Prominent Economist Says Cuts in U.S. Immigration Threaten U.S. Economy and Innovation   

Austan Goolsbee, a professor of economics at the University of Chicago’s Booth School of Business and a former adviser to President Barack Obama, asserts, “The long-run health of the United States economy is in serious danger from a self-inflicted wound: the Trump administration’s big cuts in immigration.” [1]

First, he cites last year’s 70 percent decline in immigration to only 200,000 people, a principal cause of which was the Trump Administration’s “restrictions as well as the unwelcoming tone set by the president himself,” which will be exacerbated by its reduction of this year’s refugee quota to 30,000.

Second, Goolsbee says, “The impact of low immigration on the American economy will be profoundly negative, both now and in the future.”

He explains that the “growth rate of the economy comes from two parts: income growth per capita and population growth.” (Emphasis added.) However, the U.S. and other advanced economies are experiencing declining birthrates and aging populations. “The only way the United States [so far] has avoided the demographic pressure facing other rich countries is through immigration.”

“Without sustained immigration, [U.S.] economic growth will be notably slower.” Moreover, “lower immigration portends big problems because the basic American retirement system — Social Security and Medicare — relies on workers to pay for retirees, and the entire expansion of the work force over the next 15 years will come from immigration. Lower immigration rates will mean serious funding shortfalls for older Americans.”

Moreover, “evidence increasingly says having immigrants here makes workers born in the United States more successful.” These “immigrants start companies at twice the rate of native Americans.” There also is evidence that immigrants help foster innovation. “The essence of knowledge work is building on others’ ideas, and having fewer creative people from different backgrounds in the United States undermined the entire enterprise” under U.S. immigration laws of the 1920s that “were designed to block the entry of immigrants from Southern and Eastern Europe and from Asia in order to preserve the ethnic ‘character’ of the United States.”

In short: “Making outsiders feel unwelcome, blocking asylum seekers or putting their children in cages may succeed in reducing the flow of immigration to the United States. But the American economy will suffer.”

Conclusion

This article provides additional evidence for this blog’s  consistent argument about the U.S. need for more immigrants. [2]

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[1] Goolsbee, Sharp Cuts in Immigration Threaten U.S. Economy and Innovation, N.Y. Times (Oct. 11, 2019).

[2] See, e.g., these posts to dwkcommentaries.com: More Warnings of the Problems Facing U.S. Aging, Declining Population (Aug. 14, 2019); Another Report About U.S. Need for More Immigrants (Aug. 25, 2019); Minnesota’s Challenges of Declining, Aging Population (Oct. 2, 2019); Worthington’s Mayor Defends City (Oct. 3, 2019).

 

 

 

Minnesota’s Challenges of Declining, Aging Population

Minnesota has an aging, declining population coupled with shortages of skilled and other labor, as discussed in prior posts.[1] Here is additional information on that subject along with words about the problems of shortages of medical care in rural parts of the nation and the challenges of having more immigrants.

Skilled Labor Shortages[2]

As of September 30, 2019, “the number of job vacancies in Minnesota continues to climb and is now at the highest total on record — which state officials said continues to be of concern because it could slow economic growth. . . . More than half of the job vacancies were in the seven-county Twin Cities area. . . . While most of the openings statewide are in the health care and social assistance field, nearly 8% are in manufacturing.”

These shortages have led to employers expanding “job candidate lists to include older workers, people with disabilities, people of color and other groups sometimes marginalized from good-paying jobs.”

Other responses to these shortages include employers busing metro-area residents to companies in smaller nearby cities, buying houses to rent to new employees, investing in apartment buildings for renting to the newcomers, engaging in social media campaigns about the companies and their towns, designing high school courses for needed job skills, and sponsoring social activities for newcomers.

Warning signs of a downturn in the U.S. and Minnesota economy, however, threaten this demand for more skilled and other labor. On October 1, a report showed that nationwide factory activity in September fell to the lowest level since 2009, the last month of the Great Recession. As a result, some economists now consider the manufacturing sector to be in a recession. This  follows months of worrying earnings and other economic reports that signaled slowing economies around the world and heightened pressures as U.S. factories scrambled to deal with the shortage of skilled workers and the fallout from a volatile trade war with China.

Creighton University’s Economic Forecasting Group, which measures activity in Minnesota and eight other states including the Dakota, said through its Director, Ernie Goss, “Based on the last two months of surveys of manufacturing supply managers, both the U.S. and Mid-America economies are likely to move even lower in the months ahead.”  The probability of a recession during the first half of 2020 has “risen significantly” over the past few months.

Another expert, Thomas Simons, senior money market economist at Jefferies LLC, said that the Mid-America economy has been expanding in 2019 at a pace well below that of the nation and that  recent reports were “troubling,” “weaker than expected” and dragged down by “non-organic forces” such as the trade war and Boeing’s grounding of its entire fleet of 737 Max Jets. . .  Manufacturing itself is in a recession, but it does not mean that the overall economy is in a recession.” These thoughts were echoed by Tom Hainlin, national investment strategist at U.S. Bank Wealth Management in Minneapolis: “Easily the biggest issue that [manufacturing executives] talk about is trade. . . . The manufacturers are not just worried about the trade war between the Trump administration and China, but also unresolved trade agreements with Canada and Mexico, Germany’s weak economy and unfinished U.S. trade policies that affect Europe’s auto industry.”

Another bit of negative news came on October 1 when the World Trade Organization slashed its forecast for trade growth for this year and next. World trade in merchandise is now expected to expand by only 1.2 percent during 2019, in what would be the weakest year since 2009, when it plunged by nearly 13 percent in the midst of the worst global financial crisis since the Great Depression. The W.T.O. warned that intensifying trade conflicts posed a direct threat to jobs and livelihoods, while discouraging companies from expanding and innovating.

In response to this new negative news, global stock markets declined on October 1 and 2.

Medical Care Shortages [3]

Rural areas in Minnesota and other states also are facing shortages of primary-care physicians and other doctors. “In the medical desert that has become rural America, nothing is more basic or more essential than access to doctors, but they are increasingly difficult to find. The federal government now designates nearly 80 percent of rural America as ‘medically underserved.’ It is home to 20 percent of the U.S. population but fewer than 10 percent of its doctors, and that ratio is worsening each year because of what health experts refer to as “the gray wave.” Rural doctors are three years older than urban doctors on average, with half over 50 and more than a quarter beyond 60. Health officials predict the number of rural doctors will decline by 23 percent over the next decade as the number of urban doctors remains flat.”

One example of this shortage is the State of Texas, where “159 of the state’s 254 counties have no general surgeons, 121 counties have no medical specialists, and 35 counties have no doctors at all. Thirty more counties are each forced to rely on just a single doctor.”

A related problem is the closure of at least 113 rural hospitals in the U.S. since 2010. It, therefore, should not be surprising that “elderly patients are more likely to die when the nearest rural hospital closes and they have to travel farther for treatment of time-sensitive conditions such as heart attacks and strokes, according to a study by a new University of Minnesota health economist.” This study also invalidates  the theory that rural patients might do better after a hospital closes because they would travel farther for higher-quality care.

 Challenges of More Immigrants [4]

The Minnesota city of Worthington has been cited in this blog as an example of a city that has successfully welcomed and integrated immigrants. Its “population has surged from fewer than 10,000 in 1990 to more than 13,000 today and its residents expect it to exceed 14,000 in the near future with immigrants constituting roughly one-third of the population.  And the median age is under 36.”

“Some of the [Worthington] immigrants are entrepreneurs, who described the difficulties they had in getting their businesses started and frustration over lack of stores with their favorite foods and police forces still almost exclusively locally born white people. But they still expressed optimism about their future in this community.”

Worthington had recently been visited by “Neel Kashkari, the president of the Minneapolis Federal Reserve Bank. At a community meeting in the town he said, “If you do the math, there are three choices we have as a society. One choice is just accept slower growth. A second choice is to subsidize [human] fertility. Or number three, you can embrace immigration. Now the advantage we have in the U.S. is that, while we are not perfect, we are better than just about any other country at embracing immigrants and integrating them in our society.”

More recently, the Washington Post published a critical article about this small city as it struggles to meet the educational needs of the children of these immigrants and the costs of doing so.

This article reports that in the past six years, more than 400 unaccompanied minors have been placed in Worthington’s . . .[county]— the second most per capita in the country. . . . Their arrival has helped swell Worthington’s student population by almost one-third, forcing administrators to convert storage space into classrooms and teachers to sprint between periods, book carts in tow.” As a consequence, “the number of ELL [English language learner] students in Worthington has nearly doubled since 2013, to 35 percent of students. In the high school, where most unaccompanied minors are placed, it has almost tripled.”

In response, the Worthington school district has “scrambled to hire Spanish-speaking teachers, who are part educators, part parents, part therapists. Many unaccompanied minors live with unfamiliar relatives who offer little support. Teachers often fill the void, arriving early, staying late, even buying their students groceries.”

To meet this challenge, the school district over the last five years has “asked residents to approve an expansion of its schools to handle the surge in enrollment. Five times, the voters have refused” with another scheduled this Fall. According to this article, “The driving force [in this Trump-supporting county]behind the defeats has been a handful of white farmers,’ who provide a major portion of its tax base. One activist said, ““White people here don’t want to pay for people of color and undocumented children to go to school.”

The Executive Director of the Immigrant Law Center of Minnesota, Veena Iyer, disagreed  with the Washington Post article. She said, “Immigrants keep Worthington strong, growing, and working — and many residents welcome them. The Immigrant Law Center of Minnesota has worked in Worthington for more than a decade. We have seen many residents respond with welcome arms and generosity as one wave of immigrants after another arrived. This century’s immigrants reversed a decline in population and prosperity that threatened Worthington and that still characterizes too many rural communities. . . . These immigrants come from Guatemala and Mexico, and also from Laos, Myanmar and Ethiopia. In all, they come from 80 different countries and speak more than 40 languages. They are young — with an average age of 36 — and hardworking. Immigrants make large contributions to the local economy and help make Worthington a vibrant and dynamic community. . . . Immigrants remain a crucial part of Worthington’s past, its present and its hope for the future.”

The Washington Post article, however, spurred Michele Bachmann, the former Republican member of the House of Representatives from a district north of the Twin Cities and far away from Worthington, to write an article in the leading newspaper of the State, lamenting the “ideological civil war” in the town created by the immigrants’ causing “significant social disruption and severely strain[ing] local resources.”

Bachmann’s article prompted a letter to the editor from a former senior vice president of the Minnesota Chamber of Commerce, who voiced three criticisms of Bachmann. First, she failed to recognize that immigrants pay state and federal income and payroll taxes, sales taxes when they shop and real estate taxes whether they are homeowners or renters. Second, she also failed to recognize that immigrants “are significant contributors to the development and growth of our economy.” They “start businesses and help existing ones to grow” and replace “our retiring baby boomer workforce.” Third, she failed to suggest “ways to redesign [our broken immigration system] to support 21st century community growth and the development of our economy.”

 Impact of Lower Immigration Numbers [5]

The latest data from the Census Bureau’s American Community Service indicates that the net increase of immigrants in the U.S. population “dropped to almost 200,000 people in 2018, a decline of more than 70 percent from the prior year.” According to the Chief Demographer at the Brookings Institution, William Frey, said this “was likely caused to a more restrictive approach by the Trump administration.”

Mr. Frey also pointed out that of the 14 states with the lowest concentrations of foreign-born people, 12 voted for Mr. Trump in 2016. In half of those 12 states, Asians dominated recent immigrant gains and in 10 of those states, immigrants are more likely than native-born residents to hold bachelor’s degrees.

Another expert, David Bier of the Cato Institute, observed, “It’s remarkable. This is something that really hasn’t happened since the Great Recession. This should be very concerning to the administration that its policies are scaring people away.”

Also favoring more U.S. immigration was the Chair of the Latino Donor Collaborative, Sol Trujillo, who said if  “the U.S. Latino population were an independent economy, its gross domestic product would be the fastest-growing among the world’s developed economies. U.S. Latino GDP is now $2.3 trillion, as detailed in a new report that estimates the group’s economic output by measuring their share across 71 industries.” Continued growth of the U.S. economy requires the continued growth of Latino immigration to counteract the decline in U.S. labor-force growth.

In addition, Trujillo says, “Latinos also strengthen the economy by creating jobs. Latino entrepreneurs produce more than $700 billion annually. And as Latinos in the U.S. have become wealthier, they increasingly contribute to the economy as consumers. They account for nearly 30% of America’s growth in real income. With that comes purchasing power, and from 2010-17 real consumption by Latinos in the U.S. grew 72% faster than the rest of the population.”

Trujillo continues. “The U.S. needs an immigration policy focused on recruiting people who are ready to work in every sort of job, who have demonstrated an exemplary work ethic, and who have become essential workers in many industries.” This requires “comprehensive reform of immigration laws and policies.”

Conclusion

Once again, Minnesota and other states with aging, declining population need more immigrants. The Trump Administration’s anti-immigrant rhetoric and actions are contrary to the U.S. national interest and need to be abolished as soon as possible.

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[1] E.g., Minnesota Facing Slowdown in Labor Force Growth, dwkcommentaries.com (September 3, 2019); Rural Minnesota Endeavoring To Attract Younger People, dwkcommentaries.com (Sept. 2, 2019).

[2] DePass, Job vacancies in Minnesota rise again, StarTribune (September 30, 2019); Forgrave, Worker shortage sparks Minnesota businesses to think outside the box, StarTribune (Sept. 29, 2019); DePass, Manufacturing in Minnesota slumps but faring better than nation as a whole, StarTribune (Oct. 1, 2019); Goodman, Global Trade Is Deteriorating Fast, Sapping the World’s Economy, N.Y. Times (Oct. 1, 2019); Tsang, Stocks Slide as Investors Face New Evidence of a Slowdown, N.Y. Times (Oct. 2, 2019); Bernhard & Vigna, U.S. Stocks Drop on Worries About Growth, W.S.J. (Oct. 2, 2019) .

[3]  Saslow, ‘Out here, it’s just me;’ In the medical desert of rural America, one doctor for 11,000 miles, Wash. Post (Sept. 28, 2019); Olson, Deaths rise after hospitals close, StarTribune (Sept. 29, 2019).

[4]  Outstate Minnesota City Aided by Immigrants, dwkcommentaries (Aug. 5, 2018); Miller, Immigrant kids fill this town’s schools. Their bus driver is leading the backlash, Wash. Post (Sept. 22, 2019); Iyer, Immigrants make our community stronger, StarTribune (Sept. 26, 2019); Bachmann, Washington Post article shows that open borders rip our towns apart, StarTribune (Sept. 26, 2019); Letters re Bachmann, Star Tribune (Sept. 30, 2019);

 

[5] Tavernise, Immigrant Population Growth in the U.S. Slows to a Trickle, N.Y. Times (Sept. 26, 2019); Trujillo, Latino Workers Save America From Stagnation, W.S>J. (Sept. 25, 2019).

 

 

Minnesota Facing Slowdown in Labor Force Growth

The State of Minnesota currently is experiencing many positive economic circumstances. First, “most people who want a job have one, with the state’s unemployment rate floating around 3.4 percent. Meanwhile, nearly seven in 10 working-age Minnesotans either have or are looking for jobs, ensuring employers have a robust talent pool from which to hire.” [1] Second, smaller towns and cities in the rural parts of the State are affirmatively seeking younger people to move in. [2]

However, “[o]ver the next ten years, Minnesota is forecast to have far fewer people entering the labor force than previous decades — a problem for employers, who may have problems filling critical jobs as baby boomers retire and others drop out of the workforce.”

This problematic future was endorsed by Cameron Macht, a regional analysis and outreach manager at the Minnesota Department of Employment and Economic Development. He said, “It’s definitely a major issue for employers in the state, and looking forward it may become an even bigger deal.”

There are at least three key factors contributing to this problem.

First, working-age residents who are not working or looking for jobs now amount to about 30 percent of this group. “Many are in Greater Minnesota [the rural parts of the State], where in some counties nearly half of the adult population has dropped out of the workforce.”

Second, in excess of half of the state’s workforce dropouts are 65 and older — a number that is likely to increase as more baby boomers reach retirement age.

Third, roughly  60% of this group are women. Among those staying home, lack of sufficient childcare could be of concern, and Census data shows about a quarter of married couples with children under 18 reported at least one spouse outside the workforce.”

“Foreign-born populations also affect these rates, as they accounted for both a 60 percent jump in labor force growth from 2007 to 2017 but a 25 percent increase in those outside the workforce.”

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[1] Hargarten, Minnesota faces a labor growth slowdown. This data helps explain why, StarTribune (Sept. 1, 2019).

[2] Rural Minnesota Endeavoring To Attract Young People, dwkcommentaries.com (Sept. 2, 2019).

 

Federal Reserve Bank Endorses Need for More Immigrants

On November 13 the Federal Reserve Bank of Minneapolis concluded its second annual Regional Economic Conditions Conference with a strong endorsement of the U.S. need for more immigrants.[1]

Its Senior Vice President and Research Director Mark Wright  summed up the proceedings by saying, ““What’s clear to me is that, in the same way that immigration has played a very large role in shaping the history of this country, it is going to do so again in the future, one way or another. The simple laws of demography and economics demand it.”

Wright added, “But what can’t get lost in purely thinking about the statistics, the spreadsheets, and the government budgets and how that’s affected by immigration, we also have to recognize that behind those statistics are the very real lives of many people, many families who are living in a great deal of uncertainty and great deal of difficulty right now.”

The conference’s keynote speaker, U.S. Senator Ron Johnson (Rep., WI), agreed. He said, “If you don’t have enough human capital, you’re not going to have a growing economy. No policies, no tax cuts, no deregulation is going to make up for the fact that we simply don’t have enough workers. … We’re going to need a vibrant, legal immigration population.”

Therefore, Senator Johnson called on his fellow members of Congress to adopt an approach of continuous (and incremental) improvement of immigration policy to be responsive to current conditions. He also emphasized the need for  a legal immigration system where states would have a stronger voice in determining the appropriate mix of skilled workers it could welcome to address local labor force needs and where greater emphasis was placed on immigrants work skills, rather than family reunification.

More specifically Johnson said he would reintroduce a bill to allow states to administer guest-worker visas allowing the individuals to stay in the U.S. for one year to take jobs, and he previously has suggested having an annual cap of 500,000 of such visas

Political reality, however, said Johnson, requires the Congress first to fix illegal immigration.

Another speaker, Ryan Allen, Associate Professor of  Community and Economic Development at the University of Minnesota’s Humphrey School of Public Affairs, emphasized that as fertility rates among native-born Americans lag and as the population ages, the growth of the labor force will stagnate, but for the inflow of immigrants. For the State of Minnesota, the labor force is growing at what Allen called an “anemic” one-half of 1 percent annually, and that’s not enough to ensure economic growth. In Allen’s view, to maintain the current labor force growth rate, Minnesota needs more than four times the number of immigrants that the state demographer projects will arrive in the state over the next three decades.

These thoughts were echoed by speakers from North and South Dakota. And a Montana immigration attorney redefined what “assimilation” of migrants should mean going forward. “They’re working, they’re providing for themselves and their family, they’re contributing to the economy by spending the money they earn. They are assimilated—perhaps not in language all of the time, perhaps not in skin tone or cultural background. They are assimilated in the sense that they are part of our economy.”

This Federal Reserve Bank’s President, Neel Kashkari, frequently makes these points about immigration.[2]

Conclusion

Recent Minnesota statistics provide further evidence of this need. Its unemployment rate in October remained at 2.8% while the state added jobs at a slower rate than last year and employers were working harder to attract and retain talent. A recent survey by the Minnesota Chamber of Commerce found that the difficulty of finding skilled workers is so pervasive that it is threatening business growth in the state. [3]

These conditions are also true throughout the U.S., Europe and other industrialized countries.[4]

It, therefore, is contradictory for the Trump Administration to increasingly deny and delay applications for legal immigration.[5]

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[1] Weiner, Human capital, demographics,, economic growth, and immigrants, Fed. Res. Bank of Mpls,  (Nov. 14, 2018); Ramstad, Sen. Ron Johnson says illegal immigration needs to be fixed before other reform, StarTribune (Nov. 14, 2018).

[2] E.g., Kashkari,  WSJ Op-Ed: Immigration Is Practically a Free Lunch for America (Jan. 19, 2018).

[3] Ramstad, Minnesota adds 3,400 jobs in October; unemployment holds at 2.8 percent, StarTribune (Nov. 15, 2018); DePass, Minnesota Chamber of Commerce Survey: Hiring woes threaten state’s business growth, StarTribune (Nov. 15, 2018).

[4] Noack, Fertility rates around the world are declining, some Trump supporters won’t like the solution, Wash, Post (Nov. 9, 2018); Freeman, Is America Running Out of Workers?, W.S.J. (Nov. 1, 2018). See also these posts to dwkcommentaries: U.S. Needs More Immigrants (April 14, 2018); Other Factors Favoring U.S. Immigration (May 17, 2018); Impact of Declining, Aging, Rural Population (May 22, 2018); More Immigrants Needed in U.S. (June 23, 2018); Fear of Change Driving U.S. and European Clamor Over Immigration (July 3, 2018); Outstate Minnesota Newspaper Stresses Need for Immigrants (July 27, 2018); Outstate Minnesota City Aided by Immigrants Aug. 5, 2018).

[5]  Bier, America Is Rejecting More Legal Immigrants Than Ever, N.Y. Times (Nov.15, 2018).

 

Others Factors Favoring More U.S. Immigration

On May 17, the U.S. National Center for Health Statistics reported “the fertility rate in the United States fell to a record low for a second straight year, federal officials reported Thursday, extending a deep decline that began in 2008 with the Great Recession.” This latest rate “fell to 60.2 births per 1,000 women of childbearing age, down 3 percent from 2016. . . . It was the largest single-year decline since 2010, when families were still feeling the effects of a weak economy.”[1]

If such rates “are too low, a country can face challenges replacing its work force and supporting its older adults, like in Russia and Japan. In the [U.S.], declines in rates have not led to drops in the population, in part because they have been largely offset by immigration.”

An apparent cause is women “postponing marriage, becoming more educated and . . .more likely to be the primary breadwinners for their households.” Yet, Donna Strobino, a demographer at the Bloomberg School of Public Health in Baltimore, says, “It’s hard to tell whether this is a dip that we periodically see in fertility or this is a long-term trend due to major social changes.”

“The most recent decline has been deepest for minorities. The fertility rate among Hispanic women dropped more than 27 percent between 2007 and 2016, the most recent year of data by race. The rate for whites has dropped about 4 percent, for blacks about 11 percent and for Asians about 5 percent.

The Wall Street Journal recognizes this problem. Its May 17 editorial states, “the immigration destructionists are detached from the reality of the American farm economy and a worker shortage that’s driving food production overseas.” Moreover, the U.S. “farm labor shortage is growing more serious as the overall U.S. jobless rate falls. The Labor Department says about half of the 1.2 million or so workers employed in agriculture are undocumented, and if they were deported the shortage would become a crisis.”[2]

A related Wall Street Journal article quotes “a study from former regional Fed economist Madeline Zavodny, now at the University of North Florida, suggesting that new talent doesn’t hurt our existing talent and may even help. She finds that ‘having more immigrants reduces the unemployment rate and raises the labor force participation rate of US natives within the same sex and education group.” These “results may be surprising, but they are consistent with research that finds immigration has little adverse effect on native-born workers’ wages and employment. The results do not deny, however, not all workers in America are doing well. The results simply point to the fact that immigrants are not to blame for deeper structural forces or circumstances that may have led to dim labor market prospects for some workers.”[3]

A similar report comes from Minnesota. “The strength of Minnesota’s manufacturing industry has obscured a potentially serious challenge ahead for the sector: finding enough workers.” A Minnesota industry group said a “looming worker shortages [is]  a top concern for manufacturers, as baby boomer retirements shrink the labor pool at the same time the sector continues to grow.” Nearly one-half of survey respondents ‘identified hiring and retention as their number one challenge.”  April data “provided more evidence that hiring has slowed sharply in the state this year amid an ultratight supply of workers. The [state] agency said the number of unemployed workers is at a 17-year low.” [4]

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[1] Nat’l Ctr for Health Statistics, Births: Provisional Data for 2017 (May 17, 2018); Tavernise, Fertility Rate Fell to a Record Low, for a Second Straight Year, N.Y. Times (May 17, 2018).

[2] Editorial, Exporting Jobs Instead of Foods, W.S.J. (May 17, 2018) See also U.S. Needs More Immigrants, dwkcommentaries.com (April 14, 2018).

[3] Freeman, Trump and America’s Immigrant Shortage, W.S.J.(May 17, 2018).

[4] DePass, Minnesota manufacturers’ profits soar, but a labor shortage looms, StarTribune (May 18, 2018); Ramstad, Minnesota’s employers, with fewer people to hire, are hiring fewer, StarTribune (May 18, 2018).

World Faces Demographic Challenges

“The world has made spectacular progress in every single measure of human well-being,” is the cheery synopsis of the new book, “Enlightenment NOW: The Case for Reason, Science, Humanism, and Progress “ (p. 52)  by Harvard University’s Johnston Family Professor of Psychology, Steven Pinker.

Important aspects of this “spectacular progress,” he says, are world-wide increasing life expectancy, declining maternal mortality and declining birth rates (pp. 53-57, 125-26, 273).

Unless I missed it in the 453-page book, however, Pinker does not grapple with the problems created by lower birth rates coupled with longer life spans. Examples of such problems are seen in Iowa and Minnesota in the U.S. and Brazil, Japan and Cuba.

Iowa [1]

For the Wall Street Journal, Iowa is an example of “a problem playing out in many parts of the Midwest, a region with lower unemployment and higher job-opening rates than the rest of the country. Employers, especially in more rural areas, are finding that there are just too few workers.” In fact, if “every unemployed person in the Midwest was placed into an open job, there would still be more than 180,000 unfilled positions, according to the most recent Labor Department data. The 12-state region is the only area of the country where job openings outnumber out-of-work job seekers.”

This problem is associated with low birth rate coupled with and an outflow of people. A net 1.3 million people living in the Midwest in 2010 had left by the middle of last year, according to census data. The area also attracts fewer immigrants than the rest of the country.”

Minnesota [2]

A similar problem exists in Minnesota. Last month, its unemployment rate dropped to 3.2%, compared with 4.1% nationally. This has made it difficult for “manufacturers, construction firms and repair-service firms to fill job vacancies and replace departing retirees try to meet the need for more employees, some firms, “employer associations and cooperating unions are working jointly to expand the labor pool.”

For the tech sector of the economy, last year Minnesota added 3,500 jobs, up 1.4% to 250,000 and constituting around 8% of the state’s total work force. And there is demand for even more such workers.

Minnesota’s need for immigrants is especially pronounced in the assisted-care industry. In late March the Trump Administration announced that it was ending, effective March 31, 2019, the Deferred Enforcement Departure program for certain Liberians in the U.S. One of the largest communities of Liberians lives in Minnesota and at least 1,000  are members of a local union that provides workers for assisted-care facilities.

Brazil[3]

“Retirement outlays already eat up 43% of Brazil’s national budget, and health care about 7%, while two expenditures that are critical to economic development—education and infrastructure—claim only about 3% each.” Its “social security system’s revenue shortfall widens each year as the worker-to-pensioner ratio shrinks.” This problem is exasperated by decisions last century to grant pensions to millions of peasants and informal workers who hadn’t paid [into the pension system]. . . . Rural workers paid about $3 billion in social-security taxes for the 12 months through September 2017, while rural retirees drew about $36 billion in benefits.”

The solutions are obvious. “They can raise the minimum retirement age, increase the number of years that workers must pay into the system, or reduce payouts. The bad news is that such measures tend to repel voters.”

Other Countries[4]

Brazil is not alone.

Japan has a very low birth rate, very high life expectancy and very low immigration. As a result, it has an aging, declining population, which should lead to declining economic and political importance in the world.

Cuba has the same sort of problems. It has a declining birth rate associated with readily available abortion services, longer life-spans associated with good health care and many younger people leaving the island to find greater economic opportunities elsewhere.

 More generally, “throughout Latin America and Asia, decades of falling birth rates and growing life expectancies have produced more retirees with fewer workers to underwrite their care. For government policy makers, this means challenges as burgeoning pension and health costs leave less money for economic development.”

“The United Nations projects that by 2050, the number of potential workers per retiree in upper-middle-income developing countries such as Brazil will tumble from the 2015 figure of seven to just 2.5.”

“Credit-rating firms are getting anxious. Standard & Poors estimates that unless there are major changes to publicly funded pension and health-care systems, population aging will help drive net government debt in the biggest emerging economies to extraordinary levels—307% of gross domestic product in Brazil, 274% in China, 262% in Russia and 341% in Saudi Arabia by 2050.”

Conclusion

The U.S. now has a fertility rate below the replacement rate. It, therefore, needs foreign immigrants to sustain population growth, especially in the rural parts of states like Iowa and Minnesota.[5]

Such immigration also would provide workers to pay into the Social Security trust fund and thereby help to finance the increasing number of older Americans who now draw benefits from that fund and who face rising costs of medical care.

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[1] Raice & Morath, Iowa’s Employment Problem: Too Many Jobs, Not  Enough People, W.S.J. (Apr. 1, 2018).

[2] St. Anthony, Horizon Roofing lures workers with higher pay, training, as industry embraces apprenticeships, StarTrib. (Mar. 25, 2018); St. Anthony, Twin Cities tech employment grew 1.6 percent last year, but many jobs go unfilled, StarTrib. (April. 2, 2018); Trump to end deportation protection for Liberians, StarTrib (Mar. 27, 2018); Koumpilova, Local Liberians rally to salvage deportation protection program, StarTrib (Mar. 16, 2018);Koumpilova, Trump administration announces end of deportation reprieve for Liberians in Minnesota, elsewhere, StarTrib (Mar. 28, 2018).

[3] Kiernan & Magalhaes, These Developing Countries Are Getting Old Before They Get Rich, with Dire Consequences, W.S.J. (Apr. 2, 2018).

[4] See n.3 supra; these posts to dwkcommentaries: The Importance of a Growing U.S. Population, dwkcommentaries.com (Mar. 27, 2017); Projected Cuban Population: Stabilizing and Aging (Sept. 6, 2016); Cuba Addresses Its Declining and Aging Population (Oct. 17, 2016); Cuba Faces Economic Challenges (Dec. 14, 2016); Comment: Cuba’s Economic and Political Challenges for 2017Comment: Cuban Government’s Bleak Economic Assessment for Cuba (Dec. 28, 2017); Economic Problems Bedevil Cuban government and President Raúl Castro (Mar. 23, 2017); Comment: Elderly Cubans Unable To Retire (Mar. 26, 2017); Cubans Want Economic Growth and Opportunity (Mar. 22, 2017).

[5] The Importance of a Growing U.S. Population, dwkcommentaries.com (Mar. 27, 2017).

 

Reactions to Tom Friedman’s “Thank You for Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations”

Tom Friedman’s new book’s basic thesis: now everyone on the planet is living in a simultaneous age of accelerations of changes in technology, globalization and planet earth and we all are challenged in how we can and will respond to these changes.[1] After summarizing the major points of the book, the conclusion will offer some critical comments.

Summary of the Book

Most of the book describes those changes, but nowhere is there an express “guide to thriving” in this age. Instead the reader has to pick up recommended habits and changes that are sprinkled throughout the book. Here is what I assume are the elements of such a guide.

  1. Understanding the Accelerating Changes. This is Part II of the book. Increasing technology emphasizes developments in artificial intelligence and global dissemination of these improvements. Increasing globalization includes “trade in physical goods, services and financial transactions” and “the ability of any individual or company to compete, connect, exchange, or collaborate globally.” Increasing changes to planet earth include climate change, reductions in biodiversity, deforestation, biogeochemical flows, ocean acidification, overuse of freshwater, atmospheric aerosol loading, introduction of man-man chemicals and materials and increasing human population.
  1. Understanding the Effects of These Changes. This is supposed to be the primary focus of Part III of the book. The major one I found is Friedman’s assertion that there are now international inversions: allies can kill faster than enemies; “enemies” can pose greater risks by weakness rather than strength; there is a rising risk of frail states becoming failed states; and jihadists are “super-empowered breeders” of disorder or “breakers.” Most of this Part instead discusses possible responses to the accelerating changes and effects and his conclusion that “we have no choice but to learn to adapt to this new pace of change” (p. 198).
  1. Identifying and Implementing Responses to These Changes.

Responses to changes to planet earth: we need “a compounding commitment to stewardship, a compounding wiliness to act collectively to do compounding research and make compounding investments in clean energy production and more efficient consumption, along with a willingness, at least in America, to impose a carbon tax to get compounding investments in clean power and efficiency, plus a compounding commitment to women’s education and an ethic of empowerment everywhere.” (Pp. 183-84)

In addition, nations need to learn and adapt, to be agile and adopt heterodox, hybrid, entrepreneurial, experimental measures (Pp. 298-325) and to reverse centralization of governments and increase their decentralization, and the U.S. with its federal structure is designed to do just that. (Pp. 325-27) The last point is repeated in Chapter 7 (P. 201).

Goals for innovation from Chapter 7:“[R]eimagining and redesigning . . . society’s workplace, politics, geopolitics, ethics and communities—in ways that will enable more citizens on more days in more ways to keep pace with how these accelerations are reshaping . . . [our] lives and generate more stability. [W]orkplace innovation to identify exactly what humans can do better than machines and better with machines and increasingly train people for these roles.” (Emphasis in original) “[G]eopolitical innovation to figure out how we collectively manage a world where the power of one [person], the power of machines, the power of flows, and the power of many [persons] are collapsing weak states, super-empowering breakers and stressing strong states. [P]olitical innovation to adjust our traditional left-right political platforms . . . to meet the new demands for societal resilience in the age of . . . accelerations. [M]oral innovation . . .to reimagine how we scale sustainable values to everyone we possibly can when the power of one [person] and the power of machines become so amplified that human beings become almost godlike. [S]ocietal innovation, learning to build new social contracts, lifelong learning opportunities, and expanded public-private partnerships, to anchor and propel more diverse populations and build more healthy communities.”

All individuals need a plan to succeed that includes lifelong learning and “self-motivation to tap into new global flows for work and learning.” This is a new social contract where people are hired based upon an individual’s skills, not credentials. “Most good middle-class jobs today—the ones that cannot be outsourced, automated, roboticized, or digitized—are likely to be . . . stempathy jobs,” i.e., “jobs that require and reward the ability to leverage technical and interpersonal skills.”

U.S. National Government should limit national political campaign spending and length of campaigns; stop state gerrymandering; and impose ranked-choice voting for the U.S. Senate and House of Representatives. Chapter 10 also contains a list of at least 20 suggested changes to federal laws and policies without explanatory comments and without saying whether and how they are related to changes to the earth. All of these changes will require government “to create every possible regulatory and tax incentive for every company to provide, and every worker to get access to, intelligent assistance, intelligent assistants, intelligent networks, and intelligent financing for lifelong learning.” (P. 241)

  1. Reflecting. This is the title of Part I of the book, where Friedman says, stopping “to pause and reflect . . . is a necessity” because it enables you to start “to rethink your assumptions, to reimagine what is possible, . . . reconnect with your most deeply held beliefs [and] . . . reimagine a better path [forward].”

Supposedly he realized this when a guest was late for breakfast at a restaurant, thus giving Tom a few minutes to reflect and relax and then to thank the guest for being late (and thus providing the first part of the title of the book). I was put off by his converting this trivial incident into a significant one that is in the title of the book. Friedman is a serious man of the Jewish faith, which like other religions emphasizes regular prayer and attendance at worship services to provide the opportunities for such reflection, but no mention of that or of his recommitting to a regular practice of reflection at the start of the book. In Chapter 11, however, he says, “we make God present by our own choices and decisions. Unless we bear witness to God’s presence by our own deeds, He is not present. You cannot be moral unless you are totally free. All religions have some version of the Golden Rule: do unto others as you would have them do unto you.”

  1. Identifying and Honoring Your Anchor. “We each need to be anchored [and enriched] in a topsoil of trust that is the foundation of all healthy communities . . . [and to] enrich it in turn.” For him that is Minnesota and St. Louis Park, where he grew up and where he obtained the values he holds today: “I am a socially liberal, deeply patriotic, pluralism-loving, community-oriented, fiscally moderate, free-trade-inclined, innovation-obsessed environmentalist-capitalist,” and “America can deliver a life of decency, security, opportunity, and freedom for its own people, and can also be a bulwark of stability and a beacon of liberty and justice for people the world over.”

Conclusion

Although I am not qualified to assess Friedman’s discussion of technological change, a recent Wall Street Journal article takes a less grandiose view of technological innovation.[2] It says, none of the technological change “has translated into meaningful advances in Americans’ standard of living.” Moreover, “outside of personal technology, improvements in everyday life have been incremental, not revolutionary.”

The book, in my opinion, was very poorly organized and edited. And it suggests that the U.S. responses to the accelerations should rest on the shoulders of thousands of local governments while inconsistently compiling a long list of things the federal government should do, many of which appear to be unrelated to responding to the accelerations.[3]

After a rather manic discussion of this book on the Charlie Rose Show last November, Friedman made a more effective presentation last December at Minneapolis’ Westminster Town Hall Forum.[4]

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[1] Friedman, Thank You for Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations Farrar, Straus & Giroux, new York, 2016).

[2] Ip, The Economy’s Hidden Problem: We’re Out of New Ideas, W.S.J. (Dec. 6, 2016)..

[3[ Here are two of the many reviews of the book: Micklethwait, The Message of Thomas Friedman’s New Book: It’s Going to Be O.K., N.Y. Times (Nov. 22, 2016); Vanderkam, Everyone Has an App Idea, W.S.J. (Nov. 21, 2016). Unsurprisingly Friedman uses some of the book’s ideas in his New York Times columns; here are two such columns: Dancing in a Hurricane, N.Y. Times (Nov. 19, 2016); From Hands to Heads to Hearts, N.Y. Times (Jan. 4, 2017).

[4] Charlie Rose Show, Tom Friedman (Nov. 21, 2016); Westminster Town Hall Forum, Tom Friedman (Dec.13, 2016).