Friday, March 30, 2012

Zero-Sum Talent Migration

Territorial (i.e. place-based) thinking lends itself to horribly discriminatory and self-destructive policies. We count the jobs available in the homeland. Are there enough openings for adult-aged workers? Economix (New York Times) offers a useful history lesson:

Low employment was a tremendous problem during the Great Depression of the 1930s. That problem created an excuse for some shameful and ultimately regretted labor market policies, such as the barring of married women from some jobs. Reminders of this pattern are already starting to be seen in today’s recession: the Employ American Workers Act (a part of the stimulus bill) makes it difficult for companies helped by the federal bailout plan known as TARP to hire skilled immigrants. ...

... Thankfully, marriage bars are recognized today to be both politically and economically incorrect. But the “zero sum” theory still thrives in political rhetoric, as in “Take This Job and Ship It,” a book by Senator Byron L. Dorgan, which claims that every job created for our trading partners is one less job for Americans.

When we employ a place-based approach to economic development, we engage in the same zero-sum thinking that inspired the marriage bars. The "theory" still thrives in economic rhetoric, as in "plug the brain drain". I'd characterize most labor market policies celebrated today as shameful and regrettable. What made sense during the Great Depression still makes sense today. We have no reason to be thankful.

Every time you see net migration discussed, remember the barring of married women from employment. At the next ribbon cutting for the latest urban amenity located downtown, recognize the zero-sum theory that supports the boondoggle. People develop, not places.

1 comment:

Stephen Gross said...

Some quick thoughts on zero-sum economic thinking:

* Economic growth has a magical quality to laypeople.
* Economic growth seems to manifest ex nihilo.
* Economic transfer, however, is very understandable; money shifts from one person/institution/location to another. (Gambling is a great example).
* Since economic growth--especially growth predicated on technological innovation--is unpredictable, it's much easier to focus on relocation of wealth.
* Competition is well-understood by ordinary Americans.
* Competition makes sense; lower cost, win more consumers.