Alan Greenspan, along with George Shultz and John Cochrane, gave short speeches at a Hoover lunch yesterday and took questions and answers. All the speeches were good: Cochrane’s was outstanding.

I’ll be posting in the next day or two, mainly on Greenspan’s and Cochrane’s.

Greenspan went first and surprised me. He had two policy proposals. This post is on the first and it led to my title. Greenspan said that one of the worst U.S. federal government policies is its H1B visa system, the system that allows only 65,000 immigrants a year into specialty occupations. He pointed out that because of this tight restriction on supply, pay for high-income people is even higher than otherwise. This, he said, is helping cause the large income inequality we see today.

Greenspan emphasized a Robert Frank view that what matters to people is their income relative to others, that is, inequality of income and not absolute level of real income. I don’t think he’s right but that wasn’t crucial for his argument.

Greenspan didn’t specify however, how he would change the immigration law. So in Q&A, I said:

I’m highly sympathetic to your case for relaxing immigration laws. Would you allow an additional 3 million people a year? 10 million people a year? The higher the number, the better, but what number are you advocating?

Greenspan said that because Americans are worried about losing their culture, there would be a lot of resistance to substantial increases in immigration and so he would allow as large a number as is politically feasible, but couldn’t say what the number is.