Tuesday, November 08, 2005

Immigrant entrepreneurship in Paris vs. Houston

Joel Kotkin has an insightful op-ed in the Wall Street Journal today on the riots in Paris. He starts by pointing out the economic stagnation of Europe, including this staggering statistic:
Since the '70s, America has created 57 million new jobs, compared with just four million in Europe (with most of those jobs in government)
He talks about the lack of jobs and opportunity for the young in Europe - especially immigrant youth - and how many European-born youth are immigrating to the US for better opportunities, especially highly-educated ones. Immigrants in Europe are provided for by the welfare state, but really given nothing else to do as they idle in their grim government-housing ghettos. That pent up frustration is being unleashed now in the riots.

He then goes on to talk about immigrant social mobility in the US, with some nice plugs for Houston.

The contrast with America's immigrants, including those from developing countries, could not be more dramatic, both in geographic and economic terms. The U.S. still faces great problems with a portion of blacks and American Indians. But for the most part immigrants, white and nonwhite, have been making considerable progress. Particularly telling, immigrant business ownership has been surging far faster than among native-born Americans. Ironically, some of the highest rates for ethnic entrepreneurship in the U.S. belong to Muslim immigrants, along with Russians, Indians, Israelis and Koreans.

Perhaps nothing confirms immigrant upward mobility more than the fact that the majority have joined the white middle class in the suburbs -- a geography properly associated here mostly with upward mobility. These newcomers and their businesses have carved out a powerful presence in suburban areas that now count among the nation's most diverse regions. Prime examples include what demographer Bill Frey calls "melting pot suburbs": the San Gabriel Valley east of Los Angeles; Arlington County, Va.; Essex County, N.J.; and Fort Bend County in suburban Houston. The connection between this spreading geography and immigrant opportunity is not coincidental. Like other Americans, immigrants often dramatically improve their quality of life and economic prospects by moving out to less dense, faster growing areas. They can also take advantage of more business-friendly government. Perhaps the most extreme case is Houston, a low-cost, low-tax haven where immigrant entrepreneurship has exploded in recent decades. Much of this has taken place in the city itself. Looser regulations and a lack of zoning lower land and rental costs, providing opportunities to build businesses and acquire property.

It is almost inconceivable to see such flowerings of ethnic entrepreneurship in Continental Europe. Economic and regulatory policy plays a central role in stifling enterprise. Heavy-handed central planning tends to make property markets expensive and difficult to penetrate. Add to this an overall regulatory regime that makes it hard for small business to start or expand, and you have a recipe for economic stagnation and social turmoil. What would help France most now would be to stimulate economic growth and lessen onerous regulation. Most critically, this would also open up entrepreneurial and employment opportunity for those now suffering more of a nightmare of closed options than anything resembling a European dream.

It's been noted before that Houston doesn't have much history of rioting compared to many east and west coast cities. I've always theorized that it was just too darn hot here to riot: you grab your baseball bat and head out to the street, feel the blast of stifling hot humid air, and then turn around and decide you prefer to stay in the air conditioning. But maybe there's another reason: Houston's relatively high levels of economic opportunity and the belief that if you work hard you can get ahead (as noted in Dr. Klineberg's Houston Area Survey - Figure 4 on page 10). It just goes to show that you can't make people happy by just meeting their basic needs with welfare programs - they need purpose and an opportunity to get ahead.


At 10:56 AM, November 11, 2005, Blogger kjb434 said...

I've been follow the Wall Street Journals commentary on the Riots. They are raising some good points.

I hope Western Europe takes a page out of Eastern Europs playbook economically.

At 5:03 PM, November 11, 2005, Anonymous Anonymous said...

"I hope Western Europe takes a page out of Eastern Europs playbook economically. "

Hmmm.... I think I'd take Amsterdam and Paris over Warsaw and Bucharest any day of the week.

At 5:46 PM, November 11, 2005, Blogger Tory Gattis said...

I think he's talking about GDP growth rate, which is substantially higher in Eastern Europe, albeit they have some catching up to do to get to the same GDP/capita. Ireland "The Celtic Tiger" might be a better example: incredibly high growth rate *and* they now have the highest GDP/captia of the major countries of Europe (I think) - generally credited to low taxes, esp. on foreign investment, and low regs/free market focus - although good education and English-speaking and a member of the Euro all helped too.

At 6:49 PM, November 11, 2005, Anonymous Anonymous said...

Ireland has had massive infusions of cash from the EU to put the country up on its feet, and that is one of the primary drivers of their economic good fortunes. The population of Ireland is about the same as metro Houston... so imagine the economic effect of pouring billions and billions of euros into an area with such a small population.

At 10:04 PM, November 21, 2005, Anonymous Anonymous said...

As a born [1952] and raised Houstonian, I have never been surprised at the lack of riots here. I'm not a Pollyanna but it seems we were never really a city consumed by racial tension and hate. Sure, there are huge inequities as far as race and ethnicisity goes, but it just seems less prevelant here-and this coming from a hard-core Liberal.
You would think a city our size would be more at tension regarding the haves and have nots-yet we aren't. Is it because there is more opportunity? More of a hand-up rather than a hand-out? I'm not sure. I just know-after traveling the world-there is something here that makes us a less tense community. This might be a great topic for a discussion. Just something I've thrown out there.


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