The Secret to U.S. Growth in the 21st Century: More Asians

A country is only as strong as its people, and we need more -- starting with Asia

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Reuters

What makes a country prosperous and strong in the long run? Four things: land, people, institutions, and culture. Most discussions these days focus on patching up America creaky institutions (health care, the Senate filibuster, etc.), but we should also be thinking about our plan for the long term. Here's a plan.

For most of its history, America was the "Alternative Europe." Political and religious dissidents who were dissatisfied with the ruling regimes in their homelands, oppressed ethnic minorities, and poor people who couldn't get a good job -- all made their way to the United States. Here they found a place where their beliefs, their ethnicity, and their parents' socioeconomic status mattered far less than in the Old Country. America itself benefited greatly from the inflow, gaining a huge labor force, a constant supply of entrepreneurs and creative free thinkers, and a diverse ethnic makeup that helped us avoid the kind of brutal ethnic violence and fragmentation that plagued the European subcontinent.

We also benefited from the strong relationships we built with European countries -- first Britain and France, then Germany and others. Our shared heritage helped facilitate trade and investment, which made our East Coast a center of global commerce. And it helped the U.S. to play an essential stabilizing role in the World Wars and the Cold War, which saved Europe from endemic warfare and from domination by totalitarian regimes.

In other words, "Alternative Europe" was a winning strategy for us. But that strategy is mostly played out. Europe today is rich, peaceful, and liberal, with higher economic mobility and ultra-low fertility. The United States still needs people -- to start new companies, to keep our pension systems funded, and to keep our domestic market large in order to attract investment. But we're not going to get our new people from Europe.

For the last few decades, we've been importing our new population from Mexico, but that too looks to be at an end. Net immigration from Mexico has fallen to zero, thanks in large part to a healthy Mexican economy (good), lower Mexican fertility (good), the housing bust (bad), and nativist sentiment against "illegal" immigrants in states like Arizona (very, very bad).

America's birth rate is not as low as Europe, but we still need immigrants to ensure a healthily expanding labor pool. Where are we going to get our new Americans? Asia and Africa. Asia is especially important, and encouraging large-scale immigration from Asia will have benefits far beyond the simple economics of immigration. The United States' geopolitical strategy for the emerging Asian Century must be to position ourselves as the Alternative Asia, the way we were once the Alternative Europe.

ALT-ASIA

East Asia, South Asia, and Southeast Asia together have over half the world's population, but Asians make up only 5% of the United States. If our ethnic makeup was a portfolio of stocks, we would be severely underweight Asia.

Asia is important not just because it is huge, but because it is growing rapidly. Trade with these countries will be incredibly important to the American economy this century. One way to facilitate trade and investment is ethnic ties -- witness the way the Chinese diaspora has invested in China, or the way Indian-American entrepreneurs have forged links between Silicon Valley and India. We need much more of this.

Presented by

Noah Smith is an assistant professor of finance at Stony Brook University. He writes regularly at Noahpinion.

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