Wednesday, February 01, 2012

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.

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