"Malaysia Prime Minister Mahathir Mohamad and the Sultan of Johor are seen in a blue Proton Saga... "When asked whether there is any tension with the sultan, Dr Mahathir said: “No, I don’t see anything because I went to see him and he drove me to the airport. I don’t want to comment on the sultans because if I say anything that is not good then it’s not nice because he is the sultan”"

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Tuesday, October 02, 2018

Do Immigrants Import Their Economic Destiny?

Do Immigrants Import Their Economic Destiny?

"How do immigrants change the countries they move to? Immigration has become a big political issue in the U.S., the UK, Germany, and beyond, and experts and pundits alike have tried answering this question. At least among economists, almost all the debate has focused on the short run, and most of that has focused on lower-skilled immigrants. The overall answer is fairly clear: low-skilled immigrants don’t have a major effect on the rest of the economy one way or the other. That means that in the short run, the most important effect of low-skilled immigration is that it helps low-skilled migrants themselves.

But what happens in the very long run?...

Three lines of research point the way to a substantial answer:

- The Deep Roots literature on how ancestry predicts modern economic development,
- The Attitude Migration literature, which shows that migrants tend to bring a lot of their worldview with them when they move from one country to another,
- The New Voters-New Policies literature, which shows that expanding the franchise to new voters really does change the nature of government...

A glance at the map tells much of the tale: Today’s rich countries tend to be in East Asia, Northern and Western Europe, or are heavily populated by people who came from those two regions. The major exceptions are oil-rich countries...

To sum up some of the key findings of this new empirical literature: There are three major long-run predictors of a nation’s current prosperity, which combine to make up a nation’s SAT score:

S: How long ago the nation’s ancestors lived under an organized state.

A: How long ago the nation’s ancestors began to use Neolithic agriculture techniques.

T: How much of the world’s available technology the nation’s ancestors were using in 1000 B.C., 0 B.C., or 1500 A.D.

When estimating each nation’s current SAT score, it’s important to adjust for migration: Indeed, all three of these papers do some version of that. For instance, without adjusting for migration, Australia has quite a low ancestral technology score: Aboriginal Australians used little of the world’s cutting edge technology in 1500 A.D. But since Australia is now overwhelmingly populated by the descendants of British migrants, Australia’s migration-adjusted technology score is currently quite high.

On average, nations with high migration-adjusted SAT scores are vastly richer than nations with lower SAT scores: Countries in the top 10% of migration-adjusted technology (T) in 1500 are typically at least 10 times richer than countries in the bottom 10%. If instead you mistakenly tried to predict a country’s income today based on who lived there in 1500, the relationship would only be about one-third that size. The migration adjustment matters crucially: Whether in the New World, across Southeast Asia, or in Southern Africa, one can do a better job predicting today’s prosperity when you keep track of who moved where...

Let’s consider the case of Chinese migration throughout Asia. By the standards of European colonization, Chinese migration post-1500 has been relatively (I emphasize relatively) peaceful. The non-Chinese residents of these countries tended to have lower ancestral SAT scores than Chinese residents, so we can ask: did Asian countries with a higher percentage of Chinese-descended migrants end up economically freer?...

Overall, the relationship between a nation’s percent population of Chinese descent in 1980 and current economic freedom is strongly positive. Singapore, Hong Kong, and Taiwan, the countries with the largest percentage of post-1500 Chinese immigrants, are the freest. Hong Kong, which had only a few thousand Chinese residents before the British arrival, is now the economically freest country in the world. Malaysia (a third of whose residents are of Chinese descent) and Thailand (10 percent) are next, and Malaysia is clearly the freer of the two. The remaining countries, Laos and Myanmar, are substantially less economically free than Singapore...

Economists have long known that some of the strongest statistical predictors of long-run national prosperity have been “percent Confucian” and “percent Buddhist.” A famed paper coauthored by Xavier Sala-i-Martin demonstrated that conclusively. It’s time for scholars to investigate whether, for most countries, a pro-Confucian migration policy is a good option...

Second-generation immigrants to the U.S. are more likely to favor income redistribution policies if they come from a country where the average citizen today also favors more redistribution. In this case, attitudes migrate, so heavy immigration from pro-redistribution cultures will tend to boost a nation’s number of pro-redistribution citizens decades later. More importantly, the same holds for trusting behavior: A study published in the American Economic Review, provocatively entitled “Inherited Trust and Growth,” finds that

…inherited trust of descendants of US-immigrants is significantly influenced by the country of origin…of their forbears…

So trusting attitudes migrate. And the link from trust to economic performance is well-accepted at this point: One famous paper, “Does Social Capital Have an Economic Payoff?” [Answer: Yes] is now routinely cited in economics textbooks. And why do low-trust societies generate worse economic performance? One reason is that low-trust individuals demand more government regulation...

In low-trust societies, people want someone checking up on untrustworthy businesses and individuals, and a strong government is one way to do just that. Together, this literature suggests that migration from low-trust societies will tend to hurt long-run economic performance, partly because low-trust individuals demand more government regulation...

…on average familistic values are associated with lower political participation and political action. They are also related to a lower level of trust, more emphasis on job security, less desire for innovation and more traditional attitudes toward working women...

Of course immigrants don’t just become voters: they sometimes become taste-makers, opinion-setters. As immigrants join the culture, they start to shape the culture. That means that immigrants and their descendants may shape political opinions the way they often shape people’s opinion about food: Migrants start eating some of the foods of the country they move to, but at the same time older residents start trying some foods from immigrant cultures. There’s a mutual exchange, and behavior meets somewhere in the middle...

Immigrants and their descendants will shape a political system isn’t by directly bringing their own attitudes into the voting booth: It’s also by shaping the political attitudes of their fellow citizens. That’s what happens in a melting pot: We all become a little like each other. So if we really are shaped by our neighbors, then we have yet another good reason to choose our neighbors wisely...

Some critics will argue that perhaps “this time is different”, and that even if immigrants import their cultural attitudes to their new homes, maybe they’ll leave those views just outside the voting booth. Perhaps, when it comes time to vote, migrants completely conform to their new home countries.

Here’s one way to check this “New Voters = No Change” theory: Look at times when large groups of individuals were suddenly given the vote, and then check to see if government policies changed within a few years. Even better, only look at large groups of individuals who had been living somewhat peacefully in the nation for decades. Here’s one such case: The women’s suffrage movement across Western civilization. This extension of the franchise has been heavily studied by economists: The best-known paper draws on the fact that different U.S. states extended the vote at different times to create a kind of natural experiment. It turns out that, contrary to the “New voters = No change” theory, giving the vote to women really did change government in a more progressive, expansionist direction...

Women did not quietly, meekly vote for whatever the men around them supported. They had their own minds, and those minds, when empowered by the vote, moved policy in a more progressive direction. And notice that the longer-run effect was twice the immediate effect: Expanding the franchise to a group that favored more government spending indeed increased government spending, but it took decades to see the full effect. In U.S. history, new voters have mattered.

And this is no one-off study: the policy impact of female suffrage has been studied extensively...

Together, these three literatures provide a combination of big-picture and close-up evidence that if a country is choosing between high-SAT and low-SAT immigration policies, the high-SAT approach will yield big benefits in the long run. Individual countries will always be exceptions to the rule, so some countries taking the low-SAT immigration path will still look pretty good. But wise citizens don’t bet on being the exception: they bet on being the rule."


This suggests, among other things, what "Chinese Privilege" is really about
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