Chapter Seventeen: The Bill Someone Else Paid

Consider the three achievements that, more than any others, established the United States as the supreme power of the twentieth century: the atomic bomb, the journey to the moon, and the computer. They are the crown jewels of American genius, the proof of a nation that could do what no other could. And now look at who actually did them.

The bomb was built at Los Alamos under the direction of Robert Oppenheimer, an American — but the theoretical heart of the project was supplied, to a remarkable degree, by men who were not. Enrico Fermi was raised and trained in Italy. Leó Szilárd, Eugene Wigner, Edward Teller, John von Neumann — the astonishing cluster of Hungarians the other physicists half-jokingly called "the Martians" — were all born and educated in Hungary. The rockets that carried Americans to the moon were designed by Wernher von Braun and a team of German engineers, raised and trained at the expense of Germany, and brought to America at the end of the war. The architecture underlying nearly every computer on Earth still bears the name of von Neumann, the Hungarian again. The single most famous scientist of the age, whose letter to Roosevelt set the whole atomic enterprise in motion, was a German named Einstein.

America's twentieth-century supremacy was built, to a degree we have politely forgotten, on minds that America did not make. They arrived already formed — educated, trained, often already brilliant — raised at the expense of other countries that then watched the United States reap the entire return. And what was true of the famous few at the top was true, far more quietly and at vastly greater scale, of millions of the unfamous: the engineers, the doctors, the nurses, the technicians who have arrived on American shores every year for a century, fully grown and ready to work, each one a finished product that someone else paid to build.

That someone else, and the bill they paid, is the matter at hand — the largest and most efficient subsidy in the history of the world, which the United States has run on for a hundred years and which, like everything else, is about to run out.

What a Twenty-Five-Year-Old Costs

Start with a question we almost never ask, because the answer is uncomfortable: what does it cost to produce a twenty-five-year-old?

Not in sentiment — in money. Twenty-five years of food, of shelter, of clothing. Two and a half decades of healthcare, from the delivery room through every illness and injury and checkup. A full education, from the first day of school through university and professional training. The whole vast, sustained, decades-long investment it takes to carry a human being from a helpless infant to a competent, healthy, trained adult standing at the threshold of his working life. Add it up in developed-country terms and the figure runs to several hundred thousand dollars per person — a few hundred thousand dollars of investment, sunk over twenty-five years, before that person produces a single hour of professional work.

Now watch what happens when that twenty-five-year-old immigrates. He steps off the plane, and the country receiving him acquires, in an instant and for free, the entire return on that quarter-million-dollar, quarter-century investment. It gets his peak productive decades — the years from roughly twenty-two to forty-five, when a worker generates the most output, pays the most in taxes, contributes the most to invention and enterprise. It gets all of it, having paid for none of it. And the country that did pay for it — that fed and schooled and healed him for twenty-five years — gets, in exchange, a remittance check mailed home and an empty chair at the table. The investment was made in one country and the dividend is collected in another. This is the subsidy. The United States has practiced it at a greater scale, and with greater success, than any nation that has ever existed: the largest capture of other people's human-capital investment in human history. It deserves a precise name, and economists have given it one: demographic arbitrage.

More Efficient Than Slavery

The migrating factory — labor arbitrage — was the economic heir of slavery, capturing the spread between what powerless labor costs and what its output sells for. This second mechanism, the importing of the finished worker, is the heir of the same logic, and in pure economic terms it is more efficient than either slavery or the factory. It is worth being precise about why, because the precision is the point.

The slaveholder, monstrous as he was, bore real costs. He had to feed and house the enslaved person from infancy; he absorbed the loss when a child died young, or fell sick, or never became productive; he carried, in cold economic terms, the entire downside risk of producing the labor he exploited. The factory owner of the last chapter bore less, but still something — the wages, the plant, the exposure to the country's instability. The importer of finished workers bears neither the cost nor the risk of production at all. The source country and the immigrant's own family absorb the whole twenty-five-year expense, and — this is the efficient part — they also absorb the whole twenty-five years of risk: the children who died before adulthood, the ones who got sick, the ones who never panned out, the wars and famines and economic collapses that struck during the long childhood. The receiving country waits at the end of that gauntlet and selects only the survivors — the healthy, the trained, the successful, the finished twenty-five-year-old product — and skims the upside off the top. It has externalized not just the cost of production but the risk of production, entirely. There has never been a more efficient way to acquire human labor. The genius of it is that it looks like generosity — a nation of immigrants, opening its doors — when in accounting terms it is the most complete extraction of value-without-cost ever devised.

I want to be careful, as I was in the last chapter, not to let this collapse into a simple indictment, because skilled immigration is in many ways a genuinely mutual bargain. The immigrant chooses it, and very often prospers enormously by it — this is not coercion, and the engineer who builds a good life in California is no one's victim. The source country gains too: remittances flow back by the hundreds of billions, diasporas open trade and knowledge networks, some workers return with skills and capital. It is not pure extraction, and the human beings involved are not pawns. But hold, once again, the two truths together: skilled immigration can be a good bargain for everyone at the individual level and still function, at the level of nations, as a massive subsidy from the countries that raise people to the countries that use them. Both are true. The mutual benefit does not erase the subsidy; it just makes it palatable.

The Free-Ride, Written Large

And now the connection all of this has been building toward — the reason the factories and the immigration belong in a book about the family.

Recall the childless professional, and the charge laid against the self-care ethic: that it free-rode on other people's children. The childless household consumed the workers, the taxpayers, the caregivers that other families had borne the cost of raising, while declining to bear that cost itself. It enjoyed the fruit of a next generation it did not help produce. That was the domestic free-ride — one household living off the children of the household next door.

The hidden labor subsidy is the very same free-ride, written at the scale of nations. A country that does not produce enough of its own next generation, but imports grown workers from countries that did, is running precisely the same evasion: consuming a next generation it did not pay to make, merely sourced from abroad rather than from down the street. The childless couple borrowed its workers from its fertile neighbors. America borrowed its workers from the fertile world. It is the identical structure — the identical refusal to bear the cost of producing the people one's prosperity depends on — operating at two different magnifications. And it did for the nation exactly what it did for the household: it let America paper over its own failure to reproduce. The United States fell below replacement fertility decades ago, like every other rich country. But its headline population kept rising and its workforce kept growing, because the shortfall was continuously made up by import. Immigration was a mask — the second great mask, laid over the same fertility collapse that the longevity bulge concealed from the other side. Behind both masks, the same fact: a society that had stopped making enough of its own people, and had found two ways to avoid noticing.

When the Source Runs Dry

A subsidy depends on someone willing to keep paying it, and the hidden labor subsidy depends on a steady supply of young, surplus, well-formed workers in other countries who are available to leave. That supply is now drying up, for the reason that by this point in the book will feel inevitable: the source countries are aging on the same timeline as everyone else.

The places that sent America its workers are, one after another, running out of surplus young people to send. The European wellsprings — Germany, Italy, Poland — are deep in their own demographic declines and have turned from senders into competitors, importing workers themselves to staff their own aging societies. The East Asian sources — Japan, South Korea, Taiwan — have some of the lowest fertility rates on Earth and no surplus to export. China, which sent hundreds of thousands of its brightest to American universities, is entering exactly the demographic crisis we examined earlier and will need every young worker it has. Even Mexico — for decades the great reservoir of young labor flowing north — has seen its own fertility fall to around replacement and below; the surplus that defined the entire American immigration debate of the last generation is quietly disappearing at its source. The countries that used to send their young are increasingly trying to keep them, or to bring them home, or to import others of their own. The day is arriving — soon, and across the whole globe at once — when there is simply no surplus twenty-five-year-old engineer to capture, because every country capable of producing one has discovered that it needs to keep the one it has.

So both of America's ways of avoiding the cost of producing its own people are shutting at the same time. It can no longer reliably borrow the goods that foreign labor makes, because the migrating factory has run out of countries (the last chapter). And it can no longer reliably borrow the workers themselves, because the source countries have run out of surplus young (this one). Which leaves only the option a society reaches for when both forms of borrowing fail: producing its own. And to produce your own peak-productivity workers, you need children — which requires affordable housing, a survivable cost of family formation, the rebuilt scaffolding, the whole impossible list. Which is to say: the only remaining alternative to the dying subsidy is to solve the exact problem that this entire book has shown to be unsolvable by policy and actively resisted by the incumbent class that profits from the present arrangement. The escape hatches close on each other. You cannot import the next generation any longer, and you did not make one, and you cannot easily start now. The bill that came due at a private bedside is the same bill arriving at the scale of the nation: a society that outsourced its own reproduction, discovering that there is no longer anyone abroad to outsource it to.

There is one country where this collision is about to be most spectacular, and it is the very country that was supposed to be the great exception — the rising colossus of more than a billion people, the workshop of the world, the demographic giant that was meant to dominate the century by sheer weight of numbers. China was supposed to have labor to spare for a hundred years. Instead, China is about to discover that it has built the greatest manufacturing machine in the history of the world, and is running out of the one input that machine cannot run without. The factories will stand. The workers will not come.