Economic history reveals one unmistakable psychological pattern.
By Joseph Henrich – When President Coolidge signed the Johnson-Reed Act into law in 1924, he drained the well-spring of American ingenuity. The new policy sought to restore the ethnic homogeneity of 1890 America by tightening the 1921 immigration quotas. As a result, immigration from eastern Europe and Italy plummeted, and Asian immigrants were banned. Assessing the law’s impact, the economists Petra Moser and Shmuel San show how this steep and selective cut in immigration stymied U.S. innovation across a swath of scientific fields, including radio waves, radiation and polymers—all fields in which Eastern European immigrants had made contributions prior to 1924. Not only did patenting drop by two-thirds across 36 scientific domains, but U.S-born researchers became less creative as well, experiencing a 62% decline in their own patenting. American scientists lost the insights, ideas and fresh perspectives that inevitably flow in with immigrants.
Before this, from 1850 to 1920, American innovation and economic growth had been fueled by immigration. The 1899 inflow included a large fraction of groups that were later deemed “undesirable”: e.g., 26% Italians, 12% “Hebrews,” and 9% “Poles.” Taking advantage of the randomness provided by expanding railroad networks and changing circumstances in Europe, a trio of economists—Sandra Sequeira, Nathan Nunn and Nancy Qian–demonstrate that counties that ended up with more immigrants subsequently innovated more rapidly and earned higher incomes, both in the short-term and today. The telephone, hot blast furnace, screw propeller, flashlight and ironclad ship were all pioneered by immigrants. The analysis also suggests that immigrants made native-born Americans more creative. Nikola Tesla, a Serbian who grew up in the Austrian Empire, provided George Westinghouse, a New Yorker whose parents had migrated from Westphalia, with a key missing component for his system of electrification based on AC current (Tesla also patented 100s of other inventions).
In ending the quotas imposed under the Harding-Coolidge administration, President Johnson remarked in 1964 that “Today, with my signature, this system is abolished…Men of needed skill and talent were denied entrance because they came from southern or eastern Europe or from one of the developing continents…” By the mid-1970s, U.S innovation was again powerfully fueled by immigrants, now coming from places like Mexico, China, India, Philippines and Vietnam. From 1975 to 2010, an additional 10,000 immigrants generated 22% more patents every five years. Again, not only did immigrants innovate, they also stoked the creative energies of the locals. more>