Category: Economics

U.S. economy defies Science

by philg

We’ve been informed that low-skill migrants, as a matter of Scientific fact, are positively correlated with U.S. economic growth (at least aggregate growth if not per-capita!). Low-skill migrants have been departing the U.S. at an unprecedented rate since the Trump Dictatorship v2.0 began (CIS; NYT (covers a different time period than the CIS analysis)).

Toda we learn from the Wall Street Journal that the aggregate GDP is expanding even as the migrant population shrinks.

Maybe the GDP numbers are wrong? We can see for ourselves that valuable Somalis and Latinx are being kidnapped by ICE (should we try to fight ICElamophobia?). We know that these folks are worth $billions even though there is not another country on Planet Earth that is willing to take the migrants whom we deport (i.e., no other country wants to be enriched as we have been). If the GDP data are correct, could the apparent contradiction be explained by The Science being merely a projection of researchers’ love for migrants? “Why immigration research is probably biased” (Guenther, December 20, 2025):

All of these choices resulted in 1,261 submitted models; no two were identical. Notably, this heterogeneity arose even though the hypothesis and data were the same! Think how much freedom researchers have when they are allowed to choose the hypothesis and the data.

It is not necessarily problematic if researchers are more liberal than the general public, but it is problematic if these attitudes make them analyse data in a biased way, to arrive at conclusions that reinforce their prior attitudes. In that case, immigration research ceases to be research and transitions into propaganda, where only hypotheses are tested that one can anticipate to portray immigration positively, and the research design is chosen to obtain the desired conclusion.

Related:

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Philip’s Book Club: False Dawn

by philg

Maybe some of you will join me in reading False Dawn: The Mirage of Recovery, an economist’s book about the Great Depression, which is when Americans came to accept the idea that every problem should be met by a larger federal government. FDR is almost a god for today’s Democrats (in a debate Ayatollah Mamdani identified FDR as the best modern-day U.S. President and then Florida Realtor of the Year 2020/2021 Andrew Cuomo said FDR would be his pick as well if FDR could be considered “modern”). If nothing else, False Dawn would make an awesome last-minute Christmas gift for anyone with insomnia (384-page work by an economist).

The Wall Street Journal selected this book as one of 2025’s ten best. Some excerpts from their review:

In 1932 Franklin Delano Roosevelt won the presidency with the promise to restore prosperity. But he and his advisers had no clear explanation for the collapse and his subsequent New Deal would amount to a series of experiments. FDR admitted to the nation that some of his proposals took the nation down “a new and untrod path.” If they failed to “produce the hoped-for results, I shall be the first to acknowledge it.”

George Selgin’s “False Dawn” asks if the New Deal’s varied experiments produced the promised recovery. In dispassionate, careful and finally devastating detail, “False Dawn” shows that, with a few exceptions, FDR’s experiments did not work. And he did not acknowledge it.

Based simply on raw numbers, the case for the New Deal is not strong. Although the economy did recover from its nadir when FDR took office in 1933, by 1939 the unemployment rate was still 17%. After six years of supposed recovery, the economy was in worse shape than in any other recession of that century or the following one.

Some might suppose that FDR used deficits rather than the Fed to juice the economy. But deficits as a percent of the economy were hardly different during Roosevelt’s time in office than they had been at the end of Herbert Hoover’s. While the New Deal spent more, it also imposed new taxes on food and payrolls. The result was a bigger federal government, but not one that relied on deficits as stimulus.

If not by increasing the amount of money or deficit spending, how did Roosevelt and his advisors hope to create recovery? The earliest solution they hit on—odd considering the rampant shortages—was to restrict production and thus raise prices. The National Industrial Recovery Act that passed in mid-1933 turned much of the American economy over to giant cartels. Industries colluded to raise prices and unions colluded to raise wages. The result was fewer goods on the market and an immediate economic collapse that would still be remembered today if it hadn’t been surrounded by so many others.

This could be an interesting update to The Forgotten Man, by Amity Shlaes, a Wall Street Journal reporter. I wrote a lot about that book shortly after its 2007 publication (what awesome timing by Schlaes and her publisher, given that the U.S. economy collapsed just a year later):

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The undocumented have departed, but the number of jobs keeps going up

by philg

In Immigrants expand our economy, but millions of immigrants exiting the U.S. don’t shrink our economy we looked at a New York Times report, “Immigrant Population in U.S. Drops for the First Time in Decades”: “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.” (An analysis of January-September data by CIS found a reduction of 2.3 million.)

The Bureau of Labor Statistics says that the “Civilian noninstitutional population” is up by about 2% year-over-year (this is limited to those age 16+, which is why it isn’t the same as the 343 million official Census population estimate) and “Civilian labor force” is up by 1.5%. November news:

The rate of natural increase in the U.S. is only about 0.3% (too small for those who want the Ponzi scheme of infinite growth; excessive for those who care about the environment, traffic congestion, affordable housing, etc.). If the foreign-born population, which has been driving nearly all U.S. population growth, is shrinking, shouldn’t the number of people and the number of people in the labor force be going down or, at most, be flat?

A simple answer would be that the 1.5 million (or 2.3 million) reduction is only among noble undocumented enrichers and that we enjoyed enrichment by 3 million legal immigrants (family reunification, H-1B nonimmigrant immigrants, refugees, asylum-seekers, etc.). But that isn’t consistent with the Pew/NYT report cited above, which says that there has been in a reduction in the number of “foreign-born” residents of all categories. (The more complete CIS study also reports a “foreign-born” reduction.)

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Open borders don’t lower wages, but sending migrants home will raise wages

by philg

Frontiers of Migranomics from one of our intellectual elites, a New Yorker writer:

We’ve been informed, as a matter of Scientific Fact, that low-skill immigration does not reduce wages for the American working class (contrary to Harvard economists’ analysis). Now the same Scientists are telling us that employers will be forced to pay higher wages, e.g., to apartment cleaners and roofers, if low-skill migrants are sent back to their home countries. More immigrants caused wages to rise (the undocumented built the current American economy) and, also, a reduction in immigrant supply would cause wages to rise.

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

Separately, I’ve refined my Is U.S. immigration policy a form of animal hoarding? post into a more succinct form (without even trying AI!):

The passion for low-skill immigration has the same rational basis as keeping 100 cats in a 2BR apartment: “Animal hoarding is an accumulation of animals that has overwhelmed a person’s ability to provide minimum standards of care. … Rescue hoarders believe they’re the only people that can adequately care for their animals.” The same people who say that the U.S. has a dire shortage of affordable housing and health care then say that the 70 million migrants we’ve welcomed in recent decades aren’t sufficient and we need to bring in more migrants.

My new standard response on X, featuring photos from Unlimited Car Wash in Palm Beach Gardens, Florida, November 21, 2025:

Without 70 million immigrants and their children (another 50 million?) who will hand-wash and vacuum my Rolls-Royce for $21?

In case the Jill Filipovic tweet is memory-holed:

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Science proves that the U.S. needs immigrant workers; U.S. companies say that they don’t need more workers

by philg

It’s Veterans Day. Historically, one of the things that U.S. society tried to do was ensure that good jobs were available for those who left the military and returned to civilian life. This was a matter of great concern around the end of World War II. See for example “JOBS FOR VETERANS REPORTED FEWER; Full Impact of Discharges Is Yet to Come, Says Commerce Bureau” (New York Times, December 20, 1945):

Veterans are beginning to encounter difficulties in finding employment, with the full impact of discharges upon the labor market yet to be felt, the Department of Commerce said today in this month’s issue of its Survey of Current Business.

With Army surveys showing that at least 75 per cent of the returning veterans would be job-seekers, the article concluded that the country faced a “primary problem” of developing a labor demand sufficient to provide employment for the returning veterans,” along with the additional problem of “finding jobs satisfactory to the veteran with previous training, newly acquired skills and generally high expectations.”

Ever since we opened our borders in 1965 we’ve forced veterans to compete with an ever-larger group of immigrant workers. We’re informed that it is a Scientific fact that an open border enriches every American, including veterans, because immigrant workers are critical to the U.S. economy and there are more than enough jobs to go around. For this post let’s ignore that our immigration policy doesn’t select for immigrants who are able to work; someone who is 2 years old or 85 years old or disabled or completely unskilled has the same entitlement to lifetime residence/citizenship under our asylum-based system or under our family relation-based system as someone who is of working age. Let’s assume that, in fact, immigration does bring in mostly people who are capable of working and who want to work (an irrational desire in a cradle-to-grave welfare state!). Does the assumption that there are ample jobs both for new veterans and new immigrants still make sense?

“More Big Companies Bet They Can Still Grow Without Hiring” (Wall Street Journal, October 26, 2025):

American employers are increasingly making the calculation that they can keep the size of their teams flat—or shrink them through layoffs—without harming their businesses. Part of that thinking is the belief that artificial intelligence will be used to pick up some of the slack and automate more processes. … “If people are getting more productive, you don’t need to hire more people,” Brian Chesky, Airbnb’s chief executive, said in an interview. “I see a lot of companies pre-emptively holding the line, forecasting and hoping that they can have smaller workforces.”

Many companies seem intent on embracing a new, ultralean model of staffing, one where more roles are kept unfilled and hiring is treated as a last resort. At Intuit, every time a job comes open, managers are pushed to justify why they need to backfill it, said Sandeep Aujla, the company’s chief financial officer. The new rigor around hiring helps combat corporate bloat.

“Amazon Plans to Replace More Than Half a Million Jobs With Robots” (New York Times, October 21, 2025):

Over the past two decades, no company has done more to shape the American workplace than Amazon. In its ascent to become the nation’s second-largest employer, it has hired hundreds of thousands of warehouse workers, built an army of contract drivers and pioneered using technology to hire, monitor and manage employees.

Now, interviews and a cache of internal strategy documents viewed by The New York Times reveal that Amazon executives believe the company is on the cusp of its next big workplace shift: replacing more than half a million jobs with robots.

Amazon’s U.S. work force has more than tripled since 2018 to almost 1.2 million. But Amazon’s automation team expects the company can avoid hiring more than 160,000 people in the United States it would otherwise need by 2027. That would save about 30 cents on each item that Amazon picks, packs and delivers to customers.

Executives told Amazon’s board last year that they hoped robotic automation would allow the company to continue to avoid adding to its U.S. work force in the coming years, even though they expect to sell twice as many products by 2033. That would translate to more than 600,000 people whom Amazon didn’t need to hire.

“Amazon to Lay Off Tens of Thousands of Corporate Workers” (WSJ, October 27, 2025):

The latest round of job cuts would be the largest since 2022, when Amazon eliminated around 27,000 roles. That layoff occurred in waves.

The company views the cuts in part as an effort to correct an aggressive hiring period during the pandemic, the people said. During that period, a boom in online shopping led Amazon to double its warehouse network over a two-year period.

Amazon CEO Jassy has sought to find ways for the company to do more with less. In June Jassy sent a note to employees that said increasing use of artificial intelligence will eliminate the need for certain jobs. He called generative AI a once-in-a-lifetime technological change that is already altering how Amazon deals with consumers and other businesses and how it conducts its own operations, including job cuts.

“​​As we roll out more Generative AI and agents, it should change the way our work is done,” he said at the time. “It’s hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce.”

Veterans are above-average in health, intelligence, and education and they come from richer-than-average families. Nonetheless, I wonder if the combination of AI and a continued inrush of legal immigrants (somewhere between 1.2 and 2.6 million annually, according to ChatGPT) will make it almost impossible for tomorrow’s veterans to get decent jobs.

Related: The Bobs.

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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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