The Brain Drain

  • In 1933, Albert Einstein renounced his German citizenship soon after Adolf Hitler became Chancellor. Although that left him without a legal home, he was welcomed in England and later, the US, and eventually became a US citizen in 1935. This was quite a risky move at the time, as he had no certainty of a better life outside of Germany, or even a prospective job. But he saw the writing on the wall. As a man of reason, he focused not on the present condition in Germany, but where events would ultimately lead. His focus was on the Germany of the future and he made a difficult call that those with less vision might not have made.
  • In most cases, it begins with a few forward-thinking people making their exit, followed by a small wave of others who see what’s coming. That wave is followed by a larger wave, made up of those who need a bit more evidence of decline before they see the writing on the wall. After that, the waves become ever-larger, as the most inventive and productive people realise that they may become collateral damage of the decline.
  • For each successive wave of exiters, the ability to leave freely became less likely, as did the possibility of being welcomed in the destination of choice. Today, we’re witnessing the unravelling of the “First World” – the group of nations that were launched into prosperity following World War II. All of them – Canada, the UK, Australia, Japan and much of Europe – hopped on the US train to prosperity after the war and benefitted from the post-war prosperity that the US created. But unfortunately, they were still on the train when the US changed from being the world’s greatest creditor nation into the world’s greatest debtor nation. And now, still on the train, they will follow the US over the economic cliff that it’s headed for.
  • And so, as always transpires, a brain drain will occur. I first began warning of this, some twenty years ago, well in advance. The actual exodus did not begin until 2008, and even then, it was just a trickle. Now, it’s speeding up. Of course, for anyone who lives in an exit jurisdiction, such as the EU or US, this is hardly noticeable. Indeed, most people in these jurisdictions are preoccupied with the flood of immigrants – the largely unproductive refugees in their tens of thousands, who are flooding in, based upon promised largesse from the government. Not surprising then, that few people notice those who are leaving. This group is, however, quite visible to those of us who live in a destination country. In my own country, larger numbers are applying for residency every year. And true to form, they tend to be those who are capable people, having been successful in their home countries and seeking a continuation of opportunity in their choice of destination. For the most part, they invest whatever wealth they’ve earned in their lives in the target country, thus ensuring continuing prosperity for that country.
  • As the waves increase in volume, we can expect the governments of the exit countries to react. First, they’ll create capital controls, making it difficult to expatriate your wealth. Next come the migration controls – the laws and regulations that seek to criminalise any sort of expatriation. We can expect that these will be explained by governments, not as a loss of freedom, but as a protection against those who expatriate, with the accusation that they’re involved in money laundering and/or terrorism.
  • Once all the best and brightest – the movers and shakers – have exited, they rarely return. They tend to get on with life in their new homes, where they then invest, and cause those nations to advance economically. And certainly, the refugees who entered that country as parasites, following promises of governmental largesse, will not pick up the slack. Therefore, once a brain drain has occurred, that country is likely to slide into the doldrums – perhaps for a generation, and, as history has shown, often for much longer.