Wall-o-nomics: Calculating the cost of refugees to the U.S. economy

by philg

The proposed Wall/fence that dominates the news right now is at least partly about economics. People who make it across the border are then entitled to make an asylum claim and live in the U.S. for years of administrative processing and, if successful, live in the U.S. forever. They can collect welfare while doing this. Their children and grandchildren born on the U.S. side of the border can collect welfare as well. Advocates for an open border (“A wall, in my view, is an immorality.” — Nancy Pelosi) say that taxes paid by migrants exceed the welfare cost. Let’s look at this…

A reader of an earlier post cited “The Economic and Social Outcomes of Refugees in the United States: Evidence from the ACS” (NBER) as evidence that we are running a profit on our refugee industry:

“By the time refugees who entered the U.S. as adults have been here for 20 years, they will have paid, on average, $21,000 more in taxes to all levels of government than they received in benefits over that time span, according to a working paper released Monday by the National Bureau of Economic Research that examined the economic and social outcomes of refugees in the U.S.”

So if we believe the expert economists at NBER and don’t dig into the paper, we make a profit of $1,050 per year on every refugee who arrives as an adult. The Federal deficit of $779 billion for FY2018, therefore, could be wiped out if we simply admitted 741,904,761 adult refugees, e.g., by asking most adults in India or China to move here and spin an abuse yarn.

When we dig a little deeper, though, it seems that the economists have had their thumbs on the scales (or somewhere else?). An “adult” is defined by the researchers as 18-45, but refugees are admitted without any age limit. A disabled 70-year-old has the same right to asylum as an able-bodied 22-year-old.

Suppose that all refugees were actually aged 18-45 and the economists had gotten the rest of the analysis correct. Would refugees yield a net profit? They’re paying more than they’re taking so they’re not “takers,” right? The Abstract reveals one question to explore: “After 6 years in the country, these refugees work at higher rates than natives but they never attain the earning levels of U.S.-born respondents.” Even for this cherry-picked age subset, the idea is that we’ll become richer overall by having lower earnings on a per-capita basis (and of course anyone in the U.S. income inequality industry will have an uglier statistic to wave around). Can that work?

The paper looks at six government welfare programs: “There are six social insurance programs that account for the majority of government payments to U.S. citizens: welfare, Supplemental Security Income (SSI), Social Security, food stamps, Medicare, and Medicaid.”

What if we subtract the cost of these programs from the total cost of running local, state, and federal government and then see if $1,050 per year per person will pay for the remainder? If we budget the above subset of welfare at $2 trillion per year and subtract from about $7.5 trillion per year in total spending (source) we get $5.5 trillion. Divide by a population of 328.4 million (popclock) and we find that it takes $16,748 per person to fund our government minus these headline welfare programs.

Each refugee paid a net $1,050 per year and consumed an additional roughly $15,700 in government services (roads, schools, libraries, police and fire protection, etc.). Over a 20-year period, then, the refugee took approximately $314,000 from other taxpayers.

Did the economists even begin to do a full cost accounting, though?

As of 2012, there were 79 Federal means-tested welfare programs (Heritage). The NBER looked at only 6.

Since the refugees never get to the median U.S. income, the typical refugee never gets above the 400 percent of poverty disqualification threshold for Obamacare health insurance subsidies. The typical refugee would also be eligible for public housing, a program that can be worth $60,000+ per year per family in the NBER’s home town of Cambridge, Massachusetts and yet they didn’t think it was worth including.

If we assume $5,000 per year in health insurance subsidies and $20,000 per year in public housing subsidies per refugee, over a 20-year period the best-case refugee now costs $814,000. That best-case refugee showed up during his or her core working years.

Once across the border, of course, the best-case refugee or asylum seeker should live for longer than 20 years. Would it be fair to round up the total cost to $2 million? Therefore if $5 billion is spend on an immoral wall/moral fence it has to stop 2,500 migrants in order to pay for itself in pure economic terms?

[Of course, there is more to life than money. We might have other reasons for wanting an open border, e.g., superior morality, loneliness if the U.S. population remains stuck near 330 million, etc.]

Readers: Did I miss anything? Or is $814,000 over 20 years a reasonable estimate? Also, how can people imagine that someone who pays a net $1,050 per year in tax is going to be of any real help in keeping the U.S. government going?

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Why did Trump have to declare a National Emergency?

by philg

“Trump Declares National Emergency to Build Border Wall” (nytimes):

President Trump declared a national emergency at the border on Friday to access billions of dollars to build a border wall

Suppose that he wants to spend $4.4 billion per year on wall construction. That’s 1/1000th of the $4.4 trillion federal budget. It is 0.6 percent of the ordinary annual budget for the military of which Mr. Trump is Commander in Chief.

What would have stopped President Trump from directing military personnel to go down to the border area and install some fences, using the budget that he already has available? Why must it be an emergency? If the Commander in Chief decided that the military should build some new fences around various bases, that wouldn’t require declaring a national emergency, would it? How is this different?

Based on my reading of The Line Becomes a River: Dispatches from the Border, all that Trump would need to do to shake loose significant money is have the Border Patrol stop flying Eurocopters all day every day (a lot of this seems to be evacuation of the dehydrated, something that could be accomplished for $100/hour instead of $10,000/hour if done with SUVs).

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Why does the FBI investigate “truths” that violated no federal law?

by philg

A friend on Facebook cited “2nd Fairfax accuser says she was raped by former Duke basketball player Corey Maggette” (CNN):

“I say again without reservation: I did not sexually assault or rape Meredith Watson, Vanessa Tyson or anyone else,” Fairfax said in the statement.

“The one thing I want to make abundantly clear is that in both situations I knew at the time, and I know today, that the interactions were consensual.”

Fairfax said what he has “expressed is the truth.”

“I want to stand here in that truth and restate that my truth, as well as the truth of Dr. Tyson and Ms. Watson, should be fully investigated and thoroughly assessed,” Fairfax’s statement said. He called on the FBI to “investigate fully and thoroughly the allegations against me.”

The story was highlighted for the fact that the person accused of a criminal act asserts that his accusers are telling “the truth,” but that he is also telling “his truth” in contradiction them.

As a taxpayer, I’m more interested in the question of why the FBI even could be involved. From the bureaucracy’s web site:

Federal law gives the FBI authority to investigate all federal crime not assigned exclusively to another federal agency (28, Section 533 of the U.S. Code). … The FBI has special investigative jurisdiction to investigate violations of state law in limited circumstances, specifically felony killings of state law enforcement officers (28 U.S.C. § 540), violent crimes against interstate travelers (28 U.S.C. § 540A0), and serial killers (28 U.S.C. §540B). A request by an appropriate state official is required before the FBI has authority to investigate these matters.

There is no “truth” that has been covered by the media that would fit into one of the above categories.

Why do taxpayers in Ohio need to pay the FBI for an investigation of stuff that happened at the 2004 Democratic Convention in Boston or in North Carolina? If there were crimes committed under state or local laws, why wouldn’t it be state or local taxpayers paying the bills for any required investigations?

Related:

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First Officer Fame

by philg

In a room of about 70 people at MIT (mixture of undergrad, grad, and alum), I asked how many thought that Captain Sully had another pilot up front with him in the Airbus A320 that landed on the Hudson.

A few hands went up.

“What was his name?”

Blank stares. One student seemed to be struggling and then came out with something that sounded almost like “Jeff Skiles“.

I gave him $20 on behalf of current and former First Officers.

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Will New York build public housing on the defunct Amazon HQ2 site?

by philg

Amazon is bailing out of New York City (thus, thousands of potential fat-target defendants have now escaped New York’s winner-take-all family law system!). From a Facebook friend:

Bezos is like every Manhattanite, says he’s going to a great house party but then finds out it’s in Queens and doesn’t show up….

What will the wise central planners in the NYC government do now? From their site:

Every New Yorker deserves a safe and affordable place to live, in a neighborhood that provides opportunities to get ahead. The market alone is not always able to meet that need, and, accordingly, governments at all levels must work together to help. Mayor Bill de Blasio has made affordable housing a top priority of his administration and has committed the City to “build or preserve nearly 200,000 affordable units, and help both tenants and small landlords preserve the quality and affordability of their homes.”

New York City’s shortage of affordable housing has reached a crisis point. The crisis has many causes, starting with the erosion of New Yorkers’ purchasing power in the housing marketplace. Wages for the City’s renters have stagnated over the last 20 years, increasing by less than 15 percent, after adjusting for inflation. During the same period, the average monthly rent for an apartment in New York City increased by almost 40 percent.

A massive increase in the population results in stagnant wages as humans are no longer scarce? While simultaneously generating increased demand for housing that drives up prices? Textbook Econ 101 in action? Not exactly, according to the government technocrats:

Another cause of the affordable housing crisis is the mismatch between demand for, and the supply of, housing.

Econ 101 wouldn’t call this situation a “mismatch.” It would just turn out that the market-clearing price is higher than people want to pay and folks would have to start sharing 2BR apartments with 7 roommates, moving to eastern Pennsylvania and riding buses, etc. Maybe the technocrats are illustrating the general principle of “When the market gives you an answer that you don’t like, declare market failure”.

Regardless of whether this shows the failure or success of Econ 101, the politicians have promised more apartments and the city has plenty of money, since the finance industry has been booming for years. With Amazon out, there is a big empty space. The neighborhood already contains a big government-run apartment complex (see “Amazon’s New Neighbor: The Nation’s Largest Housing Project” (nytimes)).

If the politicians in New York are true to their word and housing those who are unable or unwilling to work is truly a “top priority,” should we expect to see government-run housing built on the proposed Amazon site? If not, what else could happen with this part of the city?

[My own Facebook comment on the collapse of the Amazon deal with New York’s Office of Crony Capitalism: “It is a dark day when small retailers in NYC are denied the opportunity to pay the expenses of their largest competitor.”]

Related:

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AOC tax plan is a conspiracy?

by philg

Who proposes a super high tax rate on America’s idle rich? Alexandria Ocasio-Cortez (“AOC”).

What part of the country benefits most if there is a super high tax rate on the idle rich? Puerto Rico, the only place on Planet Earth in which an American citizen need not pay Federal tax. (see GQ for the lifestyle; search for “Act 22 tax” for the details)

Where is AOC’s family from? Wikipedia: “Her father was born in the Bronx to a Puerto Rican family, and became an architect; her mother was born in Puerto Rico.”

Related:

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Literally born to be a digital photographer

by philg

From “Women of Color Organize for Access and Accountability in Photojournalism” (nytimes, Feb 5, 2019):

Tara Pixley often felt isolated in the newsrooms where she worked as a photographer or photo editor. As a “black woman who was the child of immigrants, raised by a single mom, and also a first-generation college student,” she struggled for a decade to fit in. She was the only woman of color in the photo departments where she worked and was ignored or treated dismissively.

Pixley!

[The article goes on to explore the question of how a person who fits into multiple victim categories might start determining the reason that he or she was “ignored or treated dismissively”:

“There is a three-prong gender/race/class identity space, and the bias and marginalization that it brings down on a visual journalist is very real and makes it difficult for women of color to succeed in this industry,” Ms. Pixley said. “Add to that being gender nonconforming, non-binary or trans, then you’re just this kind of oddity that no one seems to know how to engage.”

So it is either three dimensions or four dimensions.]

Related: Sony Alpha Female program (identify as female as Step 1 towards picking up a $25,000 grant, $5,000 in gear, mentorship, networking, and exhibitions), which Tara Pixley and company complained about in a letter:

one of the awarded portfolios included a prominently featured wedding photo that uses an apparent wildfire as a backdrop for a bride and groom. This was an egregiously tone deaf choice as wildfires destroyed thousands of California homes and lives in the same week as Sony’s announcement. Another portfolio featured images of black and brown people from impoverished nations that exoticized those individuals and communities, rather than telling complex and compelling stories from their perspective.

(Is a wildfire image inappropriate for a California wedding? A lot of California marriages end up in scorched earth litigation that consumes all available fuel (cash) to pay the lawyers.)

Any photo of a non-white subject is risky:

By relying on tropes of people of color, honed and employed over hundreds of years of colonization and dehumanization of black and brown people, you fail to convey a holistic narrative. That is the damning imperialistic photographic tradition being upheld by these images, their photographers and therefore the camera companies that reward, employ, fund, mentor, highlight and support such work.

But what if a bunch of white photographers take pictures of white subjects? Wouldn’t they then be accused of ignoring people of color? The letter goes on to say that Sony, et al., should “hire inclusion consultants.” Maybe the answer is that cameras should have a real-time feed to a second electronic viewfinder. Whenever a person of color is in the frame, the inclusion consultant can check the second viewfinder and approve the shutter release.

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Why the disrespect toward Alexandria Ocasio-Cortez?

by philg

Folks have pointed me to mocking memes regarding Alexandria Ocasio-Cortez, e.g., “It’s so cold, I had my hands in my own pockets,” in connection with her “Green New Deal” that “offers economic security for those unwilling to work.” (original draft)

But why not respect her for ably representing the interests of her constituents? Census data show that median household income in her district is about $58,000/year. That means more than half of the people she represents are eligible for welfare (less than $83,450 for a family of 4 entitles a New Yorker to public housing). More than half would also qualify for health insurance welfare (either Medicaid or subsidized Obamacare for those who earn less than 4X the official poverty line).

“Unwilling to work” should probably be understood as “unwilling to work given the existing system of incentives.” As of 2013, six years before Ms. Ocasio-Cortez took office, welfare in New York paid 110 percent of median income (CATO) and therefore it wouldn’t be rational for the typical person in her district to work. Why is it Ms. Ocasio-Cortez’s fault that Americans have voted to create a system in which work is irrational for anyone who can get welfare or child support after having sex with a high-income partner? She wasn’t old enough to vote when these systems were created.

Mitt Romney stated in 2012 as a simple fact that the 47 percent of Americans who don’t pay income tax weren’t going to vote for him (Politifact):

“There are 47 percent of the people who will vote for the president no matter what,” Romney said in the video. “All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what.

He didn’t say that these folks were stupid, irrational, or evil. They were rationally voting their interest. (Politifact says that the proportion with no federal income tax liability may actually have been as high as 51 percent.) Why can’t folks who disagree with AOC and who are differently situated in life compared to her welfare-qualified constituents credit her for faithfully representing her voters’ interests in Congress?

Personally, I’m kind of a fan. Her tweet that health insurance as a waitress was twice as costly as health insurance for a member of Congress was an inspired way to wake people up to absurdity of our health care and health insurance systems (my proposal for reform is different from hers).

Readers: Given her welfare-qualified constituents, is it fair to slam this young member of Congress for advocating for expanded welfare?

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Phones are too good or Americans are too fat to have sex?

by philg

“Why Are Young People Having So Little Sex? Despite the easing of taboos and the rise of hookup apps, Americans are in the midst of a sex recession.” (Atlantic, December) is long and rambling, but two trends are identified:

  • Americans are more likely to have a smartphone than in the old days
  • Americans are more likely to be fat compared to the old days

Both are identified as reasons why Americans might have less sex than a few decades ago (the idea that weight leads to body shame is considered, but not that extra weight simply leads to having less energy to move around, including in bed).

Researchers don’t consider another big change: the rise of “single parents” (data from 1960, 1980, and 2014). These folks need to hire a babysitter before heading out for a Tinderfest. Contrast to the old days when a married couple with kids could do whatever they wanted after 10 pm.

Readers: What do you think? Blame phones, blame weight, or blame something else?

Related:

  • “Child Support Litigation without a Marriage”: the cash and litigation trail that may follow sex acts in the U.S. Sex is potentially much more lucrative than a W-2 job for a college graduate in California, Massachusetts, or Wisconsin). So you’d think Americans would be eager for this. But on the other hand, the researchers are measuring weekly or monthly sex and it is possible to make $millions with only a single sex act. So maybe there is no inconsistency.
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