David R. Henderson  

Henderson on Robert Guest

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His basic argument is that migration of people across borders creates, in the United States particularly, not so much a melting pot as a "rich stew." (This is not a quote from the book; it's actually from Cato Institute senior fellow Tom Palmer, but I think Guest would like it.) Immigrants to the United States also benefit the countries they left--in two ways. The first way is that immigrants collaborate with people in their home countries, giving them access to technology that the immigrants have discovered in their new, wealthier country. Guest's best examples are of achievements of emigrant Indians--in particular, the "Indian fridge" mentioned in the book's subtitle. A Mumbai-based manufacturing firm, he writes, "has developed a $69 refrigerator--the world's cheapest." The breakthrough occurred because three emigrant Indian engineers, visiting their home country, wangled an invitation to see an official of the Indian firm so that they could show him their new technology.

The second way immigrants help their kinsmen is by sending them money. Guest notes that remittances to people in poor countries surged from $31 billion in 1990 to $316 billion in 2009. He quotes the finding of the World Bank's Dilip Ratha that remittances are now larger than foreign direct investment and more than twice as large as foreign aid. Because almost all foreign aid is from one government to another, most of it is wasted. Remittances, on the other hand, are typically sent directly to relatives. Guest writes that it is common for an engineer whose annual income is $5,000 in a poor country to move to a rich country, make $30,000 a year, and send $5,000 of it back home. Guest writes, "His homeland is substantially better off, since when he lived there, he spent much of that $5,000 on himself. Now all of it goes to others."


This is from my review [scroll down about half way] of Robert Guest's Borderless Economics: Chinese Sea Turtles, Indian Fridges and the New Fruits of Global Capitalism. I loved the book and I also have a few criticisms.

Another highlight:

Many Americans worry that the United States will lose its dominant place as an economic power. Not Robert Guest. He celebrates the wealth that the average American has compared to even the average German or Frenchman. Moreover, he notes, Americans welcome foreigners more than pretty much any other country. Virtually anyone can find a niche, "whether she is a socially conservative Arab or an ostentatiously gay Nicaraguan." One of our greatest strengths is religious tolerance. Former Dutch citizen Hirsi Ali, for instance, who took great risks in the Netherlands to make a film critical of Islam, moved to America to be safer from Muslim threats. Ali reports that when American Christians find out she is an atheist, "They don't try to kill me. They say they'll pray for me." Although many Americans now worry that the United States will become like France, Guest doesn't, pointing out that the United States doesn't have ghettos "full of permanently jobless and alienated young immigrants." Immigrants to America are too busy making a living.

One criticism:
To his credit, Guest does note one other cause of Muslims' anger: "Obama's copious use of drone-fired missiles to assassinate suspected Taliban leaders in Pakistan, a tactic that kills hundreds of innocents." He also criticizes the TV series 24 for popularizing the idea of torturing alleged terrorists. The most cryptic comment in the whole book, though, is his statement that 24 "popularizes the notion that American presidents just pick up the phone and have people murdered." Is it a bad idea to popularize "notions" that are true? President Obama has claimed, and exercised, the power to kill Americans abroad whom he suspects of being terrorists. On Obama's orders, suspected terrorist Anwar al-Awlaki was killed in a drone attack last fall, and his 16-year-old son Abdul-Rahman was killed in another drone attack a couple of weeks later. The father may well have deserved to die (although I'm less sure of the son's desert), but it is difficult to square a presidential order that they be killed with the rights that they supposedly hold as U.S. citizens. I admit that I don't know whether Obama gave the order over the phone.



COMMENTS (10 to date)
Ken B writes:
Although many Americans now worry that the United States will become like France, Guest doesn't, pointing out that the United States doesn't have ghettos "full of permanently jobless and alienated young immigrants." Immigrants to America are too busy making a living.
Rather a weak point since the problem in France is predominantly with the second generation, "alienated young [children of]immigrants." The first generation immigrants to France were busy making a living too. This is why many worry about assimilation and culture, not jobs.
David R. Henderson writes:

@Ken B,
Interesting. I didn’t know that. Thanks.

Gene writes:

Those vast sums dropped into poor countries as remittances would, a Keynesian might say, act as a stimulus to those economies. (And unlike the US stimulus, would not be essentially a political payoff to favored constituencies.) It might be interesting for an economist to test that theory by studying those effects, though I wouldn't be surprised if it hasn't been done already ... has it?

Ken B writes:

David
Perhaps I am spending too much time chez Murphy but I am not sure if your comment is sincere or sarcastic! It looks sincere, which is what makes it suspicious ... I'd ask but then we'd have a recursion! Assuming it's sincere, here's an interesting bit.
I'm not sure the European problems are being duplicated here but it's a legitimate concern.

Ted Levy writes:

" I admit that I don't know whether Obama gave the order over the phone."

Apparently it requires a direct face to face order from the President along with a firm handshake. The Constitution is safe...

David R. Henderson writes:

@Ken B,
One thing my friends know about me is that I virtually never use sarcasm. The few times I’ve done so in a learning environment, I’ve regretted the effects.
@Gene,
Interesting thought. I think it pretty clearly is stimulus--it increases wealth, after all--but is not necessarily stimulus in the Keynesian aggregate demand sense.
@Ted Levy,
Alas.

Jeff writes:
Although many Americans now worry that the United States will become like France, Guest doesn't, pointing out that the United States doesn't have ghettos "full of permanently jobless and alienated young immigrants."

The U.S. has plenty of ghettos, full of permanently jobless and alienated people, young and old. Have recent immigration waves from Latin America and the Caribbean swelled their size and populations? The answer would appear to be "yes, at least to some degree." Street gangs like the Latin Kings and MS-13 aren't operating out of Bethesda.

rpl writes:
Those vast sums dropped into poor countries as remittances would, a Keynesian might say, act as a stimulus to those economies.
It's a mistake to try to compare remittances and Keynesian stimulus. Remittances bring real resources in from outside a society; therefore, they lack the "by your own bootstraps" characteristic of stimulus.
Ken B writes:

@DRH:
Yes I recall you saying something like that before. I thought you were being ironic.

:)

David R. Henderson writes:

@Ken B,
Seriously, though, part of my pleasure in doing the blog is the feedback I get from smart people who know things I don’t. In a speech I gave once at the Independent Institute when my book, The Joy of Freedom came out (the speech is on C-SPAN), when I was struggling for a fact that I knew but didn’t remember perfectly, about 3 or 4 people in the audience shouted it out at once. I said, “It’s fun giving talks to people who know things."

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