Rust Belt Salvation through Immigrant Entrepreneurs?

This article was last updated on April 16, 2022

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Once again a correspondent has emailed to me the link to an article that he suggested I might find interesting. I did, although I didn’t agree with much in the article.

What I found even more interesting was the fact that the correspondent who sent the link was the author of the article, Daniel McGraw. It can be found in Belt magazine, which is described in the email as “a new media enterprise targeting the literate middle class”; the web site says it has a “distinctly Rust Belt sensibility”.

The piece, entitled “Come to Cleveland? Maybe not“, lays out all of the reasons that Cleveland – described by the author and some of the persons interviewed as insular, and economically and demographically distressed by declining populations and few jobs – can be saved if it becomes more welcoming to immigrants. In short, the article is a paean to all things immigrant and a pan to the native-born. Immigrants are contrasted favorably to the native-born in terms of their risk-taking, their entrepreneurial skills, their ability to turn around this ailing city, if only local politicians, city fathers, and the influential open their eyes to the magic of their presence.

For instance, much is made of studies showing that in 2012, immigrants were almost twice as likely as native-born Americans to start up a new business. What we don’t know is whether such businesses are in fact job-creators, or simply barely self-sustaining corner markets and bodegas; according to Forbes, 52 percent of all small businesses are home-based. We also don’t know whether their success rate is better than the average; again, according toForbes, only half of all small business survive for five years, and by 15 years, the survival rate is down to a quarter. This is simply the overall average; failure rates are much higher for particular segments of small business.

Mr. McGraw also cites studies showing that “immigrant-founded engineering and technology firms employed approximately 560,000 workers and generated $63 billion in sales.” If my recollection is correct, such studies have inevitably tended to count as “immigrant-founded” any firm in which an immigrant has participated at start-up, even when the founders were a consortium or mixed group of immigrants and native-born. (See, for instance, here andhere.) That kind of bias makes such studies of little value.

Indeed, I find many of the facts and citations used by Mr. McGraw with a sense of wide-eyed wonder to be of questionable value because his underlying tenet – success is simply a matter of luring immigrants, who are coequal, in his eyes, to entrepreneurs and risk-takers – is simply wrong. We need to understand that not all of the foreign-born are entrepreneurs; like the rest of mankind, they run the gamut. Not all risk-taking is good; think of teens who view themselves as immortal behind the wheel of their parents’ Jeep Commander on a Saturday night. Nor are all immigrants highly skilled or educated; many are in jobs such as lawn care or the service industry because they can find little else given their lack of marketable skills. Many are obliged to seek use of scarce state and municipal social benefits to get by.

It seems to me that if metropolitan Cleveland wishes to reverse its declining population trend and brighten its economic future, then doing so will require an approach that has little to do with such an artificial divide as native-born or immigrant entrepreneurs. It will require luring new businesses, including start-ups, with the right combination of tax and other incentives. It will also need to ensure that the city provides a baseline of things that all individuals (and their firms) look to when making relocation decisions: good schools, affordable housing, decent roadways and transportation systems, etc.

There also appears to be an unseemly presumption flowing through the article that, somehow, immigrants, even those at the high-tech entrepreneurial level, form a kind of chattel or indentured servant class who can be obliged to stay in a particular location for a requisite period of time even in the absence of the kinds of things described above. Not so. Immigrants are just as likely as anyone else to pick up and leave if things are not to their satisfaction. Permanent residents have no obligation to remain; illegal aliens have no lawful basis to stay.

In sum, there is a naiveté about immigrants to Mr. McGraw’s piece that would be charming if not for its in-built bias against native-born citizens. I was particularly aggravated by his last paragraph:

And with that I leave, thinking of newcomers and immigrants and gigantic Lazy Susans, making my way to the car and looking at all the vacant property on Rockwell Avenue in view of the lighted Cleveland skyline. I get hit up twice by panhandlers on the half-block walk to the car. They appear to be native-born panhandlers.

Does Mr. McGraw suggest that only immigrants are made in the heroic entrepreneurial model? What makes the panhandlers “appear” native-born? That they are white or black, and not Asian or Hispanic? Has he never been accosted by an “apparently foreign” panhandler? Then perhaps he is as insular as his city. There is a kind of snarkiness and absurd political correctness which oozes through those words that aggravates to the bone.

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