“Paying for the Wall” by John Edward

This is the third in a series of columns by John Edward, who teaches economics at Bentley and UMass Lowell, on economic issues related to the upcoming presidential election. The first column, “The 100 Percent,” appeared on May 16, 2016; the second, “Voodoo Two,” on May 23, 2016.

In 1987, President Reagan told Gorbachev to tear down the Berlin Wall. Now presumptive Republican presidential nominee Donald Trump wants to put up a wall along the Mexican border. It will cost billions of dollars to build. Trump’s immigration policies will cost our economy trillions of dollars.

Donald Trump presumes he will get Mexico to pay $5 to $10 billion for the wall. The Migration Policy Institute estimates the wall will cost $15 to $25 billion. United States per capita income is about 5 times as much as Mexico’s. Trump may be a good negotiator, but good luck getting Mexico to pay.

He also declared his intent to deport 11 million “illegal immigrants.” Trump claims to be a great businessman, but he does not appear to know how our economy works.

Just the law enforcement expenses of mass deportation could cost $500 billion. That estimate comes from The American Action Forum (AAF), led by the former head of the Congressional Budget Office. Many of the people Trump wants to throw out came here legally, but their visa or work permit expired.

Gross Domestic Product would decrease by $1.6 trillion or 6% according to AAF models. Losing 8 million vital members of our work force, regardless of legal status, will greatly reduce productivity, output, and tax revenue. Millions of jobs would go unfilled.

Prices will go up for products produced by immigrant labor. The American Farm Bureau Federation predicts a 6 percent increase in food prices if we deport all undocumented workers.

The Social Security Trust Fund would take a big hit. A 2013 study by the Social Security Administration showed undocumented workers contributing $13 billion a year to the fund and receiving only $1 billion a year in benefits.

Federal, state, and local governments collect more in revenue from undocumented workers than the government expends on providing services for them. However, the need for services is concentrated. Border states need federal assistance, not mass deportation.

Trump claims that: “The influx of foreign workers holds down salaries.” However, a recent Federal Reserve study showed that undocumented workers actually increase wages in some job sectors, while in others they lead to a small decrease. As observed by the Economic Policy Institute (EPI): “there is a broad consensus among academic economists that in the long run immigration has a small but positive impact on the labor market.”

Most undocumented workers perform low-wage work — employed in construction, manufacturing, hospitality, and agriculture. Also observed by the EPI: “low-skilled immigrants do exert mild downward pressure on the lowest paid American workers.”

However, the number of undocumented workers is already down about a million from the peak in 2007. About 70 percent of undocumented workers come here from Mexico and Central America. According to the Organisation for Economic Co-operation and Development, Mexican workers rank as the hardest workers in the world. In recent years, as many people migrated from the U.S. to Mexico as came here from Mexico.

Meanwhile, we have an estimated 40 million high-school dropouts. Another half million to a million high school students drop out every year. Those that graduate often have poor practical job training. The right way to reduce competition for low-pay jobs is education, not deportation.

Many immigrants obtain visas to work here because they perform specialized or highly skilled work. Legal immigrants may abandon their jobs and leave when they see Trump deporting family members or they fear getting caught up in a round up.

Moreover, immigrants are not just workers. They are also business owners, job creators, innovators, taxpayers, and a very large source of demand in our economy. Deporting undocumented workers would hurt our economy in many ways.

It seems to be accepted that free flows of capital are necessary. The financial industry and multinational corporations move money and jobs across borders with little restriction. Yet some free-market fanatics want to severely restrict the flow of labor by denying a path to citizenship. They would rather deport people who have been working here for years or decades, raising families that include birthright citizens.

We already know of failed experiments with Trump-like policies. A CATO Institute survey of “punitive” state-level immigration policies found they were “economically destructive and inimical to growth.” Several studies show Arizona’s now infamous immigration “reform” costing the state thousands of jobs, tens of millions in tourism revenue, and hundreds of millions in economic output.

The United States has already spent $3 billion on fencing along the border with Mexico. Fences and walls will not prevent illegal immigration any more than they stop the flow of illegal drugs. Migrants desperate for work and a safe place to live will find a way. To the extent a wall could suppress migration, it will only put more pressure on our coastlines and the Canadian border.

The best way to characterize Hillary Clinton’s immigration policies – they are not Trumps! She wants to “Conduct humane, targeted immigration enforcement.” She supports “comprehensive immigration reform legislation with a path to full and equal citizenship.”

We are very fortunate in the United States of America. Our standard of living has improved dramatically over the history of our nation. Immigration has been a critical contributor to our economic success. It continues to be so.

Clinton understands this. Trump is resurrecting the anti-immigration fervor of the Know Nothing Party of the mid 19th century.

Trump’s wall and policies on illegal immigration would be terrible for the economy. With respect to legal immigration, he wants to stop people from coming here based on their religion or region of origin. That would be terrible for our society.

An informed voter is our best citizen.

Next up: the trade war that Trump intends to start.

19 Responses to “Paying for the Wall” by John Edward

  1. Joe from Lowell says:

    If you wall yourself off behind walls and razor wire and guard towers, it changes who you are.

    We went over 200 years without a “secure” border, now all of a sudden we’re North Korea?

  2. Paul Early says:

    Joe, I agree with your sentiments here. I worked for many years as a software engineer setting up hardware and software for site securities at many locations around the country. After I had been working in the security field for some time, I realized that the more we obsess about security, the less secure we become. I believe that a major problem rises from our fundamental lack of trust.and confidence in our neighbors, our values, morals and strangers. By morals, I mean values like free speech, the right to congregate and the ability to change, absorb and internalize new ideas and cultures, We are so fearful to lose something, that we lose ourselves in the process.

  3. David Maine says:

    The Israeli government built a wall on the West Bank they argue that it protects civilians from suicide bombings and other terror attacks. Do you think they should tear it down? Would it be okay by you if we build a wall for that reason? Do you think that only good people sneak in looking for the American Dream? We also spend billions on national defense, would you agree the wall is a part of our national defense?

  4. David Maine says:

    “Trump may be a good negotiator, but good luck getting Mexico to pay” All we have to do is stop giving Mexico free money and eventually Mexico will have paid for the wall. .

  5. David Maine says:

    Federal, state, and local governments collect more in revenue from undocumented workers than the government expends on providing services for them. However, the need for services is concentrated. Border states need federal assistance, not mass deportation. Mr. Edward would please let me know where you got this information? I don’t think your statistics are correct.

  6. David Maine says:

    Can anyone tell me how we got 11 million illegal immigrants in the USA? Gee maybe we should build a wall? Illegal is illegal Mr. Edward it is not okay if you are illegal for a long time. This is a problem and we need to deal with it.

  7. John Edward says:

    In response to David Maine,
    with respect to fiscal impact, from a Congressional Budget Office survey:
    “most efforts to estimate the fiscal impact of immigration in the United States have concluded that, in aggregate and over the long term, tax revenues of all types generated by immigrants—both legal and unauthorized—exceed the cost of the services they use.” ;
    with respect to the “free money” we give to Mexico, please let me know where you get your information;
    with respect to how we get 11 million illegal immigrants in the USA the answer is a wall would not do much good — many come here legally, and then they become illegal, others are desperate to come here because our economy is so much better in significant part because immigration has been so good for our economy;
    with respect to “illegal is illegal” yes this is a problem we need to deal with but we need to be honest and acknowledge the severe negative economic impact of mass deportation.

  8. David Maine says:

    Q: How much foreign aid does the United States give to Mexico?

    A: Quick Answer
    In 2013, the United States gave Mexico $51.5 million in foreign aid. Of that amount, $24.8 million, the largest segment, was designated for democracy, human rights and governance. The next largest amount, $10.9 million, was designated for the environment, and $8.4 million was designated for economic development.
    Know More Full Answer

    Lesser amounts were designated for health ($2.9 million), program management ($2.4 million), education and social services ($1.1 million), peace and security ($0.6 million), humanitarian assistance ($0.3 million) and multisector ($0.1 million). As of September 2014, the data shows disbursements from the United States to Mexico totaling $15.4 million, with $7.1 million going for democracy, human rights and governance, $4.4 million for environment, $2.9 million for economic development, $0.6 million for education and $0.5 million for program management.
    Learn more about International Orgs

    Sources: foreignassistance.gov

  9. Dean says:

    There is a shortage of sand in the world. Sand is an ingredient used in mixing concrete. Like oil, sand is finite. That wall will never be built. Who is going to supply the sand , Mexico ?

  10. John Edward says:

    In response to David Maine:
    So we can get Mexico to pay 5 to 10 billion (with a b) dollars for the wall by holding ransom 51 million (with an m) dollars in foreign aid? Also note “the largest segment, was designated for democracy, human rights and governance” or in other words programs that help stem the tide of emigration out of Mexico.

  11. John Edward says:

    In response to David Maine:
    So we will get Mexico to pay 5 to 10 billion (with a b) dollars by holding ransom 51 million (with an m) dollars? Also note “the largest segment, was designated for democracy, human rights and governance” in other words a small investment that helps stem the tide of emigration out of Mexico.

  12. John Edward says:

    Again in response to David Maine:
    Please read “‘Model immigrant story’ faces uncertain ending” in today’s The Boston Globe, then tell me again how illegal is illegal and then tell me how deporting Pearse McDermott would make sense economically or morally even though he has been illegal for a long time. If nothing else, by reading the article you should have a little better understanding of “how we got 11 million illegal immigrants in the USA.” I will leave it as an exercise for the reader as to whether attitudes would be different if his name was Pedro Hernandez.

  13. David Maine says:

    I don’t have a problem with Spanish people or any other nationally, so why do you insinuate that with your comment “attitudes would be different if his name was Pedro Hernandez”?

    I do have a problem with people who are in this country illegally. There is a process to enter and to stay in this country legally. We are a nation of laws and we need to enforce the laws of our land, not pick and choose which laws cost too much to enforce. Look at the drug laws, how much have we spent and we still have a enormous problem but we continue the fight.

    I feel we should enforce our laws and secure our boarders, all of our borders as a part of our national defense. I don’t care if it is with a wall, a fence or our troops we need to get it done. So Mr. Edward how would you address our problem with people who are here illegally?

  14. John Edward says:

    David Maine asks: how would you address our problem with people who are here illegally.
    Easy answer, same as President Obama, candidate Clinton, and many enlightened Republicans have advocated — a pathway to citizenship. Using your drug law analogy, we can either throw people in jail (has not worked) or get them help, for example with the opioid addiction, as many communities are starting to do.

  15. David Maine says:

    That is the easy answer Mr. Edward, don’t enforce immigration laws! Just help them and give them a pathway to citizenship? So do we do the same with the next 11 million illegal immigrants ten years from now? What about all the people who are on list to immigrant to the United States legally? If we are going to go with that plan why spend money on protecting our borders? Lets just open our borders let every one in? The terrorist are looking for opportunity too.

  16. John Edward says:

    One last response to David Maine:
    Like I said, informed Republicans (and Democrats, and others) who understand the conditions and procedures that a path to citizenship entails favor it because they realize it would strengthen our country and is consistent with policies to protect our borders (note the plural) and combat terrorism.

  17. David Maine says:

    In 1985, during the administration of Republican President Ronald Reagan, Congress passed a reform bill that shielded some 3 million immigrants from deportation. Now thirty years later we have the same problem only much larger with 11 million illegal immigrants. Note my responses also say borders in the plural.

  18. David Maine says: