Wall Street Week with Louis Rukeyser; 1941; The Case for Immigration

¶¶ . . . . .

Wall Street Week with Lewis Rucaiser is made possible by the financial support of viewers like you. By the travelers, insurance and related financial services working to provide financial peace of mind for over 40 million Americans. By Enron providing natural gas which holds the promise for a cleaner world and a more energy independent America. Enron Corp and the Enron Foundation are by provincial bank securities. The investment firm with rock-solved resources and market-wise thinking in the business of making money. Produced Friday, April 13, our panelists are Mary Farrell, Monty Gordon and Julius Westheimer. Tonight's special guest is Julian L. Simon, professor of business administration, University of Maryland. Good evening, I'm Lewis Rucaiser. This is Wall Street Week. Welcome back.

According to the old story, when the pilgrims approached Plymouth Rock, the reception committee of Indians waited on shore in disgust. The clearing fervently there goes the neighborhood. And it's been about the same ever since. This is after all a nation of immigrants. Even the Indians came originally from Asia, yet there is nothing more American than the conviction of each generation that the days of useful immigration have ended. In the old days, when their ancestors came to these shores, it was different they content. Perhaps not realizing that since the time of Pocahontas, each sitting group of Americans was skeptical of the abilities of the latest group of immigrants. In retrospect, of course, that latest group eventually assimilated, contributed mightily to the country's progress, and became equally suspicious of its own successors. Now comes a man who tells us after long and scholarly study that it is exactly the same again today. As usual, hardly anybody believes him. After I announced last week that he would be my guest tonight, the hostile mail started coming in, even before he had a chance to make his argument.

Did he not know, wrote one viewer in suburban Seattle, that every increase in U.S. population, and I quote, makes life a little worse for those already here, because it exacerbates problems of pollution, waste disposal, transportation gridlock, and housing costs. A viewer in Indiana took a more high-minded approach to the same conclusion. After noting that Japan has achieved its economic growth without immigration, and with very little population growth, he asked, is it fair to take away the most productive members of other societies? An viewer in California wrote me as follows, and acquaintance who teaches high school in an area where there are many different immigrant students complains that immigrants are different these days. No longer is there a will to learn. Parents were poor students out of school for whimsical reasons.

The main goal in school has become the maintenance of discipline. It seems that immigrants no longer bring fresh ideas. They only increase current problems. Unquote. Wow. Imagine what the reaction will be after my guest actually opens his mouth. It's not unusual, of course, to hear that the American dream is no longer open to new dreamers. Yet the essence of this country historically has been that it was continually being reinvented. Being an American is different from being a Norwegian or a Frenchman. Traditionally, his country was merely the land of his ancestry, not an ideological statement. Yet with the glaring exception of the disgrace of slavery, Americans are the people or the descendants of people who came here because they wanted to share the dream. Is it truly different today, or the latest immigrants merely welfare bums, filthy loafers, or other sorts of undesirables?

Are they, even if not so loathsome, simply too late in the ecological cycle of an overcrowded land? Or do they, as my guest will so unconventionally suggest, not just come in search of hope, but like each generation of immigrants before them, bring the rest of us hope as well. In a week in which two of the world's great religions celebrate hope and triumph, it seems appropriate at least to hear what this man says. But first let's see if it's time to revoke the past ports of the gang in Wall Street. And just when you thought it wasn't safe to go back in the water, that Dow Jones industrial average has been creeping up again. Despite a lagging bond market and a sluggish economic picture, the Dow had its best week in a month, climbing to within 60 points of a new record, up about 35 points for the week to 27-51.80. And with the single exception of the American exchange, which was hurt by the gyrating oil price, all the broader indexes joined the party in this holiday shortened week.

Can't budge our elves, though, those ten technicians for the third week in a row, net out to a mildly bearish minus two. Meanwhile, the US dollar lost ground against all other major currencies, except the newly troubled Japanese yen, while gold and silver, the flops of the last decade, continued to look like the flops of this one too. But there are a few flops, and no poverty in the rarified financial world of Major League Baseball, where New York Yankee first baseman Don Mattingley this week signed a record five-year 19.3 million dollar contract to show up for a game that little boys can play. You call out a fundamental economic contribution? What does that guy think he is? Michael Milken? Very far last time you were with us, you advised us to look for a pretty good summer rally. Is Wall Street jumping the season on you? They are jumping. I think when you look at what's going on in Eastern Europe right now, which has incredibly positive potential for US industrial companies, ultimately US consumer companies, it's hard not to be very enthusiastic for the 1990s.

And I think that certainly seems to be happening right now. And conventional optimism is breaking out all over. How about all the problems I keep hearing about the overriding debt, the SNL? How are we going to handle all that? Unfortunately, there are always problems. It's never simple, but I do think that's going to continue to be a negative psychology. Even though we have been positive this week, if you look at this year, it has definitely been a broad trading range as it responds to the news of the moment. That's likely to continue before real consensus emerges with enough momentum to sustain new highs, but I do think that's coming later this year. Would you take some profits on this rally then? I would not, but I would be very selective because we continue to have those earnings problems and the market continues to exact that very heavy price from companies that disappoint. What do you think the action is going to be for the next few weeks and months? Very eclectic groups. Again, if you look at 1990, there isn't an emerging group or an industry or a sector. It really has been individual companies.

It makes it tough for investors, but that does mean a lot of opportunity in the right stocks. It means bottom-up analysis. We look at the company rather than the economy. Exactly. So the old fundamentalists are coming back into stallion. The decade of debt is behind us. The junk bond market has dictated its over, and that's healthy growth and good stocks by the best of America rather than the worst. George Westhammer, whenever the atmosphere is sunny, I know you can tell us that nobody's buying these stocks. Anyhow, so why are we talking about it? Was that true? Well, that's partly true. The public is still quite dissolution with Wall Street. It's interesting, Lewis, that all they seem to remember is Black Monday and Friday the 13th. They don't take note of the fact that we've recovered from both of these collapses and we're in much better shape. Where the market stands right now, this weekend, we're exactly where this year began, as you just pointed out. I think we're less than 2% below the all-time high. As somebody who once said, I think I heard that a restaurant recently. This is the unhappiest bull market I've ever seen. Brokers have long faces. Customers have long faces?

Anyone who's portfolio is concentrated in the big blue chip company who ought to be doing all right. They're doing all right, but they have done extremely well in the last couple of years. I mean, the market was up 30-odd percent last year. They think the big money has been made, and they look at earnings are coming down. And Lewis, there's something else. Dividend increases are off from last year, and dividend decreases are up from last year. And a lot of people live by what dividends do, and they're disillusioned by those figures. You're still able to sell some bonds? Yes. Yes, yes. Luckily, we have to make a living somehow. There's some tax-free bonds around now that you'll almost 7% free of federal and state. And when you put that into the taxable equivalent, it's over 10%. That's almost three times the inflation rate. Monday Gordon, Mary tells us that the 90s are shaping up better than expected. Julia says his customers don't believe it. What's the answer? Well, I think it is shaping up better than expected, but I think we've been in like a condition of what I would call trench warfare comparable to World War I,

where you were in position, you slugged it out. And the good news has been slugging it out with the bad news, and it's obviously to a certain extent it stands still. That's why we're still in that trading range, which is top by about 2750. I suspect that the kind of problems that are around the SNLs, the uncertainty and so on, the unraveling of really excesses in the 1980s, will continue to beset the market and be devilish and restrain it in terms of its ability to get ahead. But looking out, these kinds of conditions have historically provided very attractive buying opportunities. And there's no question that you are beginning to get much more value oriented and much more perceptive in terms of what these attractions are further out. This market hasn't yet begun to discount the second half of 1990. That's one of the reasons why it hasn't been able to break out of this range. I don't want to get in trouble with the Ls, but it does seem to me that as Mary suggested, maybe we're getting back to fundamental analysis. I don't think the market time has been having a great year. No, they haven't been, because every time they went thought it was going up, they went down, every time it was going down, it went the other way.

But that only emphasizes the point that we go back to that condition, that historically this is still a very strong and resilient economy. We've surprised everyone. The last few days is past week. What we saw was better earnings than people anticipated. And I think that is the first kind of like a flash of light in a black sky. We get the sense that things are beginning to change. So I really am optimistic that we're going to see the breakout soon. Thank you for your lightning like with. In any event panelists, it's time not to roll a few eggs to our viewers. Mary Farrell, how would you respond to Ray and Mary Lou working of Long Beach, California, who we're after saying, thank you for the best program on television. We love you. Of course, working as you sure do know how to get to a fellow's heart, don't you? Right me as follows. We will be in Paris for eight or nine weeks this summer, poor babies. And at today's prices is going to cost a small mint. So we're concerned as we see the dollar fall against the French Frank. Should we buy French Frank's now to protect ourselves against further erosion of the dollar, or should we wait until we are there this summer, hoping that the dollar will strengthen?

And if we should buy now, how should we go about it? The difficult problem because predicting currencies is always difficult. They depend on very unpredictable factors like interest rates, economic outlook, inflation, government intervention, who can predict. This summer is going to be especially tough because the German currency, which is the strongest in Europe, intends to influence the others, is going to come in for a major jolt when the West German and East German currencies unite. But the French Frank has been relatively stable versus the dollar to date. The consensus of economists says that for the rest of the year, it's likely to remain stable, suggesting they probably ought to just wait until they get there to change. If they do want to go ahead, though, Deak Pereira is a currency dealer in a number of major cities, in smaller cities, your commercial bank, given enough advanced notice, usually can arrange. So bon voyage. Thank you for your frank response. Julius West, Lee Denton, back of Horseshoe Bay, Texas, would like some clear advice on what kind of annuities to buy when considering retirement, as he puts it, all of the articles and perspective information are very confusing, especially regarding method of payout. I'll try. I think the first thing Mr. Denton back should do, and so should anyone else who's contemplating an annuity, is get a qualified stockbroker or an insurance man or woman to guide him or her in the annuity purchase.

It's complicated and it's highly individual. Following that, be sure to buy an annuity of very high quality, one that's rated a plus by the AM Best & Company. As for payout, Lou, this is individual. If Mr. Denton back feels he might need the money soon to buy a house or a boat or something, get a short one, maybe one or two years. If he doesn't feel he'll need the money, just let the money pile up and tax free. Lou is here some interesting figures at 8.5% in annuity. $10,000 in five years grows to $15,000 because its tax deferred. $25,000 grows to $37,000. The annuities are very good things if you get a qualified advisor. Do you have some qualified advisor? My business card's regular. Monti Gordon, Barbara Halperin of Glen Aubrey, New York, S. If you are the growing concern for the environment and the desire of many people to have their food free of chemical pesticides, is there an opportunity for investment in companies making biological pesticides? Yes, there is, Lou. Actually, what you're talking about is the alternative to a chemical pesticide and the only way which is being done is not through the bio pesticide itself.

It's also being done through biotechnological engineering of the genes in the plants so the day themselves will become generally resistant. It's a new industry and obviously even though it has excitement, the companies that are in it are obviously speculative. A couple of their names that come to mind are Microgens and Echrogen which are some of the other, some of the companies that are active and fairly pure. However, companies like DuPont, Monsanto, Sandos are also active in this area so the competitive pressures will be substantial. I would say it's an area that has a great deal of potential appeal but I'd be very, very wary before I sink my money into it. Now, if you would like to get the bugs out of your finances and the pests as well, our biologically pure panelists may be just the answer for those who really like to dig. So, send your most ecologically impeccable money questions to our little garden here at Wall Street Week. Owens Mills Maryland 21117. That's Wall Street Week. Owens Mills Maryland 21117. Now, before we meet tonight's special guest, let's take a look at some of the reasons why he believes that Americans should not fear greater immigration but should actually encourage it.

That the American motto for the next generation should in effect be the more the merrier. According to a spate of recent studies, he says immigrants do not cause unemployment among those born here. Indeed, he argues their contributions actually help make jobs for others. Contrary to the belief that immigrants tend to overuse welfare services, he contends, immigrants actually are more likely than other Americans to save and pay taxes, to be self-employed, or to be reliable employees. And despite all the talk about wretched refuse, he says, immigrants typically are as well-educated and occupationally skilled as the rest of us. In fact, he adds this was true of the new arrivals even a century ago. Nor do immigrants huddle together as much as is generally believed, he says, immigrants of all origins assimilate quickly to American ways, he contends. And while the percent of the U.S. population represented by new immigrant arrivals has been rising since World War II, it's still less than a fifth of what it was just after the turn of the century.

Incidentally, the total of those born abroad is now 6% of the U.S. population, which he notes is less than that in Britain, France, West Germany, Australia, or Canada. Is it really time for Americans to open their arms wider to those born abroad, or are there potential problems in swinging wider the golden door? For some thoughts on that, let's go over now and meet tonight's special guest, Julian L. Simon. Julian, welcome. Very pleased to have you here. Lewis, you said it already. No indeed, not in that thick book of yours. Julian Simon is used to being an unfashionable fellow. When the conventional wisdom held that the gas pumps would run dry, he argued the contrary and was ridiculed. When the conventional wisdom held that the world was smacked up against limits to growth, he argued for greater prosperity and was ridiculed. It was of course right, as the world has since discovered, on both sides of the Iron Curtain. So when this University of Maryland Professor and author tells us after two decades of studying population economics that were not about to be doomed by immigration either, it seems appropriate at least to stop and give him a listen.

Julian, many Americans believe that today's immigrants are simply not of the caliber of those in the past. Are they writers? Is this just the same old story? The same old story. We know that immigrants who came 200 years ago had about as much skill and talent and education as did the Native labor force. 100 years ago the immigrants who came had about the same amount of skill and education as did the Native labor force. Same is true today. Why then is there so much prejudice against immigrants? In brief, I think it boils down to economic ignorance and racism. Is that blunt enough? Who are the organized leaders of the fight against immigration in this country? I don't know that there's any conspiracy of this sort. I think it's a sort of common sense that wells up from people.

When, for example, they look around at a factory and they say they're a limited number of machines. If an immigrant comes and sits before one of those machines, there must be some native being pushed out of a job. Let's look at some of the common objections. One objection is that immigrants come here, take jobs at lower wages than Americans would take, therefore bring down the wage average. Is that true? No. Now I can tell you what we couldn't tell you 10 years ago. We have a solid body of reliable scientific research that tells us that immigrants do not displace natives from jobs. The immigrants come, they not only take jobs, but they make jobs. They make jobs in two ways. They make jobs because of the earnings which they then spend and go into other people's pockets. They also make jobs with the new businesses which they start. We showed a fellow with an out of shade case and a doctor, but aren't there in fact many immigrants who wash windows and swab floors and do other jobs that Americans generally have a distaste for these days? On average, the immigrants who come have about the same amount of education and skill as does native labor force, but the immigrants also have a disproportionately large number of highly educated, highly skilled professionals, doctors, engineers.

There are also a disproportionate number of immigrants at the very, very bottom illiterates for people with very little education. How many immigrants come in each year and how many would you favor being led in? We've been getting about 650,000 immigrants a year. We should notice that even though the 1980s have been a very high era, fewer absolute numbers of immigrants came in the 1980s and came between 1900 and 1910, even though we had a much larger population then. So the rate of immigration now is low rather than high historically. It's only about a fourth now of what it was in the turn of the century. Many Americans who would otherwise share your view say that there's a distinct new element now in the move toward bilingualism. People come over here and do not learn English. What's your response? That's not my special knowledge, but from everything that I can gather, immigrants know very well that they have got to speak English to get ahead in the society, and therefore they get about the business of learning at the great big hurry.

Let me present a panel all of whose members we are grateful to their ancestors for starting with Mary Fowl. For what I'm grateful my ancestors chose to come here. And that actually makes me feel somewhat upset about the fact that we've been so restrictive, specifically I'm referring to the 1986 immigration law. Do you feel that this was the right response to immigration, the wrong response, can it be corrected? The purpose of the 1986 bill was to restrict illegal immigration. And there's something to be said for that. There's something to be said for the fact that people should come who waited in line and not just who jumped across the borders. On the other hand, the idea that illegals are not good for us, we know is wrong. We know that the illegal pay taxes don't use welfare services. We know that the illegals, when they don't have jobs, they leave again. So the illegals on balance are an economic benefit to us, and we should be clear on that.

Julian, looking into your crystal ball, do you think that some of these prejudices and barriers will fall, and do you think the gates will open wider, so we will get new ways of immigrants, which you favor to help our economy? Julian, there is some shift in mood, I think that's obvious. On the other hand, every country in the world is racist toward foreigners, and I would expect that we will be the same way 100 years from now, 200 years from now that we were 100 years ago also. So I don't see any major change in that. We've been talking about the positive and official effects of immigration on the U.S. economy, yet one of the great superpowers that has emerged here in the past decade has been Japan. One of the great superpowers that has deteriorated in quality has been Russia. How do you account for the growth of Japan and the opposite experience of Russia, in that particular era? That's an interesting question, buddy. We should always be aware of the fact that some country can have a different experience than all the others.

We can try to read rules from one particular example, and Japan may be such a case. But we should also notice that Japan recognizes its need to be involved with foreigners as well. I think that's the reason why we find the Japanese buying colleges in New England wanting to send students abroad so that they have this association with other people that we get at no cost to us by the immigrants coming here. Without the objection that was raised by some of those viewers I quoted earlier, that we have an overcrowded, polluted environment we can't take more population. Well, immigrants on balance increase the availability of natural resources rather than decreasing, though that boggles the mind, I know. We've got to be clear that we have more natural resources available to us as measured by their prices with every successive decade and century. And the reason that happens is because these natural resources are the products of our minds. Immigrants come here, they contribute their ideas, they help us increase the supplies of our natural resources rather than use up more of them.

I think it was true of the environment, I think. The less than a minute left I want to move to another area entirely where you've made a contribution. You're the inventor of the airline over booking plan, which people volunteer rather than being bumped. How did that come about and how do you think it's working? Wonderful. It's working marvelously. I once went out with a woman who was a stewardess and she told me that what the airlines did when they were oversold was to throw off two categories of people. Old people and servicemen because they wouldn't complain. I thought that was terribly unfair. I thought they had to be a better way. And a market is a better way. An auction is a better way. The best thing to do would be go to people and say to them, how much will you take to wait for the next flight? So I wrote up the scheme, spent 12 years trying to get anybody to try it. And finally we got an economist for the first time at the CAB, Fred Khan. He said, let's try it. And since then it's been a marvelous success. The best view is one who once was a serviceman and hopes to be an old person. Thanks, thank you very much for your work.

Thanks very much, Julian Simon for a fascinating discussion. Thanks to our panel. Hope you'll be back with us again next week when we'll take the temperature of an industry whose future affects every one of us. Healthcare. My guest, Maryola Haggar, is a leading analyst of healthcare companies and she'll be telling us which ones may have the medicine we need to keep our bodies and our finances alive and kicking. I prescribe one half hour taken painlessly. Meanwhile, this has been Wall Street Week. I'm Louis Rucaiser. Good night. Wall Street Week with Louis Rucaiser has been made possible by the financial support of viewers like you. By the travelers, insurance and related financial services working to provide financial peace of mind for American business. By Enron, providing natural gas which holds the promise for a cleaner world and a more energy independent America, Enron Corp and the Enron Foundation. And by provincial-based securities, the investment firm with rock-solid resources and market-wise thinking in the business of making money.

For a printed transcript of this program, send five dollars to transcripts. Wall Street Week with Louis Rucaiser Owings Mills Maryland 21117. That's five dollars to transcripts. Wall Street Week with Louis Rucaiser Owings Mills Maryland 21117. Wall Street Week with Louis Rucaiser transcripts are also available to subscribers of the Dow Jones News Retrieval Service.