The above-linked article details what may be the most hare-brained scheme ever devised for resuscitating Detroit’s economy, or the economy of any city, for that matter. The plan is the brain-child of Michigan Governor Rick Snyder who, before being elected governor, served for a few months as interim CEO of ailing Gateway Computers until a more competent chief executive could be found.
Detroit’s woes are no mystery. Its economy was built on the auto industry which, until about the 1960s had a virtual lock on the domestic auto market. Thanks to a change in U.S. trade policy in the late 40s, which opened the doors to our market without gaining access to equivalent markets, the share of the auto industry held by domestic manufacturers has shrunk to barely 50%. The demise of the auto industry, together with escalating racial tensions, led to a mass exodus from Detroit. Since 1960, Detroit has lost nearly two thirds of its population. Last year, the state of Michigan experienced a net loss of 9,000 new college graduates.
In his state-of-the-city address, newly-elected Mayor Mike Duggan proclaimed that his tenure should be judged by one criteria – that within four years the population of the city of Detroit would be growing again. Fair enough.
But there’s a right way and a wrong way to go about it. The right way is to improve city services, reduce crime, eliminate the blight, clean up the city, and attract businesses back into the city. That’s the mayor’s job. If he does it well, then Detroit will once again be judged a desireable place to live, and its population will grow. And Mike Duggan will be seen as a successful mayor.
Then there’s the other way – the lazy way – the wrong way – Governor Rick Snyder’s way. Let’s just bring in 50,000 immigrants, says Rick. Immigrants with advanced skills who can start businesses, says Rick. (The insulting implication is that Detroit’s current residents are too dumb to start businesses.)
But this begs a question for anyone who is familiar with Detroit. Detroit already has one of the largest immigrant populations in the nation. If immigrants arrive on our shores with this magic elixir for curing the economy, as politicians, corporations and the Chamber of Commerce would have us believe, then Detroit’s economy should be flourishing instead of floundering. What happened? Did we let in the wrong immigrants – the dumb ones? Will the new batch of 50,000 immigrants be better-screened to identify their possession of the magic economic elixir?
The fact is that immigrants possess no such powers for curing the economy. They are just people, no different than the rest of us. They’re no smarter about how to establish businesses and grow the economy. Nor are they dumber, thus being inclined to become a net drain on social safety net resources, as some anti-immigration groups claim. In the final analysis, the only effect of immigration is to grow the population.
And that’s just what those who benefit from a growing population – corporations who want to see growth in total sales volume – want. Those 50,000 immigrants will set up households and consume the products necessary to do that. And that will “create” jobs. There’s a lot of work involved in meeting the needs of a growing population.
But no debate of immigration policy is complete without giving equal consideration to the other economic consequences. The inverse relationship between population density and per capita consumption dictates that, once a critical population density has been breeched (a population density that liberal immigration policy helped us reach decades ago), the now-larger population will, on an average per capita basis, consume just a little less as they are forced into more crowded conditions. Out of the 50,000 people added to the population, they’ll add to the labor force just slightly more than are absorbed by the new job opportunities created. The end result will be declining wages and rising poverty. Detroit will have a bigger economy, but it will merely be a bigger version of what it has now.