E Trump Versus Powell: Who Is Right About Immigration?

Immigration, needless to say, is a hot button topic and Fed Chairman Jerome Powell has expressed concern about cutting off the flow of immigrants. He views immigration this way:

From an economic growth standpoint, reduced immigration would result in lower population growth and thus, all else equal, slower trend economic growth.

As for Trump, even after he toyed with the idea of letting more immigrants into the nation based on merit, he seems more concerned with the racial makeup of immigrants.

Governor Powell sees bad economic times coming from isolationism. He knows the workforce is aging. As discussed below, Powell is concerned about the strength of the workforce.

Free Trade and Open Societies

Minneapolis Fed President Neel Kashkari, a registered Republican, has said that immigration is key to economic growth, and Powell agrees with that. Kashkari is a free trade Republican but there are many from both parties who still hold to free trade as key to prosperity.

Free trade is open to abuse and is far from perfect. But the alternative is far worse. I said:

The US set up a system whereby free trade would thrive and nations would improve economically all over the globe. The theory behind that is that the more affluent the consumer, the more they will buy from our corporations.
But the system was seriously abused at times. Three major abuses can be singled out:

  • American workers have been abused by jobs moving offshore without adequate compensation by the US government.
  • And American consumers have been abused by liar loans and by financial products imported from globalist banking. The Federal Reserve Bank did not bail out the borrowers but rather bailed out the sources of the toxic loans! This has not been pleasantly received by the American public. All that abuse, corporate abuse of consumers included, must be acknowledged and owned. But it still is not fully owned.
  • Nations claiming democracy have had their leaders murdered, sometimes at the hands of US forces. Latin America is a poster child for this past US behavior.

But free trade opens each society and creates efficiencies. David Ricardo made the case for free trade:

In the classical definition of free trade espoused by 18th century British economist David Ricardo, trade is generally thought of as goods being shipped from one nation to another to take advantage of what Ricardo termed comparative advantage: nations would benefit by exporting whatever they produced efficiently and importing what they did not produce efficiently. 

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Disclosure: I have no financial interest in any companies or industries mentioned. I am not an investment counselor nor am I an attorney so my views are not to be considered investment ...

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William K. 3 months ago Member's comment

As for free trade, there is probably nothing that can not be abused and misused, and that does include free trade. So the solution is probably a bit more control, but with the full realization that no amount of regulation can produce" Utopia." Achieving the correct amount of control and no more than that amount would require a huge amount of wisdom and insight.

Gary Anderson 3 months ago Author's comment

Trump is interfering with capitalism more than China interferes with capitalism.

William K. 3 months ago Member's comment

Interesting indeed, an area that I had not considered a whole lot. But clearly the immigrants must be those willing to, and wanting to, work to make their livings better. That is not the stereotype that Mr Trump invokes, of course. His rage is against those who are lazy and stupid. What portion fit that description is a real question that I am not sure how to figure an answer to. Evidently, if he can't find an enemy he can create one. He does seem to be quite skilled in that area.

Gary Anderson 3 months ago Author's comment

I have never seen legal or illegal aliens who were not hard workers. Trump is, as you say, trying to create a fake stereotype.

James Dean Samuels 3 months ago Member's comment

Isn't saying all immigrants are hard workers as much a stereotype as all the negative things that #Trump says?

Gary Anderson 3 months ago Author's comment

Not for me James. I said I have never observed a lazy immigrant. Period.

James Dean Samuels 3 months ago Member's comment

Right, but saying there are no lazy immigrants is still a stereotype.

David A Romero 3 months ago Member's comment

Not quite - he didn't say that. He said he's never seen one. Big distinction there.

Moon Kil Woong 3 months ago Contributor's comment

Clearly free trade has benefited the US and is necessary for the continued dominance of the US in the future. Few countries could hope for the wide net the US has in acquiring resources, manufacturing at competitive pricing, managing logistics, and dealing in markets all over the world. I hope we don't give it up.

That said, work can always be done to improve things and deal with unfair issues. China must reform faster than it has been doing. The issue is convincing them that it is in their interest as well as ours. In reality, I'm not sure it is. Their behavior prevents them for making closer ties with International companies like the US further up the value chain. Their obstruction of IP thwarts their move up the value chain as well. Likewise, their insistence on controlling the free flow of money prevents them from becoming a great International monetary powerhouse.

As in all things, there are costs to your actions. And what benefits you as a start up manufacturer can hurt you badly trying to move up the value chain. If anything, we are helping China telling them make these changes. In the end, manufacturing is a mobile industry and China will loose their manufacturing base the same way Europe lost it to the US, The US lost it to Japan, japan lost it to Korea, Taiwan, etc., and the rising tigers lost it to China. The wheels of the global economy don't stop. However, if you gum up the works it just passes you by.

Gary Anderson 3 months ago Author's comment

I have made the argument that China, as a developing nation, does not have high tariffs. During its development, the USA had higher tariffs. We really have no business bossing around the nation that saved us from the Great Recession. Maybe next time they won't be able to bail us out! Then what?

Moon Kil Woong 3 months ago Contributor's comment

Sadly we now are so big the rest of the world can hardly bail us out if something went drastically sour. We can only rely on ourselves now. The good news is the US has been adapt at that throughout history.

Bruce Powers 3 months ago Member's comment

I don't think most Americans are opposed to immigration - we're all immigrants if you go back a generation or two. The issue is ILLEGAL immigration.

Gary Anderson 3 months ago Author's comment

And, Bruce, his base does not want legal immigration. The backlog is huge. Maybe Trump would take someone from Scandinavia, as he indicated in the past.

Gary Anderson 3 months ago Author's comment

That isn't Trump, Bruce. He wants more white skin. He is a dreadful human being. There is absolutely no question that he entertains fascist tendencies. How far he carries those tendencies is the real issue. Does he have an inner moral check? Or does family offer the check? At this point I see no check on his fascism.

Norman Mogil 3 months ago Contributor's comment

US should examine how Canada handles immigration. First, we take in about 400,000 a year or just over 1% of total population. Without that number we would actually depopulate which is bad for the economy. Second, the program is tied heavily to specific skills and qualifications so that immigration helps fill holes in the labour force. Third, we are the only country, I believe, that has private sponsorship for immigrants which means the govt does not foot the whole cost of resettlement. We took in 40,000 Syrian refugees totally under private sponsorship groups ( e.g. churches, synagogues, private charities, etc) without direct government aid. The process was relatively seamless without fanfare.

Gary Anderson 3 months ago Author's comment

Nice to be a wealthy small nation. And what you do, prof, makes sense. However, the backlog for legal aliens is huge. The system is broken, and illegals are necessary for the intensive agriculture that exists in the USA as well as for jobs in food service and hotel services.

Norman Mogil 3 months ago Contributor's comment

We had a problem with illegals under a broken system in the 1990s

We dealt with it by introducing a new system as i describes and at the same time we offered amnesty for all illegals.it was the only way handle the problem.

Carol Klein 3 months ago Member's comment

Let's face it. Immigrants take the jobs most Americans don't want. If you eliminated immigration, who would do those jobs? Wages would have to go way up for you or me to take on that work. Which means cheap labor will disappear.

Stock Fan 3 months ago Member's comment

This is a good point and the crux of the issue.