Donald Trump’s campaign to choke off almost all immigration to the United States is starting to threaten the economy, which depends on new arrivals to fuel economic growth.
That warning comes from his own acting White House chief of staff Mick Mulvaney and echoes progressive think tanks and noted economists like Paul Krugman.
Perhaps, not surprisingly, the Nobel Prize-winning economist has repeatedly made the very same argument.
Even the conservative American Enterprise Institute (AEI) realizes the important connection between population growth and immigration.
“One wonders to what extent anti-immigration sentiment is driven by a warped understanding of reality,” wrote James Pethokoukis, AEI’s ideas editor in a 2018 blog post.
“Without migration, US economic growth would have been roughly 15 percentage points lower than it actually has been. Or to put it another way: ‘While not quite putting the US in recession, this is enough to cancel out the majority of post crisis gains,” he wrote, quoting economic research by Citigroup and Oxford University.
“But the lack of understanding probably doesn’t stop there. The study, ‘Migration and the Economy,’ goes to great length in explaining the unappreciated beneficial impact from the global movement of our fellow humans.”
The assertion is fundamental to economics, although the Trump administration has pursued exactly the opposite immigration policy.
Trump was elected, in part, on his promises to build a border wall with Mexico, ban Muslims from entering the country and narrow the path to citizenship.
Mulvaney acknowledged the fallacy, but he had to go out of the country to speak candidly.
He told a crowd at a private gathering at Oxford University in England, Feb. 19, that the Trump administration needs to encourage “more immigrants” for the U.S. economy to continue growing, according to an audio recording obtained by The Washington Post.
“We are desperate — desperate — for more people,” Mulvaney said. “We are running out of people to fuel the economic growth that we’ve had in our nation over the last four years. We need more immigrants.”
His emphatic plea is not something the Trump administration wants to hear. It’s waged a war against both legal and illegal immigration.
Of course, the administration has come out in favor of immigrants who come to the United States in a “legal fashion,” Mulvaney insisted.
But Trump’s idea of immigration is skewed by racism.
In a Jan. 2018 meeting, he complained about “having all these people from shithole countries come here,” referring to Haiti, El Salvador and Africa. The country “should have more people from Norway,” he said.
It’s fair to say he was referring to “white” immigrants. Norway is 91.5 percent Caucasian, according to worldpopulationreview.
But the chances of mass immigration these days from Norway or almost any other European country are nonexistent.
Norway is one of the richest countries in the world on a per capita basis, and its citizens enjoy cradle-to-grave welfare programs paid for by its oil and gas industry.
Most other European citizens enjoy the same social safety net, including free universal health coverage paid by all through taxes.
Trump has played off conservative arguments that immigrants increase competition for U.S. jobs and depress wages to woo blue collar workers who have seen jobs disappear over the past several decades.
“A tight labor market is the best social policy,” argues Mark Krikorian, director of the conservative Center for Immigration Studies, who has influence over the Trump administration.
“We’re seeing an uptick in wages for less-skilled workers, as well as incentives for employers to recruit ex-cons, disabled people, in general workers they would not consider if the job market were looser,” he asserts.
That view, however, is contrary to economic experience.
“The idea that there are a fixed number of jobs, so that if a foreign-born worker takes a job he or she takes it away from a native-born worker, is completely at odds with everything we know about how the economy works. Hearing it from a conservative is especially surreal,” wrote Krugman in a New York Times column.
Exequiel Hernandez, a professor at the Wharton School of Business at the University of Pennsylvania, drew a direct connection between immigration and economic growth in 2018 study.
The research shows immigrants have a powerful effect on both capital investment and innovation and can positively influence a firm’s operations. “All these factors can lead to greater economic growth,” he writes.
“The bigger picture here is that the economy isn’t just powered by jobs and wages, it’s also powered by capital investment and innovation that makes both workers and capital more productive — and all three of those are affected by immigration,” Hernandez found. “You can’t pull one lever back and not hurt the other two.”
“In the US, immigrants are two to three times more likely than US-born individuals to start a company, create a patented innovation or win a Nobel Prize or Academy Award,” according to Ian Goldin, who conducted a landmark study by Citigroup and the Martin School of Government and Public Service at Oxford.
Ironically, Republicans in the past had favored immigration because of its positive effects on the economy.
During Mulvaney’s time serving in Congress, he supported expanded immigration along with other Republicans. But he’s been overshadowed by the Stephen Millers in the administration.
Trump, more recently has tried to sound positive about immigration.
“Legal immigrants enrich our nation and strengthen our society in countless ways,” he said in his 2019 State of the Union address. “I want people to come into our country in the largest numbers ever, but they have to come in legally.”
The speech, however, appeared to be nothing more than lip service. Since then, he’s tightened the screws on immigration.
Indeed, during his 2020 speech, Trump returned to his usual tropes on immigration referring to sanctuary cities and crime, The Post noted. He obviously had an eye on the upcoming election.
There’s no escaping the fact that household formation is a key driver of the economy as young couples marry and have children, creating demand for everything from new homes to consumer goods.
For the past three years, it’s been declining about one percent per year, according to macrotrends, a web site that tracks economic statistics. The U.S birth rate in 2019 was 11.979 births per 1000 people, a 0.09% increase from 2018. The birth rate in 2018 was 11.968 births per 1000 people, a 0.95% decline from 2017. The birth ratein 2017 was 12.083 births per 1000 people, a 0.94% decline from 2016.
Right now, not enough children are being born to replace their parents let alone fuel economic growth, and the United Nations projects the trend will continue through 2100.
“The next several decades will see populations in Europe and North America age and shrink as people have fewer and fewer children. That trend will hurt economic growth and dynamism and leave too few workers for every retiree,” writes Charles Kenny in Foreign Affairs magazine.
Without a rising population, the country is on the road to economic stagnation.