The Boogiemen of Trade and Immigration by Bill Culbert


 Political leaders sometimes use popular and nationalistic sentiment to consolidate power. There will almost always be a call to patriotism and the demonization of some common “enemy” as the vehicle to exploit voters unschooled in human nature and history. We are seeing this in our current trade and immigration policies. 

 Populism’s simplistic solutions to complex problems are almost always unworkable and carry major unintended consequences. Nationalism is atavistic and leads to isolation and ultimate decay. 

 The greatest resource of any rich nation is its labor market. According to The Economist, if the world had free labor migration i.e. anyone could move anywhere for a job, it would add $73 trillion dollars to the world’s economy. This would not have to entail citizenship. In other words, it is the world’s greatest economic gift that has only to be embraced. 

 With a decreasing birth rate, the U.S. will lose much of its labor force and will be unable to fund the social support system for our aging population. Accepting more immigrants is the only reasonable solution to this dilemma that affects all rich nations. It is incomprehensible that we would turn away and torture young families that are eager to serve our nation and perform jobs few Americans will do. 

 A simple state allotment of immigrants with access to common services and a minimal short-term stipend would help revitalized many of our urban centers. Twice as many immigrants start U.S. businesses as reflected by their population. Immigrants started 40% of our Fortune 500 companies.

 Families that are fleeing terrible situations in their home countries are often the best ambassadors for the U.S. around the world. They commonly have a greater appreciation for our freedom than those born to it and they have lower crime rates. They often help support the extended families they leave behind and promote economic and social stability in those countries as a cheap alternative to U.S. militarization.

 American businesses have enjoyed a 22% increase in profit margins above a 50-year trend since China entered the World Trade Organization in 2001. Our access to their labor market is largely responsible, allowing American companies to provide greater added value using the low-cost Chinese products with more skilled, higher-wage American workers. For example, sixteen times as many U.S. companies will be hurt financially from higher priced steel and aluminum than those helped by import tariffs on these products. 

 Because most publicly-traded companies choose to share their wealth more with shareholders than with their workers, the working-class enmity against immigrants and foreign labor is misplaced.  For example, with all the gains in productivity between 1970 and 2015, the percentage of GDP in advanced economies that goes to labor has decreased from 55% to 51%. Even in the last five years of rapid economic recovery, real wages are almost flat. 

 Even though China had trade revenues in the U.S. of $506 billion in 2017, this was almost exclusively the result of direct product sales. The U.S., on the other hand, made much of its $450-500 billion from this relationship through China-based U.S. subsidiaries, so there is still parity in commerce.  The premise for a trade war is tenuous at best. It will result in job losses for both nations and with the current trade structure, China can inflict serious financial pain on the U.S companies that operate there. 

Eric KellerComment