B005HFI0X2 EBOK (56 page)

The goal of US immigration reform during the civil rights era in the 1960s was to replace a low-immigration, racist national quota regime that minimized non-European immigration with another low-immigration regime based on nonracist national quotas. It did not work out that way. Immigration based on family ties, which was expected to be minor, now accounts for the majority of legal immigration to the United States. By a sort of compound-interest effect, this has resulted in an ever-growing Latin American share of US legal immigrant flows, as the largest groups already in the United States can bring in ever-growing numbers of their relatives, in what is called “chain migration.” Because of the proximity of Mexico and Central America, illegal immigrants are also overwhelmingly Latin American in origin.

Nativists to the contrary, the assimilation and intermarriage rates of Latinos in the United States are comparable to those of European immigrants in earlier generations. The problem is that most of them, through no fault of their own, are poor and poorly educated. So were many of the European immigrants of the past. But they came to a country in need of farm labor or unskilled factory labor. Today’s unskilled immigrants enter a labor market that, even before the Great Recession, was producing mostly poorly paid jobs in the menial service and construction sectors.

In addition to lowering wages for native and naturalized competitors, unskilled immigration tends to retard productivity growth in an advanced industrial nation like the United States. By enlarging the pool and reducing the costs of unskilled labor, a high level of unskilled immigration warps the incentives of American employers, making it more rational for them to add unskilled workers rather than invest in innovative labor-saving equipment or innovative labor-saving techniques. As a result of Japan’s restrictive immigration policies, Japan is far more advanced in robotics than the United States, while Australian agribusiness relies far more on machinery than American agribusiness, with its never-ending supply of serflike labor from south of the border.

Meanwhile, the United States is competing with other low-fertility societies for talented immigrant scientists, engineers, scholars, and entrepreneurs. From Alexander Graham Bell to Albert Einstein, skilled immigrants have always benefited the US economy. While skilled immigrants may displace Americans or reduce their wages, the economy gains as a whole from the intelligence and enterprise of the best minds from other countries. The United States can always benefit from foreign-born talent.

Britain, Canada, and Australia have created point systems that award immigrants points if they speak English and are highly educated. As a result, most immigrants to those nations are highly skilled, while the majority of immigrants to the United States are unskilled immigrants, most of them family members of Americans. The United States should encourage skilled immigration, by creating a point system for permanent immigrants based on skills. The quota should not be so large that skilled American workers are displaced in great numbers.

At the same time that the quota for skilled permanent immigrants is moderately increased, temporary worker programs, such as the H1-B visa, that tie immigrants to particular employers, in a modern version of indentured servitude, should be scaled back or eliminated. The idea of granting legal permanent resident status to all graduates of US universities—“stapling a green card to every diploma”—should be rejected. That would only encourage the creation of diploma mills with no purpose other than allowing foreign nationals to purchase American residency and citizenship with their tuition fees. And existing programs that provide privileges to prospective immigrants who promise to invest in the United States should be abolished, not expanded. American citizenship should not be for sale.

While it can always be enlarged in the future if necessary to maintain an adequate population, in the near future the numbers of unskilled immigrants legally admitted to the United States each year should be reduced. Family-based immigration should be limited to immediate family members. The illegal immigrant workforce, which is largely unskilled, should be reduced by a combination of strict sanctions on employers with the help of a national ID card, tough border enforcement and, if necessary, a one-time amnesty for some illegal immigrants coupled with symbolic penalties for their violations of law. No immigration policy is possible unless immigration laws are enforced.

From the eighteenth century to the twenty-first, America’s immigration system has always been based on some form of nepotism—racial nepotism (“free white persons”) from the 1790s until the 1920s, then ethnic nepotism (the national quota system) from the 1920s to the 1960s, and finally family nepotism from the 1960s to the present. The American immigration system needs to be reformed, so that the main criterion for immigration is not race, or nationality, or kinship to particular American citizens, but the potential to contribute to America’s economy. Immigrants should be admitted to America on the basis of their talents, not their genes. In the words of President Lyndon Johnson when he signed the 1965 immigration reform act: “This is a simple test, and it is a fair test. Those who can contribute most to this country—to its growth, to its strength, to its spirit—will be the first that are admitted to this land.”
²¹

STILL A LAND OF PROMISE

Every few generations, the familiar American republic falls apart and must be rebuilt in a generation-long struggle. To date, each American republic has provided more freedom and more opportunity than the one that preceded it. The First Republic abolished aristocracy and feudalism on American soil. The Second Republic abolished slavery. The Third Republic eliminated widespread destitution and sought to suppress the exploitation of wage labor. And each republic has used the technological tools of its era to create a more productive economy with gains shared by more Americans.

In the words of the stockbroker’s warning, “Past performance is not a guarantee of future results.” The United States could emerge from the trial of the Great Recession as a more productive nation with more widespread sharing of the gains from growth. Or it could go into relative and even absolute decline, losing its technological and industrial edge to foreign competitors and fissioning at home along the lines of caste and class. The United States could come to resemble the oligarchic countries of Latin America—or some of its own impoverished southern states. The American experiment could end in failure.

National renewal or national decline? The question will be decided by today’s Americans. In meeting the challenge, they can be inspired by those who successfully met even greater challenges in the past.

They can be warned by George Washington, who observed, in his circular letter to the states in 1783, that if the United States were to fail, then it “will be a subject of regret, that so much blood and treasure have been lavished for no purpose, that so many sufferings have been encountered without a compensation, and that so many sacrifices have been made in vain.”
²²
They can learn from Franklin Roosevelt, in his speech accepting his second nomination as president: “There is a mysterious cycle in human events. To some generations much is given. Of other generations much is expected. This generation of Americans has a rendezvous with destiny.”
²³

And Americans can find guidance in the words of Abraham Lincoln in 1862: “The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise—with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country.”
²⁴

CHAPTER 1: A LAND OF PROMISE

1.
George Washington to David Humphreys, 25 July 1785, in Jared Sparks, ed.,
The Writings of George
Washington
(Boston: Russell, Odiorne, and Metcalf, and Hilliard, Gray, 1835), 9:113.

2.
Herbert Croly,
The Promise of American Life
(New York: Macmillan, 1914 [1909]), 3.

3.
Marcia A. Dente,
Great Falls of Paterson
(Charleston, SC: Arcadia Publishing, 2010), 21.

4.
“S.U.M.: Society for Establishing Useful Manufactures,” Paterson Friends of the Great Falls, http://www.patersongreatfalls.org/sum.html (accessed November 1, 2011).

5.
“Society for Establishing Useful Manufactures,” in
The Encyclopedia of New Jersey
, ed. Maxine N. Lurie and Marc Mappen (New Brunswick, NJ: Rutgers University Press, 2004), 753.

6.
Dente,
Great Falls of Paterson
, 37.

7.
“Economic Independence Through Industry,” Hamilton Partnership for Paterson, http://www.hamiltonpartnership.org/node/257 (accessed November 1, 2011).

8.
Ibid.

9.
Ibid.

10.
Richard Knowles Morris,
John P. Holland, 1841–1914: Inventor of the Modern Submarine
(Columbia: University of South Carolina, 1966).

11.
Ibid., 116.

12.
Lois Palken Rudnick,
Mabel Dodge Luhan: New Woman, New Worlds
(Albuquerque: University of New Mexico Press, 1984), 87.

13.
Dente,
Great Falls of Paterson
, 52.

14.
Kirk W. House,
Hell-Rider to King of the Air: Glenn Curtis’ Life of Innovation
(Warrendale, PA: SAE International, 2003).

15.
Richard R. Nelson and Sidney G. Winter,
An Evolutionary Theory of Economic Change
(Cambridge, MA: Belknap Press of Harvard University Press, 1985); Richard R. Nelson,
Technology, Institutions, and Economic Growth
(Cambridge, MA: Harvard University Press, 2005); Carlota Perez,
Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages
(Cheltenham and Camberley, UK; Northampton, MA: Edward Elgar, 2002); Robert D. Atkinson,
The Past and Future of America’s Economy: Long Waves of Innovation That Power Cycles of Growth
(Cheltenham and Camberley, UK; Northampton, MA: Edward Elgar, 2005); Wolfgang Drechsler, Rainer Kattel, and Erik S. Reinert,
Techno-Economic Paradigms: Essays in Honour of Carlota Perez
(London and New York: Anthem Press, 2009).

16.
Michael Lind,
The Next American Nation: The New Nationalism and the Fourth American Revolution
(New York: Simon & Schuster, 1995). Other interpretations of US history in terms of a series of successive republics or regimes include Theodore Lowi,
The End of Liberalism: The Second Republic of the United States
(New York: W. W. Norton, 1979); Bruce Ackerman,
We the People
, vol. 1:
Foundations
(Cambridge, MA: Belknap Press of Harvard University Press, 1991); Morton Keller,
America’s Three Regimes: A New Political History
(New York: Oxford University Press, 2007).

17.
George Tucker,
The Life of Thomas Jefferson
(Philadelphia: Carey, Lea, & Blanchard, 1873), 503.

18.
John Maynard Keynes,
The General Theory of Employment, Interest and Money
(London: Macmillan, 1936).

19.
Chalmers Johnson, “The Developmental State: Odyssey of a Concept,” in
The Developmental State
, ed. Meredith Woo-Cumings (Ithaca, NY: Cornell University Press, 1999). See also Eric Reinert,
How Rich Countries Got Rich . . . and Why Poor Countries Stay Poor
(New York: Carroll and Graf, 2007).

20.
The identification is found in David Nasaw, “Gilded Age Gospels,” in
Ruling America: A History of Wealth and Power in a Democracy
, ed. Steve Fraser and Gary Gerstle (Cambridge, MA: Harvard University Press, 2005), 324, n9.

21.
Andrew Carnegie,
The “Gospel of Wealth” Essays and Other Writings
, ed. David Nasaw (New York: Penguin, 2006), 63.

22.
Doron Kornbluth, “Is History Bunk?” Chabad.org, http://www.chabad .org/library/article_cdo/aid/M67039/jewish/Is-History-Bunk.htm (accessed December 8, 2011).

CHAPTER 2: NATION BUILDING

1.
Henry Adams,
History of the United States of America
, vol. 9 (New York: Charles Scribner’s Sons, 1911), 195–6.

2.
James Hawkes,
A Retrospect of the Boston Tea-Party, with a Memoir of George R. T. Hewes, a Survivor of the Little Band of Patriots Who Drowned the Tea in Boston Harbour in 1773
(New York: S. S. Bliss, 1834), 39.

3.
Thomas Mun,
England’s Treasure by Foreign Trade
(New York: Macmillan, 1895), 7–8.

4.
Quoted in Ha-Joon Chang,
Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism
(New York: Bloomsbury Press, 2008), 44.

5.
John Locke,
Letter Concerning Toleration
, ed. James Tully (Indianapolis: Hackett, 1983), 47–48.

6.
Locke MSS., Lovelace Collection, Bodleian Library, Oxford University, c. 30, fols. 8 and 19, quoted in John Locke,
Second Treatise of Government
, ed. Richard Howard Cox (Arlington Heights, IL: H. Davidson, 1982), 175–6.

7.
Quoted in David Bertelson,
The Lazy South
(New York: Oxford University Press, 1967), 86.

8.
Edmund Burke,
The Works of the Right Honorable Edmund Burke
, vol. 1, 371, cited in Jonathan Haslam,
No Virtue Like Necessity: Realist Thought in International Relations Since Machiavelli
(New Haven, CT: Yale University Press, 2002), 141.

9.
Samuel Eliot Morison and Henry Steel Commager,
The Growth of the American Republic
, vol. 1 (New York: Oxford University Press, 1942), 102.

10.
Ha-Joon Chang,
Kicking Away the Ladder: Development Strategy in Historical Perspective
(London: Anthem, 2002), 52.

11.
Morison and Commager,
Growth of the American Republic
, vol. 1, 103.

12.
Chang,
Kicking Away the Ladder
, 52.

13.
Ibid., 54–55.

14.
Ibid., 52–55.

15.
Robert E. Wright and David J. Cowen,
Financial Founding Fathers: The Men Who Made America Rich
(Chicago: University of Chicago Press, 2006), 126
.

16.
Charles Rappleye,
Robert Morris: Financier of the American Revolution
(New York: Simon & Schuster, 2010), 304.

17.
Ibid., 306.

18.
Quoted in Margaret C. S. Christman,
Adventurous Pursuits
(Washington, DC: Smithsonian Institution Press, 1984), 43.

19.
Rappleye,
Robert Morris
, 105–106.

20.
Wright and Cowen,
Financial Founding Fathers
, 139.

21.
Ibid., 137–38.

22.
Charles E. Brooks,
Frontier Settlement and the Market Revolution: The Holland Land Purchase
(Ithaca, NY: Cornell University Press, 1996), 13.

23.
Washington Irving,
Life of George Washington
(New York: G. P. Putnam’s Sons, 1876), 2:654.

24.
Hamilton to James Duane, September 3, 1780, in
The Papers of Alexander Hamilton
, ed. Harold C. Syrett et al. (New York: Columbia University Press, 1963), 2:400–418.

25.
Chang,
Kicking Away the Ladder
, 21–22.

26.
“Stock Marine List,”
New York Gazette
, April 2, 1792, quoted in Robert E. Wright,
One Nation under Debt: Hamilton, Jefferson, and the History of What We Owe
(New York: McGraw-Hill, 2008), 159.

27.
Hamilton to Morris, April 1781, quoted in Frank Bourgin,
The Great Challenge: The Myth of Laissez-Faire in the Early Republic
(New York: George Braziller, 1989), 75.

28.
Leonard L. Richards,
Shays’s Rebellion: The American Revolution’s Final Battle
(Philadelphia: University of Pennsylvania Press, 2002), 158–59.

29.
For Hamilton’s bank plan, see
The Papers of Alexander
Hamilton
, ed. Syrett et al., 7:305–42.

30.
Ibid., 3:419, in Bourgin,
The Great Challenge
, 80.

31.
David Jack Cowen,
The Origins and Economic Impact of the First Bank of the United States, 1791–1797
(New York and London: Garland, 2000).

32.
Richard Sylla, “Reversing Financial Reversals,” in
Government and the American Economy: A New History
, ed. Price Van Meter Fishback (Chicago and London: University of Chicago Press, 2007), 121.

33.
James O. Wettereau, “The Branches of the First Bank of the United States,”
Journal of Economic History
2 (December 1942): 66–100.

34.
Thomas Jefferson, “Note on the Establishment of a Money Unit, and of a Coinage for the United States,” in
The Works of Thomas Jefferson
, Federal Edition, Paul Leicester Ford, ed. (New York and London: G. P. Putnam’s Sons, 1904–1905), 4:297–313.

35.
James E. Vance Jr.,
The Continuing City: Urban Morphology in Western Civilization
(Baltimore and London: Johns Hopkins University Press, 1990), 329.

36.
Lawrence A. Peskin,
Manufacturing Revolution: The Intellectual Origins of Early American Industry
(Baltimore: Johns Hopkins University Press, 2003), 94.

37.
Hamilton, “Report on Manufactures” (Washington, DC: Government Printing Office, 1913 [originally published in 1791]), 18.

38.
Alexander Hamilton,
Federalist
35, in
The Federalist Papers
, ed. Charles Kesler and Clinton Rossiter (New York: Penguin, 1999), 208.

39.
Alexander Hamilton, “Report on the Subject of Manufactures,” in
The Papers of Alexander Hamilton
, ed. Syrett et al., 10:285–6.

40.
Doron Ben-Atar, “Alexander Hamilton’s Alternative: Technology Piracy and the Report on Manufactures,”
The William and Mary Quarterly
, 3d ser., 52, no. 3 (July 1995): 396.

41.
Ibid., 390.

42.
Ibid., 390–91.

43.
Jefferson to William Crawford, June 10, 1816, in
The Writings of Thomas Jefferson
, ed. Paul Leicester Ford (New York: G. P. Putnam’s Sons, 1892–1899), 10:33–35.

44.
Ben-Atar, “Alexander Hamilton’s Alternative,” 408.

45.
Ibid., 396.

46.
Ibid., 407.

47.
Ibid., 412.

48.
The Papers of Alexander
Hamilton
, ed. Syrett et al., 10:525.

49.
Hamilton to James A. Bayard, January 16, 1801, in
The Papers of Alexander
Hamilton
, ed. Syrett et al. (New York: Columbia University Press, 1963), 25:319–24 (“by a trick,” 25:321n).

50.
Ibid., 11:131.

51.
David J. Cowen, “The First Bank of the United States and the Securities Market Crash of 1792,”
Journal of Economic History
60, no. 4 (December 2000): 1041–60; Cathy Matson, “Public Vices, Private Benefit: William Duer and His Circle, 1776–1792,” in
New York and the Rise of American Capitalism: Economic Development and the Social and Political History of an American State: 1780–1870
, ed. William Pencak and Conrad Edick Wright (New York: New-York Historical Society, 1989), 72–123; Joseph Stancliffe Davis, Essay II, “William Duer, Entrepreneur, 1747–1799,” in
Essays on the Earlier History of American Corporations
(Cambridge, MA: Harvard University Press, 1917), 278–345.

52.
Albert Gallatin, “Report on Manufactures,” in Alexander Hamilton et al.,
State Papers and Speeches on the Tarriff
(Cambridge, MA: Harvard University Press, 1893).

53.
Thomas Jefferson,
Notes on the State of Virginia with Related Documents
, ed. Donald Waldstreicher (New York: Palgrave, 2002), 197.

54.
Jefferson to General Thaddeus Kosciuszko, June 28, 1812, in
The Writings of Thomas Jefferson
, ed. Andrew A. Lipscomb and Albert E. Bergh (Washington, DC: Thomas Jefferson Memorial Association, 1905), 13:170.

55.
Jefferson to William Crawford, June 20, 1816, in
Writings of Thomas Jefferson
, ed. Paul Leicester Ford (New York: Cosimo, 2009), 10:34–35.

56.
Jefferson to Benjamin Austin, January 9, 1816, in
The Writings of Thomas Jefferson
, ed. H. A. Washington (New York: H. W. Derby, 1861), 6: 522–23.

57.
Marvin Meyers, ed.,
The Mind of the Founder: Sources of the Political Thought of James Madison
, rev. ed. (Hanover, NH, and London: Brandeis University Press, 1973), 380–84.

58.
Jefferson to Pierre Samuel Du Pont de Nemours, 1811, quoted in Bourgin,
The Great Challenge
, 137.

59.
Jefferson to Joel Barlow, 1811, quoted in Bourgin,
The Great Challenge
, 151.

CHAPTER 3: THE FIRST AMERICAN ECONOMY

1.
Adam Smith, part 2,
An Inquiry into the Nature and Causes of the Wealth of Nations
(New York: P.F. Collier & Son, 1903 [originally published in 1776]), 112.

2.
Fortune
, “Almanac of American Wealth: The Richest Americans,”
CNN Money
, http://money.cnn.com/galleries/2007/fortune/0702/gallery .richestamericans.fortune/2.html (accessed September 27, 2011).