The other day, I wrote how Trump’s tariff plan cannot make America great again. In that post, I promised a follow-up on immigration. This is that post.
A quick note before I begin: many people will likely object to this post because of various social problems immigration may bring (they’ll vote away our freedoms, they’re violent, they suck welfare, etc). I, and many others far smarter than I, have addressed those myths in the past and I will not reiterate those arguments here. This post will focus on the economics of immigration.
Immigration is necessary and vital to any growing economy,and not just skilled immigration either. Even unskilled provide valuable benefits.
Julian Simon once said the greatest resource is the human brain. Human creativity is what transforms inert matter into useful resources: goop into oil, telephones and computers into the Internet, etc. Immigration helps contribute to “national” creativity (which by that I mean the creativity capabilities of the people inhabiting the nation). Institutional frameworks help determine the effectiveness of resources, and a resource (such as labor) trapped in a place hostile to it will produce less output than in one where institutions are beneficial to it (indeed, this is why trade happens. Resources go to where they are most valued).
Immigrants are also beneficial in that not only do they produce, but they consume as well. Immigrants boost consumption of other people’s productive goods, helping to stimulate economic growth in the nation as well.
But what about an effect on wages? Those effects will likely be fairly minimal. Like the seller of any resource, the immigrant (who, in this case, sells his labor) will go where it is most valued. If there is a sudden influx of immigrants into an area, and the wages for immigrants (and whatever domestic competitors there are) start to fall, it naturally de-incentivizes immigration to that area and rather incentivizes it to other areas. Likewise, given increased immigration to an area increases demand in the area for various goods and services, there is an increased demand for inputs producing those goods and services, inputs including labor. This would mean that wages would rise.
One final point: America, like other industrialized nations, is facing a rapidly aging population. Wealthy nations simply do not reproduce at the same rate poorer nations do. Therefore, the US needs immigration to help grow the population. A stagnant or declining population will reduce economic production and prosperity.
In short, Trump’s anti-immigration plans cannot make America great again. They will only harm it.