Periodically in some debate over social security and entitlements, someone will suggest that we simply throw open the immigration doors and let young, fresh immigrants come in and rebuild the bottom of the Ponzi scheme pyramid. I used to think this was a good idea, but (while I remain in favor of more open immigration), I'm not sure it will work, for the reasons outlined below:
1. The places that send us immigrants aren't having so many kids
. Phillip Longman
has a piece in the new issue of Foreign Policy which points out how dramatic a demographic transition the world is undergoing:
Indeed, the U.N. projects that by 2025, the population of children under 5, already in steep decline in most developed countries, will be falling globally -- and that's even after assuming a substantial rebound in birth rates in the developing world. A gray tsunami will be sweeping the planet.
. . . Because of the phenomenon of hyper-aging in the developing world, another great variable is already changing as well: migration. In Mexico, for example, the population of children age 4 and under was 434,000 less in 2010 than it was in 1996. The result? The demographic momentum that fueled huge flows of Mexican migration to the United States has waned, and will wane much more in the future. Already, the net flow of illegal Mexican immigration northward has slowed to a trickle. With fewer children to support and not yet burdened by a huge surge of elders, the Mexican economy is doing much better than in the past, giving people less reason to leave. By 2025, young people on both sides of the border may struggle to understand why their parents' generation built this huge fence.
Even if we wanted to go this route, it would probably be at best a stopgap.
2. The workers who most want to come aren't the same as the workers who are already here. Social Security does not just depend on the existing pool of workers; it depends on their output. You cannot keep the pyramid going by replacing each retiring public accountant with 1.5 cleaning ladies and carpenters. While there are certainly lots of highly skilled immigrants who want to come here, it's far from clear that the math works for social security. To be clear, that's not a brief against letting lower-skilled workers come in; they are a valuable complement to higher-skilled workers. But they cannot en masse shore up social security's finances, especially since they too will eventually collect it--and social security's benefit structure is progressive.
3. America's capital is cultural as much as financial and physical. We cannot bring in so many immigrants that we swamp the institutional structures: trust, rule of law, common norms about commercial behavior--that make us wealthy. I think that America can absorb more immigrants than it does--and should. But I am skeptical that it can absorb enough to keep the pyramid going.
4. An aging America is one that is going to be politically resistant to change. Immigrants change things. Therefore, politically this solution is going to be very tricky. Which probably makes my other three points irrelevant.