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Trump Wants 4% (or Higher) US Growth. Easy. Just Massively Increase Immigration.
Donald Trump has high hopes for his economic plan. From CNBC:
Donald Trump thinks American GDP can grow more than 4 percent under his policies, more than double the average rate the U.S. has seen in this century. “My great economists don’t want me to say this, but I think we can do better than that,” he said Thursday in a speech to the Economic Club of New York. Earlier Thursday, his campaign said in a fact sheet that its planned tax cuts and deregulation will boost average annual GDP growth to 3.5 percent and “create as many as 25 million new jobs” in the next decade. The U.S. economy grew at roughly 2 percent in 2015 and last grew at a 4 percent annual rate in 2000.
There are a number of problems with this 4% goal.
First, there’s the economic math. Fast US economic growth in the postwar 20th century — 3.5% — benefited from fast labor-force growth. But today that growth rate is only a third of what it used to be. As the Obama White House rightly cautioned in its 2013 economic report: “In the 21st century, real GDP growth in the United States is likely to be permanently slower than it was in earlier eras because of a slowdown in labor force growth initially due to the retirement of the post-World War II baby boom generation, and later due to a decline in the growth of the working age population.”
Second, just to grow nearly as fast as we used to — maybe 3% or a bit higher — means sharply boosting productivity growth above its historical average. That’s the difference between today’s 2% economy and a 3% economy — not a 4% economy or higher. Unless you are counting on the Singularity.
Third, if the productivity numbers are under-measuring growth —as some economists think — then getting to 4% would be easier. But if true, that means the US economy right now is doing better than we think. This is not the Trump campaign message.
Fourth, another way to boost growth to 4% or even higher is massive immigration. As economist Adam Ozimek has noted, ” … it’s actual pretty easy to make GDP grow 5% a year: just increase immigration until that happens. If we’re expecting 2.5% real GDP growth a year, then increase immigration by 2.5%. If we’re expecting 1.5%, then increase it by 3.5%. This shouldn’t be too hard considering there are 145 million adults worldwide who would like to come here.”
And keep in mind, as I have previously written,”that despite America’s immigrant friendly reputation, our immigration rate is only half that of some other advanced economies, including Australia, Canada, and Germany.”
Again, this also is not the Trump campaign message.
Published in Economics, Immigration
Per capita, boyo. Per capita.
” it’s actual pretty easy to make GDP grow 5% a year: just increase immigration until that happens”…completely ignores the issues of skill mix, of capital investment required to support new workers, of social services costs…
A study of immigration and its economic effects, here
James, What is stopping all the Somali immigrants in Maine and Minnesota from going to Canada? The Brazilians who have made it all the way to Massachusetts? The Central Americans who are pretty much everywhere in the US?
Low by a factor of at least 10.
How may of them would add $100k+ per year to the gdp?
Nothing – nothing – displays the cleavage between the think tanks and those with common sense or the disparity between the apologists for capital and those that think there is an imbalance between the rights of capital and labor than this immigration issue. The only valid excuse for voting for Trump is the Flight 93 election argument; that stopping immigration now is the sole path to saving the character of this country. No no no – we need a moratorium on the general paths of immigration.
Then pay for them out of your own pocket. Not from debt or inflation.
To draw a simply allegory, I can drink energy drinks and in theory increase the duration I can work. I can even do this if I’m bedridden with a fever. The problem is that if I do this it creates problems later. We have reached the later, and people reject you and more immigration.
Reform Conservatives were fine with the Obama tax hike. Now they say,”We can’t think of any other reason for sluggish economic growth other than insufficiently open borders.”
Really, that is the only option you can come up with?
You are fired.
Lord save us from idiot straight line extrapolators.
Nuts.
This is all nonsense. We don’t know whether it would be 4% or 6 % growth if we removed the regulatory burden, eliminated welfare and long term unemployment insurance so that people had to work, privatized SS so the nation would save and stopped spending so much. We count government spending as output but it’s overhead, most of it dead weight overhead. Those people could actually be producing. And we could control immigration so that we imported workers we really need to eliminate bottlenecks, improve our educational system so we made our people actually productive and get the government and educational bureaucracy out of the way so people could figure out what education works for them and the economy demands. We do so many really destructive harmful things we do not have a clue how fast we could grow. Certainly a lot more than we have over the last several dozen years. That said, economic growth is not the goal it’s a potentially beneficial side effect of freedom and good law. If we have a goal for all this general stuff it would be human flourishing, which can include growth but is so much more. If we limit our concern to growth it would be per capita growth not aggregate. Aggregate growth like everything aggregate has little meaning and questionable benefits unless specified.
You’re just trolling us now, aren’t you.
Aren’t labor force participation rates ridiculously low? Couldn’t we increase growth by putting those people to work instead of importing a whole new person?
And I don’t care what all the charts and graphs say, immigration isn’t exactly a net benefit for all the countries that now have to change how their daughters dress when they leave the house so they don’t get sexually assaulted.
There’s also a benefit to a community being united by little things like a common language and a few shared cultural assumptions, but I doubt the eggheads care much about any of that because you can’t put it in a pie chart.
Maybe Mr. Pethokoukis is thinking along the lines of broken windows – a known fallacy, which posited economic growth by virtue of the labor and materials put into fixing broken windows. Just go around breaking windows and economic activity will follow.
If we “massively increase immigration” as he proposes, among our new neighbors – given the usual skill of our omniscient federal government – will be numerous new illegal voters and un-vetted “refugees”, who will surely break lots of windows and other things. Just think of all the wealth which was created by cleaning up the broken glass in lower Manhattan in 2001 and after. A great model for economic growth and wealth creation under a dependent permanent voting majority (remember, the courts tell us no citizenship proof is permitted in determining who can vote!).
Why is no one wailing about the sacredness of the vote or credible elections? Appearance of impropriety? Vote fraud? Nothing to see here. Instead, in classic false-flag fashion, the DHS tells us to worry about Russian hacking while our own experts tell us how vulnerable all electronic voting machines are. Undoubtedly, the DHS will trumpet its success in foiling the Russians, while the DNC quietly enrolls scores of thousands of illegals to vote and outright steals millions of votes for Hillary and Dem senate candidates. Yeah, lets open the borders even wider and we’ll all become rich.
I am 100% in favor of this. The overwhelming evidence shows that immigrants are a net positive for our society.
As long as it’s somebody else’s daughter getting groped. Or someone else’s neighborhood in which you have to learn Spanish to get by in the grocery store. Or when MS13 is shaking down somebody else’s business for “protection” payments. Or when your media refuses to show all the cars being torched for nights on end. Or when it’s a police department in somebody else’s town that refuses to stop the ring raping thousands of girls because they’re afraid of being called racist.
All such “benefits” should be restricted to ZIP codes that welcome such “net positives” into our countries.
How does importing a Somali national who comes from a populace with an average IQ of 68 benefit society? I’m not arguing that the government resources that will be poured into that community to support this deficit will be seen as a positive GDP indicator.
Does the magical soil give him 30 IQ points?
Well said, and both of you are absolutely right.
And is there nothing to be said for a community having a shared language, a shared history, and shared values? Wouldn’t it be nice to have a pretty decent idea what you could say without fear of offending some guy who got to your country a year and a half ago? All sorts of customs and religious proclivities to adjust for at school (or in those schools from which all non-immigrant children’s families have fled, failing to teach the kids anything Western at all), and small town life completely altered overnight as they found out their local high school is now a refugee center.
I’ve spent a decent amount of time in the “third world”, and I assure you that although the governments aren’t exactly the best, there are some strong cultural factors that often allow the governments to be that way and cultural traits that we don’t want to import to the US. And whatever the benefits, that’s part of what you’re importing.
There are ZIP codes in which I’d like some Somali communities planted, just to let them personally experience all the “benefits” that they’re so eager for us to “tolerate”.
You are throwing red meat to this rabid puppy Charles.
I saw much of the same, growing up on the Texas-Mexico border. Lawless, third world countries like Mexico are the way that they are because of their people, and it is no coincidence that as more and more people from the third world have settled in the United States, the United States has come to increasingly resemble a third world nation itself.
The next step is asking, what are you trying to conserve by bringing more of that demographic (nation is a people) change here?
This is what I was going to say. We need to get the people who are already here into the workforce.
It should be pretty easy to enlarge the labor force by bringing back all of those who have dropped out. Let loose the animal spirits of entrepreneurship, and we will see the growth rate explode.
James, you need to incorporate the concept of causation into your analysis. It is not that difficult. Many economists understand it. The way it works is, you drop your blind belief in post hoc, ergo propter hoc, and look at cause and effect. The labor force grows because the economy has grown. Yours is a belief in the Field of Dreams – If you bring the immigrants, jobs will come. Oh puh-leeze!
Will anyone here attempt to dispute the economics [redacted]?
I’d happily welcome immigrants into my zip code. No amount of nativist scaremongering changes the fact that they’re a net boon for society.