America’s problem isn’t immigration - it’s education

Are we witnessing the beginning of the end of globalisation? And should we be cheering or chafing at the prospect of its demise? It's one thing for the French to block cross-border takeovers and riot at the prospect of increased labour market flexibility. From the arch-charlatan Jacques Chirac down to the silliest Sorbonne student re-enacting the demos of '68, globalisation to the French will always be "Anglobalisation". But when Americans start to question the wisdom of international economic integration, something serious is afoot.

For years, Lou Dobbs, of CNN, has used his prime-time show to lambast the Bush administration for its failure to stem the flow of illegal immigrants - most of them Mexicans - into the United States. But only in the past few weeks has the bee in his bonnet turned into a full-scale political swarm.

Last week, there were two bills before Congress designed to address the issue. The Senate bill was the more liberal measure. It envisaged a new guest worker scheme to allow 325,000 temporary foreign workers across the border each year. As for the estimated 12 million illegal immigrants already in the US, the majority would be given a chance to obtain US citizenship.

In the House of Representatives, it was a different story. There, Congressmen were calling for the construction of an impenetrable fence along the entire US-Mexican border - a kind of Cortina de Acero (that's Iron Curtain in Spanish, amigo). By close of play on Friday, attempts to find a middle way in the Senate had ended in acrimony, the idea of an amnesty for lawbreakers was too much for disgruntled Republicans.

I can't say I am surprised by the fuss. Every time I visit a state that shares a border with Mexico - and I've been to three in the past six months - I've heard the same refrain: "They take our jobs!" The makers of South Park recently had some fun with the issue by having people from the future migrating to the present through a time portal; despite speaking gobbledegook, they were soon mowing all the lawns and serving all the Big Macs. But in Arizona, illegal immigration is no joke. With mid-term Congressional elections just months away, legislators who want to retain their seats have a strong incentive to respond to such complaints.

This backlash against porous borders is not confined to the issue of immigration, however. Simul-taneously, Congress has been busy trying to tighten the rules governing foreign investment in the US, ever since the story broke that a company based in the United Arab Emirates might gain ownership of facilities in American ports.

Then there are the protectionists, who generally represent states with big manufacturing centres. They'd like nothing better than to slap a whopping tariff on Chinese imports. The pretext, as when the idea first surfaced last year, is the alleged manipulation of the exchange rate between the Chinese currency and the dollar - as if that were the only reason Chinese products are cheaper than those made in the US.

So global flows of labour, capital and goods are all under attack - and this in a country that has been enjoying robust growth for the better part of five years. I shudder to think what would be coming out of Congress if the country were in recession. Presumably a bill for total autarky, mandating the construction of a vast impermeable dome from sea to shining sea.

Even the global flow of ideas is under attack. Last week the virtuoso cellist, Yo-Yo Ma, told the House government reform committee how it has become "increasingly difficult to facilitate [international] cultural exchange because of the high financial cost, uncertain timeline and countless logistical hurdles" now involved in obtaining US visas. Music from Ma's revelatory Silk Road project has been the top playlist on my iPod for the past year. I can think of no one who is currently doing more than Ma to bring down the cultural barriers between East and West. But presumably Congress would prefer him to stick to Aaron Copland.

The last time globalisation died, some historians say, it was an American backlash that killed it. A century ago the world economy was in many ways just as integrated as it is today. Migration rates were comparably high, as was trade in relation to output. Capital flows today are bigger in relative terms, but a century ago they were more evenly distributed between rich and poor countries. After 1914, however, globalisation fell apart, and by the 1930s the world economy had fragmented - with disastrous consequences for growth and employment.

The great disruption caused by the First World War certainly did a large part of the damage, sinking thousands of tons of merchant shipping and severing international telegraph cables. Even before war came, however, globalisation was already dying the death of a thousand legislative cuts. As early as 1882, the US had introduced the Chinese Exclusion Act, the first of a series of measures designed to restrict immigration to white Europeans. Quotas for other ethnic groups were introduced between the wars - one reason Jews found it hard to find refuge from Nazi Germany - so that by the mid 1930s the flow of new immigrants to the US had all but dried up.

The same was true of trade. Never wholly committed to free trade in the 19th century, the US sharply raised tariffs between the wars. The protectionist Smoot-Hawley trade bill, enacted in June 1930, dealt a lethal blow to business confidence, compounding the damage done by the Wall Street Crash.

Proponents of a new generation of anti-global measures claim to want to protect vulnerable native groups from the ravages of competition. They point to studies that show the biggest losers from immigration to be high school dropouts. Other evidence shows that it's unskilled blue collar workers who are most likely to lose out from free trade with China. Yet it would be an error to blame the widening inequalities of American societies on globalisation and to seek to rectify matters with the old, failed policies of nativism and protectionism. American inequality has much more to do with not-very-progressive taxation and patchy welfare provision than with immigration and free trade, much less free capital movement (without which, let's not forget, American consumption would have to be quite drastically reduced, given the vast size of the US current account deficit).

The aggregate economic benefits of attracting the economically ambitious from around the world are real. In a flexible labour market like that of the US, immigrants play a key role. In ageing societies, such as those of Western Europe, immigrants are especially needed. True, it's not clear if Europe's over-regulated labour markets can successfully absorb and exploit their youthful energies, but that doesn't change the basic economic logic. An even more liberalised global labour market would boost economic growth all round. Restrictions on migration would cut it.

It makes no sense to jeopardise the benefits of globalisation to protect the employment prospects of high-school dropouts. So here's a modest counter-proposal for the House of Representatives. Instead of building an expensive, hideous and probably ineffective new Iron Curtain, why not use the money to get this simple message across to the kids in America's high schools: If you flunk, you're sunk. Yes, boys and girls, academic achievement is the only route to decent employment in an economy at the top of the technological food chain. Drop out of education without qualifications, and you'll be lucky to get a job alongside the Mexicans picking fruit or stacking shelves.

Sounds kind of harsh, I know. But a second Great Depression sounds a lot harsher.
 

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