Ed Lotterman: High-initiative immigrants help U.S., even when they depress pay

Around my home in Minnesota, we joke about how a dumb Minnesotan moves to Iowa and raises the average IQ in both states. Iowans tell the same joke with the dolt moving the other way.

Old though it may be, the joke contains a kernel of truth about the economic and social phenomenon known as the “brain drain.” Migration of individuals with above-average education, leadership skills or entrepreneurial ability affects both the nation or state they leave and the one they move to.

The term “brain drain” is somewhat dated. It was better known in the 1960s when newly independent Asian and African colonies of France and England experienced outflows of some of their most educated citizens. In many cases, these people had been educated with scarce public funds and had taken up vied-after seats in national universities in their home countries. But, after graduation, the best and the brightest often headed to the United States or United Kingdom.

Many in affected developing countries viewed the phenomenon as just another case of rich countries exploiting poor ones.

One case was India, which soon after independence had established the Indian Institute of Technology as a world-class science and engineering school. But by its second decade, as high as 80 percent of early IIT graduating classes were working outside of India.

While the term “brain drain” strictly meant the migration of highly educated engineers and scientists, the more general effects of large migrations of all skill levels on the losing country involve the same issues — and indeed make the average IQ, and the potential associated with that, poorer.

The decision to emigrate is not one scattered randomly across individuals in a nation. People who decide to take on the daunting task of another culture and language tend to be more risk-taking and have higher levels of personal initiative. They may have better schooling and higher intelligence levels.

In 1993, I consulted for the U.S. Agency for International Development in Eastern Europe, advising former communist government enterprises on managing privatization. One collective farm manager in the southwest Czech Republic said, “All of my smart or hard workers slip across the border to work in Bavaria (Germany). All I have left are the dumb and lazy ones.”

Same thing today in Cuba, where I was last week. The pastor-president of a small Protestant denomination in Jaguey Grande, about 120 miles east of Havana, told me, “The youngest and most capable members of our congregations all try to go to Florida. So do our best pastors. We are left with the old, the poor and the indifferent.”

Sometimes internal conflict or high crime levels drive people to migrate. Working on a USAID project in Peru in the early 1980s, we used IBM for computer services. Getting a job with IBM was the highest aspiration of anyone graduating from a Peruvian university with a computer-related degree. They were the cream of the crop.

I left in 1982, at the onset of a debt crisis and insurgency that would drive that country into a nightmarish decade. Fifteen years later I talked with one of my old IBM friends. He told of a photo taken at a Christmas party at his house in 1982 that showed 22 Peruvian computer experts. By 1988, only two were still living there. Some have since returned, but most not.

This echoes the waves of Syrians and Lebanese, often Maronite Christians, who fled the oppressive yoke of the decaying Ottoman Empire some 120 years ago for opportunities in Brazil, Argentina and other South American countries. Their energy and business skills benefited the economies of destination countries, but many of the migrants would have stayed home if political freedom had been greater.

Current anti-immigration bluster aside, destination countries such as the U.S. benefit overall from high-initiative, high-intelligence immigrants. And yes, they probably do depress salaries in some high-tech sectors. And yes, U.S. citizens with masters degrees, who would have been able to get jobs at small colleges in the 1960s and 1970s, now cannot even apply because these institutions are flooded with applications from foreigners with freshly-minted U.S. doctorates seeking any alternative to returning to bleak prospects back home. So, as in most trade-off situations, not everyone benefits, but U.S. society as a whole still does.

Cheap transportation and effortless, instantaneous communication have altered the net flows of benefits, however. Many South Asian scientists and engineers who have made successful careers here return home to establish their own businesses. In many cases, they go back and forth, still working in our country and contributing to our economy, but also moving capital and expertise back to their home countries.

The economic effects of brain drains have been studied more extensively than the political ones. In Cuba last week, a friend said, “We have no Lech Walesa, no Vaclav Havel here, because everyone with the capability to fill such a role went to Miami instead.”

At the risk of angry emails from rural areas, note that the same dynamics can apply to migration within a country. There are many smart, hard-working people in my hometown, but when I look at who in my high school class of 1967 moved away and who stayed, it was not a random process. I have heard county commissioners and other rural legislators describe how outmigration of many of the most able young people is a chronic problem, and despite many initiatives to reduce it, there has been little improvement.

My hometown of St. Paul has many productive people born in the Dakotas and Montana who might have stayed had broader career opportunities or cultural and recreational amenities been available when they graduated from high school or college. Seattle has many from Montana west. These are our cities’ gain, but those states’ losses.

As with poor nations, modern transportation and communications do help. Boise is doing very well, because it is a much more attractive alternative to the high housing prices and congestion of metro Seattle than it was just a couple decades ago. And once the core of a high-tech sector becomes rooted, growth can snowball.

This clustering of business and technical know-how has its benefits. Taking a global view, when a resource such as highly skilled labor moves to a location where complementary resources of capital and technology are more abundant, or where legal and other institutions are more propitious to productivity, the global economy as a whole is better off. A computer engineer in Silicon Valley may well produce more value for global society than if back home in Lima, Peru or Srinagar, India. And some of that value does trickle back to their home country. But the old 1960s issue of the skewed distribution of benefits has not gone away.

Ministers of the Economy or Industry in poor countries face some of the same frustrations as legislators or local officials in rural areas of the United States. Neither has any easy solution, and perhaps never will.

This story was originally published January 16, 2016 at 2:36 PM with the headline "Ed Lotterman: High-initiative immigrants help U.S., even when they depress pay."