirement system, the only roles I would like gov't to take on are:

  • to take care of the indigent, who cannot care for themselves (widows, orphans, disabled),
  • to force savings so that no one is allowed to become a burden to society through a lack of planning, foresight or wisdom,
  • to regulate forced savings so that people do not get ripped off and do not invest overly foolishly, so that we can project a worst case outcome that is better than currently promised benefits.

That said, I am glad to see immigrants come in, but not to save our country from socialism. We can do that ourselves by simply abandoning it. Socialism, and Social Security in particular, is a failure so far. It will always fail. This is not news. We should not continue to pretend otherwise.

Related articles:
Making Kids Worthless: Social Security's Contribution to the Fertility Crisis, Oskari Juurikkala, Ludwig Von Mises Institute, Jan 24, 2007
Having Large Families is An 'Eco-Crime', Sarah-Kate Templeton, Times Online, May 6, 2007
The Global Baby Bust, by Philip Longman, Foreign Affairs May/June 2004

4 comments:

Mark Calvert said...

Related, You should also read this, particularly the last link, even if it is from the CFR.

http://instapundit.com/archives2/004917.php

milkchaser said...

I agree, Mark. Those articles are very interesting -- especially the one in Foreign Affairs. I read an interesting article explaining why China is probably not going to overtake us economically. One of many reasons is that their population, most of which is rural and extremely poor and undeveloped, is rapidly aging. The burden of caring for the aged in China will be crushing and probably not something they can pull off without outside, charitable assistance.

Johnner said...

In (Jonathan) Swiftian logic, we could just eat the illegal immigrants and get good use out of them.

OR...

We could just let them work their little hearts out and make sure they pay their FICA so that they can support us in our old age.

What? What? Jolly good, I say, what?

So, I take umbrage with this article's contention that workers are less productive if they are not well-educated. Productive workers do what they are told and show up for work. Good readers, while an asset, are not necessarily good workers. They can be trained...much like monkeys, really.

I agree wholeheartedly with your suggestion to let MORE immigrants into this fine land of ours. Just allow for them to come in legally so that they will pay their taxes.

Brian Burridge said...

First I don't agree with the theory that couples stopped having as many children because they didn't think they would need the financial support. I've never heard any couple seriously state that they had children as an investment. From studies I've read it costs about $250,000 to raise a child, not including college expenses.

I used a savings calculator, including taxes paid on the savings, and using only a 9% savings rate (very conservative) over the course of 29 years (from when I had my first kid to when I would retire). If I saved that amount of money instead of having my two kids, because I didn't feel I needed their help during retirement, I would have retired with 2.7 million dollars.

I hear the exact opposite from couples; that they don't have children because they don't have the money to have them and would prefer to build a nice house, have nice cars, be important at their job and spend lots of hours working. It's a change in personal goals that has resulted in less children and its due more to the high level of lifestyle one can now attain in this country. It distracts from valuing family.

I agree there is a problem with people being able to take care of themselves when they retire, but it has nothing to do with the lack of uneducated, cheap laborers. It has to do with a general belief in this country that someone else will always pick up the tab. Your $250,000 house gets destroyed by a hurricane? No problem, insurance builds you a new one. Oops, you forgot to save for life after 65, no problem, we'll just bill the young workers. It's a time proven fact, that people work harder when they do not have a safety net than when they do. Remove the safety net, and less people will be trying to land in it.

As for letting in more immigrants, I personally believe that with any organization, from schools to churches to businesses and to countries, there is a pace at which you can grow and ensure you are stable and if you grow faster than that, you will eventually feel the pain. You must have a stable infrastructure in order to handle a higher population. While we have a better infrastructure than anywhere else, we have ever increasing problems with health care, property insurance, massively changing industries and shifting skill sets needed to maintain a stable income, a dependency on foreign energy, a social security system that is broken and holding people back from riches they might otherwise have, a set of tax laws that is doing the same, and a growing group of socialists who want everything the founding fathers sought to build to be torn apart in the name of fairness.

I am concerned that increasing the number of immigrants here will inevitably increase the number of people who believe in socialism, at least at some level. Most of the people who come here see the advantages of our country, but I bet they don't understand why the advantages exist. I bet they believe its because we are just a rich country. Then when they get here they are so easily led astray. They see all the safety nets but don't understand the damage they do to our culture. You see this in the liberal camp all the time. They have no idea that we are as rich a country as we are because of the very constructs they seek to tear down. They think we can install socialism here and still be as rich, and I believe that the majority of the world thinks the same way. I do not want the majority of our country to be made up of people who do not understand true freedom and capitalism. Those that come from a socialist view point of the world, even if miserable within it, will not understand for some time, how deep the socialist principles run within themselves. It takes time, capitalistic experience, and conservative leadership to train people from socialist backgrounds to think this way. We aren't talking a 'Welcome to America' afternoon class at the local immigration center. It's much more involved than that. There is no way you can screen these beliefs out when allowing immigrants in. I've met many a liberal who seems to be so hardworking and seems to have all the right beliefs, but then as you get to know them over a longer period of time, you are amazed at truly how socialist their underlying beliefs are.

The only course of action when dealing with immigrants is to 1) stop once and for all, illegal immigration and get the current illegals out, then 2) reduce the flow of legal immigrants while we work to strengthen the core of our country and base it once again on the foundation it was once built on, and then as that happens, you can 3) increase the flow, but only to a level at which you are completely sure you can remain stable and grounded on the principles that make us great.