Why They Come

Yesterday, millions of immigrants demonstrated on the streets of U.S. cities asking to be allowed to work to achieve for themselves and their families the American dream. But why not stay home and work to achieve the Mexican dream or the Guatemalan dream or the Salvadoran dream? The World Bank's fascinating new book, Where Is The Wealth of Nations: Measuring Capital in the 21st Century provides the answer to that question.

Every immigrant who makes it across the border automatically gains access to over $500,000 of capital. What? That's right. The clever economists at the World Bank have figured out how to measure natural, produced and intangible capital. It turns out that natural capital (forests, minerals, oil) and produced capital (buildings, roads, and factories) while important pale in comparison to intangible capital for producing income and wealth. In fact, 80 percent of the capital of rich countries is intangible. Intangible capital encompasses raw labor; human capital, which includes the sum of the knowledge, skills, and know-how possessed by population; as well as the level of trust in a society and the quality of its formal and informal social institutions including an honest bureaucracy, a free press, the rule of law and so forth.

By World Bank measurements, Americans enjoy access to $513,000 worth of capital, the vast majority of it embodied in intanglibles such as the rule of law, strong property rights, democratic governance, and high levels of education. This accumulated capital yields an average per capita GDP of about $38,000 per year.

Contrast this to Mexico, whose per capita capital amounts to $62,000 and yields a per capita GDP of $9,000 per year. Or Guatemala, whose per capita wealth is just $30,000 produces a GDP per capita of $4,000 yearly, and El Salvador, where per capita wealth is $36,000 yielding an annual GDP of $4,800.

Who could resist increasing their capital 8 to 16 times simply by moving? I know I couldn't. Could you?