Donald Trump

You Do Realize that if You Keep All the Jobs in America, the Mexicans Will Return?

Has Donald Trump really thought through the implications of not letting U.S. companies outsource low-level work?


God bless President-elect Donald Trump, who hath already saved hundreds, perhaps thousands, of jobs from running to Mexico like desperadoes fleeing south from the scene of a crime!

That's swell, but even he can't repeal the law of uninteded consequences, can he? And the fact of the matter is that if you build jobs here explictly at the cost of jobs in Mexico, you will start to see Mexicans migrating northwards for…jobs. That's the way immigration works for most people. They go to where the jobs are and they stop coming when the jobs dry up. In an open society, you can either have a whiz-bang economy or little-to-no immigration. Even Donald Trump can't have it all.

In recent weeks, Trump has taken credit for keeping 700 or 800 jobs at an Indiana plant for Carrier and some more at a ball-bearing factory in the Hoosier State (needless to say, taxpayer-supplied sweeteners were part of the deals). After railing against GM and threatening punitive tariffs on autos made in Mexico and sold here, the car maker changed plans to placate Trump. Ford Motors proactively announced it was keeping a plant open in Michigan, earning this badge of honor:

This is just the beginning, vows Trump, much more to follow! Who knows where next he'll strike, but if his twitterhea is any indication, it'll be against another car maker:

Actions have consequences, though, and not always the ones people expect or want. Consider what is likely to happen if U.S. investment in Mexico slows down or stops completely. America is Mexico's biggest trading partner and we get a bunch of stuff from them—trade isn't a one-way street, which is one of the great things about it. From the New York Post:

Ford's announcement sent shockwaves across Mexico, which has become tightly meshed with the U.S. economy since the advent of the North American Free Trade Agreement, sending 80 percent of its $532 billion in exports across the border in 2015. The U.S. government says $100 billion of that was in vehicles and parts, making Mexico the biggest exporter of automotive products to the United States. Mexico's auto plants now account for 20 percent of all light vehicles built in North America, industry figures say….

Four clustered states in central Mexico — San Luis Potosi, Queretaro, Aguascalientes and Guanajuato — have seven auto assembly plants that are operating or will be within the next two years. Around them are nearly 800 auto parts suppliers, Puente said.

In San Luis Potosi alone, between 50,000 and 60,000 jobs depend on the auto industry. An average worker in Mexico costs automakers $8 an hour, including wages and benefits, compared to the $60 an hour that Ford said it was spending on an auto worker in the U.S. at the end of 2015.

In Villa de Reyes' town square, residents said the younger generation would be hurt most by the cancellation.

Retiree Ignacio Segura Rocha said fewer people from town are migrating to the U.S. now because the crossing has gotten harder than when he went in 1977 and 1978. He said the auto industry offers good alternatives for kids growing up on the region's isolated ranches.

"They were already dreaming of going there (to Ford), and at the last minute there's nothing," he said.

Read more here.

Pew Research

Two things to consider: How much more expensive will cars (and other products) become once Trump has made all the calls to CEOs he's threatened to make? If labor costs jack up from $8 an hour to $60, that's going to cause sticker shock, isn't it? More important, perhaps, Trump needs to ask: Where are those Mexicans going to go when their $8-an-hour job doesn't materialize? An informed guess is that they're going to head north, to the land of opportunity. If history shows us anything, it's that ultimately governments don't control borders as much as motivated individuals do. Throughout the boom in immigration that started once America's economy kicked into high gear in the 1980s, immigrants from Mexico and other parts of Latin America migrated for work and opportunities that were better than what they had in their home countries (in this, they were exactly like earlier waves of immigrants from Europe). Concerns about legal status were completely overwhelmed by opportunities (when you ain't got nothing, you got nothing to lose). If you're betting on a wall—now to be paid for by the U.S. taxpayer rather than Mexico—to stop hungry people trying better their place in the world, good luck with that. The only reliable way to stanch immigration flows is to have a shit economy so that no one wants to come, or for the sender countries to flourish so people don't want to leave. That's the reason why we reached peak Mexican back in 2008 and 2009, when the recession kicked in here. Since then, Mexico has been a relatively better deal for Mexicans.

"If jobs are available, people come," said Jeffrey S. Passel, senior demographer at the Pew Hispanic Center, a nonpartisan research group in Washington. "If jobs are not available, people don't come."

In any case, Donald Trump and his anti-immigration allies are fighting the last war, it seems. Chinese and South Asians are now the biggest sources of newcomers to the United States. Good luck building a wall against them, too, in a way that doesn't completely stultify the American economy with workplace rules and your-papers-please laws that will place the Land of the Free under some form of perpetual lockdown.

If the only way you can "Make America Great Again" is by by forcing poor countries to create large reserve armies of the unemployed, don't be surprised when the world's wretched refuse starts washing up on shore, yearning to be paid under the table. That doesn't bother me, and it shouldn't bother libertarians or anyone else, really. The best immigration policy is one that works with human nature by making it easier for anyone who wants to live and work peacefully in the United States to do so legally. Under existing law, legal and illegal immigrants are already barred from virtually all transfer programs so if you're worried about the welfare state, then reduce that. A growing population will add to economic growth, innovation, and prosperity. Walling ourselves off literally and figuratively will only create far more problems than it could ever hope to solve.