No, the U.S. isn’t losing the global talent war

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The people at Der Spiegel, the German newsweekly, were nice enough to translate into English a pretty compelling article from last week’s issue. Here’s how it begins:

They are fed up, truly fed up. Fed up with the constant bickering over the costs of wage benefits, social reforms, elimination of subsidies, store closing hours and all the other symbols of a country stuck in bureaucratic and legislative gridlock.

They are tired of living in country where landing a job is like playing the lottery, a country where not even half of citizens live from gainful employment and a country in which even academics in their mid-40s are already considered problem cases when it comes to job placement. In other words, they are fed up with living in a country where all opportunities already seem to be taken: opportunities to succeed in one’s career, to own property and to achieve prosperity…

The “they” of the article are well-educated young Germans–doctors, architects, lawyers, etc.–who have decided that their futures lie elsewhere. The main statistic used in the article to back this up is that in 2005, for the first time in memory, more Germans left the country (144,815) than returned (128,052). I’m assuming the “returnees” include a lot of ethnic Germans emigrating from Eastern Europe, but I’m not entirely sure about that. The article says Germany still has an overall net inflow of 80,000 immigrants a year, but the people leaving are mostly well-educated and the ones coming in aren’t.

This is all bad news for Germany, although I imagine the country will somehow muddle through. Given how many millions of smart people Germany has lost over the past two centuries to immigration, war, and genocide, it’s amazing that the remaining inhabitants can walk and chew gum at the same time, let alone design and build Mercedes SLR McLarens.

My point in bringing this up, though, is to contrast Germany’s situation with that of the U.S., the number two destination (after Switzerland) for emigrating Germans. Although other factors will surely come into play, I think the most important determinant of national or regional economic success over the coming decades will be the presence of talented people. And while there’s been lots of worried talk over the past few years about the U.S. losing its edge in the global talent wars, much of it is overwrought.

It’s true that the great one-way highway of Indian and Chinese talent moving to the U.S. to escape a dysfunctional economy in India and a repressive state in China has now become a two-way street. That, as David Heenan writes in his book Flight Capital, poses some real challenges for the U.S. But we’re still far better positioned than most countries to attract talented people from overseas and keep talented natives at home. Certainly better positioned than Germany.

That’s because (a) we speak English, the global language of the well-educated, (b) we have great universities, (c) we’re more welcoming of outsiders than most European and Asian countries, (d) we have a dynamic, entrepreneurial economy that keeps spawning new companies and even industries, and (e) we have lots of livable, pleasant cities. If you were stuck in traffic getting to work this morning and you think (e) is a bunch of baloney, try commuting in Bangalore.

UPDATE: One important matter I didn’t bring up in my post–whether U.S. immigration policies discourage smart foreigners from coming here–is discussed in the comments below. It’s pretty clear that U.S. immigration laws are not designed to strengthen our position in the global talent wars, unlike those of, say, Australia or Canada. That we keeping bringing in talent anyway is testament to something uniquely attractive about the U.S.

As for Jens Straten’s comment that my post was “badly researched” and “doesn’t make much sense,” I’ll grant him the first point in that my research consisted entirely of reading an article in Der Spiegel. But I fear he didn’t really understand what I was trying to say, which was that the U.S. has some major selling points that the doomsayers among us too often ignore. One is our top universities, which while they will almost sure to be rivaled by those of China and India in the future, currently dominate just about every world ranking I’ve ever seen. As for the English language, yes lots of universities and corporations in Europe have switched to using it, but they’re still located in non-English-speaking-countries. And finally, I’m a big public transportation user myself, and I agree that the excellent transit systems of most big European cities are a selling point. But I think lots of people around the world put even more value on having their very own house with a yard, and American metropolitan areas offer this in unique abundance.

UPDATE 2: Commenter Stuart T. of London correctly points out that most everything I say about U.S. strengths also applies to the U.K. (Which is why London ended up as Europe’s financial center instead of Frankfurt.) He also says the Mercedes SLR McLaren was designed in the U.K. I think it’s better described as a joint U.K.-German endeavor, but it still was clearly not the best example I could have chosen. How about the BMW M6?