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Will Donald Trump's Immigration Policy Kill Long-Term Economic Growth?

MY ESOTERIC likes to think of himself as a bit of a polymath with degrees in Statistics, Accounting, Computer Science, & Operations Research

will-donald-trumps-immigration-policy-kill-long-term-economic-growth

Prologue

Based on the initial comments, some readers seem confused as to what this Hub is about; they seem fixated on just one category of immigrants - immigrants who cross the border illegally. So let me be clear - this hub cares very little about immigrant status and only considers total immigrants in America.

Why? Because this Hub is about economic growth or the lack thereof. The per capita GDP in America as of 2017 is about $59,500 according to the CIA fact book. Per capita income doesn't care about immigration status, it is just a number that represents how much of America's GDP each person in America consumes. It is a measure of demand.

There are more than 48 million immigrants in America today. Do the math and that represents nearly $2.85 trillion dollars of GDP (the demand portion is around 75% of that amount). If you look strictly at undocumented immigrants, they account for about $649 billion worth of GDP.

President Trump's policies are directed at both illegal and legal immigrants. The former he wants to eradicate and the latter he wants to reduce significantly. He wants to do that by severely restrict (some estimate as much as 50%) legal immigration to the United States. While the former policy will hurt American economic growth, the latter policy will devastate it.

One of the devastated agrees - http://www.smerconish.com/author/bbrinkman/

I want to present an excerpt from Brinkman's article because it addresses an important point which I don't cover in this article. And that is all of the people supposed not working who could work:

"

Still, I can hear you say, “There are plenty of people on the sideline.” Here in Wisconsin, we have a 68 percent Workforce Participation rate. That’s 1.5 million people- why not put them to work? Unfortunately, it’s not that simple.

Look beneath the surface at the details and other problems arise. Half of the 1.5 million are 65 or older – retirees. Another 17 percent are between 55 and 64 – preparing for retirement. Subtract another 14 percent for people between 16 and 24 – we expect them to be students. All of those exclusions take the 1.5 million down to 302,000 – and that includes everyone – stay-at-home parents, the physically challenged, caretakers – who are not working in that age group.

There just aren’t enough people."

Trust me, it does and I will explain in more detail later. But simply put, immigration policy affects population growth and population growth affects economic growth. By the end of this article, I hope you will understand this connection and the grave threat Donald Trump's anti-immigration policy poses to America's economic health.

This topic has been tackled in several other articles, each one coming at issue from different angles with varying degrees of detail. My hope is that with each iteration, a few more readers gain an understanding of the danger Trump poses and then passes that understanding on to friends. This isn't partisan bickering, it is economic truth.

Many economists have established this relationship between mid to long-term economic growth on two basic functions: 1) population growth and 2) productivity growth. In the short-term, many other factors come into play, but as time goes on, their influence diminishes greatly. In the end you are left with population and productivity. It really is that simple.

Before going there, I would like to lay some ground work about population growth, or the lack thereof.

The White Population in America

When white Europeans (and Hispanic Europeans) invaded the Americas, it was populated by Native Americans. Within 200 years, white Europeans established their dominance throughout the United States and ended up constituting 89.9% of all citizens by 1940. Population growth went through the roof, both from second generation Americans and immigrants. Save for the multitude of deep recessions and depressions between 1776 and 1940, economic growth perked along at roughly 2% per year (yes, only 2%/yr).1

Population growth during that period, which basically means white population growth, was roughly 2.37%/yr



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1 If fact, from 1870 forward, it doesn't really make any difference what time from you use, you end up with a growth rate between 1.72% (2001 - 2007) and 2.55 (1995 - 2001). Other examples are 2.03% (1870 - 2007) or 2.23% (1929 - 2007) (What does this say about President Obama's so-called "terrible" rate of about 1.77% (2009 - 2016)

Population Replacement Yesterday - A VERY SCARY CHART

https://www.statista.com/statistics/226292/us-fertility-rates-by-race-and-ethnicity/

TABLE 1

Race or Ethnic GroupFERTILITY (TFR)GENERATIONAL REPLACEMENT

WHITE (Non-Hispanic)

1.72

Child gen. is 82% as large as Parent gen.

BLACK

1.83

Child gen. is 87% as large as Parent gen.

HISPANIC

2.09

Child gen. is 99.5% as large as Parent gen.

ASIAN

1.69

Child gen. is 80% as large as Parent gen.

NATIVE AMERICAN

1.79

Child gen. is 85% as large as Parent gen.

OVERALL US

1.82 (2016)

Child gen. is 87% as large as Parent gen.

OVERALL US

1.76 (2017)

Child gen. is 84% as large as Parent gen.