SPEAKER_10: Freakonomics Radio is sponsored by Dell.Your ideas don't have to wait.Now they have everything they need to come to life.Dell Technologies and Intel are creating technology that loves ideas, expanding your business and evolving your passions.Dell pushes what technology can do so great ideas can happen right now.Find out how to bring your ideas to life at Dell.com.Welcome to now. Freeconomics Radio is sponsored by Capital One Bank.With no fees or minimums, banking with Capital One is the easiest decision in the history of decisions.Even easier than deciding to listen to another episode of your favorite podcast.
And with no overdraft fees, is it even a decision?That's banking reimagined.What's in your wallet?Terms apply.See CapitalOne.com slash bank.Capital One N.A.Member FDIC. Hey there, it's Stephen Dubner.This is part two of a series we are calling The True Story of America's Supremely Messed Up Immigration System.If you haven't listened to part one yet, don't worry about it.
You'll be fine.You can go back later if you want.For part two, I'd like to begin with a story.This story goes back to 2008 when we ran a contest on the Freakonomics blog.That was long before this podcast existed. Maybe we should start having contests on the podcast.Anyway, the goal of this contest was to choose a new motto for the United States.There was the old motto E Pluribus Unum, from the many, one, which I'd always liked, but no one seemed to use it anymore.Congress had replaced it in 1956 with In God We Trust, but that didn't really catch on either, except on our currency, where it is required. There were some other unofficial mottos, land of the free, home of the brave, things like that.
But I thought we could do better.At the time, I was captivated by this recent trend in six-word stories.This was a thing among writers, especially.The most famous six-word story was attributed to Ernest Hemingway, although it's uncertain if he actually wrote it.It goes like this.For sale, baby shoes, never worn. So we asked Freakonomics readers to propose a new six-word motto for the United States, and then we would all vote on a winner.There were more than a thousand submissions.We narrowed them down to five finalists.Here are the four finalists that didn't win.
Remember, six words.Caution, experiment in progress since 1776.The most gentle empire so far.You should see the other guy. And just like Canada, with better bacon.And here's the motto that was voted winner by a mile.Our worst critics prefer to stay home. That was more than 15 years ago, and I still think about this motto all the time.It's not quite uplifting, but it's a sharp and knowing observation, and I think it's aged well.To me, it describes a place that is well worth complaining about and which allows us to complain as loudly as we want.
It also describes a place that hundreds of millions of people around the world say they would like to move to if they could. Today on Freakonomics Radio, what do our worst critics have to say about the state of immigration in the U.S.today?A nation that doesn't control its borders really isn't much of a nation.Well, here's some surprising history behind the anti-immigration movement.
SPEAKER_08: If you were an environmentalist in the 1960s, your main concern wasn't climate change.And is Canada trying to steal our bacon?
SPEAKER_07: This is Freakonomics Radio, the podcast that explores the hidden side of everything with your host, Stephen Dubner.
SPEAKER_10: In the first 15 years of the 20th century, roughly one million immigrants were admitted to the United States every year.This was way more immigrants than the U.S.had received in earlier waves, and these immigrants were coming from different countries than the earlier waves.They were coming from Italy and Poland and Greece, from Russia and Hungary and Czechoslovakia. There were a lot of Catholics and a lot of Jews.E pluribus unum, baby.But as we heard last week, some old school Americans got itchy about all these unfamiliar foreigners.And in 1924, Congress passed the National Origins Act.As they saw it, they were trying to make America great again. These new rules drastically cut the immigration of Catholics, Jews, anyone from Asia.
It was a long list.By the 1930s, immigration had fallen from a million people a year to 50,000. But fast forward to today and we are back to admitting a million permanent residents every year.There's also an estimated 11 million immigrants living in the U.S.who entered the country illegally, mostly through our southern border with Mexico, which has become increasingly chaotic and frustrating to just about everyone.How did that happen?How did the U.S.go from nearly choking off immigration to reopening the floodgates and then having the floodgates flooded? To answer these questions, let's go back to the basics.
SPEAKER_02: For many families, there's a before and after.They were not in the United States, and then they came to the United States, whether it's across the Pacific or the Atlantic or the Rio Grande or you name it.That is David Leonhardt. My great-grandfather, Robert Leonhart, was the first Leonhart to come to this country.Robert Leonhart was an opera singer.And a strangely talented opera singer, given how bad of a singer I am.David Leonhart has other talents. I'm a senior writer at The New York Times, and I'm the author of Ours Was the Shining Future, the Story of the American Dream.
SPEAKER_10: Leonhardt has been writing about immigration for years.His own great-grandfather, the singer, had come from Austria.His son, David's grandfather, had stayed in Europe and was working in Paris as a photojournalist at the start of World War II.In 1940, he fled to the U.S., just ahead of the Nazis. I asked Leonhart if his views on immigration are influenced by his roots.
SPEAKER_02: I think they inevitably are.I really embrace the heroic story of American immigration.The idea that we are a nation of immigrants, to use John F. Kennedy's phrase.The idea that we welcome refugees fleeing persecution from around the world.The idea that immigrants have come up with some of the most important inventions, not only in our country's history, but in the world's history. And so I very much embrace that story, and I find it moving to read stories of immigrants.I also, in writing this book, came to grapple with the question of, okay, immigration can be great.That doesn't necessarily mean that more immigration is always better.
SPEAKER_10: Remember, the National Origins Act of 1924 had severely constrained immigration to the U.S., both in number as well as countries of origin.In his book, Leonhart describes how John F. Kennedy wanted to undo this in the early 1960s.
SPEAKER_02: I think he and the people around him genuinely believed that the immigration system of the time was grossly unfair.I mean, two-thirds of all immigration slots were given to just three countries, Britain, Germany, and Ireland.
SPEAKER_10: And many of those were unclaimed, you write, yes?
SPEAKER_02: Yes, because by that point, many people in Britain, Germany, and Ireland didn't want to leave.They had a pretty good life in their country.They were happy there. So John F. Kennedy becomes president in 1961, and he is seen as an advocate for changes to the immigration law.Part of it is political, in order to appeal to the later generations of the earlier Eastern European and Italian immigrants.Part of it is moral.And much of John F. Kennedy's agenda just goes nowhere in Congress, somewhat famously.
SPEAKER_09: We all know what happened next. President Kennedy and Governor John Connolly of Texas have been cut down by assassins' bullets.They were shot as they toured downtown Dallas in an open car.
SPEAKER_02: And Lyndon Johnson becomes president and is extremely skillful at negotiating Congress and understands that Kennedy's death creates some momentum behind Kennedy's legislation and also understands that there are real political forces pushing for immigration reform because this is the civil rights era. And the Congress passes and Johnson signs two big civil rights bills that basically bar discrimination based on race and on national origin.
SPEAKER_10: Okay, so this is one of LBJ's major pushes, but he also got some help, not from John F. Kennedy, who's dead, but a couple other Kennedys in the Senate, yeah?Correct.
SPEAKER_02: Both Robert Kennedy and Edward Kennedy become big advocates for an immigration overhaul.They see it as a way to honor their brother's legacy. And we then come to this point where there's a very important distinction.The advocates for changing the immigration system, the Kennedy brothers, basically all progressive Democrats at the time, a lot of moderate Republicans as well, and President Johnson, all insist... we are not changing the volume of immigration to this country in any meaningful way.We are only changing the rules around who can come.So we're not going to have much more immigration.We're not going to vastly expand the number of slots.We're simply going to end this old racist system that gives all the slots to Western Europe.
SPEAKER_10: You write that Bobby Kennedy liked to give examples, real-world examples, of the kind of immigrants who were currently not allowed to come to the U.S., but whom the U.S.could really use.
SPEAKER_02: Yeah, there's this really testy and fascinating exchange in a Senate hearing between Bobby Kennedy and an immigration skeptic from North Carolina, Sam Irvin. And Irvin asked Kennedy, is this bill that you're pushing going to allow ditch diggers to immigrate?It's the word they both use, basically for construction workers.And he said, no, it will not.Kennedy says, there are lots of ditch diggers in the United States, so we would not be bringing ditch diggers in here.That's RFK's line.And his point is, we have written this bill in such a way, we are going to treat every nation around the world equally.We're going to get rid of the old racist system. But we are going to continue to make decisions based on which workers we actually need, and we're not going to increase the overall level of immigration.And since we don't need ditch diggers in this country, we're not going to let them in.
SPEAKER_10: And give me some of the mechanics of that.For instance, let's say that the economy needed a bunch of whatever, nurses and nuclear engineers and physicists, okay? How does the U.S.put out the call for that?What is the mechanism for all that to happen?
SPEAKER_02: The way it would happen is that the government says, we need nurses and we need physicists, and they look at all the people who are applying to get in.And unlike in the past, they do not take into account what country those people are coming from. They say, is this really a nurse?Is it really a physicist?They think about how many slots they have for nurses and physicists, and then it's first come, first served.
SPEAKER_10: So that sounds, on paper, logical and probably a good thing for the U.S.What actually happened?
SPEAKER_02: I think it's important to say it is logical and a good thing.What ended up happening was the bill's advocates were so committed to passing this change that they really dismissed almost all criticism of the bill as unfair.This is what Teddy Kennedy said, "...the charges are highly emotional, irrational, and with little foundation in fact." They are out of line with the obligations of responsible citizenship.They breed hate of our heritage and fear of a vitality which helped to build America.
SPEAKER_10: In other words, y'all are a bunch of old racists.Shut up.I know how this is going to work.It's going to work great.Just watch.
SPEAKER_02: Yes.And let's be really clear about what Kennedy was talking about.He was talking specifically there about accusations that the bill would lead to an increase in the level of immigration.It turns out he was entirely wrong about that.LBJ was wrong about it.And the bill's critics were correct.The bill led to an almost immediate and very large increase in immigration.And it did so because it included a whole bunch of loopholes. that the bill's authors and advocates basically didn't pay much attention to.
SPEAKER_10: So what happened?How was their prediction so wrong?Was it a failure of execution, a bureaucratic failure?Were there not enough resources put into the system?
SPEAKER_02: The reason the 1965 immigration law led to this huge surge in immigration, even though its authors insisted it wouldn't, is this technical difference between quota and non-quota immigration. The bill set an annual ceiling on immigration.Roughly 265,000 people could come into the US.But then it exempted several categories of immigrants from that ceiling.And they just didn't think through how many people would come into the system in the non-quota categories.The most important ended up being family members.And so if you were certain categories of family members of someone already living in this country, you could come to the United States and not count toward the quota.And over time, what happened is family members came, and then family members of that family member came.So we really had vastly more immigration than the laws authors insisted they were allowing.
SPEAKER_10: Did the advocates ignore those possibilities because they had motivated reasoning, they just wanted to see the upside?Were they really bad at math, perhaps? Or did they just not understand how much demand there was out there?
SPEAKER_02: I've gone through the historical records on this.I found no evidence that they privately believed it would lead to an increase.I don't think they were lying.I think they were engaged in motivated reasoning, and I think they weren't thinking very rigorously.
SPEAKER_10: The Kennedys' opponents at the time had another reason for wanting to limit immigration.It's a reason we don't hear about much today.
SPEAKER_08: In some ways, it's a strange answer.The story goes back to the environmental movement.And when I first read it, I was like, really?
SPEAKER_10: That's Zeke Hernandez.He's a professor of management at Wharton and the author of a forthcoming book called The Truth About Immigration.We met him in part one of this series.
SPEAKER_08: If you were an environmentalist in the 1960s, your main concern wasn't climate change.It was overpopulation.And listeners who are old enough might remember the book The Population Bomb, the fear that the world was going to starve to death because there were too many people, birth rates were too high, and agricultural production was too low.There was a man named John Tanton in Michigan, an ophthalmologist who was a avid conservationist, He joined this zero population growth movement.A decade or so later, the predictions of the population bomb didn't prove correct.The environmental movement shifted into what we would recognize today.But John Tanton was in the radical wing of zero population growth, and he wouldn't give up the cause, and he moved into this green nativism.So he started... with funding from Cordelia Scaife May, who was an heiress to the Mellon Foundation, started a whole bunch of think tanks like FAIR, Center for Immigration Studies, Numbers USA.
These are the heart of today's anti-immigration movement.And he started these think tanks pushing policy papers, making arguments that we were all going to die, that the U.S.couldn't handle that many people.The movement was fringe for a few decades, but eventually latched on to today's conservative movement.The Trump administration's immigration apparatus was staffed by people from these Tanton-founded think tanks. What they have found and been fabulously successful is that this plays very well with a certain base of voters and it angers them and it gets people to the polls.
SPEAKER_02: In any country in the world, people feel uncomfortable when their society changes really rapidly and the far right is often able to take advantage.And what the left tends to do is they say, don't be like that. to the voters of the country.Don't be so intolerant.And it just doesn't work.And I think the left and immigration advocates should ask themselves, why is it that this story is so similar all over the world?
SPEAKER_10: But it took a long while for that anti-immigration sentiment to set in.Consider the national vibe in 1986.That was the 100th anniversary of the Statue of Liberty being erected in New York Harbor, a gift of friendship from the people of France to the United States. President Ronald Reagan, a Republican, spoke at the anniversary event.Here is what he said about the millions of immigrants whose very first view of America had been the Statue of Liberty.
SPEAKER_01: They were the men and women who labored all their lives so that their children would be well-fed, clothed, and educated. They worked in our factories, on ships and railroads, in stores and on road construction crews.They were teachers, lumberjacks, seamstresses and journalists.They came from every land.
SPEAKER_10: There is a famous poem by Emma Lazarus inside the statue's pedestal.You're probably familiar with it.It begins, Give me your tired, your poor.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-tossed, to me.I lift my lamp beside the golden door. When you hear these words today, they take on a different color.The huddled masses and wretched refuse sound more like epithets.
But back then, at least for Ronald Reagan, this massive immigration had been a boon for the United States.Here's how he put it in 1989.
SPEAKER_01: Since this is the last speech that I will give as president, I think it's fitting to leave one final thought, an observation about a country which I love.We lead the world because unique among nations, we draw our people, our strength from every country and every corner of the world.
SPEAKER_10: This is plainly not the kind of political rhetoric you hear today, especially from the Republican Party.Zeke Hernandez again.
SPEAKER_08: A lot of our national conversation about immigrants is framed around two narratives that both are incorrect and they do a lot of damage to us.
SPEAKER_10: Hernandez himself is an immigrant from Uruguay.He came here for college and stayed.
SPEAKER_08: I call one of them the villain narrative, which is the idea that immigrants hurt us because they steal our jobs, they threaten our national security, they threaten the rule of law.The evidence contradicts that. But then, interestingly, on the pro-immigrant side, the most common narrative is what I call the victim narrative, which is the idea that immigration is good for immigrants, and we owe the poor huddled masses of Emma Lazarus's poem compassion, even if it costs us.And, you know, that's a very moral point of view, but it's kind of a weak argument because it doesn't tell everyone else what immigrants do for the rest of us. So the anti-immigrant message is focused on how immigrants affect us.The pro-immigrant message is focused on how immigration affects immigrants.And there isn't like this narrative of the truth about how immigrants affect us economically and socially.And I thought, boy, we're giving up so much because the evidence so overwhelmingly shows net positive benefits for us, not for immigrants.I mean, yes, for immigrants, too, but like for us.
SPEAKER_10: We heard a lot of that evidence in the first episode of this series.For instance, the children of immigrants climb the economic ladder at a higher rate than the children of parents who were born in the U.S.Nearly half of the companies in the Fortune 500 were founded by immigrants or their children.
SPEAKER_08: Immigrants today are responsible for 36% of all patents in the U.S., They tend to be mostly Asian immigrants, but not exclusively.And so had the U.S.not allowed those immigrants in, we wouldn't have those patents.
SPEAKER_10: And immigrants are 80% more likely than the native born to start their own business.What accounts for that difference?
SPEAKER_08: If you're an unskilled immigrant and your employment prospects are low, you have a lower threshold for entering self-employment.That's why you see everything from ethnic restaurants to nail salons, laundromats, corner stores that sell calling cards, you know, these kind of ethnic businesses that I think everyone in the U.S.is familiar with.
SPEAKER_10: What do you think the U.S.would look like today economically and socially, politically, etc., etc., if the Immigration and Nationality Act of 1965 had never existed and the U.S.had continued on its low immigration path?
SPEAKER_08: I think the U.S.would still be a powerful economy just because it's very large and because it still produces a lot of smart people on its own.So I don't think the U.S.would be like a poor country.We don't become a bigger Greece, for instance?I don't think so, but I think it would be on its way to decline.In fact, I think a good historical parallel to the U.S., which even follows a lot of the same timeline, is Argentina. So in 1900, immigrants were equally likely to go to both places.So Italians would go as much to Buenos Aires as they would to New York because, you know, Argentina produced cars.Argentina had a thriving manufacturing industry.
It was a country with a lot of very talented, educated people.Then the two countries diverged.A populist movement led by Juan Perón, this is Evita, you know, those of you who know the musical, Evita's husband, Juan Perón, started a bunch of policies that were deeply protectionist and exclusionary.And so Argentina stopped receiving as many immigrants.It turned inside economically.It started preventing foreign investment and ideas from coming in. I don't want to oversimplify.There's a lot of other differences between the U.S.and Argentina since then, but Argentina has not fared well and kind of entered this consistent little by little economic decline to the point of being what it is today.
And I think the U.S.would have probably been similar, perhaps not as bad as what Argentina is because its politics were less dysfunctional, at least back then.But I think it's a good parallel.
SPEAKER_10: So the U.S.didn't become Argentina, but the huge spike in illegal immigration, especially over the past few years, does have a lot of Americans thinking we're losing our grip.We'll get into that after the break.I'm Stephen Dubner.This is Freakonomics Radio. Freakonomics Radio is sponsored by NetSuite.Quick math.The less your business spends on operations, multiple systems and delivering your product or service, the more margin you have and the more money you keep.Reduce costs and headaches.Graduate to NetSuite by Oracle.
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SPEAKER_10: Unless you have been paying no attention to the news, you know that illegal immigration to the U.S.is a big problem that has generated all sorts of friction.
SPEAKER_03: Apprehensions of migrants crossing the southern U.S.border are once again reaching record levels. Nearly 10,000 migrants a day.That is what federal officials say they are encountering at the U.S.southern border on average.
SPEAKER_10: Border chaos, refugee backlogs, political fighting.And that's only part of the immigration story, the inbound side of the equation. On the outbound side, here's how The Wall Street Journal put it recently.In the past, most migrants were single adults from Mexico looking for work.If caught by the Border Patrol, they could easily and quickly be deported.Now, a fast-growing share are families with children who are difficult to deport to their home countries.The change started around 2014 and has exploded in the past two years.
SPEAKER_02: As Barbara Jordan, the former congresswoman from Texas, said, a nation that doesn't control its borders really isn't much of a nation.
SPEAKER_10: That, again, is David Leonhardt, author of Ours Was the Shining Future, the Story of the American Dream.The U.S.
SPEAKER_02: has gone back and forth about how strong its border security has been.In recent years, our border security has been weaker, and that message, thanks in part to social media and the rise of smartphones, has really spread.And so, yes, chaos and poverty in Latin America play a role in the recent surge of immigration, but But another thing that plays a role is that many immigrants have come to believe, often with cause, that as long as they can get here, even if they don't have legal permission, they will be able to stay for months, if not years, if not forever.And that creates a feedback loop that causes more and more people to want to come and creates more chaos at the border.
SPEAKER_10: But it isn't just chaotic.It's also expensive.Here again is Zeke Hernandez, author of The Truth About Immigration.
SPEAKER_08: It's a complicated issue, but there is a legitimate complaint by states and localities that become the gateways for a disproportionate number of immigrants. The best estimate, and this is from a study by the National Academies of Science in 2017, it costs states money to welcome a first-generation immigrant.And the average estimate is $1,600 per immigrant. And this is accounting for all the future expenses and turned into net present value terms.And so in the short run, it costs states to welcome immigrants.The main reason for that is because immigrants have more children than natives.And so states spend more educating the children of immigrants and the children of natives because they have more of them. It is true that some places bear a disproportionate share of those costs, and they're not guaranteed to recover them.Because imagine if the children of those immigrants that the state of Iowa paid for, they moved to Illinois, and then Illinois collects the taxes that those children pay as adults, Iowa doesn't get its sort of, quote, return on its investment on those children.If you look in the long run, however...
at the state level, those children that were expensive to immigrate, so that's now the second generation, contribute positively to the tune of $1,700 per immigrant, and the grandchildren, the third generation, to the tune of $1,300 per immigrant.So if you add it up over three generations, the gain for the second and third generation is $254 billion across all states versus a cost of $57 billion.So it's a positive return on investment, but it just takes a long time. And so I think the legitimate conversation is, why is the federal government not reimbursing states for the costs that they bear to welcome new immigrants?The estimates show that the net benefit at the federal level, the net tax benefit of each immigrant is like $260,000.That adds up to over $10 trillion in taxes collected over many decades because of immigrants.But it's just that the federal government gets the benefits States bear those costs unevenly, and there's no reimbursement scheme.
SPEAKER_10: So that return on investment goes into the plus column when you're thinking about the economic benefits of immigration.But it does lead to a separate question.Does the economic success of immigrant families hurt the economic prospects of native-born families? Here's David Leonhardt again.
SPEAKER_02: A lot of people, particularly on both the political left and the pro-business libertarian right, imagine immigration as a kind of free lunch with no downsides.
SPEAKER_10: So those who call for, let's say, open borders, and there are economists who call for that.What's the most obvious critique of an open border argument to you?
SPEAKER_02: There are not only economists who call for open borders.There are many political progressives in this country who say, no, I'm not for open borders, but in fact are extremely uncomfortable talking about any border security or any deportation.And I think effectively, even if they don't want to admit it, do favor something like open borders.So I would say that the first downside to large levels of immigration is there are wage costs for workers who are already in this country. both native-born workers, citizens, as well as recent immigrants.And there is just abundant evidence of this.
SPEAKER_10: The evidence Leonhardt is citing here comes from that same 2017 report from the National Academy of Sciences.
SPEAKER_02: They created a table that reviewed all of the relevant studies to look at what the effect of immigration was on the wages of people already here.And it is dominated by negative numbers.The economic logic here is fairly straightforward.When the supply of a good increases, all else equal, the price of that good tends to fall. And so when you look at individual studies, the aftermath of the 1994 Mexican peso crisis, which led to this burst of immigration here, it found that wages fared worse in regions of the U.S.that had more people who were coming here because of the peso crisis. Another study has looked at teenagers and found that those who live in places with less immigration tend to work more and earn more.A particularly elegant, if narrow, study looked at mathematicians and found that American-born mathematicians fared really poorly after the collapse of And all these Eastern European and Soviet mathematicians came into the country.It's a very basic concept, but a lot of advocates for immigration tend to dismiss it and say, no, no, there are all these other complex factors that erase that effect.
And they can diminish that effect, but they don't erase it.
SPEAKER_10: Although I do see one line in the summary of the study, which is the impact of immigration on the overall native wage may be small and close to zero.And the bulk of the effect is among the lowest education bracket in the U.S.Yep.So tell me why you think that statement, that the impact is small, close to zero, doesn't line up with your assessment.
SPEAKER_02: There's a whole fascinating... debate about the summary written about that report.One member of that expert panel, George Borjas, who tends to be more skeptical of immigration, released a separate summary arguing that the summary did not fully accurately describe the report's own evidence and that it put a thumb on the scale Now, I actually don't dispute the idea that it may be small.And as you said, it may be focused on lower-income workers.But that means for many of those lower-income workers, it's not that small.This is one of these things in which it's worth not only looking at the evidence, which I think is supportive of what I'm saying, but also letting people think this through for themselves.Just imagine you work in an industry where there's suddenly a big burst of workers who are competing for your job.Do Do you think your wage is gonna fall?
Or ask yourself, why is it that certain professions that have a lot of political capital in our country manage to restrict competition from immigrants?My favorite example is doctors.It is extremely difficult to practice medicine in this country unless you do your training in this country. And that is effectively a way of doctors saying, hey, we know that if doctors immigrate to this country and can immediately compete with us, it might hurt us.So we want to keep some of them out.
SPEAKER_10: I went back to Zeke Hernandez from Wharton to see what he thinks of this argument, that immigration hurts the wages or employment prospects of current citizens.
SPEAKER_08: I understand it, and so I don't want to be uncompassionate for that kind of concern.There are some exceptional cases where you do see negative wage effects, but the headline is, it just doesn't happen.When Hernandez says, it just doesn't happen,
SPEAKER_10: He means that he doesn't buy David Leonhardt's interpretation of the data.
SPEAKER_08: And there's two explanations for that.One is when you get this increase in the supply of workers because there's more immigrants, it's not just the supply of workers that increases, but demand goes up, the economy grows because there's now more people who need to be fed, who need entertainment, who need housing. A bigger economy needs more jobs, and so you get this outcome where it's not zero-sum.And then the other misconception behind the worry, it's what I call the a worker is a worker is a worker assumption, which is that a worker is the same regardless of where they were born, but actually it's not the case.We know that immigrants, for example, go for jobs that natives won't do, whether it's farm jobs, construction jobs, dishwashing jobs. Companies simply can't find natives to do those jobs.The other is that even for jobs in which both immigrants and natives want to work, they bring different skill sets and play different roles or have different occupations.Let's say you have an immigrant in the construction field.That immigrant might not speak English very well, so that immigrant will end up doing the drywall work or the work that doesn't require language skills. And that will create a push for the native construction worker perhaps to become the foreman where he or she needs to speak English.
And so you also get this reallocation into occupations that don't compete directly with each other.
SPEAKER_10: By now, you may be starting to feel about immigration the way I do.The more you dig in, the more you can appreciate just how complicated it is, how many inputs there are and how many outputs. how many conflicts between a humanitarian impulse and an economic one, how many arguments we have with family and friends and political rivals that aren't based on evidence, in part because the evidence itself is complicated and in part because we humans like to cherry-pick the facts in order to win our arguments.
SPEAKER_08: I'll say something provocative, and I don't know if this is true, but I wonder if this is one case where the wisdom of the crowd doesn't work because the crowd is so misinformed and drowning in false narratives and false facts.
SPEAKER_10: One example, Hernandez says, has to do with public safety.
SPEAKER_08: The misperception is that immigrants increase crime, that especially undocumented immigrants increase crime.And of all the hot-button issues, that's the one that has the most unambiguous answer, which is exactly the opposite.It's not only that immigrants don't increase crime, it's that immigrants, and especially undocumented immigrants, commit fewer crimes than natives.
SPEAKER_10: Now, you may be unfamiliar with this data because US media coverage of immigration tends to be how shall we say this kindly, a tad hyperbolic.Whenever a recent immigrant, especially an undocumented one, does something terrible, that crime is held up as an example of an overwhelming trend, even though, as Zeke Hernandez told us, the data tells a different story.
SPEAKER_08: If you take a national security angle, the real threat to national security is not enough immigration. Let's take one example from Oppenheimer.That movie gets into the threat of the Nazis developing the atomic bomb before America.And the reason the U.S.was able to out-innovate the Nazi regime is because it got all these talented scientists, many of which were German Jews.Today, of course, immigrants are coming from many different places. Modern migration is not from Europe, it's from Asia, China, India, other Asian countries, and also Latin America, Mexico, Central America.What are the benefits?Well, immigration creates this conveyor belt of investment.One of the fastest growing fast food chains in the U.S.
in the last couple decades is a company called Pollo Campero.It's a company from Guatemala. It's kind of like a KFC, Popeyes kind of company, but they have recipes that are unique to Central America.This is a company that is super popular.It's Central America's favorite fast food.They're one of the fastest growing chains in the U.S.because they follow this strategy of starting restaurants in places that have high populations of Central Americans. They discovered the opportunity because their highest-selling stores were in the airports of Guatemala City and El Salvador.And if you were on a flight from Central America to the U.S.in the early 2000s, the plane would stink like fried chicken.
And that's because if you were a Central American who was going to go visit friends and family, they didn't let you stay with them unless you brought a bag of pollo campero.There's a story of a woman that carried 1,600 pieces in duffel bags, 1,600, and sold them at a profit.This is stale chicken that you sell at a profit, right?So that's the extent to which there was a market for this. But that's a short-term market.
SPEAKER_10: You're saying the actual expansion of stores here made sense?
SPEAKER_08: It made sense.Their strategy is what they called from Sanchez to Sanchez to Smith.The first Sanchez is the Central American market.Then you kind of grow into the Hispanic market more broadly, not just Central American.And then the ultimate target is the Smiths, meaning the general U.S.market.And so immigrants... They act as a gateway for firms to tackle markets.There's a lot of information that immigrant communities can give you that is very nuanced and you can't just buy in a consulting report.It's also a matter of trust, who is going to refer you to suppliers, to investors.
The point is that investment across borders and investment in general is much more deeply human and social than we imagine. It's not just a matter of price differentials, wage differentials, market size.Of course those variables matter, but social ties are the grease that makes those wheels spin.
SPEAKER_10: As Hernandez sees it, economists have given us bad mental models of how the economy actually works.
SPEAKER_08: We also have really bad mental models of society.The melting pot model is very much a one-dimensional model. There's the origin culture, there's the receiving culture, and they're kind of competing.And then, of course, if you're very worried about immigrants and you look around and you see that Peruvian immigrants in New Jersey have this very tight-knit community and they maintain their foods and a lot of them still like to speak Spanish, and you're like, wait a minute, they're not melting.And so you have this unidimensional model of assimilation. But psychological research by John Barry tells us that model is totally wrong.The original culture and the receiving culture aren't along one dimension that competes.They're sort of perpendicular dimensions, and they can coexist.Barry calls assimilation when someone is strongly attached to the receiving culture but loses attachment to their original culture. That's very hard.
For first-generation immigrants, that is not going to happen because you're asking them to give up something that's precious and visceral to them, right?I mean, you can't tell me to give up everything that makes me Uruguayan.What Barry has found instead is that immigrants can have strong attachment to both. And that's what he calls integration.Integration means that you develop a healthy attachment to the mother culture and the adopted culture, and that has the best psychological outcomes for immigrants.Here's the counterintuitive part.Immigrants adapt better to the receiving country when they maintain that healthy attachment to the original culture rather than when they lose it.
SPEAKER_10: After the break, how can the receiving country do better?Also, if you want to learn more about how labor supply and wages fit together, we made an episode a while back called The True Story of the Minimum Wage Fight.I don't remember it that well, but I think it was pretty good.It's episode 460 and you can get it and all our episodes on any podcast app.I'm Stephen Dubner.This is Freakonomics Radio.We'll be right back. Freakonomics Radio is sponsored by Amica Insurance.Amica Insurance is all about empathy.They know your auto, home, and life insurance are more than just policies.
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SPEAKER_05: In the 2010s, the dream of artificial intelligence that could rival and even surpass the human brain became real.The big tech companies, Google, Facebook, Meta, knew they'd have to harness this technology if they were going to win the new AI race.In fact, it was key to their very survival.But researchers within each company would soon sound the alarm that if the tech giants moved too fast, the consequences could be devastating. Hi, I'm David Brown, the host of Wondery Show Business Wars.We go deep into some of the biggest corporate rivalries of all time.And in our latest season, the tech behemoths fight to dominate the artificial intelligence space and reckon with the costs.Follow Business Wars wherever you get your podcasts.You can listen ad-free on the Amazon Music or Wondery app.
SPEAKER_10: Zeke Hernandez's forthcoming book is called The Truth About Immigration.In it, he spends a lot of time untangling and simplifying the many components of this particularly complex issue.
SPEAKER_08: We've only really had illegal immigration or undocumented immigration since 1965 because the system never quite matched economic reality.
SPEAKER_10: Another argument you make is that in the U.S., the anti-immigration movement has coalesced around primarily the issue of border security.So how do you think about that issue?
SPEAKER_08: Well, I agree that it's a big problem.It is important, though, to separate immigration, which is overwhelmingly good, from the immigration system, from the border.Those are three separate issues.And yeah, I think people are justified in being upset at the mess that's happening I get a lot of emails and letters.And the common argument for those who are anti-immigration and very angry about the border is they make the bad apples argument, right?We have all these bad apples, all these bad actors who are violating our laws.And that's why the solution to that is we have to ratchet up enforcement and secure the border. You know, sure, there are some bad apples that get through, but the U.S.has a stable, permanent population of over 11 million undocumented immigrants.
When you have 11 million people in that status, it's too simplistic to say that it's 11 million bad apples. right?It's that our system of bringing apples into the U.S.is totally messed up.When you haven't updated the number of visas since 1990, and in some cases since 1965, you just have a huge mismatch between the economic needs of businesses and the supply of talent that those businesses need. A lot of people think, oh, it's big greedy corporations that are hiring these undocumented immigrants.The truth is they're not.It's the small and medium businesses that dot your community who have a very hard time finding talent, who don't have the resources to pay for expensive immigration lawyers or navigate the complicated U.S.immigration system. There's just a huge mismatch between America's demand for people and the supply that the system allows.
What does it take to start Zoom or Google or OpenAI?It takes really deep STEM skills, and immigrants are just overrepresented in STEM fields.They're nearly half of the STEM workforce with graduate degrees.
SPEAKER_10: Is that more reflection on excellent STEM education in those places or crappy STEM education in this country?
SPEAKER_08: I don't know that we know the answer to that.I think some of it is that we have programs that select for immigrants with those skills.Immigration programs.Immigration programs like the H-1B program or even our employment-based green card program really selects for people with graduate skills, especially in STEM.
SPEAKER_10: The fact that knowledge-based immigration and employment-based immigration produces that many, let's say, founders is, if nothing else, an indication that one component of U.S.immigration policy is is really good, yes?
SPEAKER_08: I would take the word policy out there.One component of US immigration that's really good is that we attract a hugely disproportionate share of skilled immigrants.We have something like half of foreign-born Nobel Prize winners in the world. Of all the immigrants in the world with bachelor's degrees or higher, the U.S.gets over 40%.And so the U.S.has been a magnet for the world's best and brightest for a long time.But you're suggesting that's not connected to policy per se.How?I think the U.S.
does well with immigration despite policy, not because of it. What do you mean?Well, our policies are pretty bad.Our immigration system is not designed for a modern economy.I mean, it was a system designed in 65 with some updates in 1990.But, you know, even if we take 1990 as a reference point, the economy was $9 trillion then and it's over $20 trillion now.In 1990, we didn't have the tech boom or the need for the kinds of talent that we need now.And so we have a patchwork of programs and visa types that is really outdated.And so we don't accept enough talented people.
Only 14% of green cards annually are given for employment-based purposes, and two-thirds are given for family-based purposes.So we have a system that actually isn't designed to benefit from the world's best and brightest. Mostly, the U.S.gets so much talent because the U.S.is still the preferred destination for talented people.I would also say the other thing that the U.S.is still outstanding at is higher education.The U.S.has the highest quantity and on average the highest quality of education institutions, and they are the preferred institutions for most international students. Even though the U.S.
only keeps less than a quarter of them in the labor force, the U.S.is still getting a lot of that supply of really talented people through education.We just do a really bad job of keeping them.
SPEAKER_10: Just how bad a job does the U.S.do in keeping talented immigrants?Consider the H-1B visa program that Hernandez mentioned.It is a three-year work visa for a
SPEAKER_04: There are 85,000 slots every year.That number is fixed.This time, I believe it was somewhere around 700,000 applicants.
SPEAKER_10: That is Sindhu Mahadevan.
SPEAKER_04: I work in quality assurance in the medical device industry.
SPEAKER_10: Sindhu grew up in Gujarat, India.In 2012, she moved to the U.S.to get a master's degree in molecular and cell biology from the University of Texas at Dallas.
SPEAKER_04: After that, I worked at major medical device manufacturers in this line of work.
SPEAKER_10: Her husband, who is also an immigrant, was getting his PhD in computer science.
SPEAKER_04: What's happened with immigration in the US is that the whole identity of the immigration issue has become border security.That's the face of immigration in the US.What I'm talking about is what's called EB immigration, employment-based immigration.And that's just not talked about.It's a source of great frustration in the immigrant community that this is not an issue that sees any daylight at all.
SPEAKER_10: Through her employer, Sindhu applied for an H-1B visa.Twice.
SPEAKER_04: The thing with the H-1B visa, if you are in the for-profit sector, is that it's a lottery.And when they say lottery, they really do mean lottery.You know, a lot of us are very surprised by that when we first come to the U.S.So what was that like?It's a very cryptic, strange process.The way it works is that the employer sends the USCIS a package, an application package on your behalf,
SPEAKER_10: The USCIS is the United States Citizenship and Immigration Services.It was founded in 2003 as part of the Department of Homeland Security, and it now oversees all immigration to the U.S.The agency it replaced was the U.S.Immigration and Naturalization Service.
SPEAKER_04: And with that, they enclose a check for the processing fees.And they keep checking their accounts to see if the check has been cashed.And if the check has not been cashed, you were not picked.And that's it.That's the kind of uncertainty that you are put into. So it's a very strange sort of idiosyncratic process.And you're kind of left hanging.Unfortunately, I went many times around the merry-go-round and I never did get an H-1B.So I had to stop working.And since my husband had just graduated, we figured we would continue on in the U.S.
and explore our options.
SPEAKER_10: So what happens then when you realize that you haven't been picked and your work authorization has run out?What does that actually mean?And how is that made clear to you that your time has run out?
SPEAKER_04: What that means is that when your current visa ends, your time in the U.S.is going to end unless you can switch over to a different visa. For me, that meant I could go on to a dependent visa status.I could become a dependent to my husband.But what that also meant is that I needed to stop working.Because by default, dependents in the U.S.are not allowed to work.It's one of the things the U.S.immigration system does badly.
SPEAKER_10: Did the notification that you needed to stop working come from the U.S.government?Did it come from your employer?What happened there?
SPEAKER_04: No, the funny thing is, if you live in the US, you become very familiar with immigration.You just get to know this stuff because you have to know the rules of your visa status.You have to know what happens when it ends.You kind of have to figure out how to swim.
SPEAKER_10: So I understand that you became a sort of immigration nerd, yes?
SPEAKER_04: Yes.
SPEAKER_10: That you got to know the policies and regulations inside and out.Was that on purpose or was that just the process of you learning a lot about the system because of your personal involvement?
SPEAKER_04: I think it was a combination of things. Number one, I work in a regulated industry.So reading a lot of dense material comes kind of naturally to me, I guess.The second thing is I had to stop working.And that led me down a path where I was wondering, who does this benefit?And why is this the case? And is having work visas allotted by lottery really the best way of allocating these scarce resources?I remember when I first heard that the H-1B was a lottery, I reacted with, obviously, skepticism. first.But then I thought, you know, really that does make sense because how's the government supposed to decide whether a business administration person is better suited for this than a social science person or a therapist or a scientist, right?
But then I got to thinking about it and I wondered if this was the best way of doing it.So I started going down that rabbit hole and turns out I'm still in it.Yeah.
SPEAKER_10: Do you feel there's discrimination against Indian immigrants in the U.S.on any dimension, including perhaps the way that H-1Bs are awarded?
SPEAKER_04: H-1Bs are not country of birth specific, but green cards are. So can I lay out sort of a pathway for how a typical Indian person would find themselves in what's come to be known as the green card backlog?Yeah.So this is specific to employment-based immigration.A person comes to the US either through a work visa or as a student like I did.If you have a STEM degree, you get to work extra and then you join the workforce using an H-1B typically. That is typically granted for a maximum of six years.In that six year period, you have to get your employer to sponsor a green card.But the trouble is there's very limited number of green cards.That is also something that has not been reassessed in 30 plus years.
But the issue is that for Indian-born applicants, that backlog is very, very long.I believe their last finding was that to clear the backlog right now, it would take 54 years, taking into account attrition by way of death and abandonment.
SPEAKER_10: Wow.That's for the Indian backlog.
SPEAKER_04: It's for the Indian EB-2 and EB-3 backlog, which is the typical master's, bachelor's skill level.
SPEAKER_10: So how do you interpret that massive backlog?What does it mean?What does it say?
SPEAKER_04: I'm in Canada, aren't I?
SPEAKER_10: That's right.Sindhu Mahadevan and her husband have brought their talents to Canada.Coming up next time in the third and final episode of our series on immigration, many people feel the American dream has faded significantly. Canada, meanwhile, has increased their immigration levels big time.I believe the Canadian dream is alive and well.Has Canada stolen the American playbook?And are they siphoning off the talent we need here?That's next time on the show.Until then, take care of yourself.And if you can, someone else too.
Freakonomics Radio is produced by Stitcher and Renbud Radio.You can find our entire archive on any podcast app, also at Freakonomics.com. where we publish transcripts and show notes.This episode was produced by Alina Kullman and Zach Lipinski.Our staff also includes Augusta Chapman, Eleanor Osborne, Elsa Hernandez, Gabriel Roth, Greg Rippin, Jasmine Klinger, Jeremy Johnston, Julie Kanfer, Lyric Bowditch, Morgan Levy, Neil Carruth, Rebecca Lee Douglas, and Sarah Lilly.Our theme song is Mr. Fortune by The Hitchhikers.All the other music is composed by Luis Guerra.As always, thank you for listening. Is your great great or your great?
SPEAKER_02: Did I say great great?You did say great great.Oh, that's wrong.
SPEAKER_07: Stitcher.
