Talent On the Move

By KATHERINE MANGU-WARD

'As a tool for spreading wealth, open borders make foreign aid look like a child's lemonade stand," writes Robert Guest, business editor of the Economist, in "Borderless Economics," a rapid-fire case for the free movement of labor from one country to another. Central to his case is a 2005 study by Lant Pritchett, a former economist at the World Bank, titled "Let Their People Come: Breaking the Gridlock on Global Labor Mobility." Mr. Pritchett found that if developed countries slightly liberalized their immigration laws and increased their work forces by a mere 3%, the gains in remittances and other benefits to developing countries would amount to more than $300 billion.

Put another way, a Salvadorean man with a high-school education needs only to come to the U.S. to increase his annual earning power more than eightfold, from $2,700 to $22,611—a figure, by the way, almost identical to the earning potential for Americans with the same level of education. Compare the $300 billion benefit with the $70 billion spent annually on foreign aid by developed countries, much of which ends up in the Swiss bank accounts of corrupt politicians.

Unlike graft-riddled foreign-aid programs, nearly 100% of the dollars sent back home by emigrants who have made good find their way to the intended destination. Mr. Guest quotes Philippe Legrain, the author of "Immigrants: Your Country Needs Them" (2007), explaining that "it is common for an engineer who earns $5,000 a year in a poor country to move to a rich one, earn $30,000 a year and send $5,000 of it back to the old country. His home economy does not even miss him." Recorded remittances to developing countries were $316 billion in 2009 (and that's just what shows up on the books).

Developing countries also benefit indirectly from sending their skilled workers abroad. More than a quarter of middle- and upper-class Indians made their money in America before returning home. In rural Pakistan, families with at least one migrant member who goes out into the wider world are 54% more likely to send their girls to school.

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Borderless Economics

By Robert Guest
(Palgrave Macmillan, 250 pages, $27)

But what good does it do to educate those girls if globalization will simply drain poor countries of skilled workers? Mr. Guest says that the concern is misplaced. Consider the Philippines, the world's largest exporter of nurses. It still has more nurses per capita than Austria, despite such losses. Drawn by the prospect of relatively high-paying jobs in developed countries, the aspiring Florence Nightingales of the Philippines enroll in the country's many nursing schools. Inevitably, some of those who planned to leave end up staying—and putting their skills to work.

"Borderless Economics," a clear, witty and relatively short book, doesn't consider in much depth the passionate debates concerning the costs and benefits of immigration for developed nations. Its snappy pace allows for Mr. Guest to do little more than point to a couple of studies showing that immigrants in America (unlike their European counterparts) probably contribute more in taxes than they consume in benefits. Such assertions are unlikely to persuade a well-informed skeptic of open borders, although the studies seem sound. For a more leisurely historical and philosophical treatment of the many virtues of open-border societies, readers may want to pick up Matt Ridley's "The Rational Optimist."

Mr. Guest concludes with the argument that, thanks to America's immigrants, the U.S. is likely to remain for decades the richest and most powerful nation in the world. America has the largest foreign-born population by far—an astonishing 43 million people, 10 million more than the entire population of Canada. China, by contrast, has a foreign-born population of less than one million.

And yet the path to citizenship is still a daunting one for immigrants. In 2009, the Gallup organization reported that when people across the globe are asked where they would most like to live, the U.S. beat other desirable destinations 4 to 1. Getting permission to come legally to America, though, can be next to impossible: Chinese citizens frequently move to Australia and go through the entire citizenship process there first, an absurdly circuitous route that they hope will eventually win them legitimate status in the United States.

Mr. Guest notes that the U.S. annually awards only 85,000 H-1B visas for highly skilled workers; more than that number have been known to apply on the first day that applications can be submitted. America is strong because it has long been the nation richest in the resource that matters most: talent. Yet the U.S. government every year turns away tens of thousands of the most talented, motivated people in the world.

It is galling to Mr. Guest that many well-meaning people are more invested in promoting ideas like Third World microcredit than in clamoring for easier immigration. Lant Pritchett, the former World Bank economist, shares Mr. Guest's skepticism about the importance of the much ballyhooed microloans that help the world's poorest people to buy livestock or open a small business. The concept was pioneered by Muhammad Yunus, the founder of Grameen Bank in Bangladesh and winner of the 2006 Nobel Peace Prize. Mr. Pritchett tells the author that the average gain for a Bangladeshi from a lifetime of these loans is about the same as the earnings from working just eight weeks in America. "If I get 3,000 Bangladeshi workers into the U.S.," Mr. Pritchett wonders, "do I get the Nobel Peace Prize?" No, but with luck Mr. Guest's argument in "Borderless Economics" will be rewarded with serious attention in the places that count.

Ms. Mangu-Ward is the managing editor of Reason magazine.