'America Is Full' Is An Example of Economic Illiteracy
President Trump’s statement that “our country is full” as an argument against immigration is not just reminiscent of one of the darkest periods in human history. It is not just a re-iteration of the foul principle of Lebensraum that justified some of Nazism’s worst moments. It is economically wrong. One of the United States’ greatest economic assets has always been its willingness – sometimes enthusiasm – to take in people who contribute to economic growth. Throwing away that asset is not just morally wrong; it is bad economics.
The hardest part of analyzing the statement – as is often the case with things that Trump says – is figuring out exactly what he means by his word salad. Does he mean the United States is literally, physically full? If that is what he means, he is dead wrong. Most of the country is empty. Nearly two-thirds if the U.S. population live in cities, according to the Census Bureau, but the cities take up just 3.5 percent of the nation’s land mass. A detailed federal study of land use in the United States in 2006 found that all residential areas – urban and rural – comprised only about 7 percent of total U.S. land area. In other words, one thing the United States is not short of is land.
What the United States is short of is people. If Trump thinks otherwise, he is embracing one of the biggest fallacies in economics – one of which any first-year economics student is quickly disabused: The lump of labor fallacy, which holds that every national economy has a fixed number of jobs, varying only by macro economic circumstances – such as a recession or high economic growth. Under the fallacy, an economy cannot create more jobs to accommodate more people. In fact, any economy with large capital flows and reasonable labor mobility – such as the United States – is able to generate jobs for everyone who is ready, willing and able to work. The low U.S. unemployment rate today offers proof of that.
The number of jobs the U.S. economy is able to generate is far from fixed. One of the biggest variables is the composition of the workforce, their talents, skills and entrepreneurial drive. In that respect, immigrants have not reduced the number of jobs available to others – as Trump seems to suggest. Rather, they are far more likely to widen the job pool.
In 2011, an immigration reform group, the Partnership for a New American Economy, found that more than 40 percent of Fortune 500 companies were founded by immigrants or children of immigrants. For the newest Fortune 500 companies, many of them technology companies, the rate of immigrant founders was even higher, the organization said.
Just ask yourself: Would the United States be better or worse off without Sergei Brin, a Russian immigrant who co-founded Google? Google’s 60,000 employees would probably answer in the negative. Would the country be better or worse off without Pierre Omidyar, founder of EBay? Better or worse off without Apple, co-founded by the son of immigrants? With or without Andy Grove, founder of Intel? Would the Trump family be better or worse off if the United States had not opened its arms to Trump’s grandfather, Frederic Trump?
If the United States had refused them and other entrepreneurs entry because the country was “full”, Americans would be a lot worse off today.
We are in an ideas economy, one in which success depends on people with ideas. The United States has only 5 percent of the world’s population. By definition, most of the best ideas in the world will be thought of by the other 95 percent. Moreover, new people bring new ideas and new ways of doing things.
One of the greatest strengths of the U.S. economy has been its willingness – even enthusiasm – to greet people from all over the world. Without that attitude, the United States would not have become the world leader in films, steel, search engines, social networks, and apps.
As long as there are new ideas to import, new ideas to develop, new and better ways of doing things to incorporate, the United States is not full. Indeed, the country’s greatest economic strength has always been the recognition that it is far from full – and never will be.