More Americans should work abroad
On Thursday, House Speaker John Boehner told members of the press that though immigration is “an important issue in our country” (thanks for that, John), it will be difficult to move immigration legislation this year. According to Boehner, the chief stumbling block is that Republican lawmakers simply don’t trust the Obama administration to implement a new immigration law in an aboveboard way. It is also true, however, that conservatives in the House doubt Boehner’s instincts on immigration, and worry that following his lead will do them more political harm than good. I tend to think that the skeptics are right, and that the GOP ought to put immigration reform on the back-burner.
But just because we can’t agree on immigration reform doesn’t mean that we can’t agree on emigration reform, a subject I’m guessing you’ve never heard about. Believe it or not, the question of how easy we make it for Americans to live and work outside of the United States will be almost as important in the decades to come as the question of who we should let live and work in the United States is now.
Though you’d hardly know it from our domestic political conversation, U.S. migration doesn’t just involve foreigners moving to the United States. It also involves Americans moving to foreign countries. And I’m not just talking about the troops stationed in southern Afghanistan, Okinawa, or Germany. The State Department estimates that 6.3 million U.S. citizens live outside of the United States, a number that explicitly excludes military personnel. Granted, as a share of America’s gargantuan population of 314 million, the American diaspora is an awfully modest 2 percent. Some will no doubt see this as cause for celebration, particularly sentimental Americans who can’t stand the thought of having loved ones move to distant locales. While I hate the thought of losing friends and family to Montevideo or Marrakech as much as the next guy, the truth is that the American diaspora enriches us all, and the United States would be much better off if it were much larger.
If you’re reading this column, you’re probably aware of the fact that there are and have long been handfuls of American professionals living in global financial capitals like London, Hong Kong and Singapore, and that intrepid young Americans will head to emerging market boomtowns like Nairobi, Yangon, and Manila to take advantage of new economic opportunities. What you might not know is that the United States sends far fewer skilled professionals abroad as a share of its population than other rich countries like Britain or Germany.
As a jingoistic American, I acknowledge that some of this reflects the fact that the United States is a really awesome place to live and work, and that moving from New York City to Minneapolis to Miami to Memphis to Los Angeles is enough to gain exposure to many different cultures and ways of life. It is also true that unlike British or German professionals, Americans who live and work abroad have to pay taxes on the income they earn outside of the United States. There is, to be sure, a credit that shields some of the income Americans earn abroad from U.S. taxes. Frankly, if you’re not a high-flying entrepreneur or business executive earning large sums, you probably won’t pay all that much. Even so, it is a huge pain in the neck that is causing many almost-Americans — i.e., lawful permanent residents, many of whom studied at U.S. colleges and universities, or who grew up at least part of the time in the United States — to surrender their green cards rather than deal with this hassle. Consider the China-born software coder who speaks unaccented American English after a stint at Harvard Business School, and who loves the United States as much as she loves her native country. She could be a great asset to America over the long-run, and if the terrifying complexity of the U.S. tax code causes her to sever ties with our country, we all lose.
Moreover, the fact that taxes on income earned abroad hits high-flying American entrepreneurs and executives living abroad is actually a pretty bad thing in itself. These Americans are, in effect, our informal ambassadors. They build commercial relationships that redound to the benefit of all Americans. When they return home, which most of them eventually do, they bring with them relationships and know-how that contribute to economic growth. Think of them as the honeybees who collect pollen from around the world and eventually bring it back to the hive.
And we really need the pollen. America has long been home to the world’s most innovative firms. Yet as the rest of the world gets richer and smarter, innovation is bubbling up in surprising places. During the 1970s and 1980s, the Japanese surpassed U.S. firms in sectors like steel and automobile manufacturing, and U.S. firms raced to catch up. We’re now seeing a similar dynamic take hold in other domains, like retail and health services. “Reverse innovation,” according to business professor Vijay Govindarajan, involves “developing ideas in an emerging market and coaxing them to flow uphill to Western markets.” It is often easier to add bells and whistles to a super-cheap product aimed at poor consumers in the developing world than it is to reverse-engineer a super-expensive product aimed at poor people for more affluent consumers. This is a tremendously exciting opportunity, and it is expatriates who can help us realize it.
Revitalizing American innovation is just part of what emigration reform can do for us. In The Upside of Down, Charles Kenny, a senior fellow at the Center for Global Development, makes many arguments I find profoundly unconvincing, on the virtue of increasing less-skilled immigration and shrinking the U.S. military budget, among other things. Yet in a chapter on “Global Nomads,” he makes a compelling case that Americans ought to stop being so solipsistic and appreciate how much we can all benefit from encouraging people to live abroad. Among other things, Kenny observes that American students can often get a much cheaper education in other countries. Once Americans start to appreciate this fact, domestic educational institutions might wise up and appreciate that they have to offer better value for money.
Then there is the fact that U.S. retirees can stretch their savings much further in warm-weather middle-income countries like Mexico or Costa Rica then they can at home. By allowing U.S. retirees to access their Medicare benefits abroad, we might lighten the load of caring for older Americans while also giving workers in poor countries a big economic boost. The costs associated with caring for Americans suffering from dementia already exceed $157 billion per annum, according to a 2013 study by the Rand Corporation, and that number will soon climb to dizzying heights. Most of this amount reflects the cost of care-giving, a field that has plenty of qualified labor in poorer countries. Can you think of a more pleasant form of entitlement reform than allowing U.S. senior citizens to live out their lives in beachfront splendor? I certainly can’t.
