President Trump this week provoked yet another media meltdown by endorsing the RAISE Act, an immigration reform bill sponsored by Senators Tom Cotton (R-Ark.) and David Perdue (R-Ind.).
If passed, the bill would cut legal immigration to the United States by up to 50 percent, and break the cycle of chain-migration by giving priority to immigrants with in-demand skills.
Predictably, this has sparked outrage—but not just from the Left. Many economists and businessmen are likewise fretting. For example, Mark Zandi, chief economist at Moody’s Analytics, says “limiting immigration to the U.S. is a grave mistake” and that “the only way to meaningfully increase U.S. economic growth on a sustained basis anytime soon is to increase immigration.”
Of course, this is nothing but exasperated histrionics at best, and contemptible lying at worst. Why? Immigration does not cause real economic growth—not even theoretically. And beyond this, the data overwhelmingly show that mass immigration is actually costing Western nations, including the United States, exorbitant sums of money every year.
Dealing with the first issue: the RAISE Act would not impede America’s economic growth for the simple reason that economic growth is not a predicate of population expansion, but of productivity improvements. This requires a somewhat thorough treatment, because it is not immediately obvious.
Immigration and the Archaic Growth Paradigm
Put simply: economic growth occurs when, and only when, either more stuff is made, or better stuff is made. For example, America’s economy grows when it produces more cars, or (all other things remaining equal) more fuel-efficient cars. This logic applies to all types of production, whether goods or services. This serves as the axiomatic starting point.
Next question: how to make more stuff? There are two options. First, work harder. For example, want more wheat? Plant more fields. Need more legal research? Work overtime. In all cases the common variable is to add more labor. This is known as the archaic growth paradigm, and it boils down to the simple maxim: more input, more output.
The archaic growth paradigm is, unsurprisingly, how ancient civilizations generally understood economic growth. For example: when Roman emperors needed more swords, the only solution was to add labor (train more blacksmiths). Of course, doing so displaced labor from elsewhere in the economy, and this caused a cascade of labor scarcity. To end said scarcity, the Romans, like all ancient societies, ended up waging war to capture slaves and tribute—thereby adding noncitizen labor to supplement their economy. Basically, places like Egypt were forced to ship grain and wine to Rome, so that Romans could focus on war, art, and architecture. This labor made the Romans richer, at their foes’ expense. The problem with the archaic growth paradigm is that it is zero-sum: Rome only got richer if Egypt got poorer.
A much better way to expand the economy instead is to increase productivity; that is, make more stuff in the same amount of time. This is called the industrial growth paradigm. It is how countries truly get rich. Industrial growth breaks the link between population and production, and allows economies to grow exponentially.
The best example of this is what happened at the dawn of the Industrial Revolution. In 1785, Edmund Cartwright invented the power loom, which made British textile workers 40 times as productive. By the 1820s, after power looms were widely adopted in British mills, Britain produced as much cloth as the rest of Europe combined. Not only did this invention make the British exceedingly rich on a per-person basis, but it also changed the way people thought about economic growth: the paradigm switched from being population-driven to productivity-driven. This continues to be true to this day.
Where does immigration fit into all this? For the most part, immigration falls under the archaic growth model: more immigrants mean more people, and therefore more production. Therefore, more immigration will undoubtedly grow the economy, but it will not necessarily make it more productive. Therefore, immigration is theoretically neutral with respect to the industrial growth paradigm: it neither makes Americans richer nor poorer.
But is economic growth for the sake of economic growth a worthwhile goal?
The size of the economy does not matter; what matters is the size of each person’s share of that economy. Think of it this way: would you prefer to live in Denmark or India? Denmark has a tiny economy, but the average Dane is quite rich. Conversely, India has a very large economy, but each Indian is relatively poor. The answer is obvious: you would prefer Denmark. In short: the size of the pie is irrelevant, what matters is how big your piece is.
This observation dovetails with the immigration debate perfectly: immigration is only economically justified if it makes everyone in the nation richer, not the nation itself richer—immigration for immigration’s sake, just like economic growth for growth’s sake, is a vapid justification. It is irrational. Immigration is a policy choice, it is a means to an end, not an end unto itself.
Simply put: economic and population growth are not dependent variables, and therefore Americans should be skeptical of arguments justifying immigration on economic grounds.
There is one major caveat worth mentioning: a relatively small proportion of immigrants into America are highly likely to contribute to developing new technologies (scientists, engineers, etc.), and therefore improve U.S. productivity—they make America richer. This caveat is well-attested to in most policy debates, and easily predictable by anyone familiar with the Pareto Principle. But even importing too many skilled workers can be detrimental. For example, America’s medical schools are atrophying due to easy access to foreign physicians.
In short, mass immigration grows America’s economy, but does not necessarily make American citizens richer.
How Immigration Impoverishes the West
Enough of the theory. What do the numbers say?
A number of comprehensive studies have examined the impact of immigration on economic growth. In America, one of the most thorough was a 642-page study by the National Academies of Sciences, Engineering, and Medicine. The study found that immigration held down the wages and undermined employment prospects of American citizens, particularly working-class Americans. This is not surprising, since more workers means more competition for employment, and therefore lower prices (wages). It is basic supply and demand in action.
Despite this, the report concludes that immigration is good for the economy because second-generation immigrants tend to be better off than their peers. This observation has been noted time and time again, and is readily observable in the raw data. But is the conclusion warranted? Probably not.
Today America trains the same number of physicians as it did in the late 1970s, and would likely train them regardless of immigration levels. However, during this period the percentage of second-generation immigrants enrolled in medical schools has increased dramatically. Therefore, it is questionable whether these second-generation immigrants are actually growing the economy, or are simply displacing American students who would otherwise enter medical school—and I say this as a second-generation immigrant myself.
Regardless, studies conducted in other countries have been much more clear-cut.
A recent one by Denmark’s Ministry of Finance found that immigrants, particularly those from beyond Europe, were a net drain on the nation’s economy. In fact, non-European immigrants and their descendants consumed 59 percent of the tax surplus collected from native Danes. This is not surprising, since some 84 percent of all welfare recipients in Denmark were immigrants, or their descendants. The bottom line: immigration is a net burden on Denmark.
Another comprehensive study by the Fraser Institute found that immigration costs Canadian taxpayers some $24 billion per year—and this was using data from nearly a decade ago. The number has since increased significantly, as Canada has one of the highest immigration rates, adjusted for population, of any Western nation. The details are not worth delving into, but suffice it to say that this simply adds more evidence atop the mounting heap.
A final study worth mentioning comes out of the UK, and was conducted by the University College of London. The report found the value of immigration to the economy was contingent upon the immigrants’ country of origin. This may not be politically correct (no fact is), but it conforms to the data from Denmark. The study looked at the labor government’s mass immigration push between 1995 and 2011. Researchers found that immigrants from the European Economic Area made a small, but positive net contribution to the British economy of £4.4 billion (roughly $5.7 billion) during the period. However, during the same period non-European immigrants (primarily from South Asia, the Middle East, and Africa) cost the British economy a net £120 billion (around $157.6 billion). Essentially, the type of immigrant matters.
Taken together, the studies prove the theoretical point: immigration does not cause economic growth. At best, mass immigration is a relatively benign force, while at worst it is devastatingly expensive.
Why the RAISE Act Would Benefit America’s Economy
The RAISE Act would benefit America’s economy in at least two ways. First, the legislation would reduce the overall level of immigration significantly. Second, it would better-calibrate the type of immigrant coming to the United States.
Reducing the overall level of immigration is important because America’s economy does not need additional labor: the labor market is already over-saturated as it is. Real unemployment remains high and there is no sense exacerbating the problem. Furthermore, fewer immigrants would help improve working conditions and wages for U.S. citizens. This has already begun in a few locations (albeit for different reasons)—the logic is sound and empirically valid.
And, of course, fewer low-skilled immigrants means fewer people on welfare.
The RAISE Act also ensures that America gets high-quality, skilled immigrants, by prioritizing people with particular skills. These are the type of immigrants who are most likely to help expand the economy in the long run—immigrants that U.S. policy should have been targeting for decades.
All things considered, the RAISE Act may be precisely what the United States needs. If President Trump were to sign the RAISE Act and do nothing else, he would have done more for America than any president since Dwight Eisenhower.
This article, as well as the RAISE Act focus on the economics of immigration. Within the context of this limitation, I think it does a fair job of articulating the policy choices. So, it is not a criticism of this article or the RAISE Act to point out that there are non-economic factors associated with immigration.
What is observable in the record of immigration are occasional moments of resistance to immigration. Such resistance is often written off using phrases such as ‘nativist’ or ‘racist’ as if the *only* reason the existing population of a nation might resist immigration is solely due to ethnic factors. Of course, ‘ethnic’ factors can play a role, and often resistance is articulated in ‘ethnic’ terms. But, since there are also in the record very large immigration events for which little or no resistance is encountered and ‘ethnic’ factors *could* have played a role in such resistance, ethnicity cannot be the deciding factor in resistance.
From an economic perspective (that of this article and the RAISE Act), what appears to be a significant factor in resistance is whether or not the economy is growing *faster* than the rate of immigration. Almost all ‘pro-immigration’ arguments refer to *future* growth as a result of immigration, which is to say that immigration is understood in terms of economic *investment*. Investments, by definition, are actions involving *present risk* for the *possibility* of *future reward*. Investment activity is simple when one is risking one’s *own* assets with the intention of *personally* absorbing either the gains or the losses. However, pro-immigration advocates are *not* risking their own assets and are almost *entirely immune* from adverse outcomes of the ‘investment’ they propose. In essence, they are playing games with other people’s lives (both native and immigrant) for which they have no intention of ‘making good’ on any *failure* of their ‘investment strategy’.
What the historical record on immigration resistance seems to indicate is that *only* an economy that is growing at a rate — and I might add in a *manner* — that allows immigrants to *almost immediately* to be assimilated into the economy *without* altering the power dynamic between labor and capital will *not* produce significant resistance. Any immigration that (a) does not result in immediate economic assimilation and/or (b) does result in a shift of the labor/capital power dynamic in the favor of *capital* results in resistance to immigration. The greater the failure of economic assimilation and/or the greater the redistribution of power from labor to capital, the greater the resistance.
Trump is right! Pass the RAISE Act!
When you are an advanced Western nation, letting somebody immigrate to your country is a huge decision. Western nations such as the US maintain all their residents including recent immigrants at a high standard of living. If the person is unable or unwilling to support themselves, the Government (that is the Taxpayers) support them. To allow an immigrant into your country is to agree to support them and there descendants forever and forever until the end of time.
Our immigration policy should be based on conscious decisions as to what skills we need in these new Americans, the likelihood that they will support themselves and their family, and the likelihood that they will assimilate. (Assimilate as opposed to having a “bug up their butt” from Day 1 about America.)
Opposition to the RAISE Act is based on a belief that the Western nations should solve the problems of the poor in the world by absorbing those poor people into their population. Guess what? Nearly every “Western” nation has this as their immigration policy. Canada, France, Germany, Great Britain, Sweden, etc. So if the US stops doing this these immigrants have plenty of other places to go.
We are not just an economy. Immigration-fueled growth adds a person every 12 seconds – Census. 25% of our population are immigrants/offspring. Those that claim concern for “global warming” and care for the environment are hypocritical to keep pushing growth. . . especially as world population booms from 7 to 11 billion by 2100. We are not just an economy. Our limited resources -roads, schools, housing, healthcare- are overloaded by newcomers.
And natural resources like water are threatened. NationSavers supports RAISE and suggests Americans better get busy letting Congress know we demand it.
Pass the raise act please… It may be too late. This is what happens when you ABORT 2-3-4 generations of native born nationalist (Americans included). We are in the same situation in first world countries that homosexuals found themselves: The homosexuals can’t reproduce, so they must RECRUIT. They are now seeding stocks of trans-genders through the education system K through 12. First world countries must now use that same strategy; rather than propagation of our species (nationalized born citizens) we import invaders (bloodless war and land take over) through phony immigration policies to replace ourselves with malleable, subservient human live stock for the ruling class which are; The new world order slave masters… “The Illuminati” (slave world without borders). Muslims are like antibodies injected into the earths first world populations to reduce the populace ideals amongst the nationalist and to eradicate old idealist (convert, or die). This paves the way for the ruler’s master plan…A Slave world, complete domination and reduction of the worlds population (500,000,000)!
On the subject of Jim Acosta’s tirade at the Stephen Miller press conference: what does he do at the micro/personal level for the immigrants for whom he champions his open-doors policy?
Could we please have skilful journalism which researches and disseminates far and wide the following facts?
1. What Jim Acosta receives as total pay + perks package in his full-time role and activity (like most ‘journalists’ now) as a propagandist for ‘liberal’ ‘progressive’ Leftism.
2. What he does to accommodate migrants in his own property/ies. Does he feed, shelter them in ways that cost him anything? (I am of course emphatically not referring to whether or not he employs a maid, cook, gardener, &c [at nice low wages?], from Mexico or other poor countries. I am talking about a really self-sacrificing act: e.g. sharing his own home with an immigrant family, giving much of his income away to charities which benefit them; spending spare time that he would otherwise have for vacations giving lessons in English to foreign low-paid workers….)
If Emma Lazarus’s poem is to be the template for the national immigration policy, then WHAT IS ACOSTA DOING for any one individual or family or group among the ‘huddled masses’?
This is a really dumbed down version of economics with many flaws. I’ll focus on the largest. The main reason immigration provides an economic benefit to the US is because immigrant families, who have more children, have slowed the demographic shift towards a society with a relatively larger share of older non-working citizens who are living longer and using benefits paid for by younger working citizens.
If you want an example of a country with a restrictive immigration system and a rapid demographic shift to an older population, look at Japan.
Also, the types of labor provided by an immigrant workforce keep prices lower for basic goods, mainly food.
It’s not. You don’t know what you’re talking about. Japan’s GDP per capita has grown more rapidly than America’s for the last 50 years—this measure is not distorted by a falling population. The same thing has happened in Germany (until very recently).
Technology & automation can solve all of the “problems” caused by a declining population—there is no scientific or economic reason to resort to immigration.
In fact, a declining population could be a good thing: just look at what happened in the wake of the Black Death in Europe—the flowering of labor-saving technologies. Likewise with Britain during the 18th century. Necessity is the mother of invention, strength comes from adversity.
Thanks Spencer for the response. I appreciate the engagement. 50 years is a pretty long window of time. So you say all of the problems of a declining population can be solved with automation and technology. What about this one? Right now we have a system of social welfare benefits that transfers a large amount of cash from young workers to retirees and those benefits are growing in cost at a greater rate than inflation. They are consuming a larger and larger portion of the federal budget every year. Will the machines pay those taxes? Or should we change the current cash transfer system so that young workers no longer spend so much on retirees whom we are able to keep alive and healthy for longer than say, 50 years ago, or during the Black Death.
Necessity, as you say, is the mother of invention. And the internet, as we’re learning, is the mother of drivel. Can’t wait to hear back on your grand solution.
The critique you’ve presented is essentially the good ol’ “without immigrants, who will pay for boomers’ pensions” argument. There are a number of problems with this criticism, both philosophical & practical.
On the philosophical side, this critique only holds water if we assume that we ‘must’ maintain our social welfare net—this isn’t a settled issue. Not by a long-shot. Is it moral to enslave the young to pay for the old? What happened to voluntary charity? What happened to family obligations?
I’m not really convinced society would crumble without government intervention: perhaps organic networks would fill in the gaps. Perhaps the welfare state is to blame for breaking the bond between fathers & sons—if the state will care for you when you’re old, there is no economic incentive to ‘invest’ in your children.
I think the welfare state is actually causing as many social problems as it’s fixing (what in the medical practice is called iatrogenics)—that may be an understatement.
Of course, the next question is also iatrogenic in nature: is mass immigration actually solving the problem it’s designed to, or is it simply causing a new host of problems?
I think we can agree that society is a complex system: we don’t really know how it works, and whenever we tamper with it (social engineering) we often end up with unforeseen consequences—just like when we meddle with the economy, or the weather.
My point here is that even if we take for granted that immigration is relieving the pressure of an aging population, it may likewise cause problems that are far worse. For example, the volume of immigrants needed to “sustain our economy” is so great that they can’t assimilate. We’re splintering our neighborhoods, cities, and nation—completely destroying the social fabric.
For example, the 48% of white Americans surveyed (anonymously) said that they feel like “strangers in their own land.” Is this mass alienation worth the money?
And what about terrorism? Crime? Both are dramatically increased by immigration—in no small part due to society’s fragmenting.
And finally we come to reality: immigration isn’t actually making us richer, it’s making us poorer. Immigrants, on average, consume far more in welfare & tax subsidies than they pay into the system—your argument is factually wrong. Immigration is simply adding to the problem, not helping it. The data for this is citing in the above article.
Do I have a perfect solution? No, but I know one thing for certain: immigration isn’t helping.