Better Capitalism: Renewing the Entrepreneurial Strength of the American Economy, a new book by Robert E. Litan and Carl J. Schramm, is worth buying just for this single spectacular sentence about how immigrant entrepreneurs build the American economy:
Readers will surely recognize the names of these outstanding immigrants and the companies they founded and helped launch, but we'll bet not many realize that these individuals were all born in other countries: Alexander Graham Bell (AT&T), Levi Strauss (Levi Strauss & Co.), Andrew Carnegie (U.S. Steel), Herbert Dow (Dow Chemical Company), E.I. du Pont (DuPont), Charles Pfizer (Pfizer), David Buick (Buick Motors, later purchased by General Motors), Adolph Coors (Coors Beer), Henry Heinz (H.J. Heinz Company), James Kraft (Kraft Foods), William Proctor and James Gamble (Proctor & Gamble), Eberhard Anheuser and Adolphus Busch (Anheuser-Busch), Samuel Goldwyn and Louis Meyer (MGM), Marcus Goldman (cofounder of Goldman Sachs), and even Ettore Boiardi (Chef Boyardi).
In the next paragraph, the authors add Sergey Brin (Google), Andrew Grove (Intel), Jerry Yang (Yahoo!), and Pierre Omidyar (eBay).
The list of names is part of the argument the authors give for one of their suggestions for fostering economic growth, one which happens also to be my one of my own personal favorites: increasing immigration. The authors see immigrants paying payroll taxes as part of the solution to the entitlement-related budget problems that could hurt America's future growth. They endorse the "staple a green card to the diploma" plan for science, math, technology and engineering graduates that I've written about here several times.
Some of their specific immigration policy suggestions I found less than fully persuasive. The authors, citing what they describe as political realities, recommend focusing at least initially on what they call "skilled immigrants." But was Sergey Brin "skilled" when he arrived in America at age six or seven from the Soviet Union? Was Levi Strauss "skilled" when he came to America at age 18? It's hard to properly assess someone's skills without allowing the person to come here and test their abilities in a country that has freedom and the rule of law.
The authors also suggest establishing what they call a "job creators visa" — "a phased-in system for immigrants who launch businesses here to receive a one- to two-year temporary visa, then qualify for permanent status once they employ a certain number of nonfamily U.S. workers." But for an entrepreneur, a business failure is bad enough already without adding the threat of deportation. As for the minimum-employee requirement, who is to say the jobs won't vanish, or be outsourced or otherwise reduced through increased productivity, once the permanent immigration status is granted?
The gist of the book is that America can increase its GDP growth rate by an additional percentage point each year if it creates 60 new startups a year that reach $1 billion in annual revenues. That would be a four-fold increase from the current birth rate of about 15 such firms.
The authors offer a number of quite specific suggestions for how to achieve that growth. Some of them, like the overall openness to increased immigration, seemed sensible: Reform the research and development tax credit so that startup firms can carry it forward until their business is profitable and can absorb the credit. Break the monopoly that university technology transfer offices have on licensing inventions and discoveries by faculty members, making the commercialization of academic research more competitive and productive. Unleash "infrastructure entrepreneurs" by authorizing more privately built and owned toll roads and bridges. Reduce "excessively burdensome" state and local regulations and licensing requirements for occupations such as child-care and hair-cutting. Trim government entitlement spending. Turn schools into "entrepreneurial engines" by teaching students at every level how to start and run businesses.
Other suggestions will meet more resistance, especially from readers who judge ideas not only by whether they maximize growth but on how they affect individual choice or freedom. In this category would go the authors' urging of "openness by Republicans to additional tax revenue," including what they describe as "a tiny increase" in the unemployment tax, and a "variable tax on both domestically produced and imported oil" set at a level that would establish a price floor "perhaps in the $60-$70 barrel range." The authors also call for a federal mandate "that all new cars operating on liquid fuels be 'flex vehicles' capable of running on multiple fuels such as alcohol, ethanol, and methanol." That would give consumers a choice of fuels but deprive the consumers of the choice of buying a single-fuel car, and it would deprive automakers of the choice of selling single-fuel cars.
Mr. Litan and Mr. Schramm are both fellows of the George W. Bush Institute's 4% Growth Project. Mr. Litan was vice president of the Kauffman Foundation, and Mr. Schramm, a professor at Syracuse, was president of the Kauffman Foundation. The authors don't offer much in the book, which is heavy on policy detail but somewhat light on personal anecdotes, to explain how their own personal histories led them to become evangelists for entrepreneurship. But that's the power of the list of names and companies of all those immigrant entrepreneurs. The tale behind each of the companies and their founders may not be well known. But at least in a general sense, Americans can recognize the pattern of immigrants who arrive here with little but brains and ambition, and who leave us all better off as a result of their creativity and hard work. We need more of them.
