The Case For A Supply-Side Immigration Policy, Part 2

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To reiterate from Part 1, the 1870 census showed a US population of only 38.6 million. During the next 50 years, however, this number grew by +35.3 million owing to newly arriving immigrants and their offspring alone. That is to say, by 1920 the new immigrant population had amounted to 91% of the total US population in 1870.

That was surely a “flood of immigrants” by any version of the term. Yet what it actually facilitated, as we also showed in Part 1, was the greatest economic boom in human history as of that time.

During this same period real GDP stated in 2024 dollars of purchasing power soared from $1.1 trillion to $6.4 trillion. This represented a compound growth rate of 3.62% per annum, averaged over an entire half-century and one which occurred despite booms and busts, numerous natural calamities and US involvement in two major wars (Spanish-American and WWI).

Yet fully 51% of that gain was due to the massive expansion of the US labor force by immigrant workers and their off-spring. Likewise, 51% of the huge living standards gain represented by the rise of real per capita income (in 2024 $) from $27,100 in 1870 to $60,500 by 1920 was also owing to the immigrant labor contribution to overall real GDP growth.

In others words, America’s golden era of industrial growth between 1870 and 1920 embodied supply-side policy on steroids. For most of that span, there was no income tax or central bank to interfere with capital formation, innovation, invention, enterprise and entrepreneurial risk taking on the capital side of the economy. Nor were there any barriers to labor formation, either.

In fact, there were no immigration limits or quotas whatsoever. Nor any border patrols, citizenship police or deportation raids at work places. And (until 1918) there were not even passports for entry at any port or border crossing anywhere in the USA.

Also, of great relevance to the whole border invasion nonsense is that until 1914 when cocaine was outlawed there weren’t even any “illegal drugs” at the Federal level. Therefore, the economic motivation for black markets to import contraband into the US via violent criminal distribution organizations was non-existent, as well.

But above all else what made for the immigration-based Melting Pot miracle of that halcyon half-century was another big “no”. Namely, No Welfare State of any way, shape or form. And the implication was not merely that in the process of importing prosperity-generating labor, America did not end up with free-loaders and malingerers, although that was self-evidently the fact.

The far more important aspect of the No Welfare regime prior to the New Deal is that the great economic magnet of the booming American economy also functioned as a powerful and positive immigrant screening device. That is to say, as miserable as life may have been in many parts of Old World Europe during the second half of the 19th century, people did not uproot themselves from kith and kin to travel 4,000 miles to begin a new life unless they were able, industrious, resilient, self-disciplined and enterprising.