Our society has gotten into the habit of seeing almost every demographic trend or social change as a problem to be solved. Yet such changes are often opportunities, not threats. Sometimes, if we fit together what look like two serious problems, we may find that they add up to a single welcome result.
That is my view of two developments, one very much in the news now and the other a serious preoccupation of policy makers. The first "problem" is the influx of refugees from Cuba and the broader question of immigration, and the second is the demographic trend that threatens the Social Security system and the broader category of aid to those who cannot provide for themselves. If we adopt the sensible and humane solution to the first of these problems, in my judgment, we will also pretty well solve the second.
But the tides of public opinion -- not only among the public that follows these events only casually but even among opinion leaders -- seem to run the other way. We hear it said over and over again that our fragile economy simply cannot absorb the 100,000 Cubans who have arrived in our country during the past few weeks. Our federal bureaucracy and the national administration look askance at the people coming in, as if they were going to infect us all with some hideous disease. Our immigration laws, though they were reformed in 1965 and are much less restrictive than they were, show signs of the same attitude. That we still seek to keep out very large numbers of those who want to enter is clear from the large number -- at least hundreds of thousands, perhaps millions -- of illegal immigrants who are in the United States today.
Our history teaches a different lesson. Until 1924, immigration into the United States for most peoples (a notable exception: The Chinese, barred in 1882) was essentially unrestricted. If you consider what our country would be like today without the offspring of the millions who came over in the 1880-1924 period, it is evident that no other single public policy has been of such advantage to the United States. Without those immigrants, our country would be not only more lightly populated, but also far less affluent, culturally duller and more homogeneous. Immigrants held down jobs, consumed products, built businesses and created labor unions. The American entertainment business would be unrecognizable without these immigrants; so would academe.
Yet, at the time, immigration was considered a terrible problem. We were warned that those exotic peoples could never be assimilated into American society. We were told that they would commit crimes and bring in diseases. Finally, in the 1920s, we were unwise enough to effectively cut off immigration from eastern and southern Europe and most of the rest of the world as well. I do not know if any connection has been established, but it was not too many years later that we had the Great Depression, one of the primary causes of which was lack of demand for goods we were capable of producing. Could the immigrants who would have come in during the 1920s have supplied some of the aggregate demand that was so badly needed in the 1930s?
We heard then and hear now that immigrants will be a drain on the public treasury. Yet all our historical experience tells us that the people who come are young, enterprising, motivated and hard working. They would hardly have wrenched themselves from their native culture and gone to a strange and sometimes hostile land if they did not have some special spark, some strong desire to do something more than collect welfare. Every bit of evidence shows that immigrants work hard, often at menial jobs most Americans would not accept; they contribute to the economy as both producers and consumers. Economists as different from each other as John Kenneth Galbraith and Milton Friedman have identified immigration as a phenomenon that is economically beneficial to both the nation the immigrants leave and the nation to which they move. There is no reason to believe that what was true in 1880 or 1910 or 1924 has suddenly ceased to be true in 1980.
What do immigrants and refugees have to do with Social Security? They provide an answer to a problem that planners are currently grappling with. Between 1945 and 1965, we had very high birth rates in this country, unusually high birth rates for a nation with an advanced economy. Birth rates have fallen since the 1960s to levels close to zero population growth that are typical of advanced countries. Starting around the year 2010, therefore, we are going to have quite a large number of people retired on Social Security and a relatively small number of people working and paying for Social Security. There will be a crisis: either workers will have to be taxed at much higher rates or benefits will have to be cut far below what people have grown used to. A poll conducted for the National Commission on Social Security by our firm shows that Americans today, given the choice, would increase taxes; but what would be the cost to productivity?
This situation cannot be avoided, given the birth rates from 1945 to 1980, unless one thing happens: the working population of the country rises substantially. And that can happen in only one way: substantial immigration, as in the years before and just after World War I. There are obviously hundreds of thousands -- the Cuban refugees are just a small part of the total -- who want to come. As the 1980s go on, most of them will be people born after 1960 -- just the age of people we need to have working to support the elderly baby-boom generation in the years after 2010. It is to our advantage, not to keep them out, but to let them in.
Some may suppose that our economy cannot absorb them in the meantime. But the lesson of the Cuban and Vietnamese refugees and of illegal immigrants of today and the lesson of the immigration of the 1880-1924 period is that immigrants expand and strengthen the nation's economy. Even the troubled economy of the 1970s showed the capacity to generate large numbers of new jobs for those with strong motivation to work. We have a chance in the next few years to take two "problems" -- immigration, which seems threatening now, and Social Security, which we can see coming -- and by doing little more than letting others do what they want, see both solved. We would be fools if we did anything else.