Opinion

Reihan Salam

More Americans should work abroad

By Reihan Salam
February 7, 2014

On Thursday, House Speaker John Boehner told members of the press that though immigration is “an important issue in our country” (thanks for that, John), it will be difficult to move immigration legislation this year. According to Boehner, the chief stumbling block is that Republican lawmakers simply don’t trust the Obama administration to implement a new immigration law in an aboveboard way. It is also true, however, that conservatives in the House doubt Boehner’s instincts on immigration, and worry that following his lead will do them more political harm than good. I tend to think that the skeptics are right, and that the GOP ought to put immigration reform on the back-burner.

But just because we can’t agree on immigration reform doesn’t mean that we can’t agree on emigration reform, a subject I’m guessing you’ve never heard about. Believe it or not, the question of how easy we make it for Americans to live and work outside of the United States will be almost as important in the decades to come as the question of who we should let live and work in the United States is now.

Though you’d hardly know it from our domestic political conversation, U.S. migration doesn’t just involve foreigners moving to the United States. It also involves Americans moving to foreign countries. And I’m not just talking about the troops stationed in southern Afghanistan, Okinawa, or Germany. The State Department estimates that 6.3 million U.S. citizens live outside of the United States, a number that explicitly excludes military personnel. Granted, as a share of America’s gargantuan population of 314 million, the American diaspora is an awfully modest 2 percent. Some will no doubt see this as cause for celebration, particularly sentimental Americans who can’t stand the thought of having loved ones move to distant locales. While I hate the thought of losing friends and family to Montevideo or Marrakech as much as the next guy, the truth is that the American diaspora enriches us all, and the United States would be much better off if it were much larger.

If you’re reading this column, you’re probably aware of the fact that there are and have long been handfuls of American professionals living in global financial capitals like London, Hong Kong, and Singapore, and that intrepid young Americans will head to emerging market boomtowns like Nairobi, Yangon, and Manila to take advantage of new economic opportunities. What you might not know is that the United States sends far fewer skilled professionals abroad as a share of its population than other rich countries like Britain or Germany.

As a jingoistic American, I acknowledge that some of this reflects the fact that the United States is a really awesome place to live and work, and that moving from New York City to Minneapolis to Miami to Memphis to Los Angeles is enough to gain exposure to many different cultures and ways of life. It is also true that unlike British or German professionals, Americans who live and work abroad have to pay taxes on the income they earn outside of the United States. There is, to be sure, a credit that shields some of the income Americans earn abroad from U.S. taxes. Frankly, if you’re not a high-flying entrepreneur or business executive earning large sums, you probably won’t pay all that much. Even so, it is huge pain in the neck that is causing many almost-Americans —  i.e., lawful permanent residents, many of whom studied at U.S. colleges and universities, or who grew up at least part of the time in the U.S. — to surrender their green cards rather than deal with this hassle. Consider the China-born software coder who speaks unaccented American English after a stint at Harvard Business School, and who loves the United States as much as she loves her native country. She could be a great asset to America over the long-run, and if the terrifying complexity of the U.S. tax code causes her to sever ties with our country, we all lose.

Moreover, the fact that taxes on income earned abroad hits high-flying American entrepreneurs and executives living abroad is actually a pretty bad thing in itself. These Americans are, in effect, our informal ambassadors. They build commercial relationships that redound to the benefit of all Americans. When they return home, which most of them eventually do, they bring with them relationships and know-how that contribute to economic growth. Think of them as the honeybees who collect pollen from around the world and eventually bring it back to the hive.

And we really need the pollen. America has long been home to the world’s most innovative firms. Yet as the rest of the world gets richer and smarter, innovation is bubbling up in surprising places. During the 1970s and 1980s, the Japanese surpassed U.S. firms in sectors like steel and automobile manufacturing, and U.S. firms raced to catch up. We’re now seeing a similar dynamic take hold in other domains, like retail and health services. “Reverse innovation,” according to business professor Vijay Govindarajan, involves “developing ideas in an emerging market and coaxing them to flow uphill to Western markets.” It is often easier to add bells and whistles to a super-cheap product aimed at poor consumers in the developing world than it is to reverse-engineer a super-expensive product aimed at poor people for more affluent consumers. This is a tremendously exciting opportunity, and it is expatriates who can help us realize it.

Revitalizing American innovation is just part of what emigration reform can do for us. In The Upside of Down, Charles Kenny, a senior fellow at the Center for Global Development, makes many arguments I find profoundly unconvincing, on the virtue of increasing less-skilled immigration and shrinking the U.S. military budget, among other things. Yet in a chapter on “Global Nomads,” he makes a compelling case that Americans ought to stop being so solipsistic and appreciate how much we can all benefit from encouraging people to live abroad. Among other things, Kenny observes that American students can often get a much cheaper education in other countries. Once Americans start to appreciate this fact, domestic educational institutions might wise up and appreciate that they have to offer better value for money.

Then there is the fact that U.S. retirees can stretch their savings much further in warm-weather middle-income countries like Mexico or Costa Rica then they can at home. By allowing U.S. retirees to access their Medicare benefits abroad, we might lighten the load of caring for older Americans while also giving workers in poor countries a big economic boost. The costs associated with caring for Americans suffering from dementia already exceed $157 billion per annum according to a 2013 study by the Rand Corporation, and that number will soon climb to dizzying heights. Most of this amount reflects the cost of caregiving, a field that has plenty of qualified labor in poorer countries. Can you think of a more pleasant form of entitlement reform than allowing U.S. senior citizens to live out their lives in beachfront splendor? I certainly can’t.

PHOTOS: Expatriate business workers chat after office hour inside Two IFC, the territory’s highest building at Hong Kong’s financial business district July 13, 2009. REUTERS/Bobby Yip 

An expatriate business worker leaves an office building as the sun sets at Hong Kong’s financial business district July 13, 2009. REUTERS/Bobby Yip 

Comments
18 comments so far | RSS Comments RSS

Interesting comments. I rather suspect the reason more Americans aren’t working abroad is that companies can pay employees from those countries less, with fewer (if any) benefits.

That said, employing an American is employing an American, and we need all we can get. I’m all for it.

Posted by JL4 | Report as abusive
 

You are one of the most opinionated, truly ignorant people who write these articles.

Why don’t you move abroad permanently?

Posted by EconCassandra | Report as abusive
 

Thanks for writing the article. You make many good points and it would be worthwhile for more Americans to hear what you have to say. I used to be an American abroad, but now I’m a non-American, thanks to US policy.

Posted by SwissTechie | Report as abusive
 

“…high-flying American entrepreneurs and executives living abroad…are, in effect, our informal ambassadors. They build commercial relationships that redound to the benefit of all Americans. [snip] Think of them as the honeybees who collect pollen from around the world and eventually bring it back to the hive.” Well said.

There are all too many Americans who wail and cry that “globalization” has caused the destruction of the American middle class. Not true. “Globalization” is a new set of unending challenges as unavoidable as change itself in a world surprisingly at peace with many economies emerging from centuries of shadows.

The American middle class is undergoing is the same sort of “adjustment” that we see when overvalued stocks, overvalued houses, etc. undergo economic “correction”. The “reality of the future” must reinvent and replace the “reality of the past”. No one promises “easy”.

Even as people fought, starved and were left behind in the dust, out of the disruption and suffering of the Industrial Revolution emerged a world of entirely new possibilities. Now that at long last the “American market” is open to all who would compete here, many are finding they have forgotten HOW to compete.

The Chinese write “crisis” with two characters. One means “danger”, the other “opportunity”. In a “Lead, follow or get out of the way” world, American owned or influenced multinational corporations wielding American dollars are also, in effect, our informal ambassadors. They, too, build commercial relationships that will eventually benefit all Americans.

There is no answer in reverting to protectionism or unions or any of the failed ideas that ultimately work against productivity, inventiveness, perseverance and the extra effort needed to flourish or prevail under the miracle of the bigger pie that only Capitalism has ever delivered. But even the strongest engine must be properly employed it it is to do “all that it can as well as it can”. This process is, of necessity, a never-ending one.

Today there is a danger of myopia in any “management” that, as time goes by, effectively denies an increasing number of American workers sufficient prosperity to buy much of what America produces. Henry Ford was not selling America. He sold the idea of more efficient transportation to all Americans, both rich and poor. He was the “point of the spear” that transformed a horse-and-buggy nation into an increasingly technological one.

Today it is STILL for US to market America to the world as the “go to” place for good ideas, good engineering, and a “better life”. A “truth of the future” is that, given actual freedom of choice, no one wants to live under the Taliban, Al-Qaeda, Asaad or even Putin. If the muslim “good life” is truely compatible in the long term with a twelfth century mental and physical existence and experience, it will be because we SELL no better message.

Posted by OneOfTheSheep | Report as abusive
 

Excellent article, Mr. Salam. As one of those 6+ million Americans abroad, I am delighted to read an article that (for a change) has some positive things to say about us.

You are absolutely correct, however, about the tax problems. Most Americans abroad are not rich and for some hard data about that, see this article by Patrick Cain about American citizens in Canada http://globalnews.ca/news/1109404/the-st ereotype-of-the-wealthy-u-s-expatriate/

Those tax laws that you are referring (and FATCA as well) are having a horrendous impact on those of us who are already abroad and for those immigrants thinking about moving to the US. Quite honestly these laws were not well known in the past(this system of worldwide citizenship-based taxation that is unique to the United States)but they are getting a lot of attention in the international media these days. For many it’s been an unwelcome revelation. Every day I hear from Americans abroad who are struggling to become compliant (it’s not easy for those who can’t afford international tax lawyers) and others who are simply giving up and turning in their passports.

On the other side, potential immigrants to the US that I talk to in my host and other countries are simply horrified at the idea that moving to the US on a Green Card would mean having to report and potentially pay taxes on the assets they left behind in their HOME country.
In my family one of my non-US relatives with an advanced engineering degree who did work in the US for a time said to me, “Thank God I never became a US citizen when I had the chance.” That was very hard to hear…

If anyone is interested in knowing more about Americans abroad the Association of Americans Resident Overseas (AARO) has a fine map on their website with numbers for different continents/countries http://www.aaro.org/
(scroll down to the middle of the page). And, of course, if anyone has questions about our community AARO is a great resource.

Posted by vferauge | Report as abusive
 

Things like oma export (a German phrase for moving out of retirees to foreign countries) and the going for higher education abroad are very popular and have really proven themselves in Europe at least. No EU country wants to stop those flows of people, so I guess it’s something that would be really good for USA too.

HOWEVER, migration out of USA is already commonplace for those who bother to check what’s available, and especially those who are not afraid of learning languages other than English or Spanish. In Poland, for instance, it’s common in some cities to see American students studying medicine on a high quality Americanized curriculum for about 10 000 USD per year + affordable living costs. Moreover, there aren’t many barriers for Americans to go abroad in terms of visas, for example, and native English speakers experienced with the US market are high value assets for many businesses abroad.

I would say that there’s no need for any US government intervention regarding the migration out of US. The problem lies in the preferences of people but the government should not interfere with that. The unwillingness of Americans to move abroad in search for opportunities simply means that the economic crisis is not all that bad to make them search for something different.

Posted by Radek.kow1 | Report as abusive
 

I can’t help but wonder, after reading the article and most of the comments, why there is such a push from other countries to send their citizens to the United States in the first place. Could it be that they wish to unburden themselves from a grossly overpopulated state of existence and place the burden on Americans? And, then the Americans who do travel abroad bring back those little nuggets emblazoned with the word globalization and we all are expected to buy into it as the new “challenge” to over come in the 21st century. Why is it that Scandinavian countries don’t have this problem? Why aren’t Scandinavian countries buying into globalization? Why do people come from different parts of the world to begin with? If we were all meant to live together as one united entity, wouldn’t we have been born into this situation? Wouldn’t we all look similarly, act similarly, have similar cultures and customs? Then, why the push towards that end? I fear that the push toward globalization is the beginning of an end for our civilization

Posted by DJ65 | Report as abusive
 

@DJ65,

I don’t see a conscious “…push from other countries to send their citizens to the United States…” in the apparently endless northward flow of uneducated, unskilled indian/hispanic wannabee fence-jumping squatters. I see individuals fleeing from places and societies that have a “…grossly overpopulated state of existence…” because of religious “values” fundamentally incompatible with any third world society that would have a better life for it’s resident peoples.

These people very quickly pick up on how to exploit the fundamental good will of Americans. Were I in their place I would do the same.

On the other hand, I do not stand silent to this ongoing invasion because, for the first time, these people are not in the slightest interested in adopting OUR our values and becoming Americans. Quite the contrary, they wish to replace our successful society with a mirror of the one they fled.

Scandinavian countries have typical European political social values but a more homogeneous population. They are a relatively small economic backwater of little clout or consequence in the long term. Even the successful example of Switzerland is not possible to simply “scale up” to work it’s magic on the world’s economy.

The only civilizations “at risk” to globalization are those too long insulated from the “real world” to compete in it. The magic of Capitalism, “Find a need and fill it”, still requires offering the rest of the world something they need or want at a price they can afford.

When opportunity knocks, what our eyes behold when we open the door usually looks like WORK! Is it really any wonder that the lazy and unmotivated among us fail to recognize and embrace it?

Posted by OneOfTheSheep | Report as abusive
 

To “One of The Sheep” – You must be too young to remeber the Cubans who took to their boats to come to America. The Cuban economy could not support their needs and the political system, with Fidel, realized this. Otherwise, they would not have been encouraged to go. But for what some would call “socialism” I doubt that they would have thrived as they did, here in America. There was not just one “exodus” of people and each exodus consisted of a different social and economic strata. It is my hope that our own government will at some point be willing to invest in its own citizenry like we did those immigrants many of whom retained their “dual citizenship”[privileged rights like royal intelligencia caste] and greater rights to travel to Cuba than other Americans. Republicans here, Speaker Boehner included, would rather provide “gilded socialism” to immigrants, like the Cubans, than suffer the economic competition from an upwardly mobile middle class born raised,already working and paying taxes here.

Posted by ThomasShaf | Report as abusive
 

Thank you for your fine article. Although I agree with your premise that more Americans should go abroad to work, in practice the required US tax reporting is difficult and costly and mistakes can be financially ruinous.

The US is the only developed country that employs citizenship-based taxation. Although you correctly point out that many US citizens working abroad will pay little US income tax, the US tax filings are complex and mistakes, especially concerning reporting bank and pension accounts, can cause penalties and fines of 50% (!) of the balance. The IRS considers foreign accounts held by Americans working abroad to be “offshore” and has started to go after Americans abroad with a vengeance.

The US needs to begin treating its hardworking expats with a little dignity and respect. It should switch to residence-based taxation so that its citizens abroad only need to file in the country where they work and are resident.

Posted by CitizenAbroad | Report as abusive
 

Yes, perhaps if more Americans traveled to India to work, they would quickly realize what a mistake it is for America to allow the Indian masses, prone to fraud by cultural tradition, to immigrate to America.

To think about immigration, consider the difference between Japan and India.

JAPAN
Although its first human habitants came from China, Japan rose to prominence among human cultures because it was, like England, an island nation, and compared to other countries, had almost zero immigration thereafter.

Japan, the Land of the Gods, grew such a strong culture, admired around the world, because it was not constantly disturbed by immigrations.

INDIA
Japan is the exact opposite of, say, India, which has constantly, throughout its history, been disturbed by immigrations.

Including its immigrants, India today has a population of 1.17 billion people, compared to Japan’s 128 million.

India has had migration after migration from every direction. It is made up of Hindus, Moslems, Buddhists, Christians, just to start.
India, the land built by immigrants, has literally dozens of languages, great corruption and chronic diseases. Everybody speaking a different language, worshiping a different god, stealing from each other. That is India, the poster child for immigration advocates.

Yet Japan, with a population only one-tenth the size of India’s, has a GDP 4 times as big as India. That means the average Japanese citizen is roughly 40 times as productive as the average Indian.

Japan, the island nation, protected from immigrations, has a cohesive culture, very high economic production, high per-capita incomes and wages, and the lowest crime rate in the world.

So America should ask itself, do we want to remain a strong culture, like Japan, or do we want to allow immigrations from all directions, and end up with the chaos and poverty and disease that is India?

Immigration into America today has flooded the labor markets, driving down wages and causing joblessness, destroying American careers and families. Immigrants (America has 45 million immigrants today) occupy scarce American housing, driving rents sharply higher for Americans.

Immigration on such a vast scale is quickly destroying the American middle class.

Posted by AdamSmith | Report as abusive
 

@AdamSmith
By your logic it’s hard to understand why island territories such as Madagaskar, Indonesia or Sri Lanka can hardly be said to be stories of economic success.

Moreover, there are plenty of cases of successful states that accepted immigrants for a prolonged period of time, with UK, Australia and USA being very prominent examples in the English speaking world. You’re living in illusions if you think that any of those countries had little immigration. Go to London if you don’t believe. Even in the remotest villages in Scotland you can see kebab shops and Chinese takeaways.

By the way, why do you see those eating out establishments everywhere in UK? Why are immigrants in UK significantly less likely to use social benefits than natives? Isn’t it because the immigrant population is more entrepreneurial or more motivated to work than the local one?
Immigrants are the lifeblood of a lot of economic growth. Moreover, they make your oranges and meat and so many other commodities A LOT cheaper than otherwise. If the Mexicans didn’t come to USA to pick oranges, sooner or later the orange farms would have to move to Mexico to find cheaper labor force.

Posted by Radek.kow1 | Report as abusive
 

Breaking news – Today Sunday February 9, a national referendum was held in Switzerland to regarding MASS IMMIGRATION. The polls are now closed, and the results are now in:

Swiss voters narrowly decided that immigration quotas would be reintroduced, thereby overturning the free movement policy introduced in the European Union 12 years ago. Early results showed the country to be very divided in opinion over the ‘Stop mass immigration’ initiative.

‘Stop mass immigration’ was introduced by the nationalist Swiss People’s Party (SVP). Its goal is to introduce annual quotas on the number of foreign workers entering the country. The result will likely vex multinational companies based there; Roche, Novartis, UBS, and other industry giants frequently utilize foreign labor.

Many in Switzerland – which is surrounded by the EU but is not a member – believe that rising immigration levels are putting pressure on infrastructure, rent prices, the social security system, and unemployment rates.

“I don’t want to live like a sardine in a tin can,” independent politician Thomas Minder, who supports the initiative, told the newspaper Blick.

Posted by AdamSmith | Report as abusive
 

Congratulations to the people of Switzerland, on this historic day, for their vote to stop mass immigration.

Posted by AdamSmith | Report as abusive
 

Every four and one-half days, the world population expands by 1 million people.

Posted by AdamSmith | Report as abusive
 

It’s not just the high fliers who are ambassadors. It’s not just those 1% who impact America’s image abroad. Every one of us expats effects foreign opinion. When I sit in a coffee shop with friends and an anti-American discussion arises, which it inevitably does, I am the first person to throw gas on the fire. I am the first person to say out loud what a lousy country America is. The heads bob and the cups raise because John knows. John is an American being screwed over by double-taxation. My friends all agree that John is not getting a fair deal. Everybody tells him to renounce his citizenship. I may yet, but I won’t stop denouncing my home country’s unfair and paranoid tax policies.

Posted by PowerUnit | Report as abusive
 

Just a note for Reihan: There are a lot of ‘Non’ high-flying American entrepreneurs and executives living abroad also….
Some of us are just plain people who got swept under the rug after the dot.com bust, and just decided that if you can’t beat-em’, join-em…. Some of us even retired overseas later…

Posted by edgyinchina | Report as abusive
 

Thanks, many thoughtful ideas.

Posted by TheNeutralParty | Report as abusive
 

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