Is it time to kick away the welcome mat to newcomers? Europe seems to be saying yes. The election victory of Le Pen in France is the latest sign of growing anti-immigrant sentiment. Xenophobes in Italy, Austria, Holland, Denmark, and elsewhere on the Continent are gaining a voice and an audience.
A debate over immigration is also emerging in the United States, although it is far less virulent and divisive. Still, legislators and regulators seem to be reconsidering America’s open-door policy of the past three decades following the terrorist attack of September 11. There have been a series of closing-the-door initiatives in recent months. Among them: the federal government reducing overseas access to student visas; the move to bar international students from certain areas of study; proposals to create a tougher INS; expanded government powers for detaining non-citizens; and the momentum behind a national identity card. Each proposal alone has its merits and amounts to mere tinkering. But taken all together, a move is underway that could dramatically change U.S. immigration policy.
Hold on, please. Policymakers should move cautiously. The net economic benefits of immigration are substantial. Yes, Americans have always been ambivalent about immigrants, celebrating their achievements but distrustful of each new arriving group with their strange language and customs. Yet the nation’s historic ability to absorb newcomers into a vast "melting pot" has long been a vital source of global competitive advantage.
Economic models estimate that the net annual contribution of immigrants runs between $1 billion and $10 billion a year. Although a positive number, it’s not a huge sum. But many economists believe that figure vastly underestimates the role immigrant’s play in the economy. The nation’s high-tech industries, from semiconductors to biotechnology, depend on immigrant scientists, engineers, and entrepreneurs to stay innovative. Immigrant links to their old countries are a boon to U.S. exports. The demand for less skilled immigrants is strong in an economy with a long-term labor shortage, after adjusting for the business cycle.
The great migrant stream at the beginning of the 20th century worked in the factories and created many of the businesses that propelled America into the world's leading industrial nation. The century ended with another period of high immigration. Newcomers and their contribution, more than equity investment or information technology, may well be the defining feature of the new economy.
