Fed's Kaplan Says Immigration Key to U.S. Economy Beating China

(Bloomberg) -- Federal Reserve Bank of Dallas President Robert Kaplan said the U.S. has benefited from immigration and the nation’s historic openness to newcomers is a vital competitive edge that it needs to preserve its lead in the economic race against China.

“Culturally, we are receptive historically to immigrants -- that’s one of the things that differentiates us from Japan and China,” Kaplan said on Friday during remarks in Dallas. “Let’s make sure we’re very careful about undermining those things that made us great.”

His comments come in stark contrast to the tone struck by President Donald Trump’s administration, which has focused on limiting immigration as a way to protect American jobs as part of a broader campaign of economic nationalism spearheaded by Kaplan’s former colleague Steve Bannon.

The White House chief strategist, whom Kaplan helped recruit to Goldman Sachs Group Inc. in the early 1980s, told The American Prospect magazine that “the economic war with China is everything. And we have to be maniacally focused on that,” over the next five to 10 years to prevent the U.S. from being overhauled.

Kaplan called immigrant integration one of the “great distinctive competencies” of the U.S. The Dallas Fed chief, a former senior Goldman Sachs executive and Harvard Business School professor, frequently says the U.S. needs to boost its workforce to improve economic growth, including through immigration.

China has “a worse aging problem than we do. Why’s that important? It means they’ve got a workforce growth problem and they’re trying to fix it but it’s going to take 20-25 years,” Kaplan said. That’s because it means China would need to raises its birth rate, while the U.S. has historically also been able to rely on immigration. “You don’t like to screw up your distinctive competencies. That’s one of ours.”