America's Secret Innovation Weapon: Immigration

Passport immigration stamp

When I was 8 years old, my father explained to me the secret to American prosperity.

Immigrants come to the United States and take menial jobs so that their children have a chance at a better future, he told me. While the jobs they take are below their intrinsic capabilities, they’re focused on giving their children a better life, not personal job satisfaction. Second-generation children, seeing how hard their parents work to give them an opportunity, in turn work hard at school, where, he noted, they often focus on mathematics and science in pursuit of the economic returns promised by careers in engineering and medicine. Third-generation kids figure the economic return on effort expended is better for business and legal professionals and pursue those professions instead of technical ones.  By the fourth generation, any immigration-related incentives to work hard are largely nonexistent.

It was a gross generalization used to explain to a child the importance of immigration, but one that I have since found to be generally accurate.

On this 233rd celebration of U.S. Independence Day, in the midst of the worst economic recession in at least a lifetime, there is a national debate taking place as to the direction of the country. And while I’m confident that we will preserve our democracy and capitalism, I’m concerned about the tone and tenure of the discussion around immigration. Smart immigration policies will do more for American innovation and productivity than better math and science education, more spending on basic research and additional venture capital combined. If we get strategic about immigration, I believe the U.S. can preserve its economic leadership position in the world far longer than anyone currently expects.

Why immigration is more important to innovation than broad-based science education

Shortly after President Obama was elected, The New York Times published an article by Ian Ayres in which he expressed support for appointing Larry Summers as Treasury Secretary. The article quotes Dr. Summers on his assumption that top physics researchers are 3-4 standard deviations above the mean in terms of I.Q. While I don’t have evidence to support his assumption, my intuition is that he’s right, including when he notes what a small group of people these great thinkers represent. Dr. Summers states:

“If…one is talking about physicists at a top-25 research university, one is not talking about people who are two standard deviations above the mean. And perhaps it’s not even talking about somebody who is three standard deviations above the mean. But it’s talking about people who are three-and-a-half, [or] four standard deviations above the mean in the 1 in 5,000, [or] 1 in 10,000 class.”

If we assume that talent is evenly distributed throughout the planet, that the U.S. population is around 300 million, that the global population is 6.7 billion, and that 1/5,000 people are the top candidates to push U.S. innovation forward, that gives us a pool of 60,000 people in the U.S. and 1.28 million outside of it.

Innovation will not be spurred solely by giving those 60,000 Americans access to math or science education, but by providing the right incentives for them to enter the scientific and technical professions. More importantly, we could radically increase the number of innovation candidates through targeted immigration of the 1.28 million people that hail from elsewhere.

The government cannot mandate desire

If the first benefit of immigration is importing talent, the second is that of importing “hunger.” Many countries lack a way to identify and reward their brightest citizens, while that has been the allure of the U.S. since our inception. So I would argue further that the “innovation probability” of a high I.Q. individual whose family has been in the U.S. for many generations is less than that of someone who’s new to our nation and has a comparable intellect, but far more desire.

The time for a strategic approach to immigration is now

Broad-based mathematics education will strengthen our nation by improving our workforce, but that is not best path to innovation. Basic research may create jobs and openings at universities to lay the foundation for innovation in certain areas, but the ROI on such investments is uncertain and sometimes misplaced. And the pool of available venture capital is not the constraining factor in new startups — lack of talent is.

It’s time for a more strategic and aggressive immigration policy, one that targets the best and brightest around the globe and makes it easy for them to become permanent residents. We should be recruiting the world’s best talent the same way top companies recruit the best talent. Talk to anyone who’s tried to become a resident here lately and you’ll quickly realize the process is long and often highly random — in other words, very discouraging.

Strategic immigration, together with our strong democracy, capitalistic system and melting-pot culture, will deliver a better standard of living for many generations of Americans to come. I am grateful to all of the immigrants in the U.S. on this Fourth of July. To them, I say thank you — for everything you do.

Mike Speiser is a Managing Director at Sutter Hill Ventures.