Out-Migration – Who is leaving the USA?

by

Correspondent Kevin M. submitted this thought-provoking response to yesterday’s entry on the “return of Big Government”

http://www.oftwominds.com/blog.html

 

Read from afar, The Return of Big Government and the (de facto) Welfare State (March 17, 2009) describes the onset of conditions here in the U.S which are decidedly third world in nature. Should that be a reality in our future, a reinforcing trend would likely develop complicating everything you and other correspondents describe.

For centuries we’ve been accustomed to the one way flow of migration into the United States; should conditions deteriorate to the levels indicated in your essay–which is hardly beyond reasonable imagination–the flow would most likely shift in the other direction. We’re already getting reports of a reverse population shift back into Mexico as recent arrivals from that country return home after encountering poor economic conditions north of the border. Mistakenly, many people think this is a positive development, and one which ultimately will improve our situation.

But the out-migration I’m referring to would be that of an exodus of the productive class, a population shift that will have a far more profound affect on conditions than most of us can imagine. So if the government does move to a system of semi-permanent/permanent welfare for the masses, the environment will become less hospitable for those who are successful tradesman, entrepreneurs, professionals or well monied investors.

We’re more vulnerable to this than we can imagine, not the least of which since an increasing percentage of the American productive class do in fact have roots in Mexico, China, India, the Middle East and other developing countries, or are no more than a generation removed, and would have less reservation about heading back should conditions here get really ugly. Eventually, self described “real Americans” may follow suit; Jim Rogers (moved to Singapore with his wife and three daughters) is a prominent example of this.

There’s a double-edged motivation for the productive class to leave the country too. Not only will they be expected to largely foot the bill for expanded mega systems here at home, but they are also the very people who would be most welcome in foreign countries, as well as most likely to survive and thrive as new (or reverse) immigrants. Punish-the-rich platforms, which are highly popular in economic downturns, would only hasten and expand the departure.

In the end, it may be far easier for a prosperous person to resettle in a traditionally poor country–which over the generations and through social norms has also found a way to cope with it’s diminished prospects in a peaceful way–than to try to wait out an ongoing and increasingly violent devolution in a traditionally richer location.

The potential for an exodus of the prosperous would not only exacerbate our problems, but also reduce options for workable solutions. The result of such an outflow would be a permanently poorer country. 16th century Spain, then the richest country in the world, is a perfect example of this.

The outflow of U.S. productive capacity to developing countries under the banner of globalization is an indication that the trend is already underway. As businesses leave, their most productive and creative employees will eventually choose to go with them. That hasn’t happened yet because the money is still in the U.S., but eventually it will always flow to the places where real production is taking place.

Few are aware that England retained it’s status as the global financial leader for several generations after America surpassed it as the most productive economy, but eventually the money did follow production–into the United States. Our situation today is looking like a perfect reversal!

There’s a saying, “capital is the greatest of all cowards”; what’s also overlooked is the fact that a huge, unheralded component of what we call capital, is human capital. What ever ideological repulsion anyone may have toward the concept, the fact is that wealth–capital represented in the form of both money and productive people–follows production. Why anyone in power thinks we can improve our lot simply by propping up the banks should remove any confidence we might have in the leadership.

Regrettably, I have to agree with your projections with a pronounced shift into a full blown welfare state since it is the most expedient course of action from a political standpoint. However we will not succeed in solving any of our problems until we initiate a serious move toward returning this country to that of a producer nation, what ever the short term costs.

The geniuses in Washington had better invest some intellectual and political capital into figuring out how they plan to make this happen. To date however, we have no indication what ever that such a course is even being considered.

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29 Responses to “Out-Migration – Who is leaving the USA?”

  1. Samuel Says:

    Kevin M. and his doomsday scenario of big government and the welfare state strangling the productivity, capital and goodness left in our country is based on a fundamentally flawed understanding of economics and the nature of the welfare state.

    First, the rich hardly pay for the welfare services of the poor because large parts of them are funded locally, which means rich whites flee to exclusive communities where they can tailor zoning laws to keep out the “rabble”. The resulting social stratification allows for resource and opportunity hoarding on a national scale. Income inequality has been on a 40 year rise, and real wages of the average American have fallen. As the vast majority of households turn to debt to make ends meet, demand for goods and services inevitably falls. Kevin M. complains that we aren’t producing anything in our country. He is right, but it is not excessive government that is to blame, but the fall in demand created by increased inequality.

    Second, the welfare state is not the antithesis of a market economy, but a necessary compliment. The welfare state exists (whether we accept it or not) in every industrialized country, without exception. This is basically because people (and their labor) are imperfect commodities. A television can wait in store display for months or years until the desired price is met. Workers cannot withhold themselves from the market in search of a better price. They will starve. When macroeconomic forces beyond the control of individual workers force them into situations that threaten their livelyhoods, and the stability of society, a welfare state is needed. It exists to protect human beings, and their precious human capital from the always-present fluctuations of the market. Many societies tried capitalism without welfare states in the 18th, 19th and 20th centuries. All of them adopted a social safety net, or collapsed. The only recent experiment “pure” capitalism leave little doubt in the matter. They are Chile under Pinochet, Russia after the fall of the USSR and Occupied Iraq.

    Third, as stated before, the welfare state is no obstacle to an efficient economy. In many cases, government is more efficient than markets at distributing resources. Where the basic assumptions of a functioning market are not met, that market will be inefficient. When the consumer does not have perfect information about a product (eg. health insurance plans), his/her inability to choose the best product for his/her needs creates a breakdown in the efficiency-creating mechanism of the market. Producers are not rewarded and punished correctly for their products and (sometimes enormous) inefficiencies result. Furthermore, government expansion into healthcare, early childhood education and renewable energy are important investments in the physical and human capital that is so important to our country’s future economic success.

  2. Kerry Says:

    My ancestors left the countries that the knew and love, and in which they had thousands, not hundreds, of years of roots, to provide a better life for themselves and their children.

    I will do the same for my son, if I must.

    When big government demands that I must pay for its overspending, for providing welfare to those who could work, and for the constantly compounding mistakes of the current administration, then i am forced to draw the line: this far, and no further.

    I owe that to my ancestors who sacrificed for a better life. I owe it to my son to keep him, and future generations safe.

    Obama may build his house of cards on the backs of the idealists who voted for him, such as the teachers and fire fighters of Indiana who are now losing their pension fund so that Obama may give GM to a foreign buyer (Fiat) for significantly less than its value.

    This is still a free country. I’m free to leave. I suggest that other small business owners, skilled laborors, and all other productive members of this country give consideration to this before their opportunity is forever revoked.

    This will happen. What you do with it is up to you.

  3. Markus Hammond Says:

    In my opinion the culprit in this conflict is Free Trade agreements which prevent tarriffs on cheaper imported products. Why would a company, whos only goal is to make profit, continue to produce in the US when goods can be manufactured cheaper elsewhere and imported? This, combined with the “strong dollar” policy is outpricing American workers.

    American jobs will continue to dwindle until the dollar becomes worthless or we do something about our trade agreements. Many of our trade partners already have Domestic Consumption laws which require that domestic products be used rather than imported.

    This is why the welfare state will increase, for both citizens and corporations. Many banks are effectively insolvent and the bailouts are the only thing to prop them up. And if there wasn’t tax loopholes that let corporations pay around 10% taxes, they would simply up and leave and take even more jobs with them and go to someplace with lower taxes.

    The real unemployment rate in our country is around 18%. Look up ‘U6’ unemployment, the ‘official’ rate is merely propaganda. Even more concerning, look at the “employment age” percent of people who are unemployed. I believe its around 45%.(this includes people living purely off of welfare, disability, child support, and people who just don’t want to work) So welfare is needed, or we would have people dying in the streets in droves.

    The question is, will the welfare state have enough funding to prop the country up long enough for our dollar to collapse (or our trade agreements to be modified?) The country is now equivalent of a family of four where mom works part time, dad is unemployed, and they are starting to live off of their credit cards.

    I think it’s definately time to get off of the sinking ship. There’s other countrys where one can save money, pay less taxes, work fewer hours, and live in a less violent and backwards culture.

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  5. Welcome to TN India Says:

    One more reason to Migrate to India – Tamil Nadu state in particular. In western countries such as USA, Britain, France etc. only one kind medical system is officially recognized – Allopathic medicine.

    India is the the World capital for Ayurvedic Medical system. Tamil Nadu state also has Siddha Medical system practised no where in India in addition to Ayurvedic system. Homeopathy from Germany, Yanani from Greece and other medical forms are also practised in smaller scale.

    Even western origin people have not started preferring Ayurvedic treatments as Allopathic system have too many side effects. Many westerners are taking treatment in India.

  6. Welcome to TN India Says:

    Main reason to migrate to India particularly Tamil Nadu state is cheaper cost of living. It is possible to make Tax free income legally as so far Long term capital gains for Indian mutual funds and equities are except and dividends from Indian mutual funds are exempt from Taxes.

    IN Thiruvannamalai, Auroville and other place, one can see lot of western origin people. India may not be cleanest place. But there is more happiness, less tension life compared to USA.

    In USA, it is like POLICE STATE. USA people are supposed to pay taxes even if they are out of USA.

    In Tamil Nadu, there are thousands and thousands of temples and also few old churches. Spiritual life can also be fulfilled in TN.

    If there is any place to get out out USA, TN state in India may be option.

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