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When looking back at the 2016 election, historians will undoubtedly be able to identify the principal fault lines that drove the tectonic shifts we’ve seen, particularly among Republicans. However, I’m not yet throwing in the towel on the idea that Donald Trump can be denied the nomination. I think his ascendence would be a disaster for the party and our nation, given that the best evidence available indicates that Trump will perish bigly in a ball of electoral flames like Sinclair in The Rocketeer.
That said, it seems clear that the proximal causes of these ructions revolve around immigration policy. Trump has promised to address this matter and some of his positions aren’t terrible. However, they miss the fundamental issue that bedeviles us. The reason why we have an immigration problem does not lie in the lack of a wall, but in economics.
As we all know, demand tends to create supply. We see this on a daily basis in the the drug war. Why does America have a problem with violence related to drugs despite their prohibition? Mainly, because narco-terrorist gangs are rational actors in the market, and supply their customers with the products they badly desire. Sadly, Americans want drugs and are willing to pay premiums that exceed the risks of criminality, with the inevitable outcome being violence among the gangs and with law enforcement. If demand for drugs were less, there would be correspondingly fewer problems with drug-related violence.
The labor market is little different. There is a demand for hard-working people who are willing to be paid less than prevailing legal market wages. There also happens to be a convenient (though illegal) route for bringing them here.
The issue with both drugs and immigration is one of demand, not supply. So long as we (and through us, Trump) address only the supply side of the matter, we will fail to get the results we want.
Trump’s prescription for addressing immigration’s supply side is to choke it off by erecting a physical barrier at the border. It would simultaneously serve as a powerful symbol of our resolve … and an ironic symbol of our economic illiteracy.
The United States of America is the third largest nation in the world by population. We are also the fourth largest nation by geographic area. There’s a lot of space, with a long series of borders for people to enter and a lot of area where people can hide. That plan to track down and deport 12 million illegals? Good luck with that.
I concede that a wall would make it marginally more difficult to enter the country and would likely reduce illegal immigration somewhat. It would not, however, address the underlying cause of the problem: i.e., the demand for workers who don’t carry the regulatory and wage baggage that Americans are encumbered with.
Outside of some generic discussion about repealing Obamacare, Trump doesn’t bother to address some of the issues that exist with employment regulation (which is a tax on employment hidden from employees) in the form of payroll taxes, unemployment insurance, health insurance mandates, and various costly regulatory burdens that have given rise to the human resources profession. Such people add little value to the bottom line of a company but are, nonetheless, required in order to maintain regulatory compliance with the latest federal and state laws as a company approaches some critical mass of size.
Given all this, many businesses are willing to skirt the law and hire illegals not only to avoid the higher salary demanded by Americans, but mostly to avoid the regulatory headaches that come from hiring them.
To demonstrate the absurdity of this situation, by the time you have hired and employed a person working for just $7.75/hr, (annual salary $16,000) the total annual cost of employing that person balloons to well over $20,000 once you’ve factored in insurance, taxes, and other regulatory costs.
It should go without saying that the practical effect of hiring illegal workers is not only to deprive Americans of potential employment, but to simultaneously drive down average wages within that sector. Moreover, since businesses are in competition with one another, it’s hard for one company to remain above the fray and place themselves at a huge competitive disadvantage by hewing strictly to the rules. In short, legal American labor has been made artificially expensive and uncompetitive not because of any failure of the worker, but — in large part — because of the regulations and taxes imposed upon his labor. Breaking the law, unfortunately, pays dividends in excess of the potential costs. Hence, illegal immigration.
On all this, Trump is largely silent and shows no apparent understanding or interest in developing a plan to de-magnetize employers from drawing in illegals.
Returning to the demand side of the of the ledger — which can and should be addressed as well — a better solution than the wall might conveniently sits in our wallets or filing cabinets: the Social Security Card.
When applying for employment, our SSN is one of the first pieces of information our potential employers look at. It provides employers key insight into a potential employee’s life, employment history, credit, and criminal background.
Bizarrely, SSNs lack even the most rudimentary security features. Various state and federal-issued ID cards already incorporate biometric security features, and it’s high time that a similar scheme were implemented for Social Security. The benefits would be many-fold.
Perhaps President Trump (!) could, upon his ascendance, propose that Congress immediately craft legislation requiring that the Social Security Administration to improve the security features of its IDs to include mandatory biometric data capture associated with our SSNs. This could be accomplished via a variety of means — fingerprint or retina scan, facial recognition or even vascular pattern recognition — many of which are already in place on our drivers’ licenses.
This information could be curated by some third party that the government contracts with (such as Visa, or another company that specializes in carrying out millions of secure data transactions daily with minimal error rates) in order to guarantee its security and accuracy. Then, Congress could upgrade and mandate the E-Verify system to check a potential employee’s SSN (now paired with biometric data)in order to ensure their legal presence.
This — in combination with stiff administrative penalties for violating these employment requirements and addressing the supply-side matters — will quickly wring most of the illegal labor out of the employment system. Mitt Romney’s self-deportation would quickly begin to outpace actual deportations without the need to pursue costly and inefficient legal hearings against illegals. Having an American birth certificate and a verified Social Security ID would level the playing field and give Americans the leg-up they want in the market.
Is Donald Trump fundamentally serious about these matters? My suspicion is that he is not. If we were, he could use the immense microphone to call attention to them – to communicate to the American people that he has a clue and has done his homework on the issues that matter to them.
As it currently stands, it seems as if he would prefer to continue his current path of insubstantial demagoguery. What a shame.