Talent on the Move

A review of Borderless Economics, a new book about the joys of labor mobility

'As a tool for spreading wealth, open borders make foreign aid look like a child's lemonade stand," writes Robert Guest, business editor of the Economist, in Borderless Economics, a rapid-fire case for the free movement of labor from one country to another. Central to his case is a 2005 study by Lant Pritchett, a former economist at the World Bank, titled "Let Their People Come: Breaking the Gridlock on Global Labor Mobility." Mr. Pritchett found that if developed countries slightly liberalized their immigration laws and increased their work forces by a mere 3%, the gains in remittances and other benefits to developing countries would amount to more than $300 billion.

Put another way, a Salvadorean man with a high-school education needs only to come to the U.S. to increase his annual earning power more than eightfold, from $2,700 to $22,611—a figure, by the way, almost identical to the earning potential for Americans with the same level of education. Compare the $300 billion benefit with the $70 billion spent annually on foreign aid by developed countries, much of which ends up in the Swiss bank accounts of corrupt politicians.

Unlike graft-riddled foreign-aid programs, nearly 100% of the dollars sent back home by emigrants who have made good find their way to the intended destination. Mr. Guest quotes Philippe Legrain, the author of "Immigrants: Your Country Needs Them" (2007), explaining that "it is common for an engineer who earns $5,000 a year in a poor country to move to a rich one, earn $30,000 a year and send $5,000 of it back to the old country. His home economy does not even miss him." Recorded remittances to developing countries were $316 billion in 2009 (and that's just what shows up on the books).

Read the rest in today's Wall Street Journal.