Poverty and Geography: The Myth of Racial Segregation

Migration trumps race and place at Pacific Standard magazine.

Theme: Geography of income inequality.

Subject Article: "Return Migration and Geography of Innovation in MNEs: A Natural Experiment of On-the-Job Learning of Knowledge Production by Local Workers Reporting to Return Migrants."

Other Links: 1. "Wrong Way Nation."
2. "Graduate migration to cities displaces less well-educated."
3. "Density Boondoggles: Innovation Districts."
4. "Europe's brain drain in action: Incredible animation shows great cities emerging over the centuries as intellectuals and artists move across the world."
5. "What Can Hurricanes Teach Us About Socioeconomic Mobility?"
6. "People Develop, Not Places."

Postscript: Much of economic and community development practice takes conventional urban economic theory as a given. I was in that camp when I started blogging back in 2006. All of that changed when I read Robert Guest's book, "Borderless Economics: Chinese Sea Turtles, Indian Fridges, and the New Fruits of Global Capitalism." I can't put the genie back in the bottle. The problem with this line of thinking is that it undermines the rationale for a lot of redevelopment projects currently en vogue. It undermines the rationale for efforts to fight persistent poverty. I find myself embroiled in existential debates instead of a friendly exchange of constructive criticism. Migration is economic development. People develop, not places.

Connecting Neighborhoods, Not Nations: Small Geographic Scales of Globalization

The geography of globalization is quite small at Pacific Standard magazine.

Theme: Globalization and migration.

Subject Article: "Small proves beautiful at boutique banks."

Other Links: 1. "America's 1,000 Richest Neighborhoods."
2. "The Dozen Regional Powerhouses Driving the U.S. Economy."
3. "Welcome to a new world of risk-aware globalisation."
4. "Trust in Numbers: The Pursuit of Objectivity in Science and Public Life."
5. "Geography of the Legacy Economy: Mapping the Next Boom."
6. "Urban Islands of Poverty and Bowling With Strangers."

Postscript: I figure the genesis for this post started with the book "Borderless Economics" by Robert Guest. Migrants become agents of globalization. Brain drain is a good thing. Isolation (i.e. no people movement in or out) means crushing poverty. For Guest, the lines of global commerce are the pathways of migrants that connect two places and unleash innovation. But Guest's geography is one of international migration connecting two countries. What about within a country such as the United States? Some places are isolated (e.g. Rust Belt cities). Even within the most globalized cities, neighborhoods are left behind. One doesn't move from Cleveland to New York City. One relocates from Shaker Heights to Greenpoint. Two neighborhoods are connected, enabling a back flow of globalization and, I contend, gentrification.

Density And Talent Supermarket Metros

We know cities make talent more productive. Concisely put, better to work in an urban area than a rural one. The returns are so much greater in a city. The density dividend:

In 1993, James Rauch wrote a seminal paper showing that holding individual education constant, wages rise with the skills of metropolitan areas. Enrico Moretti has taken over this topic and written sophisticated papers that look both across metropolitan areas and within firms, showing that supermarket workers get more productive when better workers are in their shift.

If you read that paragraph carefully, you should note there is no mention of a density dividend. The quality of the workers in the room or neighborhood makes all the difference. Yes, proximity matters. But that is a function of distance, not density.

If you are looking for better workers, hire international migrants. Just so happens that dense cities do a great job of attracting talent from a bigger geographic cache. That's the birthplace diversity dividend. The movers are the shakers.

Such observations lend themselves to natural experiments. Take a dense city, such as Nairobi, Kenya, and find the neighborhood with the most migrants. That's the urban economic engine:

Depending on whom you're talking to, the Eastleigh market is either a tangle of back alleys where Islamist terrorists and pirates go to launder money, or it's one of the brightest spots of African capitalism, a dynamic 24-hour shopping center that's the only place for hundreds of miles where you can buy new jeans and sneakers at 2 in the morning.

Part of the reason Eastleigh attracts such investment, and such suspicion, is that Somalis make up the majority of people doing business there.

"When you come to Eastleigh, you feel that you are in Mogadishu or in other parts of Somalia, so you don't feel that you are an outsider," says Mohammed Shakul. "You feel at home." ...

... "The Kenyan government started to actively question what is the nature of this money," Kantai says. "And part of the questioning was motivated by the American counterterrorism push in East Africa."

He says what a Kenyan audit uncovered was $2 billion being quietly piped into Eastleigh through Somali channels — this in a year when Kenya's total GDP was about $40 billion.

"In this way, the Kenyan government began to understand the size of Somali capital. And one of the reactions, and this is a natural reaction from any government, was absolute panic," Kantai says. "It's like, how is it possible, that there is this kind of money, floating about, and we don't know about it?"

He says Kenya's reaction did not have to be one of fear — it did, after all, discover that its economy was 5 percent bigger than originally thought.

The Eastleigh neighborhood is more open to global capital flows. That's the "Borderless Economics" dividend. You can find many other similarly dense places in Nairobi. They aren't producing 5% of Kenyan GDP.

However, better to have Eastleigh in a big, dense global city than in one of the globalization backwaters. Somalis are more likely to run into top tier talent from other parts of the world. The quality of collision is much better. The question of density is rather beside the point.

The End Of Density

Cities are sacred and profane. As students of urban geography know, great density was abhorred. The masses crowded together and created a petri dish of disease. Thomas Jefferson extolled the virtues of the yeoman farmer:

He told James Madison: "I think our governments will remain virtuous for many centuries as long as they are chiefly agricultural; and this will be as long as there shall be vacant lands in any part of America. When they get plied upon one another in large cities, as in Europe, they will become corrupt as in Europe."

Jefferson disparaged the urban. In the Age of the Creative Class, great density is sacred. Jefferson's contemporary counterpoint is Jane Jacobs:

What are proper densities for city dwellings?  … Proper city dwelling densities are a matter of performance … Densities are too low, or too high, when they frustrate city diversity instead of abetting it …

Very low densities, six dwellings or fewer to the net acre, can make out well in suburbs …  Between ten and twenty dwellings to the acre yields a kind of semisuburb …

However densities of this kind ringing a city are a bad long-term bet, designed to become a grey area. …

And so, between the point where semisuburban character and function are lost, and the point at which lively diversity and public life can arise, lies a range of big-city densities that I shall call “in-between” densities.   They are fit neither for suburban life nor for city life.  They are fit, generally, for nothing but trouble …

I should judge that numerically the escape from “in-between” densities probably lies somewhere around the figure of 100 dwellings to an acre, under circumstances most congenial in all other respects to producing diversity.

As a general rule, I think 100 dwellings per acre will be found to be too low.

Jacobs turns American Exceptionalism on its head. The urbanist reverence for density is a geographic fetish, as was Jefferson's utopian ideal. Such policy thinking is density for density's sake. Tony Hsieh's magic number for innovation:

Tony Hsieh talks about his Internet juggernaut Zappos in the same way that urban planners talk about cities. In fact, the language is uncanny. He believes the best ideas – and the best form of productivity – come from "collisions," from employees caroming ideas off one another in the serendipity of constant casual contact.

This is only achievable through density, with desks pushed close together in the office, or – in the case of Hsieh’s ambitious plans to leverage the new Zappos headquarters to remake downtown Las Vegas – with company employees and community members colliding into each other on the street. For the kind of "collisionable" density he’s looking for in downtown Vegas around his company, he figures the neglected area (not to be confused with the Vegas Strip) needs at least 100 residents per acre. ...

... His evolution in thinking, he says, comes more from his earlier days as a party planner. Close one bar in the corner of a room for example, he says, and you eliminate congestion points and enable people to better flow through a party. The challenge is all about creating circulation and serendipity.

Emphasis added. Fittingly, Hsieh's density evangelism comes from a misunderstanding. How many people you pack into a room isn't important. It's all about circulation. A party with less density and better circulation is better for knowledge exchange. Isolation (i.e. corner office), not lack of density, is the problem. The redevelopment of downtown Las Vegas is based on a poorly understood metaphor.

North Korea could build the densest city in the world and it wouldn't matter:

Of the 70-odd countries I've reported from, North Korea is perhaps the most illuminating. The world's last Stalinist dictatorship is hermetically sealed from the outside world. Hardly anyone is allowed out, and hardly anyone is allowed in (it wasn't easy getting a visa.)

Because North Korea shuts out people, it shuts out ideas. That's one big reason why it is a starving backwater. Its more open cousin, South Korea, which welcomes foreigners and sends hordes of students and businesspeople abroad each year, is 17 times richer.

South Koreans worry whether their children will make it to the right university; North Koreans worry whether their children will make it to the age of five.

The central message of my book, Borderless Economics, is that when people move around, they spread new ideas, mostly for the better.

For example, the world's cheapest fridge was born of a marriage of minds between Indians in America and Indians in India. Three Indian-American engineers (Uttam Ghoshal, Himanshu Pokharna and Ayan Guha) were working on a cooling device, based on technology used to cool laptops, that they thought might work in a fridge. One of them had trained at IBM, so he knew a thing or two about computers.

While back in India visiting relatives, they decided to show their design to an Indian manufacturer called Godrej and Boyce. It so happened that Godrej was already working on a super-cheap fridge for poor rural Indians. The two teams joined forces and produced a little fridge called the Chotu Kool that will sell for a mere $70 - less than half the price of rival fridges.

The circulation of people will beat density every time. There is nothing inherently magical about cities and density. Through people, a collision of two places can happen. Such serendipity is much more likely in South Korea than North Korea, density be damned.

Viet-Kieu Economic Development

Talent is returning to the places their parents left behind. The trend is evident in the Rust Belt. It's also a global phenomenon. See the exodus from Chicago. Add to this emerging narrative of globalization the reverse migration from the United States to Vietnam:

Here, I can be noticed because I read stuff in the U.S. faster, and then I can adapt it here and say, “Okay, in America they're doing this, and this is how it applies in Vietnam,” and that's a big part of what my career has been in Vietnam. It's like creating opportunities versus copying opportunities. It’s almost how I would categorize it here.

Chris Tran is describing the same kind of economic boom Robert Guest explores in his book, "Borderless Economics." Migration is not a zero-sum game. Brain drain doesn't exist. Two worlds are connected. Both benefit.

While there are important difference between transnational talent flows and domestic migration, growth from connectivity is universal. Tran's career is in between Vietnam and the United States. Similarly, Bob Collins (subject of yesterday's post) straddles Syracuse, NY and Berkeley, CA. The Rust Belt never lost him. But Syracuse doesn't know how to leverage that talent migration. Vietnam does:

Ling: In fact, Park says, foreign governments are purposely making it more attractive for Americans of their ethnic descent to move back. Thanh Nguyen is founder and CEO of a professional networking website in Ho Chi Minh City. It's aimed specifically at professionals with business interests in Vietnam. She says Viet-Kieu, the term for Vietnamese who live overseas, are welcomed with open arms.

Nguyen: So if you are Viet-Kieu and you come here with certain advantages in terms of knowledge and experience, but you compete to a local one, then you have more advantages to get a good job, especially in the sectors had mentioned before like hospitalities, in service, I.T., finance, and maybe media.

In the Rust Belt, return migrants are not welcomed with open arms. In fact, most shrinking cities have no idea these repats are back in town. The centerpiece of workforce development is talent retention. Outmigration, brain drain, is a failure.

Cities such as Syracuse are ignoring economic development opportunities. Don't plug the brain drain. Leverage it.

London Is Dying

Still reeling from the shock of the financial crisis, the world continues to get flatter. Talent that used to agglomerate in Creative Class cool cities is fleeing to cheaper locales as the convergence of the Innovation Economy accelerates. London is the latest evidence of this sea of change:

London laid the foundation for my profession. The City’s legal system has boasted a global reputation for excellence ever since, and its model has become the envy of the world. But this, perversely, is the problem. London has become the victim of its own success. International centres, particularly in Asia, are seeking to attract legal and arbitration services, once rooted firmly in the City, by copying its model.

Singapore and Hong Kong are prime examples, with the latter inheriting its legal framework directly from the British more than 150 years ago. With 1,300 foreign lawyers now stationed in Hong Kong, a former British colony that owes so much to the City’s system is now positioned to supplant it.

What is the appeal of practice in the east? In a word, cost. On this London has been the author of its own decline, particularly when it comes to arbitration services. The attraction of arbitration lies in its speed and low cost relative to court-based litigation. Yet the City’s arbitration system is increasingly mimicking the practices of its more expensive legal cousin. Fees in the UK are on the rise, and, as more businesses look to arbitration services, cheap international alternatives to London are competing for their custom.

From the linked text in the first paragraph:

Firms are moving high-volume work to other cities such as Belfast, while new forms of legal process outsourcing, or LPO – some of which firms are investing in – are emerging.

The economic geography that Richard Florida made famous is dying. The iconic metros of each economic epoch are victims of their own success (e.g. Detroit and the Manufacturing Economy). We are entering a new era that will have its own group of winners (and losers) as talent agglomerates someplace else for reasons that are not yet clear. Why pay London rents when your firm can be just as effective in Belfast or Wheeling, West Virginia?

I think we can bank on more regions competing for the same talent that used to only gravitate towards alpha global cities such as London, which will make the cheaper locations even more attractive. A concurrent trend is the maturing of social media technologies as our soft skills catch up with recent innovations:

For Cowen, people who can find inexpensive, tasty food are the same type of people that use information to make themselves more productive economically. In his book The Age of the Infovore (2010), he argues that the internet means information can be better absorbed, organised and deployed than ever before. “That’s where contemporary innovation is at, in lieu of the flying car, or the teleporter, or the trip to Mars.”

Cowen is walking-talking-tweeting evidence for his theory. Why, then, apart from an early surge in the 1990s, hasn’t the internet led to more measurable economic gains? “My view of the internet is that it is way overrated in what it’s done to date but considerably underrated in what it will do.” He notes that it took decades for earlier major inventions to have institutions built around them, such as roads for cars and grids for electricity. “If you’re an optimist about what has come before, you tend to be a pessimist about what’s on the way.”

Emphasis added. The Flat World hype was premature, not wrong. As for the world is spiky, that's yesterday's economy. Innovation is diffusing, not agglomerating.

If you want to see where we are headed, I highly recommend "Borderless Economics" by Robert Guest. Brain drain is dead. People develop, not places. Exporting talent is better than attracting talent.

RoData Is Rust Belt Chic

I consider Pittsburgh to be a model of a network economy. The outmigration of talent with a shared culture serves as infrastructure for commerce. These pathways are lines of trust that facilitate transaction. As Robert Guest argues in his book "Borderless Economics", trade follows people.

Missing from this abstraction is technological innovation. Transnational ties demand new forms of communication. Various social media platforms can support diaspora communities. Despite this evolution, face-to-face interaction still rules. Pittsburgh is a major exception. Wherever yunz go, you will find lots of other yinzers. It's a domestic version of China's talent export strategy. Geopolitical domination can't be far behind.

Located in Pittsburgh, Sharpsburg to be precise, is a company ready to put the region on the world map for the emerging Talent Economy. A little bit about RoData:

"The whole point of having a successful meeting is that the technology disappears" and lets content take center stage, said John Rodella, 55, the RoData CEO and other co-founder. He and Joe Rodella are brothers who grew up in Penn Hills.

They have evolved the business right along with the video-conferencing industry at large, steadily advancing the technology and scope of their full-service offerings. Even in the economic downturn, RoData has kept a 23-employee workforce and a book of 600 customers across the government, education and private sectors.

Last year, the video-conferencing industry generated revenue of $1.1 billion last year, according to International Data Corp., a Framingham, Mass.-based research firm. The industry is predicted to grow 18 percent this year to total revenue of $1.3 billion, IDC said in a March report covering North America.

The video-conferencing boom is transforming how we do business. The technology is geared towards transnational collaboration. It's tailor-made for Pittsburgh. For example, Polycom (a video-conferencing software company) made a major announcement yesterday:

Polycom, as part of a slew of announcements in New York on Monday, is stressing a new plan to do that. The company is unveiling what it calls its RealPresence CloudAXIS Suite, to help set up videoconferencing sessions among users of systems from companies such as Cisco, Facebook, Google, and Skype (now part of Microsoft).

The technology works by drawing information from what amounts to the user directories of the various systems. Connecting those users starts by sending them a link to join a conferencing session that takes place through a Web browser, rather than through proprietary software.

“We intend to frankly change the face of the collaboration industry,” says Andy Miller, Polycom’s CEO.

Emphasis added. Given the size and quality of Pittsburgh's brain drain, collaborative technologies should be a boon to the region. Over the years, a lot of talent has graduated from Carnegie Mellon University and headed out to Los Angeles. That migration has provided a huge return on investment. Aside from Pittsburgh serving as a set for major Hollywood films, the city boasts a nascent entertainment-tech cluster. Among the most visible evidence of this windfall is the Walt Disney research lab, which demonstrates the wide-ranging applications stemming from animation innovation. Jessica Hodgins is the director there. More germane to this post, she also oversees the Disney labs in Cambridge, MA and California. Pittsburgh is the hub, not another outpost.

RoData is selling what Hodgins could use to run those geographically dispersed labs. Thanks to talent production, Pittsburgh is an important node for many industries. The city would serve as innovation HQ for more than Disney given the development of video-conferencing technology (see above Polycom release). But that's not what drew my attention to RoData. I am attracted to Rust Belt Chic:

The Innovation Economy is shifting from divergence to convergence. The costs of innovation are hitting a ceiling that make Flat World Rust Belt cities attractive to companies such as Electronic Arts. I saw evidence of this yesterday in Sharpsburg, PA (near Pittsburgh) while touring RoData, which is housed in the old Fort Pitt brewery. I'll have more to say about that visit in a future post. Suffice to say for now that RoData is cashing in on the Rust Belt Chic dividend. Talent is ample and inexpensive. So are the gritty cool environs, where innovative talent wants to work. Leaving Silicon Valley for Pittsburgh never looked better.

This post is the future one I promised way back in August. RoData reminds me of how the Youngstown Business Incubator (YBI) has anchored that city's downtown revival. Sharpsburg is an undiscovered gem in search of an economic raison d'être. The Fort Pitt Brewery housing RoData is Art Deco cool. It's the kind of place that suits the next generation of knowledge workers. As more Rust Belt Refugees return home, Sharpsburg is the kind of place I imagine them living. RoData is where they will work.

The YBI is laser-focused on B2B software. It's a tech cluster. Likewise, RoData can serve as the foundation for what I have called distance trust technologies. The need for face-to-face interaction is a problem to overcome, not a law of geography. Sharpsburg could be the location of associated companies dealing with long-distance knowledge transfer. Different parts of Pittsburgh could specialize in different kinds of innovation. RoData points towards that neighborhood's competitive advantage, which is still in the wheelhouse of Pittsburgh's talent production competitive advantage.

To give you a better idea of the synergies, consider the future of telemedicine:

“Another revolution in the delivery of health care,” is how Christine Whipple, executive director of the Pittsburgh Business Group on Health, characterized telemedicine during the group’s annual symposium on Thursday at the Marriott City Center, Downtown.

A survey of businesses released last month by Towers Watson found that 9 percent of companies in the United States are planning to offer telemedicine as part of their health insurance plans next year. And 27 percent are considering adding it in 2014 or 2015.

Telemedicine, which is essentially an online video consultation with a doctor for non-emergency treatment, is gaining traction because it can help deal with two increasing problems in health care: Access to doctors and high costs, said Karl Ulfers, vice president of consumer solutions for Optum Healthcare Solutions, a company that provides telemedicine services.

Given Pittsburgh's demographic challenges, UPMC and Highmark must figure out ways to export services. Eds and meds need effective video-conferencing. Just when you think this boom must bust, along comes another disruptive technology. RoData helps to fill that niche. Developing such a cluster in Sharpsburg would be an even better boost to the regional economy.

Why College Degrees Matter

Higher education is wasted on Europeans. The magic is migration. Enrico Moretti on the geographic mobility distinction between Europe and the United States:

This willingness to relocate is a large factor in America's prosperity, and it always has been. Today, about half of American households change addresses every five years, a number that would be unthinkable in Europe, and a significant number relocate to a different city. About 33% of Americans reside in a state other than the one they were born in, up from 20% in 1900.

This staggering degree of mobility has both positive and negative effects. On the one hand, moving has social and personal costs. Compared with Europeans, Americans tend to live farther from their parents and siblings. They are less attached to their neighborhoods and less familiar with their neighbors. But there are also advantages to mobility: If the economic conditions in a region aren't particularly good, Americans tend to look for better opportunities somewhere else. By contrast, Italians and other Europeans tend to stay put. They give up career opportunities and higher salaries to be close to their parents and friends.

Among Americans, however, there are large differences, with some groups much more willing to move than others. At the time of the Great Migration in the 1920s—when more than two million African-Americans abandoned the South for industrial centers in other regions—less-educated individuals were more likely to migrate in search of better lives. Today, the opposite is true: The more education a person has, the more mobile he or she is. College graduates have the highest mobility of all, workers with a community-college education are less mobile, high-school graduates are even less and dropouts are the least mobile of all.

Emphasis added. The inertia of Europeans, particularly Italians, is remarkable. More people graduating from university aren't overriding the dominant cultural disposition. Becoming better educated doesn't matter as much as it does in the United States. Why? People develop, not places.

An article in the New York Times maps the sorting of college educated America. Dayton, Ohio is held up as a loser in this migration because it can't retain graduates. This analysis is wrong. More apt would be the city's inability to attract talent. Regardless, I've noticed that we struggle to understand why a concentration college degrees in certain places has such a tremendous positive economic impact. Richard Florida defends his Creative Class theory:

The key mechanism at work here is the city itself. Dense and interactive connectors, cities are economic and social organizing machines. They bring people and ideas together, providing the platform for them to combine and recombine in myriad ways, spurring both artistic and cultural creativity and technological innovation, entrepreneurship, and economic growth.

This is what Jane Jacobs taught us long ago in her book The Economy of Cities. This is what the Nobel Prize winning economist Robert Lucas meant when he formalized Jacob’s argument into a theory of "human capital externalities" that stem from the dense clustering of people in cities as the basic mechanism of economic growth. Cities themselves power economic progress, driving artistic, technological, and overall economic growth at one and the same time.

It’s always been that way, as detailed archaeological and anthropological studies show. Stephen Shennan at University College London, for example, looked at the sudden spikes of artistic and technological progress that occurred in Europe, Africa, and the Middle East throughout prehistory and concluded that what they all had in common was the growth of local population densities. 

Emphasis added. That's a powerful argument. It's also wrong. The very act of moving to a city powers economic progress. Greater density will not help the diffusion of ideas and culture. Very dense neighborhoods with low geographic mobility (i.e. churn) tend to be poor, not rich. If Florida was right, the relative lack of geographic mobility in Italy wouldn't matter.

That brings me to Alan Berube of Brookings, whose number crunching informs the NYT piece. The dominant narrative is the density dividend:

So what’s going on? A mixture of powerful economic phenomena are boosting the value of living around other college graduates. Young educated workers will change jobs numerous times over their careers, which makes living in a large, “thick” labor market with diverse opportunities more appealing. The same force leads an increasing number of educated two-earner couples to these same sorts of large metro areas. Living in a highly educated metro area boosts one’s own acquisition of human capital and earning power, and leads to better employment outcomes for workers across the education spectrum.

Like Florida, Berube is standing on firm research ground (see links in above quoted passage). Without migration, there are benefits from a college degree. With migration, there are benefits from leaving a weak job market for a strong job market. I'm interested in isolating the effects (i.e. benefits) from simply relocating. In other words, even moving to a weaker job market would be worthwhile. The bottom line would be increasing geographic mobility, which pushes beyond the boundary of Enrico Moretti's analysis.

In the arena of international economic development, impeding migration and plugging the brain drain are considered to be a bad idea. Robert Guest expands on this policy innovation in his book, "Borderless Economics". I've blogged about it on a few occasions. He makes a case for increasing geographic mobility, not increasing density or raising educational attainment rates. In terms of territory, migration is a story of winners (Raleigh) and losers (Dayton). In terms of people, migration is also a story of winners (migrants) and losers (non-migrants). Migration is good even if everyone is leaving the Rust Belt.

Rural-to-urban migration, not a boom in higher education, is driving economic development in most of the world today. In the United States, the stuck tend to have less than a college degree. The problem is a lack of geographic mobility, not access to a university. We might concern ourselves with workforce development for jobs that don't demand a bachelor's. But our territorial fix, the same that plagues Florida's troubled Creative Class theory, diverts our attention away from the benefits of migration. Dayton needs migrants, not college graduates.

Brain Drain Is Dead

To be anti-brain drain is to be anti-immigrant. Detroit is the poster child for obsessing outmigration. Read about the rampant nativism (against domestic migrants) gripping the city. That's what happens when "patches of earth" matter more than people. Of course, I'm talking about income per natural:

[Clemens and Pritchett] want to call attention to the fact that migration has made a lot of migrants richer. Traditional measures of income tend to mask this fact. In rich countries, we usually ask whether migrants improve the lot of existing residents, not whether migration improves the lot of migrants. Meanwhile, the welfare of migrants rarely figures in debate in developing countries or in development institutions such as the World Bank, because the migrants have gone.

Simply because of the way the discussion is framed, the benefits to migrants tend to be ignored. Imagine a man who moves from earning 10,000 euros in Poland (an above-average wage) to 15,000 pounds in the U.K. (a below-average wage). Simple arithmetic says that he has reduced the average income of both countries; that could be true even if he has impoverished nobody and enriched himself a great deal.

Keep that Poland-to-UK tale in mind. Now consider Tampa brain drain to Silicon Valley (or Charlotte, or Atlanta):

The Tampa Bay Business Journal points to a Dice survey putting the average IT salary in Tampa at $72,802, certainly not the six-figure average of Silicon Valley, but not the dire picture that the CNNMoney article paints, either. The myfoxtampabay article, however, refers to the Tampa “Brain Drain.” It quotes Kaushal Chari, professor of information systems and decision sciences at the University of South Florida, saying that graduates with deep technological skills tend to move to cities such as Atlanta and Charlotte, where there are more tech opportunities with higher salaries.

Imagine a woman tech worker who moves from earning $80k in Tampa (an above-average wage) to $95k in Silicon Valley (a below-average wage). Talent migration is a losing proposition for both places. From the perspective of the migrant, she's making 20% more by moving. What brain drain?

That's my main takeaway from Robert Guest's book, Borderless Economics. I finally finished reading it over the weekend. Income per natural is featured in Chapter 5, "Networks of Trust: How the Brain Drain Reduces Global Poverty." The act of migration is economic development. We're just too focused on turf to recognize it.

The main point of the book is to convince the reader that a cost-benefit analysis of international migration supports the admission of more foreigners to the United States. The destination country isn't stealing brains from the developing world. Instead, it is fighting global poverty much more effectively than providing foreign aid.

Guest does much more than demonstrate how migrants benefit from relocation. Both sending and receiving countries receive a substantial bump. The brain circulation between India and the United States, as well as between China and the United States provide a solid foundation for his argument.

I think Guest's book applies equally well to domestic migration. Eventually, regional economic development will get wise to what is going on in the international economic development arena. Reading Borderless Economics would be a strong kick in that direction.

Migration Versus Population Growth

Better to boom with migrants than babies. Conventional wisdom associates population growth with economic growth. This perspective is unsustainable. I also think it is wrong. The simple act of moving to a new place is economic development. The United States is in trouble:

For the last 20 years — from the end of the cold war through two burst bubbles in a single decade — the U.S. has been casting about for its next economic narrative. And now it is experiencing another period of panic, which is bad news for much of the work force but particularly for its youngest members. The U.S. has always been a remarkably itinerant country, but new data from the Census Bureau indicate that mobility has reached its lowest level in recorded history. Sure, some people are stuck in homes valued at less than their mortgages, but many young people — who don’t own homes and don’t yet have families — are staying put, too. This suggests, among other things, that people aren’t packing up for new economic opportunities the way they used to. Rather than dividing the country into the 1 percenters versus everyone else, the split in our economy is really between two other classes: the mobile and immobile.

Having lots of babies won't do an inert and isolated community much good. The growing numbers of people is more burden than boon. There is no density dividend for such a place. Welcome to North Korea:

Because North Korea shuts out people, it shuts out ideas. That's one big reason why it is a starving backwater. Its more open cousin, South Korea, which welcomes foreigners and sends hordes of students and businesspeople abroad each year, is 17 times richer.

South Koreans worry whether their children will make it to the right university; North Koreans worry whether their children will make it to the age of five.

The central message of my book, Borderless Economics, is that when people move around, they spread new ideas, mostly for the better.

I'm still in the middle of reading Robert Guest's book, "Borderless Economics". Guest is arguing that when you squash migration, you kill innovation. You get North Korea. The United States isn't transforming into North Korea. Immigration to this country is a tremendous economic asset. Guest makes this point in his book. He's advocating for more liberal immigration policies throughout the world. Migration fuels economic growth.

My point is that the same is true on the domestic front. Exporting talent like China does (again, read Guest's book and see this article that he recently wrote) is a great way to catalyze economic development. Rick Steves makes a similar case about more Americans studying abroad:

Educators are particularly concerned that the lack of opportunity for students from poor socioeconomic backgrounds will cause a "global divide" between students who've benefited from a global education … and those who haven't. And students for whom foreign travel is not easily affordable are the ones who benefit most from the experience. As a society, we can help enrich the education of our younger generation, and brighten their futures, by making this experience more accessible. The Paul Simon Study Abroad Act, currently being considered in Congress, would dedicate $80 million annually to incentivize study abroad, with the goal of encouraging a million American students from a wide range of backgrounds to study abroad each year.

I'd go further. I think we should  incentivize Americans to live and work abroad. Allow college students to spend their last year abroad and graduate while in a foreign country. Help those students find work once they do finish school. Let them spend a year or two developing a network. Our country doesn't have enough emigration.