The Open Borders Lobby is now touting a new study claiming that the Trump administration and Congress should permanently legalize the roughly 800,000 so-called “Dreamers” in part because of “the remarkable and persistent importance of immigrants to the creation and growth of America’s largest, most successful, and most valuable companies.” Moreover, it’s making the case that the findings should be shaping the entire “on-going national debate about immigration policy.”
There just one big problem: If you’re sympathetic to the plight of those immigrant children brought to the United States illegally by their equally illegal parents, and/or to the idea that the country needs an even more lenient immigration policy than the present version, you should hope that much stronger arguments for these positions are developed. Because the study, issued by the Center for American Entrepreneurship (CAE) is a classic of Fake Policy Analysis.
CAE is clearly correct in noting “the well-established importance of immigrants to entrepreneurship in the United States….” But it’s headline finding – that a large percentage of today’s Fortune 500 companies have been founded or co-founded by immigrants or their children – should simply remind readers of a simple historical truth: America has been a “nation of immigrants” since the founding because it’s generally been a relatively young, thinly populated country that’s needed to build up its human resources and actively sought this goal. The data have absolutely nothing to do with the main questions dominating the immigration policy debate these days, such as legalizing the Dreamers; or amnesty-ing the entire current illegal population; or reducing or ending “chain migration”; or cutting legal immigration levels.
Skeptical? Just check out the CAE’s numbers. At a glance they do seem to vindicate claims that immigrants have been much more entrepreneurial than the American population in general. And if you believe in capitalism and free markets, that’s incredibly important.
But look more closely, and the relevance to contemporary immigration debates vanishes. For an enormous percentage of the immigrant entrepreneurs listed here arrived and made their marks in the 19th and early 20th centuries, when the country’s immigrant population grew substantially faster than the population as a whole. Between 1850 (the earliest official data available) and 1910 (the date of the last U.S. Census before World War I, when immigration inflows of course dramatically dropped, and before 1924, when legislation slashed inflows and established discriminatory foreign country quotas), America’s foreign born population grew from 9.7 percent to 14.7 percent. And obviously, before 1850, it was at least as large, and growing at least as fast.
So of course during this period, immigrants were especially important in business formation. They were especially important in all demographic respects.
It’s also curious, to put it mildly, that the CAE would use immigrants’ children to buttress its case about immigrant entrepreneurship. These children founded or co-founded more than 57 percent of the “immigrant-founded” companies the Center has spotlighted. (In other words, immigrants themselves founded only about 43 percent of the so-called immigrant founded firms, and therefore only 18.4 percent of current Fortune 500 companies.)
But what’s the rationale for including them? Why not count the third generation, too? Because an entrepreneurship gene is for some reason not passed on to these immigrant descendants? Or somehow watered down? And why would this be? Because the second generation is likelier than the immigrants themselves to marry someone from the supposedly less entrepreneurial native-born population?
Counting the children – along with the prominence of these progeny – also seems to undercut the belief that immigrants are outsized business creators either because their very decision to leave their native lands reveals unusually high levels of get-up-and-go; or because as newcomers to the United States, they faced unusual barriers, like discrimination, in achieving prosperity; or some combination of the two.
For immigrant children established considerably more major companies than immigrants themselves. And presumably, they faced fewer obstacles, and were more steeped in native norms, than their foreign-born parents.
And finally, if you’re wondering why any of these findings should bear on today’s main immigration policy debates, you’re right – mainly because social mobility in America has been on the wane for decades, and in particular for the kinds of relatively poorly skilled and educated individuals who have dominated recent immigration inflows and the illegal population.
This trend significantly reduces the odds that the Dreamers – who for the most part share these characteristics – won’t match the business-creation record of previous immigrant generations. Ditto for today’s other illegals and the legal beneficiaries of chain migration.
Focusing on immigration policy as a business-formation booster, let alone cure-all, also ignores all the purely domestic obstacles to greater entrepreneurship – like weak social mobility and all the policy mistakes and inadequacies (and economic and social ills) behind it; like growing levels of business concentration and consequent declining levels of competition, which shrink the space for start-ups; like today’s feeble levels of consumer demand, which have surely undercut overall business investment.
When those problems are addressed more effectively, the United States will no doubt see a revival or entrepreneurship. And just as certainly, it will be in a much stronger position to handle the costs of recent immigration levels – and even possibly increase them.