I noticed a link put up by seekingalpha.com/article/173462-saving-t... which referenced an op-ed by Prof. Reuven Brenner of McGill University This article in the National Post .
Prof. Brenner remarks:
Once we exclude the option of admitting a few million skilled, entrepreneurial young immigrants — as Israel did from Russia two decades ago…
My question: Why on earth not?
In “The Nature of Mass Poverty” published in 1979 John Kenneth Galbraith (I am quoting from memory) suggested that emigration was a “solution” (for the poor) and he illustrated that point by remarking that a BMW car is assembled mainly not by Germans but by Turkish Guest workers.
In the 1960’s both Germany and UK received large numbers of immigrant workers, typically to run factories often doing the night shift which local residents were unwilling to do.
The tide then turned and the emphasis moved to setting up factories typically in Special Economic Zones, close to the workers. Not many people realise that 80% of China’s exports are fabricated in SEZ’s, and much of that is done in factories owned or 50% JV by “foreign” companies.
Much of the labour in the SEZ is “migrant” workers, the SEZ’s are located on the coast, close to ports and in “clusters” where infrastructure has been set up, the workers come from thousands of miles away.
What China provides is the land, the investment in infrastructure (on which they make a good return), and the cheap labour; the benefits of that trickle back into China itself.
The benefits can be huge, particularly since in manufacturing these days the labour component is only a small faction of the production cost, the point is most of those secondary benefits accrue to China.
There is only one place in the world that has grown as fast as China over the past fifteen years, that’s Dubai, the reason for the growth was an SEZ (initially Jebel Ali Free Zone, later supplemented by a technology free zone and later a financial free zone). From 1990 to 2008 average nominal GDP growth (in $US) was 15% a year, that’s “trickle–down” with a hose-pipe on full bore.
America would clearly prefer not to have hoards of scruffy dirty low paid workers on its soil, and discourages this.
But the current arrangement is unjust and unsatisfactory.
And the human-rights of “Wet-Back” workers in USA are much less protected an open to abuse than the rights, certainly of Guest Workers in Germany (who have no automatic right of abode, not even their children born in Germany).
And also certainly less than in Dubai where foreign workers have rights and the government does it’s best to ensure they are protected (in spite of what gets put in the press, and one thing, a low paid foreign worker can walk into Rashid hospital emergency and be treated for free – no questions asked), and probably even worse than Chinese factory workers.
The point is by not properly addressing that issue, USA misses out on the trickle down, which would create many high paid jobs, in America, for Americans.
The world is full of high-net worth people who would like to buy a house, in America, easily worth more than $500,000, IF and this is the kicker, they could be provided with a visa (just a visit visa not a work visa) so they could live in it. They wouldn’t want social security, they would happily pay taxes, and in that income bracket they are unlikely to be caught selling crack cocaine on street corners.
How about selling one million houses at more than $500,000 in USA (with visa)? I’d be happy broker that deal, I reckon I could move those in a month.
The problem America faces now is no one wants to buy houses, well in fact, yes they do!
Many of those people can’t even get a visa to get into USA under any circumstances, or if they can it’s such a hassle, they don’t bother.
I had to go through that procedure a few years ago when they brought in the requirement for machine readable passports, I’d hired a US firm of architects, there were maybe thirty Americans employed on the project, but I couldn’t get to see what they were doing, I even suggested meeting in the departure lounge of Kennedy Airport (that would apparently have been illegal).
It took me three weeks (I had to get an appointment to be interviewed, plus a letter of invitation from the firm I was employing, plus a bank draft from a designated bank (cash not allowed); it took me two visits to the US Embassy starting at 7.00 in the morning (SHARP - I missed the first appointment, I didn’t think they were serious), and finishing at 14.00 during which I sat in a room (no mobile phones allowed) with two hundred other applicants for three hours before being frisked four times, and nobody said a word, there were cameras recording everything!
On the plane over – (finally I got a visa), my neighbour told me that they could still refuse me on arrival and sure enough when I arrived after a 17 hour flight I was interrogated about what I had been doing in Saudi Arabia when I was last there (in point of fact I had been looking at the market and financial issues relating to setting up a gypsum factory…I omitted revealing the fact that my client had been the Bin Ladin Group (one of the biggest companies in Saudi), I figured that might cause complications).
Do you know what?
The next time I went looking for an architect, I thought, it’s just not worth the hassle!
My reference is mainly my own experience in Dubai during which time I studied the economic benefits that can accrue form “opening up to foreigners”, that included drafting a presentation made at the GCC Council of Ministers in 1993 which addressed concerns that other GCC states and established (monopoly) businesses in Dubai had about Jebel Ali Free Zone.
I was also involved (from 1989 to 1995) putting together the story line for why people should invest in the zone, prepared presentations to companies from all over the world. In short it was a no brainer – and labour costs never came into the discussion.
If America wants to work on its current account deficit and create jobs, set up free zones, in America!
It’s cheap; all you need is a law, and a fence.