U.S. Needs More Immigrants

With longer life expectancy, increasing numbers of baby-boomer retirements from the active labor force and  a low birth rate that now is lower than the death rate, the U.S. increasingly faces the need to find more workers. The source is obvious: more immigrants.[1]

Barron’s Article[2]

A noted business publication, Barron’s, put it this way, “Across the nation, in industries as varied as trucking, construction, retailing, fast food, oil drilling, technology, and manufacturing, it’s becoming increasingly difficult to find good help. And with the economy in its ninth year of growth and another baby boomer retiring every nine seconds, the labor crunch is about to get much worse.”

“Census Bureau projections show the overall U.S. population, a rough proxy for the country’s demand for goods and services, growing faster than the workforce— which supplies those goods and services— through 2030 and probably beyond. From 2017 to 2027, the nation faces a shortage of 8.2 million workers, according to Thomas Lee, head of research at Fundstrat Global Advisors.”

Another restriction on labor supply is the “people [who] have dropped out of the workforce, owing to factors such as disability, opioid addiction, and prison records that make it hard to snare jobs. The labor force participation rate, which measures the percentage of the adult population that’s working or actively seeking employment, has dropped to 63% from 67% in 2000.”

Washington Post Editorial[3]

A Washington Post editorial opens with this statement: “American employers in an array of industries — manufacturing, agriculture, trucking, home building, energy, food service, retail and others — are warning that a long-brewing labor shortage is reaching crisis proportions.”

While the U.S. needs more skilled and English language-proficient immigrants, the editorial continues, “employers in food processing, retail, landscaping and other industries that rely on low-skilled labor are already desperate for workers.”

“By driving away legal and illegal immigrants even as unemployment flatlines and baby boomers retire, [President Trump] deprives businesses of oxygen in the form of labor. That’s not a recipe for making America great.”

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[1]  The above demographic challenges are not just U.S. problems. See World Faces Demographic Challenges, dwkcommentaries.com (April 3, 2018).

[2] The Great Labor Crunch, Barron’s (Mar. 10, 2018).

[3] Editorial, America needs more workers. Trump’s war on immigration won’t help, Wash. Post (April 8, 2018).

Trump’s Macroeconomic Idiocies

President Trump continues to spout with expensive ways to implement at least some of his campaign promises. He has not yet submitted a proposed budget for the federal government that would reveal whether and how the competing needs for federal expenditures would be reconciled.

So far, however, Trump continues to utter macroeconomic idiocies. Here are a few.

First, he urges unspecified huge increases in military spending.

Second, Trump continues to call for the construction of a wall along the U.S.-Mexico border. Trump initially said it would cost $8 billion and subsequently upped his figure to $10 to $12 billion. Last October, however, the MIT Technology Review put the real figure at $27 to $40 billion. (Editorial, The Costs of Mt. Trump’s Dragnet, N.Y. Times (Feb. 26, 2017.)

Second, Trump has called for expansion of U.S. arrests and deportation of undocumented aliens.  Already such efforts annually cost over $19 billion, and the American Action Forum recently estimated that expelling all unauthorized immigrants and keeping them out would cost $400 to $600 billion. (Iibid.)

Moreover, says that Forum, such drastic actions would reduce the U.S. GDP by $1 trillion. “Farms and restaurants, hotels, manufacturers, retail businesses–all sectors of the [U.S.] economy benefit directly or indirectly from immigrant labor.” In addition, they pay income, property and sales taxes and make financial contributions to our Social Security Administration while generally not collecting any Social Security benefits. That Administration estimates that such contributions annually total $13 billion while only getting back $1 billion. (Ibid.)

Another glaring socio-economic idiocy of Trump’s suggested massive increase of deportations of unauthorized immigrants is its failure to recognize obvious U.S. demografic trends. The U.S. has low birth rates and aging and declining population in many parts of the country, especially in rural areas. Immigrants are needed in those areas to care for older citizens in their own homes or in assisted-living centers of various kinds while foreign-born primary-care physicians already are a major provider of medical care.  (E.g., Karl, Minnesota used to attract more people from other states than it lost to them. Now it’s the opposite. What happened!, Minn. Post (Feb. 24, 2017).)

Third, the recent heavy rains in Northern California and the threatened collapse of the Oroville Dam have highlighted the dangerous condition of many dams and other important infrastructure systems throughout the U.S. and the need to repair, modify and replace many such structures. An expert pointed out, “Most of the dams in the [U.S.] are over 50 years old” and desperately need such work. (E.g., Assoc. Press, Rural California Levees Beseiged by Pounding Wet Winter, N.Y. Times (Feb. 24, 2017); Griggs, Aeschylus & Almukhtar, America’s Aging Dams Are in Need of Repair, N.Y. Times (Feb. 23, 2017).) An objective analysis of competing demands for federal funds should put this demand at the top of the list.

Fourth, Trump also has called for reduced taxes and unspecified changes to health care insurance

Conclusion

From a macroeconomic perspective an argument could be made for a stimulative federal budget with expenditures exceeding revenues. But the Trump proposals to date show no sign of confronting the questions of how much is too much.

There are many reasons to oppose Trump’s trumpeting the proposed U.S.-Mexico wall and expansion of arrests and deportations of undocumented foreigners: human rights, human decency and promoting positive relations with neighboring countries. They deservedly have received much attention. Yet another reason is their enormous cost.

President Obama Continues To Demonstrate His Intelligence, Eloquence and Strong Record

Obama ChicagoOn April 7th President Obama returned to the University of Chicago Law School, my alma mater and where he taught for 10 years. He did not give a speech; instead he engaged in a conversation with Professor David Strauss and with current law students. [1] (To the right is a photograph of the President at the Law School.)

 

The stated purpose of this visit was for the President to stress the importance of the U.S. Supreme Court and of the U.S. Senate proceeding with its normal processes for evaluating a presidential nominee to join the Court and thus to provide a hearing and a vote on the President’s nomination of Chief Judge Merrick Garland to the Supreme Court.

The President did just that.

After pointing out the importance of the federal judiciary in general and the Supreme Court in particular in our system of government, the President stressed that Merrick Garland was an “eminently qualified jurist,” a characteristic not disputed by anyone in either major political party. Obama added that in selecting nominees to the federal courts, he wanted to find out about their personal lives as windows to their character. For Judge Garland, Obama was impressed by the nominee’s impromptu defense of a classmate’s right to free speech in speaking against the Vietnam War and Garland’s careful investigation of the Oklahoma City’s bombing tragedy and his empathy for the victims and their families.

Responding to a question from Professor Strauss, the President suggested that liberals should not be disappointed in the choice of Judge Garland because the role of the courts was only rarely to engage in broad societal change. “The courts are a terrific shield; they are not always a very effective sword,”

Obama added, “If you start getting into a situation in which the process of appointing judges is so broken, so partisan that an eminently qualified jurist cannot even get a hearing, then we are going to see the kinds of sharp partisan polarization that have come to characterize our electoral politics seeping entirely into the judicial system. And the courts will be just an extension of our legislatures and our elections and our politics. And that erodes the institutional integrity of the judicial branch. At that point, people lose confidence in the ability of the courts to fairly adjudicate cases and controversies. And our democracy can’t afford that.”

Mr. Obama warned that Republicans’ stance on this nomination could have lasting effects. If he were succeeded by a Republican, Obama said, Democrats would be unlikely to give a new nominee an easy path to confirmation, potentially leaving the seat unfilled for an extended period.

Watching the President’s informal session at the Law School, I again was impressed by his intelligence, eloquence and very personable and disarming manner.  Later I lamented that this intelligence, eloquence and engaging manner were lacking in so many of the current candidates for the presidency.

I also lament that the current presidential campaigning ignores the amazing economic performance of the U.S. during the Obama Administration: [2]

  • The U.S. economy has added jobs for 72 months straight.
  • Unemployment is down to 5 percent.
  • The U.S. is not in a recession and a massive recession does not loom.
  • The auto industry just had its best year ever.
  • The economy is growing.
  • Most Americans like their jobs and get satisfaction from them.
  • Wages are too slowly rising — but they are going up.
  • The average gap in economic satisfaction between the upper and lower thirds in income is lower than it was during the Reagan, George H.W. Bush, Clinton or George W. Bush years, according to the respected Index of Consumer Satisfaction.
  • Nothing has dimmed Americans’ desire to innovate and make technology work for them.
  • According to the Kaiser Family Foundation, employers are even more determined to provide health benefits than before the Affordable Care Act took effect. The percentage of adults under 65 with employer-based insurance held firm for the last five years after steadily declining since 1999.
  • More than 16 million previously uninsured people now have health insurance.

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[1] White House, President Obama Participates in a Conversation about the Supreme Court and Our Country’s Judicial System (April 7, 2016) (video of the conversation); Shear, Obama Revisits Law School to Give a Supreme Court Lecture, N.Y. Times (April 8, 2016); Ellperin & DeBonis, To press his Supreme Court nominee’s case, Obama returns to his academic roots, Wash. Post (April 7, 2016); Tau, Obama Says Garland Fight Putting Federal Court System’s Legitimacy at Risk, W.S.J. (April 7, 2016); Gillespie, Obama Returns to the Law School, University of Chicago Law School (April 7, 2016).

[2] McFeatters, And now for the good news about America, StarTribune (April 7, 2016)

Alarming Federal Government Fiscal Challenges

On August 29th Dana Milbank of the Washington Post wrote an alarming column on the federal government’s fiscal challenges. Moreover, it was not his own opinion he was voicing, but rather that of the Semiannual Report of the nonpartisan Congressional Budget Office that was issued on August 27, 2014.

The CBO Report, Milbank says, shows that “the long-term fiscal disaster, predicted for some time, has crept into the short term.” Here are the particulars for that conclusion from the Report itself:

  • The foundation for the report is the CBO’s own economic forecast that “the economy will grow slowly this year . . . and then at a faster but still moderate pace over the next few years;” that “inflation is expected to remain below the Federal Reserve’s goal, and interest rates on Treasury securities . . . are projected to rise considerably.”
  • Another basic CBO assumption is “current laws governing federal taxes and spending generally remained unchanged.”
  • Federal debt held by the public will reach 74 percent of gross domestic product this year, more than twice what it was at the end of 2007 and higher than in any year since 1950. In a decade, it will hit 77 percent; in 25 years, 100 percent.
  • “85 percent of the federal government’s spending increases between now and 2024 will be consumed by just three items: Social Security (which will claim 28 percent of the increase), Medicare and other health-care programs (32 percent) and interest on the debt (25 percent). Spending on everything else — military and domestic programs alike — would fall to the lowest proportion of the economy since at least 1940, when such statistics were first collected.”
  • “The persistent and growing deficits that CBO projects . . . would have serious negative consequences, including . . . Increased federal spending for interest payments, Restraining economic growth in the long term, Giving policymakers less flexibility to respond to unexpected challenges, and Eventually increasing the risk of a financial crisis (in which investors would demand high interest rates to buy the government’s debt).”

These problems, says Milbank, will come “because of the cowardice of leaders on both sides, who have avoided serious changes to the tax code and to Medicare and the other ‘mandatory’ spending programs.”

Milbank’s comments came before the release of a report by Northwestern University economist, Robert Gordon, claiming that the CBO’s modest projection of U.S. economic growth over the next decade is unattainable. Gordon for several years has argued that reduced labor productivity, reduced labor market participation and meager capital investment have adversely affected the U.S. economy’s ability to grow. Thus, under Gordon’s analysis, the fiscal challenges facing the federal government will only be worse.