Dear Monetary Policy Observer,
With national attention focused on immigration reform legislation currently working its way through Congress, it’s easy to forget that quantitative immigration laws are fairly recent additions to our nation’s policies. This latest Forbes article by Ralph Benko takes a look at the economic impact of looser immigration policy into the early 20th century, and how it tied in with monetary policy of the time to foster an era of unprecedented growth. We hope you find this material of interest.
American Principles In Action
Relaxed Immigration Barriers Correlate With Powerful Economic Growth
Relaxed immigration correlates with a thriving America. Few remember that most of our grandparents (including those of this columnist) who immigrated to America did so freely. They just showed up and came right in without confronting a crazy quilt of laws or phalanx of DHS agents. Relaxed immigration is part and parcel with economic growth.
People as resource is part of an integrated classical liberal world view. Another great classical thinker, the late Professor Melchior Palyi, formerly chief economist of Deutsche Bank, wrote in The Twilight of Gold 1914-1936: Myths and Realities (Henry Regnery and Company, Chicago, 1972), about a classical era, now mostly forgotten, that was “a golden age.” The era’s leaders offered an integrated worldview, extending to monetary, financial, and … immigration policy. How did it work out?
“Rising living standards of a rapidly growing world population, tremendous capital accumulation, accelerated technological progress, a vastly broadening area of well-organized international trade and finance, of political democracy and individual freedom–all these were the hallmarks of growth in the century between Waterloo and Sarajevo, and of its second half in particular. Toward the end of that period, and for a while thereafter, there was little doubt in the minds of most contemporary observers that such phenomenal developments as the skyrocketing of foreign long-term investments from under $6 billion in 1864 to over $70 billion just before World War I was closely related to the basic monetary institution of the age, the gold standard.…
“The meaning of the gold standard–with its unrestrained and uncontrolled private ownership of gold–cannot be appreciated in isolation from the institutional and psychological background that characterized the civilized world in the decades before 1914. ‘The outstanding feature’ of that period was the unity of the economic world, as has not been achieved at any other time.”
The gold standard was not the only hallmark of this epoch:
“’…there was freedom of travel without passports, freedom of migration, and freedom from exchange control and other monetary restrictions. Citizenship was freely granted to immigrants….”
The Republican Party aspires to the status of the party of economic growth. By branding those who have moved here outside the unenforced laws of a broken immigration system as “illegals” — and opposing a redemptive path to citizenship — some Republicans have, willy nilly, aligned against the policy most conducive to equitable prosperity: comprehensive reform.