When "Coming to America" changed into the United States, immigrants became aliens and opportunity turned into welfare.
I remember the day I entered the USA in 1980 with an L-1 Visa in my passport, ready to start my new company in wildly expanding Atlanta Georgia. My offices were in downtown Peachtree Street’s Harris Tower and I had life in the palm of my hand. Europe’s Tax Laws had been suffocating me and “Coming to America” was much more than a breath of fresh and free air. It was opportunity and there is no frontier as powerful and infinite as opportunity.
I went to the DOT in downtown and got my driver’s license and went to the Social Security office in MidTown and got my SS card and was ready to rock and roll. That’s how easy it was back then -only 30 years ago- to set up shop and start contributing and participating in what was then a Free Economy. Even when employed by a Dutch global Real Estate developer in the 70s, I was essential a globe trotter, so immigration and laws to “protect” a country against “illegals” has always been a strange notion to someone who has freedom – absolute freedom I mean. I came to America in 1980 and saw it change into the United States of America in the next 30 years.
Not many people realize or remember that it was only a hundred years ago that almost anybody, from almost anywhere, could go almost anywhere else, without a passport.
I was reminded of that glorious historical fact when I read the following conversation between my favorite fellow globetrotter economist Doug Casey and Louis James, the editor of the market newsletter “The International Speculator.
It’ll take you 15 minutes to read, it will challenge your views on immigration, but above all it will enrich your capacity to understand where we are heading if we don’t change course.
As America turned into the United States of America
L: So, Doug, a while back there was a big furor among many people, including some of your libertarian friends, about the new immigration law – or anti-illegal-immigration law – passed by the state of Arizona. We had other fish to fry at the time, and then the markets got all jittery, but I know you have thoughts on the subject of immigration, so let ‘er rip – what do you make of all this?
Doug: I think it’s incumbent upon a free person to go anywhere he or she wants.
L: And that they have every right to do so, without restriction?
Doug: Absolutely. Everyone should be able to travel, whether they’re coming or going, without the approval of a state. As I’m sure you’re aware, it was only a hundred years ago that almost anybody, from almost anywhere, could go almost anywhere else, without a passport.
L: The good old days.
Doug: At least from that point of view. In a free society, all property is privately owned. Immigrants, like other travelers, would only have to make sure they have a place to lay their heads down at night.
L: Some people might argue that it was different back then because travel was long, arduous, and expensive, so you wouldn’t get masses of poor and poorly educated people flooding into rich countries the way you would today. The world is a different and far more dangerous place today, and such idealistic policies from the past are no longer workable.
Doug: Well, they would be wrong. Anyone who thinks the world was a safer place back in the U.S. Civil War era, or when the Indians were watching the Europeans arrive, or during the crusades, or during the Black Death, or during the rise of Rome, or during the last ice age… Well, ignorant is about the best that can be said for them. And as for the poor masses, that’s exactly what America came to be filled with, in wave after wave.
For example, in the 1840s and ‘50s, there were the starving and penniless from Ireland fleeing the potato famine. Over the centuries, most of the immigrants to the new world were not rich adventurers on holiday, coming over to see the exotic flora and fauna. They were typically the most persecuted and impoverished people from all over Europe. These were desperate and sometimes dangerous people, fighting for survival. The ones who did so successfully were among the most resourceful, driven, and creative – in other words, just the sort of people who can add value to an economy.
So no, that thinking is just plain wrong and wrong-headed. It’s always been the poor, the hungry, huddled masses.
L: As Emma Lazarus’ famous poem about the Statue of Liberty goes: “Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me, I lift my lamp beside the golden door!”
You know, I shouldn’t be surprised – because, as you like to point out, after hydrogen, stupidity is the most common thing in the universe – but it somehow always does manage to surprise me when I run into obstinate anti-immigrant bigotry. This entire country was built by immigrants. We’re all immigrants. Even the “native” Americans are just older immigrants. How can any American possibly be so blind as to fail to see the hypocrisy of being against immigration?
Doug: Just so. You know, that poem also says: “Keep ancient lands, your storied pomp!” I’ve always rather liked that line, because it’s quite anti-elitist. It’s truly a sad thing that the Statue of Liberty has become an empty symbol, as meaningless as the Declaration of Independence. It’s another sign of the death of America, which has gone from being the land of the free and the home of the brave to the land of tax slaves and the home of welfare recipients. And it’s precisely because it was the land of the free and brave that America was so fearless of immigrants; Americans were not afraid to work hard and compete with anyone from anywhere.
The statistics tell us that now, however, about 47% of Americans don’t pay income tax; they look forward to April 15 as a day the government sends them money. Of course I don‘t believe in the income tax – or any other taxes, for that matter. But the U.S., like Europe, has turned into a place where most people feel entitled to have the state – or rich people – take care of them. They certainly don’t want to compete. They want free handouts and will keep voting for them, come hell or high water. Forty million Americans are on food stamps, and I promise you that number is going much higher.
L: I think they’ll get both hell and high water as a result. But didn’t immigrants cause some problems back then? I know there were anti-Irish sentiments, to continue with your example. “No Irish need apply,” etc.
Doug: There were certainly problems. Look, life isn’t just full of problems; life is problems. Though I’d guess that even back then, more problems were caused by the people already in America than by those arriving. But that doesn’t mean the new arrivals were bad for America. Just the opposite. The kind of people who would leave wherever they were born and make their way – as long and arduous as you say – to America would have been the best class of people. They clearly had the most “get up and go…”
Doug: [Chuckle] Yes. They were the most opportunity-seeking and generally the most freedom-loving. Those poor wretches were not a net drain, as their modern counterparts are seen today, but a huge boon to the country – and the same could be true today, if we had the right policies.
L: Well, look what Australia has built on foundations of being a prison colony. It seems pretty clear that whom you let in doesn’t matter, it’s what the systems in place encourage people to do once they get there that matters.
But one more challenge; some people would say that back then America had wild frontiers, beyond which anyone could go and hack a living out of the wilderness. Now the U.S. has no open frontier; it’s a closed system with limited resources, resources newcomers may take from those already on board.
Doug: They’re wrong too, and self-serving in their myopia. The U.S. still has vast, vast stretches of empty land, owned by the federal government, which could be re-opened to homesteading. And Space Ship One has shown that there is an infinite frontier opening up for those daring enough to go colonize it.
But this is the 21st century. Homesteading shouldn’t mean hacking a farm out of the wilderness anymore, it should mean launching a technology company, or engineering some new solution to an expensive problem, or offering a valuable service to people who need it, and so forth. Space isn’t the final frontier, opportunity is, and it’s infinite. It serves no useful purpose whatsoever to try to limit people’s access to opportunity – and if the U.S. stops the best and the brightest among us from following new opportunities here, they will do it elsewhere, and the U.S. will get left behind.
L: So, you don’t see any problems with throwing the borders wide open today? Let anyone into the U.S. who wants to live the American Dream – maybe they’ll bring it back to life?
Doug: Well, to start with, it’s not America anymore, it’s the United States, a welfare-warfare state that offers perverse incentives to be non-productive and goes around the world creating enemies with an extremely aggressive foreign policy. So I expect there would indeed be problems if opening the borders were the only change made.
As long as the U.S. is mass-producing enemies in the Middle East and elsewhere, it does make some sense for it to try to erect walls to protect itself. Welfare is a disaster, but while the U.S. is handing out expensive goodies and subsidies, it makes sense for the U.S. to try to limit how many people it has to support. In both cases, however, the answer is to get rid of these destructive and counterproductive policies, not to close the border. If you get rid of the welfare-warfare state, you solve the perceived immigration problem. The U.S. needs to return to being America.
L: “Peace, commerce and honest friendship with all nations – entangling alliances with none.” But America is not the only thing that has changed over the last 100 years…
Doug: That’s right. There are two main differences between the people who want to immigrate today and those who did so in the past. First, in those days, it was mostly Europeans, so there was less racism in the reaction to them. Today, it’s … not mostly Europeans, and I’m sorry to say that, regardless of what people say, I think the cold reception is very much race-driven. But racism is a fact everywhere – the Orient, Africa, Europe – everywhere. It’s a holdover from primitive times. But I believe it will diminish over time, by which I mean the centuries to come.
Second, in those days, immigrants had to work and produce in order to survive. There were none of the counterproductive policies I mentioned above; no welfare, no unemployment benefits, no health care subsidies, no government housing projects, no subsidized transportation, none of these things. So immigrants had to start producing immediately and become self sustaining right away, or they’d starve. That sounds harsh to modern ears, but if they were starving where they came from and had limited opportunities, just the chance to not starve in America, with its unlimited opportunities, was an attractive prospect.
Today, immigrants are actually encouraged to explore all the wonderful benefits and services the U.S. government has to offer – and this attracts the wrong kind of person. And corrupts everyone else. It’s not that poor people want to come here that’s the problem today; we always had poor people wanting to come here. It’s that our government handouts are attracting parasites as well as creative opportunity seekers.
L: Are you saying that some anti-immigrant feelings may have some justification?
Doug: Only because of the corrupting influence of the system. There’s a certain atavism in the hostility towards immigrants. We believe, correctly, that America used to be in many ways better than any other country in the world. And these new people are not integrating the way past immigrants have. They come from different cultures, with different values, and they often seem to be bringing those cultures here, rather than becoming Americans – they are changing America, and that scares people. This creates resentment among people who like things the way they were, and that, while not necessarily laudable, is understandable.
But even the fear of American culture being changed wouldn’t be such an issue if America hadn’t ceased to be America. In the past era of “rugged individualism,” immigrants had to integrate. They wanted to be Americans as soon as possible – that’s why they came. Now the state, with services in several languages and all its “safety nets” makes that optional – even subtly encourages them not to, for the sake of “diversity.”
L: And of course no one wants to give up their old ways if they don’t have to.
Doug: Exactly. Even though perhaps well intended, the hate crime laws that punish boorish behavior towards people who are different have the unintended consequence of further reducing the incentive to integrate.
L: Hm. But if the America we knew and loved no longer exists, there’s the question of what immigrants would be integrating into today…
Doug: At this point, they’d be trying to integrate into a militarized welfare system, in which everyone is trying to live at the expense of everyone else. And that’s exactly the problem.
As I’ve said before, America was a beautiful idea, but pandering politicians and social engineers have killed it. Instead, we have the United States, which is just a country, like any other in the club of 200 or so states that are nothing more than protection rackets in terminal decline. The racket is done – the system doesn’t work anymore, and I believe that the nation-state as we know it will cease to exist as a meaningful player within the next generation or two.
And that’s a good thing. Because of technology, almost everyone can go almost anywhere they like, and the result will be new groupings of people based on common values, not the random and meaningless groupings we have today, based on where people are born. I believe these new forms of social organization that will replace today’s governments will be more stable, productive, and valuable to their members (who will be able to shop for the ones they deem most advantageous), so I’m in favor of making that transition happen as fast and easily as possible. Open borders would help with that.
L: So, the basic answer to those who fear open borders is that free immigration is not the problem, the problem is the welfare-warfare system.
Doug: Right. It’s the government of the United States that is creating the problems that a lot of individual citizens resent. It’s rather inchoate anger, in most cases, but they do sense that something is wrong. Unfortunately, they don’t understand the causes, so they blame the immigrants, while they should be blaming their rulers and tossing them out of office.
L: Okay, but that’s the ideal answer. Realistically, it’s hard to imagine a sudden burst of reason in Washington causing the federal government to roll back its counterproductive welfare and warfare policies and to open the borders to the most creative, driven, and entrepreneurial people around the world.
Doug: Yes, that’s completely out of the question. They may make noises about national security in a world awash in terrorism, etc., but the truth is that every politician knows that opening the borders would allow a huge influx of relatively cheap and competent labor into the U.S. market. That would break the rice bowls of too many fat, overpaid U.S. laborers who think they have a birthright to $30, $50, or $70 per hour jobs. It’s not going to happen, not by vote of the parasitical/political class that rules the world today.
However, an equalization of wage levels around the world will happen, in time, as a result of economic trends that can’t be stopped. The Chinese fellow who works for $2 a day, doing the same thing a U.S. worker does for $20 per hour now, may soon be making $2 per hour – and so will the American. But the Chinese fellow might actually be better off than the U.S. worker at that time, because he won’t be burdened with the monstrous tax and regulatory burden of his U.S. counterpart.
L: And he won’t see anything wrong with working more than 40 hours a week.
Doug: Nor would he dream of taking sick days and three weeks of paid vacation. The Chinese guy will simply work harder than his U.S. counterpart.
L: That might change as the playing field levels. But the bottom line here is that you’re saying that people can be as closed-minded as they want, close the borders entirely, keep those different-looking people out – but you can’t keep the jobs in. Even if the U.S. adopts a law preventing companies from employing the cheapest labor available on the global market, that will just ensure that U.S. companies will be replaced by more nimble international competitors. It’s going to happen, regardless of what anyone wants, says, or votes for.
Doug: And, perversely, the more political action the U.S. takes to stop it from happening, the more certain the outcome is. It will happen.
L: I love the irony; the market will level the playing field, elevating the world’s poorest, most needy people – and it will do so where decades of wrong-headed and destructive foreign aid have failed.
Doug: Yes, and at that point, when opportunity abounds around the world, the nation-state as we know it will have no credible value to offer people, and it too will go into the dustbin of history.
And it’s already started. I happen to be speaking to you from Washington DC, and last night I went to the Tyson’s Corner shopping center…
L: I remember when that was a gas station out in the middle of nowhere… (I do too as we built the first homes there in 1978- publisher’s note)
Doug: I do too. It’s gigantic now. So, my wife and I were people watching. We didn’t do anything resembling scientific research, but we did consciously try to quantify what we were seeing. Looking at the people working in the shops, I would say that about 80% of them were discernibly foreigners. And then we counted people riding the escalator from the first to the second floor, and we could immediately see that about 50% of the shoppers were discernibly foreigners.
L: What do you conclude from that?
Doug: That all these immigration laws do is raise the cost of entry. And what that does is discourage the sort of entrepreneurial middle-class people who’d have the easiest time contributing positively to the U.S. economy the moment they got here. Those people will go elsewhere, where there’s less state interference with opportunity, leaving more of the welfare-seekers who sneak in illegally. It’s completely perverse.
L: Any other comments on the Arizona law specifically?
Doug: Well, you know governments are always passing reams and reams of stupid laws. It’s what they do. I don’t believe stopping immigration is a legitimate function of government. If I did believe government was necessary, I’d restrict it to protecting Life, Liberty, and Property via police, courts, and military. But most people see the state as a magical cornucopia that will give them anything they want as long as they vote for it, and, more frighteningly, as a Big Brother that will make everyone play nice with them.
L: Heh. Yes, people forget that a government powerful enough to compel others to do what they want is powerful enough to compel them to do what others want. Big Brother… doesn’t anyone read anymore?
Doug: I don’t know; perhaps they just talk on their cell phones and watch reality TV. But it’s pretty alarming. These attitudes are sending what’s left of America down the wrong path fast. And as the economic situation winds down, Boobus Americanus is going to blame the immigrants. That’s bad enough, but for readers of this column, the more serious consequence will be that they will blame the emigrants as well. It’s a double-edged sword that cuts the wrong way, both ways.
L: Emigrants – those bastards. Why won’t they stay here and let us tax them more so they can pay for us to live beyond our means? Where’s their patriotism? Traitors. I bet they don’t even like baseball and apple pie!
Doug: [Chuckles] The only good news about that is that wealthier people are generally welcome in other countries. So, for many reasons we’ve talked about before, it’s important to diversify your assets out of the U.S., or wherever your home country is, and start looking for places where you’ll be more welcome.
L: Makes me wonder why any smart person would want to immigrate to the U.S. I guess they still see it as America.
Doug: Well, most of those who do come here to study go back where they came from these days. It’s mostly Asians, who go to U.S. universities for higher degrees in advanced sciences and the like (while their U.S. counterparts are taking courses like gender studies and sociology), and then take that knowledge home. They can see that the U.S. still has more capital, but it’s on a curve going down, while other places are on a curve going up – which is a much smarter place to build an enterprise. And they can feel that immigrants are not welcome in this country anymore.
Publisher: Doug is a world traveler, investor, investment adviser, who spends most of his time these days in his downtown Buenos Aires apartment.
His Casey Report is a leading newsletter for Smart Global Investors.