The Power And Perils Of Immigration
We need a rational debate on the costs and benefits of immigration, and the conditions that can turn it into a growth engine or a social powder keg.
Immigration will likely be the defining issue of the next decade; it might define the November US elections, and it is reshuffling Europe’s political landscape. Yet it has become so charged and politicized it is nearly impossible to discuss rationally. Irrational reactions abound: An immigration bill in US Congress appears doomed because Republicans think it expedient to leave the issue unresolved until the November elections; across Europe, rising anti-immigrant sentiment stirs acrimonious political debates; social and traditional media are rife with inflammatory opinions and feel-good sermons.
Numbers without borders
Let’s think about it rationally, and let’s start with some numbers. The foreign born share of the US population (hey, that includes me!) has increased from about 15% in 2007 to nearly 18% today. If you are interested in a bit of historical perspective, the share was 13%-15% already during 1860-1920 (always a nation of immigrants), started dropping with WW II and bottomed out under 5% in 1970, then climbed back to 6% in 1980, 8% in 1990, 10% in 1997, and… the rest is in the chart.
Source: US Census Bureau
The recent rise has been uneven: there was little change around the global financial crisis, till about 2011, then a steady upward trend till 2019, a pause during the pandemic, and a marked acceleration in the last three years.
How does this compare to peer countries? In Australia one inhabitant out of three was born abroad; in Canada one in four; Germany and Spain are close to the US — see the chart below. For the EU as a whole the share is 12.5% if you include for example Germans living in France, while the share of population born outside the EU is 5.3%.
Source: national statistical institutes
If you open it, they will come
Three issues matter a lot:
How many immigrants are coming and how quickly?
Are they coming legally or illegally?
Who are they, and with what intentions do they come?
Rapidly rising illegal immigration can quickly exacerbate tensions. The chart below shows the number of “encounters” with illegal immigrants recorded by US Customs and Border Protection at the Southwest border:
Source: US Customs and Borders Protection
When President Biden took office in 2021, he promised “kinder, more welcoming immigration policies,” as NPR put it. Would-be immigrants heard him, and the number making their way illegally across the border, which had averaged about 450,000 in the previous ten years, jumped to 1.7 million in 2021 and nearly 2.5 million in 2022 and 2023.
Europe went through a similar experience when in 2015, at the height of the Syria conflict, German Chancellor Angela Merkel opened Germany’s doors — and Europe’s — to immigrants.
A sudden surge in illegal immigration can severely test a country’s capacity to process the newcomers, determine who should be allowed to stay, provide them with emergency food, shelter and financial support and integrate them in the economy and in the local communities. Besides the objective system stress, it creates a context where crimes committed by illegal immigrants are more likely to grab the headlines, inflaming tempers and making integration even harder. It’s smarter to avoid it, if at all possible — to actually encourage it is foolish and reckless.
Economic engine or deadweight?
Spoiler: it depends on the context. Immigration can be a powerful economic engine: it has helped keep the US at the leading edge of developed economies, fueling a motivated workforce across the skills spectrum, from taxi drivers to software engineers to startup founders — more than half of US billion-dollar startups have at least one immigrant founder or cofounder. But to reap the benefits, you have to get the right conditions in place:
You need an open and flexible economic system that can rapidly absorb new labor force, and a set of incentives that strongly encourages work. The US has long provided the clearest example: a flexible dynamic economy combined with a limited social safety net.
Immigration can be a powerful economic engine — but you have to get the right conditions in place.
At the opposite extreme you have Italy, with a sclerotic economy and rigid labor market. Since Italy has a rapidly aging population, you often hear that immigration is necessary to keep the economy going. But Italy has a youth unemployment rate of over 20% — if one in five young Italians does not have a job, available manpower is not a binding constraint. To put it bluntly, when a fifth of your youth is unemployed, the last thing you need is more young unskilled people to feed. To make matters worse, in January 2019 Italy launched a “citizenship income,” (now at long last abolished) which further weakened work incentives. Italy is an extreme example, but stringent labor market regulations and generous welfare systems are pervasive across Europe, making it hard for immigrants to integrate and contribute to the economy.
Be proactive and selective
Richer countries have a moral obligation to help those in need; but the potential supply of people looking for a better future is nearly limitless. About 700 million people live in extreme poverty (less than $2.15 a day); half of the world population lives under the poverty line for upper middle-income countries ($6.85 a day) — that’s 4 billion people. The only sustainable way to help them is through the same market-driven global economic growth that has reduced the share of world population in extreme poverty by two-thirds in the past twenty years (from about 30% to less than 10%). The harsh reality is that it will take time, and that rich countries cannot take them all in.
Immigration policy should therefore be proactive, balancing compassion with rationality. It should decide how many people to take in and encourage legal immigration with clear rules and procedures, while discouraging illegal immigration. It should select students and specific professional abilities; Australia for example operates a point system to select the skills most in need. This should be combined with family reunification and asylum for refugees, but paying attention to the mix of immigrants is crucial to favor their integration, which in turns helps economic and social stability.
Values and culture matter — a lot
A society needs a glue that holds it together. In most European countries, this has traditionally been provided by an extremely high degree of cultural and ethnic homogeneity. In the US, born as a melting pot, by a set of shared principles and values — you sign up to those, and you’re one of us.
The integration effort has to go both ways: the country has to give you a way to fit in when you arrive looking different, acting different, and struggling in the local language with a funny accent. You have to want to integrate, embrace the country where you have chosen to come and live — while preserving aspects of your original culture if you want. I speak from experience — I have lived through this.
A society needs a glue that holds it together.
This is where European countries have run into deep trouble. None has a set of values you can sign up to and that will make you feel like you are truly an Italian, a German or a French. To make matters worse, a significant share of recent immigrants show little or no desire to integrate — in fact some are openly committed to challenge and destroy the culture of their adopted home. Here I need to touch the third rail: religion. Integration of muslim immigrants has proved especially hard in Europe, to the point that the cultures and values at times appear fundamentally incompatible. Add labor markets that make economic integration arduous and you have a recipe for explosive disaster.
There is something else: culture has value and is worth preserving. Today, we all readily recognize this in the case of various indigenous cultures of underrepresented minorities, or poorer developing countries. But isn’t, say, British culture worth preserving? When we visit a little town in Italy, France, or Mexico, we’re hoping to find something genuinely representative of the local culture — not another melting pot. Yet anybody who talks openly of wanting to preserve a developed country’s culture gets tarred as a xenophobic fascist. This is absurd. The whole world need not and should not become a melting pot. We have a lot to lose if it does.
Immigration offers powerful potential benefits and daunting perils. Global economic disparities, geopolitical upheaval and seamless global communication will only increase the pressure. The humanitarian aspect is important, but countries need a transparent and informed discussion of the costs and benefits, so people can decide what immigration strategy they favor. We need a rational debate and rational solutions — or we’ll keep sliding towards chaos and intolerance.
Marco, another great piece, very well thought out. I
Excellent piece.