While President Obama’s State of the Union address did not focus on immigration, his few statements on that issue sent out conflicting signals. The president pushed for a comprehensive immigration reform plan that includes letting foreign businessmen and entrepreneurs immigrate to the U.S.
It’s a great idea, but it’s hard to take Obama’s commitment to it seriously, since in the same speech he touted his increased enforcement policies — record deportations up by over 400 percent since 1996, workplace raids, stricter work permit rules, and the deputizing of thousands of local police departments as immigration agents.
If the president is serious about immigration reform, he should be looking for ways to end the failed policies of the past, rather than double up on their increasingly draconian enforcement. And it is especially crucial he do so now. If the president truly wants more business growth and opportunities for Americans, he needs to turn his words into action. Business start-ups have decreased 23 percent over the last five years. We could quickly turn that around by removing immigration barriers for entrepreneurs.
To illustrate what is at stake, consider one famous example. Had the family of Sergey Brin, co-founder of Google, not immigrated to America from the Soviet Union as refugees when he was a child, it is unlikely he would have been able to come to U.S. at all, especially as an entrepreneur. The success of Google — which has a market capitalization of $184 billion and employs over 32,000 people worldwide — might never have been had Brin tried to come to America as an adult.
There is only one way Brin could have entered the U.S. as an entrepreneur: the EB-5 immigrant investor visa. (Another route, the E-2 investor visa, is not available to Russian nationals.) The EB-5 program makes 10,000 visas available annually to immigrant investors who invest $1 million in a commercial enterprise ($500,000 in a high-unemployment area) and directly creates at least 10 new jobs, or makes a massive new investment in an existing business.
In reality, Brin and Page solicited investments and cash while graduate students at Stanford. Eventually, they convinced Andy Bechtolsheim, a Jewish German immigrant and co-founder of Sun Microsystems, to invest $100,000 in their venture — nowhere near enough to satisfy the EB-5’s capital requirement.
Even if Brin, by some miracle, had been able to develop a workable search engine during the post-Soviet disorder, partner with a Russian version of Larry Page, and find enough investors in a cash-starved former Communist country, he still would not have qualified for the EB-5 investor visa.
The other ways that Brin could have immigrated legally — though not initially as an entrepreneur — would be as a priority, professional, skilled, or special immigrant on an employment-based green card, of which only 140,000 are issued annually. However, it is expensive for firms to sponsor immigrants with legal and government fees in the thousands of dollars, so this is hardly an ideal option.
Another way would be through the H-1B visa program, a temporary skilled worker program that allows the worker to apply for an employment-based green card while working in the U.S. But even if Brin had been able to get in on an employment-based green card or an H-1B visa, he would have had to work as an employee for several years before getting the chance to start Google.
Brin is a creative and ambitious innovator, so he may have entered on one of these other visas and created Google, but the odds are low. If our immigration laws have prevented the creation of even one other Google, they are even worse than most economists think. But it’s not just potential large businesses that aren’t created because immigration laws make life difficult for entrepreneurs. Many potential small businesses are also nipped in the bud.
New firms and startups are the source of most of America’s productivity growth. They innovate, find market niches, and divide production into new and profitable combinations. Not all grow to be as large or innovative as Google, but they all make their own significant contributions to our economy. All the government needs to do is let them.
Federal immigration bureaucrats don’t have a crystal ball that can tell them who will make a successful entrepreneur. Yet our laws pretend they can do so. Soviet central planners, whom Brin’s family sought to escape, tried to predict demand for goods and services with catastrophic consequences. American immigration officials shouldn’t harbor the same conceit. It’s time to end this charade.
People become entrepreneurs when they choose to take that risk and strike out on their own. As to who might do so and when we can only guess. But three things don’t require guessing: 1. Immigrants across the skills spectrum are very entrepreneurial; 2. American capitalism and native-born entrepreneurs want to work with immigrants to create wealth; and, 3. Our immigration laws need to get out of their way.