The New Shape of Immigration

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There has been a veritable blizzard of major news stories lately. Between the continuing crisis of the European Union, the spate of major rulings from the Supreme Court, and the continuing presidential election campaign, we’re all a bit overwhelmed.

But a recent report from the Pew Research Center bears immigration news worth noting and commenting upon.

The report, aptly called “The Rise of Asian Americans,” is a hefty tome indeed, at 215 pages chock full of data. It reveals that for the first time in history, the plurality of all new American immigrants now hails from Asia — primarily China (23.2% of all Asian Americans), India (18.4%), Japan (7.5%), Korea (9.9%), the Philippines (19.7%), and Vietnam (10.0%).

As recently as 2007, the plurality of immigrants was Hispanic, primarily from Mexico. That year, 540,000 immigrants were Hispanic, compared to 390,000 Asians. But in 2010, Asians were 36% of new immigrants, while Hispanics dropped to 31%.

This culminates the decade-long, precipitous slide in Hispanic immigration, which was at 1.2 million in 2000, fell to about half that in 2002, went up to about 800,000 in 2005, and has dropped steadily since, to less than 400,000 in 2010.

By contrast, the number of Asian Americans quadrupled between 1980 and 2010, and now stands at 18.2 million, counting native- and foreign-born, adults and children. (The Pew Center’s count is slightly higher than the Census Bureau’s, with the difference being that Pew counts people with only one Asian parent as Asian. That is nearly 6% of the population, quite a rise from the 1% it was back in 1965. (By comparison, non-Hispanic whites are 63.3%, Hispanics are 16.7% and blacks 12.3%). The report projects that by mid-century, the number of Asian Americans will hit 41 million.

Of course, this is just a projection by the Pew Center, which is certainly reputable, but obviously fallible. Still, these figures are suggestive.

The reasons for this shift are varied. There are relevant demographic shifts abroad, such as the drop in the birth rate in Mexico, which as recently as the 1960s was one of the highest on the planet, with the average woman having nearly seven children — higher even than Indian and Chinese women — but now is roughly the same as the US rate (a little over two children per average woman).

But the report mentions what is clearly the major factor: our nation’s continuing shift from a manufacturing to an epistemic or knowledge-based economy. Blue-collar jobs, especially the low-skilled ones, simply have been increasingly less in demand over the past quarter-century. And a prolonged recession and slow recovery such as the one we are enduring only increases the gap in employment levels between blue- and white-collar workers.

So the disappearance of a lot of blue-collar jobs, especially in construction, has meant that more opportunities have opened for Asian immigrants, who tend to have higher educational attainment than recent Hispanic immigrants.

Add to this another factor: we have tightened the southern border, which means that Asians, who tend to get more student and high-tech (H1-B) work visas, are now in a better position to come here.

A major factor in their success is the fact that Asian Americans have a lower rate of single-parent households than does the population as a whole (20% versus 37%). They are more likely to be married than is average for Americans (59% versus 51%), and have fewer births to single mothers (16% versus 41%).

However, of paramount importance is the level of higher education. Nearly half (49%) of all Asian American workers have a bachelor’s degree, which is more than half again as many as the average — 28% — for all American workers. For non-Hispanic whites, it is 31%, for blacks 18%, and for Hispanics 13%.

Asian students — both American-born and foreign — tend disproportionately to choose more technical college majors, which is no doubt another factor in their success. In 2010, they received 45% of all engineering doctorates awarded at American universities, 38% of all computer and math doctorates, 33% of all physical sciences doctorates, 25% of all life sciences doctorates, and 19% of all social science doctorates.

Since Asians are culturally very inclined to pursue higher education, and since the US has an extensive but still relatively inexpensive source of higher education, and again since our economy is increasingly knowledge-based, it is no surprise that as a group Asian-Americans are moving sharply upward economically.

That rise has been as dramatic as it has been rapid. Asian Americans now have the highest median household income of any broad American ethnic group — European Americans included. Asian-American households average $66,000 a year, nearly a third higher than the median of all American households (which is $49,800). Whites average $54,000, Hispanics $40,000, and blacks $33,300.

Among Asian Americans, median annual family income varies. Indians average $88,000, Filipinos $75,000, Japanese $65,390, Chinese $65,050, Vietnamese $53,400, and Koreans $50,000. But all this is quite remarkable, considering that according to Pew’s figures, nearly three-fourths (74%) of Asian American adults were born abroad.




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Financial Responsibility

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The recent recession, which some call the Great Recession, has been around for years, yet it simply refuses to go away. I believe that American business is strong enough that not even Obama’s socialist agenda can permanently destroy our prosperity. But even if a Republican is elected in 2012 and this recession ends, what is to prevent another one?

The question of what causes recessions is perhaps the single most important and most highly political question that the science of economics seeks to answer. The Keynesians and socialists have one answer, the Austrians have quite another. Perhaps the Federal Reserve’s manipulation of interest rates has caused or exacerbated the recession. However, I think that from an empirical, factual standpoint the linchpin of the Great Recession was the American public's financial irresponsibility, as manifested in the collapse of the real estate bubble. Many thousands of Americans irrationally believed that home prices could only go up, and they incurred real estate mortgage indebtedness far in excess of what a financially responsible person would incur. When real estate prices collapsed, very many mortgages went into default, which led to foreclosure sales, which further reduced home values, which triggered a downward spiral. It is probably true that government efforts to encourage low-income home ownership and government home mortgage guarantees contributed to inflating the real estate bubble. But the disaster would not have been so widespread if more home buyers had been committed to living within their means or had been more risk-averse.

This is the most dangerous matter, and also the easiest to correct. If the American public, especially the lower middle class, learned to understand the concept of “financial responsibility” then this syndrome would never happen again.

What precisely is financial responsibility? I think that the main point that people should understand is that money does not grow on trees, and there is no such thing as a free lunch or easy money, and that money is not magical and cannot be created by waving a magic wand. The great Randian contribution to economic theory is the idea that in a free market people trade value for value, and to “make money” is to create value. (Yes, Ayn Rand did not invent this idea, but she perfected it.) In order to make money you have to do work to produce the value; in other words, you need to make the money that you trade with others when you buy things from them. If you don’t produce value, then you have nothing to trade.

This not only means that people earn and deserve their salary by working at their job; it also means that people do not deserve to consume more value than what the other traders in the free market are willing to purchase in exchange for money. From each as he chooses, to each as he is chosen, to quote a Robert Nozick saying that captures this concept.

Financial responsibility is the understanding that you cannot spend more money than the amount you earned because of the work you did, unless someone gives you charity or you steal wealth from others, and that you cannot consume a value that has not been produced by someone. To use Rand’s old-fashioned phrasing, you can’t have your cake and eat it too, or as I would prefer to say, you can’t eat your cake before you bake it. Understand this, and you will probably not spend money that you don’t have or use borrowed money to buy stuff when you can’t repay your loans. If you want to buy something, then you will be more likely to do the work necessary to earn the money before trying to get what you want.

This understanding that money is finite and must be created before it can be spent is the essence of financial responsibility. Implicit in the concept, however, is the notion that charity and theft are exceptions, and the general rule is that you, and only you, must do what is necessary to make your own money and control your individual financial destiny.

But if you understand this principle then you will be very careful about economic risk, because you will understand that you will be required to assume responsibility if you make a mistake.  You will be on the hook for your losses and no government will bail you out. Financial responsibility means being held responsible, which means that you are held accountable and you will accept the rewards and punishments that result from your economic choices. Thus, you will not assume risks in excess of the amount of sweat or skill you are willing to put in to compensate for your mistakes. A person who is financially responsible would not assume a gigantic mortgage on real estate he had an annual income in the lower-middle class range, because he would understand that the debt would actually need to be repaid.

If the public were financially responsible, it would not put up with a government that steals money from others or borrows excessively and spends money that it does not have.

It seems to me that the solution to the problem is for high schools or colleges to incorporate personal finance management training into their liberal arts educations. Simply teaching people how to write up a personal budget that matches income and expenditures, sort of like a balance sheet, would go far toward creating the practical skills of financial responsibility. Some high schools have such classes, but they are treated like trivial afterthoughts compared to the more important subjects. Also, merely teaching students how to spend money is not enough; the financial responsibility class would somehow have to simulate earning income in proportion to productivity, possibly by tying fake money to GPA or class performance, to give students a feel for the fact that you cannot spend what you have not earned. The ideal personal finance class would teach career ambition, how to budget to spend within your means, and the crucial importance of saving money and not borrowing beyond your ability to repay.

One would expect the poor to appreciate the crucial importance of saving money. But it is precisely the low-income families that are most vulnerable to financial irresponsibility. The poor face a dark temptation to borrow beyond their ability to repay and not worry about repayment until it is too late, so that for a short time they can live a more affluent lifestyle before their debts catch up with them. The temptation to take shortcuts to one’s desires is deeply seductive even to rational, honest people. But people with no money to spare can least afford to make mistakes. Good finance classes in high school would help poor families budget properly, save for retirement, and avoid predatory lenders. This would help the poor much more than all the modern-liberal nonsense of entitlement spending, welfare, food stamps, etc.

Middle- and upper-income people could also benefit. A study cited on Yahoo claims that the average New Yorker is $200,000 in debt and the average Californian is $300,000 in debt. The American economic system encourages credit card debt, home mortgage debt, and student loan debt. I personally have struggled with handling my finances, which were recently made worse by roughly $90,000 in law school student loans that I needed to incur; and I wish that there had been a serious class in this subject that I could have taken, particularly in college where young people are supposed to learn how to live like adults.

If such classes were commonly available, the average American would actually be exposed to the concept of financial responsibility, and the odds of another recession happening would be greatly reduced. If it were customary for every American student to take a class in financial responsibility, it would be more likely for voters to vote for financially responsible fiscal policy. And if American politicians had taken such classes, they might have better training in the art of living within a budget and be more appreciative of a balanced budget and the dangers of excessive debt.

Of course, if the public were financially responsible, it would not put up with a government that steals money from others or borrows excessively and spends money that it does not have. So the leftists who control most colleges and the teachers' unions who control the high schools would fight to keep people from understanding the truth about financial responsibility and how to prevent another recession.  But while government is the primary source of economic problems, even in a libertarian anarchy they would still exist, if the majority of individuals were financially irresponsible.

Financial responsibility is the understanding that you cannot spend more money than the amount you earned because of the work you did, unless someone gives you charity or you steal wealth from others, and that you cannot consume a value that has not been produced by someone. To use Rand




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