Amazon Would Boost the U.S. Economy by Choosing Toronto

Amazon Would Boost the U.S. Economy by Choosing Toronto
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In June of 1971 President Richard Nixon began the so-called War on Drugs.  That this war was lost is the height of understatement. 

Of course the war was lost.  Americans are human beings, and human beings have needs.  Though what politicians refer to as “drugs” are illegal, they’re widely available and consumed in the U.S.  They always have been.  

Attempts to limit the inflow of "drugs" call to mind similar arguments in favor of planning immigration.  Conservatives claim to not be against immigration as much as they’re for situational, legal immigration.  They’d like for it to be driven by merit.  The well-educated who possess skills that businesses need should be allowed in.  Fox News host Tucker Carlson has made the point that colleges and universities have selective admissions, so why shouldn’t the U.S.? Carlson makes a fair point, but also one that he would probably agree doesn’t stand up to market and other realities. 

To state the obvious, immigration limits will just set the stage for more illegal immigration.  People once again have needs. So long as the U.S. economy continues to grow, the tired and hungry will arrive in search of opportunity.  Short of the federal government crashing the economy, the world’s impoverished will risk everything to get here. The latter will be true even if walls are built, and the number of armed federal officials massively expands.  Businesses that have needs will hire the illegal arrivals. 

Importantly, not all foreigners will make the leap.  For those eager to work for the most high-profile companies, they’ll look elsewhere.  It’s a dirty little secret about U.S. immigration policies that to even have one’s case considered requires thousands worth of legal fees, months and months spent waiting just for an interview, followed by proof that the job being pursued can’t be done by an American.  For many great talents who lack a U.S. passport, it’s increasingly not worth it to try and legalize oneself in the U.S.  This is unfortunate for top U.S. businesses ever in search of impact players, but fearful about placing themselves on the wrong side of the law. 

Some conservatives say that “merit-based immigration” will fix the above problem, but their optimism is overdone. Indeed, the very notion smacks of central-planning. 

To understand why, imagine if politicians instituted rules governing imports.  Imagine if they planned what goods, services and commodities could be imported by businesses based on careful research meant to divine what businesses most require in order to prosper.  If so, conservatives would be up in arms.  They would properly point out that politicians can’t possibly know what businesses need in order to operate. 

Ok, but human capital is exponentially more important than capital goods.  Despite this, conservatives want government to have a role in deciding who can, and cannot be legal.  Wait a minute they’ll say, we just want our politicians to limit human inflows to the educated much needed by businesses….Sure, but politicians clueless about the capital goods needs of businesses surely can’t divine their human capital needs. People are economies, so the idea of politicians planning the most crucial economic inputs is too silly for words.

All of which brings us to Amazon.  Among the twenty finalists announced last week, one foreign city made the cut: Toronto.  If Amazon chooses Toronto, such a move would be great for the U.S. economy.  It would be mainly because Amazon’s decision might force a rethink about immigration policies within the U.S.

Toronto is attractive to Amazon owing to Canada's more open stance toward immigration.  No doubt the Canadian government aims to manage foreign arrivals too, but for the most part it’s easier for non-natives to live and work in Canada than it is for them to do so in the U.S. 

All of this matters to Amazon simply because the recruitment of human capital is of utmost importance.  The company's high valuation is a function of the people who show up for work every day.  That the latter is a statement of the obvious reveals the potential genius of Amazon choosing Toronto.  It does because it’s much easier for non-Americans who might rate a job at Amazon to live and work legally there.  

Such a move by Amazon would signal to a political class eager to control the inflow of goods, services and people that the only closed economy is the world economy.  If politicians want a say about whom Amazon can recruit to work in the United States, then Amazon can reply by setting up shop outside the United States. 

And if the political class is made to realize that America’s greatest businesses can headquarter anywhere, maybe this will lead to a rethink of much more than immigration policy.  Indeed, so long as people increasingly trump plant and equipment, the ability of governments to tax business profits and individual income will continue to shrink.  Amazon is happily reminding us that companies are mobile precisely because humans are.

So while it says here that Amazon will ultimately choose Pittsburgh, PA, what a great message to send if it’s Toronto.  It would be bullish for it bluntly communicating to the political class that unless the U.S. seriously reforms its barriers to people from around the world, the need for the world’s people will force businesses to move more in the way of operations outside of the U.S. 

Until then, these immigration limits will act as a tax on U.S. growth, simply because they’ll limit the arrival of people without which there is none.  The choice of Toronto would ideally force the U.S. to reform its immigration policies, but also to improve on Canada’s openness to people in such a way that market forces solely dictate who works in the U.S.  Let market forces, not a politician’s perception of merit, fully inform what is the most crucial driver of prosperity, by far.     

John Tamny is a speechwriter and writer of opinion pieces for clients, he's editor of RealClearMarkets, Director of the Center for Economic Freedom at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is The End of Work, about the exciting explosion of remunerative jobs that don't feel at all like work.  He's also the author of Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

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