Tuesday, April 7, 2009

Export Educational Opportunity

The recession is doing a lot of damage to the economy, much of it outside the financial sector that is now being so heavily subsidized by the government. Some parts of the economy won't fully recover. Automobile manufacturing is the most obvious example. Real estate construction is another. Investing in long term economic growth is essential as a way to replace these losses. Many of America's problems would become more manageable if long term economic growth is enhanced. Covering the cost of the ballooning federal debt, coping with the growing burdens of Social Security and Medicare, supporting the long term values of real estate and stocks--still the most crucial assets in retirement planning--and paying for the protection of the environment are some of the more obvious examples of problems that become less challenging if GDP growth rates rise.

Almost all of the federal government's bailout and stimulus measures are understandably focused on short term difficulties. If we don't fix short term problems like the banking crisis and the ongoing recession, prospects for the long term become dimmer. But the long term also becomes dimmer if we omit to make long term investments.

One of the best long term investments America could now make would be to export educational opportunity. We're not talking about American universities opening campuses overseas. We mean providing more opportunities for foreign students to study here. The United States has the best university system in the world. Not only is it superb--Nobel Prizes in the sciences go predominantly to faculty of American universities--but also very large, enrolling some 14 million students. There is plenty of space of for additional students, as enrollments are under pressure because of the weak economy and reduced availability of financial aid. Most importantly, foreign students can be among the best long term investments for the U.S. economy.

Something like half the startups in the Silicon Valley were founded by people who were born in another country. Sergey Brin and Jerry Yang, co-founders of Google and Yahoo, respectively, were both born in other nations. Many of the Silicon Valley's entrepreneurs first came to America to study, and then stayed because the opportunities were better than at home. Going farther back in time, foreign born engineers played important roles in the electronics revolution of the 1950s, which saw the development of the transistor (a key component in virtually every electronic device now made) and the computer. One, An Wang (no relation to this writer), helped design the structure of computer memories, and then went on to found Wang Laboratories.

America's role in the world economy will be mostly ideas-based in the future. Manufacturing, although still a critical sector, will decline relative to overall GDP. America's best economic opportunities will come from the production of high value goods and services, and we need brain power to create those products. By having foreign students study and stay here, we obtain some of the best and brightest from around the globe. Even though we're mired in recession right now, many foreign students will stay because America offers individual liberty and freedom in ways many and probably most other countries do not. They can cast off limitations in their home countries imposed by ethnicity, gender, religion, social stratum, and political beliefs, and like native born Americans recreate themselves. America is a nation of immigrants, and a flexible immigration policy is a gift that keeps on giving.

Of course, we can't simply open the borders, for both economic and security reasons. But ambition is the life force behind long term economic growth. Generosity in allowing foreigners to study and stay here channels into the United States ambition that would otherwise build the wealth of other countries.

Foreign students generally come up with the money for their educations on their own, with little aid from American sources. In that respect, they help to reduce the balance of payments deficit that the U.S. has with the rest of the world. We're not suggesting that the U.S. government provide support to foreign students, since they generally have powerful enough reasons and sufficient funding to come here anyway. However, the government should shape its immigration policies to give smart, well-educated foreigners greater opportunity to study here and then stay to work. Granted, foreigners applying for jobs here compete against native born Americans. But, from a longer term perspective, they enrich the nation as a whole. These people have, time and time again, proven immensely valuable to America. Over the long term, the most valuable capital is human capital, and America shouldn't shortchange itself.

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