WashPo: Elite Economists Boost Donald Trump’s ‘Merit Based’ Immigration Reform

immigration
AP/LM Otero

A Washington Post survey of established economists shows growing support for President Donald Trump’s planned merit-based immigration reform to boost Americans’ productivity and wealth.

The reluctant approval was buried deep in an article about elite economists’ objections to Trump’s plan to reduce the annual inflow of the unskilled workers who drive down the salaries of blue-collar Americans including African-Americans and recent legal immigrants. According to the article:

There’s little love among economists and business leaders for a 50 percent cut in immigration overall, but there is growing support for moving the United States to a more merit-based immigration system … At the moment, only 15 percent of green cards are issued for employment reasons, according to Department of Homeland Security data.

Trump and his aides are working closely with Sen. David Perdue and Sen. Tom Cotton to develop a “merit based” plan that will reduce the “chain migration” inflow of unskilled migrants, and instead favor immigration of skilled people who can help raise Americans’ productivity and wealth.

“There is a case for adopting a … system of ‘points’ whereby preference is given to people with desired skills,” Martin Barnes, chief economist at BCA Research in Montreal, told the Washington Post, echoing the long-standing preferences of pro-American immigration reformers.

But the article, by Heather Long, a graduate of Wellesley and Oxford, instead focused on the economists’ lopsided opposition to Trump’s promised cuts in mass cheap-labor, welfare-aided immigration:

“Restricting immigration will only condemn us to chronically low rates of economic growth,” said Bernard Baumohl, chief global economist at the Economic Outlook Group. “It also increases the risk of the recession.”

Thomas Simons, senior economist at the Jefferies investment firm, called the idea “absolutely harmful to an economy with a population undergoing the demographic transformation.”

Of course immigration expands the economy by importing more welfare-aided consumers and more wage-cutting workers. In fact, the federal government imports 1 million new consumers each year via the legal immigration system. That is great for business — such as the Chamber of Commerce and Amazon.com Inc. — and also for the federal government which gains more tax revenue plus more customers for government-provided services, such as welfare and healthcare.

However, merely expanding the number of consumers does not make Americans wealthier or more productive. If that were so, then Americans would get richer if Somalia, Yemen, and Niger were allowed to become the 51st, 52nd and 53rd states in the United States of America. This is a really obvious point, which any kid watching an eight-slice pizza baking in the oven immediately understands when her siblings rush into the kitchen.

In fact, cheap-labor mass immigration imposes a massive “immigration tax” on most Americans.

Each year, 4 million Americans turn 18 — but the federal government immediately imports 1 million new immigrants, plus few hundred thousand extra illegal immigrants, plus roughly 1.5 million temporary visa workers, such as H-1B workers at Wellesley.

Via the basic law of supply and demand, that huge inflow of new workers forces down Americans’ wages and salaries by roughly $500 billion each year, boosts profits for Wall Street, and also reduces pressure on investors to develop and buy labor-saving, productivity boosting, wealth-generating machinery that can pick strawberries, cook hamburgers, clean rooms, mow grass, debone chickens, milk cows, and write newspaper articles. That huge infusion of immigrant labor also creates a new population of low-wage servants for the urban elite, including waiters, cleaners, store assistants, baristas, cooks, and day-care providers, many of whom are packed into profit-generating apartments linked by public transit to their employers’ upper-income neighborhoods.

This wage drop is such an obvious consequences of labor supply-and-demand that even the Congressional Budget Office admitted it publicly when the bipartisan establishment was trying to win passage of the cheap-labor-and-amnesty “Gang of Eight” immigration bill in 2013.

This wage problem has grown far beyond the working-class because companies are now importing foreign graduates to work as cheap therapists, doctors, professors, scientists, teachers, software experts or graphics designers, at a huge cost to American college graduates.

Understandably,  Wall Street, establishment economists, and globalist writers are determined to publicly downplay immigration’s huge impact on their status and other people’s salaries. For example, Long quotes Wall Streeter Mark Zandi opposing Trump’s plan to reduce the importation of customers:

“Limiting immigration to the U.S. is a grave mistake,” says Mark Zandi, chief economist at Moody’s Analytics. “The only way to meaningfully increase U.S. economic growth on a sustained basis anytime soon is to increase immigration.”

She also noted that in June 2016, Zandi issued a report arguing that Trump’s labor-supply policies, AKA Trump’s immigration policies, would be a disaster.

But Long apparently didn’t keep up with Breitbart News’ investigation into Zandi’s report which revealed a bonanza for people outside of Wall Street and the Washington Post.

“As the immigrants leave, the already-tight labor market will get tighter, pushing up labor costs as employers struggle to fill the open job positions,” the report promised. “Mr. Trump’s immigration policies will thus result in … potentially severe labor shortages, and higher labor costs,” Zandi’s report promised. The formal unemployment rate would immediately drop by a third, from 5 percent in 2016 to 3.5 percent in 2017, the report predicted. Housing prices would drop by almost 4 percent in 2018 and 2019, it warned.

Zandi’s worry about wages and housing was based on his earlier study of Arizona, where the forced departure of illegals had many economic effects. For example, it forced employers to pay higher wages and to accept lower monthly payments from renters. According to Zandi’s Arizona report:

The median income of low-skilled whites who did manage to get jobs rose about 6% during that period, the economists estimate … wages rose about 15% for Arizona farmworkers and about 10% for construction between 2010 and 2014 … “It was like, ‘Where did everybody go?’ ” says Teresa Acuna, a Phoenix real-estate agent who works in Latino neighborhoods. Real-estate agent Patti Gorski says her sales records show that prices of homes owned by Spanish-speaking customers fell by 63% between 2007 and 2010, compared with a 44% drop for English-speaking customers, a difference she attributes partly to financial pressure on owners who had been renting homes to immigrants who departed.

This is all just the basic economics of supply, demand, and price, which is much the same for labor as it is for bananas, crude oil and other commodities.

Yet Long and her allies ignore Americans’ wages in the labor market. They’re focused on growing the power of the state and corporate American, regardless of the cost for blue-collar and white-collar Americans who don’t attend elite universities or work in elite institutions. Her focus on what is good for the elites, for business and the state — above all else — shows throughout her progressive article:

the baby boomers are starting to retire. The United States needs more people to replace them … business leaders with big and small firms complain say they can’t find enough workers. They are especially vocal about not being able to find enough people for really low-skilled, low-pay work and for really highly skilled jobs … From an economics standpoint, the key is to get more workers with the desired skills into the country. It’s why the tech community is lobbying so hard for more H-1B visas …

Polls show that Americans do not want Long’s vision of a Brazilian-style, two-tier, elite-run economy. That is largely why they imported a real-estate developer from New York to do the merit-based immigration reform that Long and her peers just do not want to do.

 

 

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