Thomas F. Cooley explains how America's demographic advantage over the rest of the developed world is largely due to immigration. He's completely right!

There has been a lot of hand-wringing of late about the need to rectify imbalances in the global economy that led the U.S. to be a net borrower from the rest of the world. Global imbalances are thought to be at the heart of many of our current global financial problems because so much U.S. debt of various forms has ended up on foreign balance sheets. Certainly, it seems incongruous that the world's wealthiest nation is also the world's biggest debtor.

But we have experienced two decades of imbalance in the flows of capital to the U.S. There is a commonplace view--presaged by the very term "imbalance"--that the U.S. current account deficit cannot continue and that the longer it lasts, the more drastic and painful will be the ultimate adjustment. When considered together, the net effect of the demographics transition is that savings will continue to flow to the U.S. from regions that are aging faster. These demographic forces are already in place, and there is little that could alter this equilibrium for some time to come.

Demographics are also important because they have implications for productivity growth. Innovation is more apt to be generated by the young and vigorous. The young are also more adaptable, better able to acquire the new skills called for by innovation, and more likely to take advantage of educational opportunities that better prepare them for such opportunities.

Translation: the rest of the world lends us money because it is closer to retirement than we are and they're saving up for when they're old. We're younger, can put the money to good use, and will pay our elders in other countries a reliable bucket of interest. The capital flow imbalance is due to demographic forces that are only going to get stronger.

There is a reason for our demographic good fortune. It is immigration. Our willingness to provide opportunities for immigrants from every class and every country has been the driving force of our economy. Our ability to continue to create new ideas and drive innovation depends critically on our willingness to welcome the best and the brightest and the hardest working, who understand the potential that the U.S. represents.

It is worth pausing now to think about this "slow news" because our political leaders seem incapable of thinking beyond lunch. Legislative blunders like the Sanders-Grassley "Hire Americans First" and other anti-immigration measures may play well on the Lou Dobbs circuit. But they are a serious threat to our long-term good fortune.

I can't speak for Lou Dobbs because I've never seen his show, and I certainly won't defend much of anything that comes out of the Senate.

I do think that the key to Cooley's argument is in this phrase: "the best and the brightest and the hardest working". I vigorously favor immigration, even in large numbers, but I believe that we need to discriminate in favor of highly educated, skilled, productive, law-abiding applicants. That certainly doesn't mean they need to be rich by American norms, but we should make an effort to attract the world's best, brightest, and hardest working, not just whomever manages to smuggle himself across a border.

We also need a plan to proactively assimilate immigrants into America's melting pot. This means that immigrants should be encouraged to become American citizens and to think of themselves as Americans first, not hyphenated Americans based on their skin color or country of birth. We should encourage immigrants to jump in and contribute to the American civilization with both feet, wholeheartedly, without holding anything back. Plans to admit "guest workers" who come in, work for a while, and then leave go against the American ideal and should be rejected.

America should be a nation that welcomes newcomers with open arms, but that process needs to be on our terms and under our control. We can afford to be choosy because there are billions of people who would love to come here and join this great experiment. Let's set aside worries about political correctness and come up with a method for evaluating and admitting immigrants without regard for nation of origin or skin color, but instead focusing on those individual attributes that make America -- and Americans -- great.

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