Category: Economics

Immigrants expand our economy, but millions of immigrants exiting the U.S. don’t shrink our economy

by philg

Immigration Logic 101 requires us to believe that low-skill immigrants expand the U.S. economy (aggregate GDP growth) and make everyone in the U.S. richer (per-capita GDP growth).

We’re informed that the U.S. economy is growing or, at least, not shrinking.

We’re informed that, apparently contradicting the two items above, that the U.S. is becoming impoverished in immigrants (not as enriched by enrichers). “Immigrant Population in U.S. Drops for the First Time in Decades” (New York Times):

An analysis of census data by the Pew Research Center found that between January and June, the foreign-born population declined by nearly 1.5 million. … experts predict looming negative economic and demographic consequences for the United States if the trend persists. Immigrants are a critical work force in many sectors, and the country’s reliance on them is growing as more baby boomers retire.

Covering a somewhat longer time period and announced with a bit more color, DHS says that 2 million migrants are no longer among us:

If immigration makes us rich how is it possible that de-immigration doesn’t make us poor?

Related:

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The soybean crisis that has left soybean prices unchanged

by philg

“China’s Snub of U.S. Soybeans Is a Crisis for American Farmers” (New York Times, September 15):

On a windy September morning, Josh and Jordan Gackle huddled to discuss the looming crisis facing their North Dakota soybean farm.

For the first time in the history of their 76-year-old operation, their biggest customer — China — had stopped buying soybeans. Their 2,300-acre soybean farm is projected to lose $400,000 in 2025. Soybeans that would normally be harvested and exported to Asia are now set to pile up in large steel bins.

If we ask the Google for a quick summary of “soybean futures” we get the following chart that shows prices almost exactly where they were on January 1, 2025:

How can there be a “crisis” and at the same time an unchanged price? Is there some other soybean price index that should be considered?

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Raging inflation despite high interest rates

by philg

Inflation is currently raging at an annual rate of 4.8 percent (up 0.4 percent in the last month times 12) and is 2.9 percent if we look back to August 2024. From the BLS, yesterday:

High interest rates from the Fed haven’t slain the inflation dragon. My posts on this subject:

How eagerly/aggressively is Congress indulging in deficit spending right now? From the Bipartisan Policy Center (a “center” with two or three people in it?):

FY2025 (purple) is one of the most profligate years in U.S. history, but it doesn’t look that profligate because Congress was borrowing/printing money at an even faster rate during coronapanic.

Flash back to January 2, 1957, in which the New York Times praises President Eisenhower for eliminating an astounding and upsetting $4 billion deficit for 1954 (adjusted for the inflation that the government assures us does not exist, this would correspond to a $48 billion deficit in 2025 (compare to the nearly $2 trillion deficit that Congress seems to have built into our economy and government; Eisenhower took strenuous action to eliminate a deficit that was 1/40th the size of today’s deficit)).

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Democrat economists hate Black women (NYT)

by philg

The New York Times:

Years before Lisa Cook became President Trump’s latest target in his effort to exert control over the Federal Reserve, she wrote about her experience as one of a relative handful of Black women in a field long dominated by white men.

“Economics is neither a welcoming nor a supportive profession for women,” she and a colleague wrote in a New York Times opinion essay in 2019. She added, “But if economics is hostile to women, it is especially antagonistic to Black women.”

What is the overwhelming political identity of those who are hostile to women in general and Black women in particular? “Political Affiliations of Federal Reserve Economists” (2022):

According to a new analysis of voter registration data, Democrat economists at the Federal Reserve outnumber Republicans 10 to 1. The imbalance is even larger among economists in leadership positions, among younger economists, and among female economists.

Previous studies look at the political ideologies of the broader economic profession. For instance, Langbert, Quain, and Klein (2016) report that Democrats outnumber Republicans 4.5:1 among economics faculty at 40 leading universities. In addition, Langbert (2020) finds a ratio of 4:1 among members of the American Economic Association (AEA), 4.1:1 among academic AEA members, and 2.5:1 among AEA members working outside academia and government. Earlier, Klein and Stern (2006) estimateds the ratio at 4.1:1 among public sector economists and 1.4:1 among private sector economists. McEachern (2006) shows Democrats outnumber Republicans 5.1:1 among AEA members in terms of political contributions.

I find that the ratio of Democrats to Republicans among Fed economists is 10.4 to 1. The lack of political diversity is especially pronounced at the Board of Governors of the Federal Reserve System (48.5:1). Economists at regional Reserve banks range from 3:1 (Cleveland) to 12:1 (San Francisco). The lack of diversity is also noteworthy in leadership positions (22.25:1). Economists who are 40 years old or younger at the Fed are more likely to lean left (20.33:1), as are female economists (27.5:1). This suggests the Fed is likely to become even less politically diverse in time.

We are informed that if Republicans were eliminated (liquidated?) the U.S. would become a paradise of diversity, equity, and inclusion. Yet it seems that the discrimination that has kept and continues to keep qualified Black women from assuming leadership positions at the Fed has been almost entirely perpetrated by Democrats.

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Why isn’t Cleveland gentrified?

by philg

Some photos from a recent trip to Cleveland. Here’s some signage from the Cleveland History Center:

By 1920, according to the local history nerds, Cleveland was rich in precious immigrants, had achieved a dream level of diversity (30 different ethnic groups), and was “progressive”. Just a few years later, though, the economic and population growth was over. It doesn’t seem as though Cleveland per se has ever recovered even as many of its suburbs have prospered and even though Cleveland is home to one of the world’s most successful health care enterprises, the Cleveland Clinic.

Nearly every other American downtown has become gold-plated. How did Cleveland manage to fail?

Across town at the Aquarium, the scientists say that immigrants “cause harm to the habitat”:

Back to the history center… It’s free to anyone who wisely refrains from work (EBT card) and they’ve preserved their COVID signage and mask-wearing habits:

The museum reminds those who are buying Cirrus SR22 G7s at $1.4 million (now fully deductible in Year 1 due to the recent One Beautiful Bill) that we live in an inflation-free society. A P-51 Mustang that could take off at 12,000 lbs. and cruise at 315 knots cost $50,000 brand new or $3,500 lightly used:

If Tesla can get Optimus to work, how about a return to wood-sided cars? The robot can apply polish to the wood every week:

The museum’s collection is especially strong in hybrid and electric cars, some more than 100 years old. Visitors are reminded that Cleveland was at one time a close second to Detroit in mass production of automobiles (which raises the question of why Cleveland auto manufacturing faded into insignificance).

The museum was hosting a special show of Islamic-American fashion:

A temporary exhibition featured Black photographers and, as it happened, all of the photographs on display were of Black subjects (i.e., there weren’t photos of architecture, landscape, or nature taken by Black photographers, but only pictures of Black people by Black people):

(More than half of the money for any museum like this comes from taxpayers, either through deductibility of donations or from direct grants from the government. So taxpayers are funding exhibitions from which some artists/photographers are excluded due to skin color, apparently contrary to the Equal Protection Clause of the U.S. Constitution.)

In a similar vein, the museum had a show devoted to women and politics, ignoring the other 73 gender IDs recognized by Science.

I wonder if nonprofit orgs are, after government and universities, principal sources of division in American society.

Circling back to Cleveland, though, why is this waterfront city such a spectacular failure?

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MIT Nobel laureate says you’re not going to make money on Nvidia and LLMs

by philg

“A Nobel laureate on the economics of artificial intelligence” (MIT Technology Review, March/April 2025):

For all the talk about artificial intelligence upending the world, its economic effects remain uncertain. But Institute Professor and 2024 Nobel winner Daron Acemoglu has some insights.

Despite some predictions that AI will double US GDP growth, Acemoglu expects it to increase GDP by 1.1% to 1.6% over the next 10 years, with a roughly 0.05% annual gain in productivity. This assessment is based on recent estimates of how many jobs are affected—but his view is that the effect will be targeted.

The full paper is available for download as a PDF.

The news gets better:

“We’re still going to have journalists [especially in Gaza where food, health care, education, and shelter are all paid for by US/EU taxpayers via UNRWA?], we’re still going to have financial analysts, we’re still going to have HR employees,” he says. “It’s going to impact a bunch of office jobs that are about data summary, visual matching, pattern recognition, etc. And those are essentially about 5% of the economy.”

If “artificial intelligence” includes self-driving, I’m not sure that the effects on the economy will be small. As of 2016, supposedly about 3 percent of jobs were for drivers per se (CNBC). As anyone who has taken an Uber or Lyft can attest, many of these folks speak no English. If their driving jobs disappear, at least some percentage of them will be on track for the lifetime full welfare lifestyle (public housing, Medicaid, SNAP/EBT, and Obamaphone).

Related: Mindy the Crippler is preparing for the stock market panic when people realize that AI is fizzling…

Related:

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Should Elon Musk get an award for reducing inequality?

by philg

Any time that money is spent in a richer-than-average state, e.g., via a federal handout to Harvard University or a Medicare/Medicaid purchase of pharma from California or New Jersey, America’s income inequality level is increased (and it’s already “a public health crisis” according to Stanford and “obscene” according to our best lawmaker).

We have tremendous inequality among U.S. states. Household income in California was $95,500 in 2023 dollars (Wokipedia) while Texas households enjoyed only $75,800 in income and in Mississippi the median household income was only $54,000. Who works to redress this inequality? Not the federal government, which keeps spending taxpayer money in the richest states, either directly (grants to universities, student loan subsidies, tuition subsidies) or indirectly (pharma and health care purchases).

But let’s consider Elon Musk. He has moved at least four companies from richer-than-average California to poorer-than-average Texas: Tesla, X, SpaceX, and The Boring Company. Is there anyone else alive who can be said to have done as much to reduce inequality among the states? If not, we must anoint Elon Musk as America’s Greatest Social Justice Warrior.

BBC:

The company is also getting an injection of $17.3m (£13.4m) from the Texas government to develop the site, a grant that officials say is expected to create more than 400 jobs and $280m in capital investment in Bastrop.

Although I can’t blame Elon for taking the state’s money, that last bit is upsetting to me as a 14th Amendment Equal Protection purist. Why is it acceptable for a government (state, in this case) to favor one business with tax breaks while hitting smaller and less-connected businesses with the full force of taxation. I would like to see all of these state programs eliminated so that 2-person company is on a more level playing field with a 2,000-person company.

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Car price predictions in view of tariffs?

by philg

Democrat-run media says car prices will go up 25% due to Trump’s new tariffs. My prediction: average transaction price goes up 3% and if we hold the car model and trim level constant, up 5%. What’s the basis of my prediction? Americans spend every penny they can earn, borrow, win in family court, inherit, or steal. There simply isn’t any way for people to spend more on cars. (Prices did go up during coronapanic, but interest rates were low and the government was handing out $trillions in free money.)

Readers: who wants to take the other side of this?

(I’m personally in favor of free trade (zero tariffs) based on standard Econ 101 arguments. I believe that the classical Econ belief is that the U.S. is best off with zero tariffs even if other countries erect tariff barriers to our exports. In other words, we would be better off exporting nothing if it came to that so long as we could get cheap imports. However, if other countries blink first in the trade war that Donald Trump has started we might be better off than we were a few months ago.)

What happened to out family so far? The imported bicycles that we wanted to purchase have gone down by nearly 17 percent compared to a week ago:

REI (expanding in Florida, while closing stores in Portland, Oregon and Cambridge, Maskachusetts) and some independent bike shops all wanted to sell us XS adult bikes, which have enormous 700C wheels and weigh about 7 lbs. more than this Trek 26″ bike. Supposedly the kids won’t outgrow the XS adult bike as fast. My position is that road bike nerds will pay $thousands to shave 7 lbs. off a road bike so we should be happy to buy these with the expectation of reselling them in 2 years.

Loosely related…

And from today at Sun ‘n Fun, a Nash Metropolitan (it actually made economic sense to build cars in England back then!):

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Immigrant-poor Japan vs. immigrant-rich Germany

by philg

Pierre Poilievre, the potential replacement for Mx. Trudeau as Canada’s leader, recently highlighted this chart showing the stagnation of the Canadian economy from an individual’s perspective (the economy grew with the population, though, so politicians had more money to spend every year). Let’s look at Japan, a frequent example of a worst-case outcome for Population Doomsayers and Open Borders advocates:

Japan is right in the middle of this chart, with superior economic performance compared to immigrant-rich nations such as Canada, Germany, the UK, Australia, and France. In other words, Japan retained their language and culture, supported a growing fraction of the population that is elderly, and managed to achieve substantial per-capita GDP growth despite a falling percentage of the population being of working age.

There is a Scientific consensus that immigration is the only viable path to prosperity, especially for countries with low native birth rates and high median age. Yet the above chart, especially the bar for Japan, is completely inconsistent with Proven Science (TM).

Circling back to Canada, Aporia has some interesting charts on this best-case scenario for immigration.

Unlike in the US or Europe, where most immigrants are either illegals, refugees or persons brought in through family reunification, Canadian immigration is designed to be selective. Most permanent Canadian immigrants are granted that status through employment, while the (supposedly) temporary immigrants comprise about one-third students. I say “supposedly” because this group makes up a full 7.3% of the entire population of Canada, and there’s no plan or real mechanism to remove them from the country. Note that Canada has birthright citizenship, giving “temporary” immigrants an easy path to permanent residency and citizenship through anchor babies.

Unlike most countries, Canada has imported humans who do better on academic tasks than its natives do. Given the correlation between academic performance and later earnings, Canada’s economy should be doing quite well.

Canada chucked its culture, value system, and religion in hopes of achieving economic growth. What they achieved instead is a society of incel males living in apartments:

Despite the miracle of 2SLGBTQQIA+ Science, apparently it isn’t practical for an incel male to produce a baby:

Canada will thus have to double down on immigration in order to keep its politicians supplied with taxpayers. Support for this program is particularly confusing to me with respect to Quebec. The Québécois fought for two centuries to preserve their distinctive culture, religion, and language. In the past 10-20 years, though, they gave it all up because of their passion for open borders. Is there any scenario in which a Muslim from India would want to learn French, convert to Catholicism (punishable by death, traditionally, in Islam), and follow Québécois customs? If not, Quebec is guaranteed to lose its distinctive character and will become just another poorer-than-anywhere-in-the-US random assemblage of humans, cultures, and religions in which the English language is the only thing that people have in common.

Loosely related… a friend’s comment: “Canada will obliterate us in this kind of trade war because they are already poor and are happy staying that way.”

Related:

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Trump listens to at least one African in shutting down USAID

by philg

Folks are upset that Trump and DOGE may shut down USAID and cut U.S. foreign aid spending (state-sponsored NPR). This is consistent with a classic 2005 interview “For God’s Sake, Please Stop the Aid!”. Quotes below, but not in quote style for improved readability (my highlights in bold).

The Kenyan economics expert James Shikwati, 35, says that aid to Africa does more harm than good. The avid proponent of globalization spoke with SPIEGEL about the disastrous effects of Western development policy in Africa, corrupt rulers, and the tendency to overstate the AIDS problem.

SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.

Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.

SPIEGEL: Do you have an explanation for this paradox?

Shikwati: Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa’s problems. If the West were to cancel these payments, normal Africans wouldn’t even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.

SPIEGEL: … corn that predominantly comes from highly-subsidized European and American farmers …

Shikwati: … and at some point, this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unsrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN’s World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It’s a simple but fatal cycle.

SPIEGEL: Would Africa actually be able to solve these problems on its own?

Shikwati: Of course. Hunger should not be a problem in most of the countries south of the Sahara. In addition, there are vast natural resources: oil, gold, diamonds. Africa is always only portrayed as a continent of suffering, but most figures are vastly exaggerated. In the industrial nations, there’s a sense that Africa would go under without development aid. But believe me, Africa existed before you Europeans came along. And we didn’t do all that poorly either.

SPIEGEL: But AIDS didn’t exist at that time.

Shikwati: If one were to believe all the horrorifying reports, then all Kenyans should actually be dead by now. But now, tests are being carried out everywhere, and it turns out that the figures were vastly exaggerated. It’s not three million Kenyans that are infected. All of the sudden, it’s only about one million. Malaria is just as much of a problem, but people rarely talk about that.

SPIEGEL: And why’s that?

Shikwati: AIDS is big business, maybe Africa’s biggest business. There’s nothing else that can generate as much aid money as shocking figures on AIDS. AIDS is a political disease here, and we should be very skeptical.

Shikwati: Why do we get these mountains of clothes? No one is freezing here. Instead, our tailors lose their livlihoods. They’re in the same position as our farmers. No one in the low-wage world of Africa can be cost-efficient enough to keep pace with donated products. In 1997, 137,000 workers were employed in Nigeria’s textile industry. By 2003, the figure had dropped to 57,000. The results are the same in all other areas where overwhelming helpfulness and fragile African markets collide.

Shikwati: … jobs that were created artificially in the first place and that distort reality. Jobs with foreign aid organizations are, of course, quite popular, and they can be very selective in choosing the best people. When an aid organization needs a driver, dozens apply for the job. And because it’s unacceptable that the aid worker’s chauffeur only speaks his own tribal language, an applicant is needed who also speaks English fluently — and, ideally, one who is also well mannered. So you end up with some African biochemist driving an aid worker around, distributing European food, and forcing local farmers out of their jobs. That’s just crazy!

A 2017 look at the interviewee:

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