This past week I traveled to Vancouver, Canada, to catch up on some writing projects. While here, I have noticed a contrast that becomes much more apparent when one crosses a continent and an international border.
Let me first describe the similarities. Both the North Country and Canada rest a fair amount of economic hope on the opportunity to attract investors abroad to their communities. In the United States, the EB5 program allows a foreign investor with as little as $500,000 to invest and create at least five permanent jobs. In return, they are given residency status and thus placed on a solid road to citizenship.
The Canadian version of such programs have been widely employed and wildly successful in attracting capital and jobs. The difference, though, is that the Canadian version is primarily bureaucratic while the U.S. version is primarily legalistic.
A U.S. EB5 application can cost $100,000 in legal fees alone, and often much more, and frequently takes years to approve. The Canadian version can work about as quickly as regionally based bureaucrats want to process it. From my casual viewpoint, it seems that the Canadian process is preferred.
Many of the investors are from China. My mother in Vancouver harbors the hope of selling her house to one of them when she is ready to move. That sentiment is very common in Vancouver. As a matter of fact, a local joke is that China would like to buy Vancouver, but Japan refuses to sell.
One may wonder why one would want to move the family wealth and entrepreneurial spirit from China to the United States or Canada. After all, China is creating great wealth and millionaires at a faster rate than anywhere else in the world.
Early in this Great Recession, I estimated that the size of China's economy will surpass the United States in 2020. I have since revised that date to 2018, primarily because recovery here has been held back by more United States political dysfunction than I could have imagined.
Meanwhile, China's economy continues to grow at 9 percent annually, and is increasingly fueled by domestic demand and affluence. Now, the smart nations want to insource those jobs that left their countries years ago when they were outsourced to places like China.
When asked why they would contemplate leaving their newfound affluence to move their families abroad, some of China's entrepreneurs respond, "You ask me why I would give up a wonderful country that gave me a great economy and a great workforce and great government? I would give that up to be free to say it actually ain't so great as I am required to say!"
Judging by the legalistic roadblocks, and our unwillingness to have a nuanced national discussion over immigration policy, the United States is not serious enough about looking across oceans for investment.
And when it does, it very often looks across the Atlantic.
We should remember that while the sun rises in the east, it sets in the west. The western provinces and states are much more connected with trade across the Pacific, even though trade of goods is becoming less important than trade of services.
Shipping routes should no longer guide global economics. It is the transportation of people with good ideas and a good work ethic that will herald economic success.
We are still trapped, though, with a picture of ships stacked high with containers as the icon of global trade. We have grudgingly accepted that financial capital is mobile, and will seek the highest return anywhere it can go.
This principle is like water finding its own level. It is sheer folly to try to frustrate this aspect of capitalism, at least if we don't want to cut off our nose to spite our face.
We also talk about the need to create jobs, when our real problem is to create competitive labor. Jobs go where capital goes and knows no borders.
Jobs are created when industry and government work together to create opportunity. Yet, labor is not mobile. It is even difficult to get people to move to where there are jobs within this country. And, the laws of every nation prevent labor from flowing naturally and easily across borders.
What we must do is race to create the best labor force in the world. If we create a labor force than can out-compete, out-innovate and out-produce every other nation, the jobs and capital will come.
We have seen that job creation does not work very well if jobs are not fundamentally good, innovative and sustainable. We should recognize our folly and talk less about jobs and more about enhancing the quality and productivity of our labor.
Successful companies have used this realization to claw their way out of the Great Recession. Can our politicians also use it to help the 99 percent claw their way out too?
Colin Read is the chair of the Department of Economics and Finance at SUNY Plattsburgh. His seventh book, Great Minds in Finance — the Portfolio Theorists, has just been published. Continue the discussion at www.pressrepublican.com/0216_read.
