The Economics of Building That Wall

wall_coronado_by_matt_clark

Photo by: Matt Clark.

First things first: the U.S. already has a border wall with Mexico. This is a widely-documented fact, illustrated in detail by National Geographic. If Trump supporters had bothered to do so much as a Google search, they would realize that — whatever one might think of undocumented migration — it isn’t going to be stopped by a border wall. A border wall already exists, and undocumented migration continues.

But what about replacing the current border wall with a bigger one? Surely that will stop migrants from coming across the border? Well, not really. Israel has some pretty high and deep barriers with Gaza, and that hasn’t prevented Gazan militants from burrowing under them and getting in. What is going to stop Mexicans — including and perhaps especially the extremely well-financed drug gangs who surely could gain access to advanced tunnelling equipment — from doing the same thing?

So building a wall to prevent undocumented migration is really dodgy from a practical perspective.

From an economic perspective, it’s much worse than that. Getting Mexico to pay for it by confiscating it from money sent to Mexico by Mexicans in America — as Trump contends he can — would simply incentivize the use of internationalized and decentralized technologies such as Bitcoin, which could evade Trump’s confiscations. And with an estimated cost of $15 to $25 billion, that has a very high opportunity cost, regardless of who pays for it. That’s more than a dozen hospitals. Or a house for every homeless person in America. Heck, NASA could build two bases on the moon for the cost of Trump’s fantasy wall.

But all this is assuming that a wall that could successfully shut out undocumented migrants would benefit the U.S. The truth is that it wouldn’t. The reality is that shutting people out of your economy deprives it of skills and talent and labour. 100 people can produce more than 99. 1000 people can produce more than 999. When a Mexican crosses the border, they bring with them potential productivity, whether or not they are carrying papers. Shut that out, and you slow down the economy.

When people can move freely, they can find the niche where they are most efficient. Everybody is different. Everyone is in possession of unique and differing talents, and everyone’s most productive niche in the global economy differs. Mexicans stream across the border because there are niches in the U.S. economy where they can be more productive than in Mexico. Many Americans go abroad to work, too, as they find economic opportunities abroad. Denying people the right to freely move to find their most productive niche in the global economy is simply self-defeating, in economic terms. It forces people to become less productive than they otherwise could be.

Trump offers false hope to the victims of globalization. Yes, very many U.S. jobs have migrated overseas because overseas labour can do things cheaply and efficiently. Those jobs aren’t magically going to come back because a blonde buffoon is in the White House wasting resources by building walls on the Mexican border. The real hope for American victims of job migration is retraining and education and investment in new cutting-edge industries where America can gain a competitive advantage, so that people can find a new niche in the global economy.

17 thoughts on “The Economics of Building That Wall

  1. If the author had bothered to do so much as a Google search, he would realize that — whatever one might think of illegal immigration — the Israeli walls have been extremely effective, reducing jihadist murders by 75%. And Israel has learned its lesson about tunneling by installing seismic sensors.

    The wall could be financed in several ways, not just by an excise tax on remittances. Mexico runs a trade surplus with the US, shipping us lots of Mexican-built cars, televisions, and microwave ovens. A small tariff would build a big, beautiful wall. It would also provide a kick in the rear end to the Mexican government to patrol their side of the border, something they have zero incentive to do now.

    A suggestion to the guy who lives in England yet for some reason finds it necessary to lecture Americans on immigration policy: Tens of thousands of North Africans and Middle Easterners are hanging out in northern France just dying to get into the UK. Let them in. Hundreds of thousands more would gladly travel to the Chunnel entrance if they had any chance of getting into the UK. Welcome them with open arms.

    There is one sign the UK can make that would be unmistakable, that would advance dramatically the cause of immigrants seeking life on the dole. Mr. Aziz, if you seek social justice, if you seek humanity for the millions of North Africans and Middle Easterners who yearn to immigrate to the UK, if you seek liberalization, go to the Chunnel opening. Open the Chunnel to everyone! Mr. Aziz, let those immigrants in!

    • If I could let them all in, I would.

      p.s.: I live in the USA now.
      p.p.s: Tariffs would do nothing but injure the U.S. consumer.
      p.p.p.s.: This is a tangent, but building the wall hasn’t actually solved Israel’s demographic problem of trying to be a Jewish-majority state while ruling over a majority Arab population. Similarly, building a wall on the Mexico border won’t solve America’s challenge of needing cheap migrant labour.

      • John, according to the “About” tab on this webpage: “I am John Aziz. I live in England.” So which is it?

        If you are here, welcome. I hope you’re a net-tax-paying, productive member of US society. The UK immigrants I’ve known are. But when they become citizens they tend to vote for exactly the same backwards policies they fled in the UK. Unfortunately for us US citizens, that just results in a larger version of the CA/TX syndrome: CA residents flee the third world craphole their state became due to massive illegal immigration and massive taxes, but when they get to TX they vote for the same “progressive” policies that turned CA into a third world craphole in the first place.

        Yes, absolutely, a tariff on Mexican goods would increase US consumer prices for those goods. Fortunately the US has multiple sources for said goods. Our GDP is so large that we can afford to be choosy about who we trade with, and can set conditions favorable to us. We could easily shift sources from Mexico to a plethora of other countries–including our own in many cases–until Mexico decides to patrol their own border and stop shipping their dregs of society to us. Paraphrasing the doctor, it’s going to hurt them a lot more than it’s going to hurt us. And, besides, who’s talking about demographics? I’m talking about–and Trump’s talking about– murderers, rapists, and other criminals. The only way to keep them out is to build a big, beautiful wall.

  2. Mr. Aziz, you are right. Immigrants do fill a need. The demand for illegal drugs in the US is high, and that need is filled by drug smugglers crossing the southern border. If you support free enterprise, you must make it easier for drug mules to cross. LOL

    The US sends millions in aid to Mexico. The easiest way to finance a new and improved barrier would be to subtract the cost from the federal aid.

    High fences must work. The Secret Service has proposed replacing the 6′ fence surrounding the White House with a new fence 11′ 7″ high. It is expected to be in place by 2018.

  3. Building a wall is a stupid idea. Completely unnecessary. To the contrary, let them enter the country with an ID and an Allien registration number. As long as they work for $10 an hour and pay taxes, the US is only gaining economically. If they commit a crime, send them back to Mexico. These people work hard for little money. What is wrong with them working and paying taxes in the US ?

    Instead of building expensive walls, the US government should employ more inspectors going to farms, construction sites etc checking whether all people working there also pay taxes. Enforcing taxation is more important than building stupid walls.

    Ultimately, people come to the US because the US Dollar is overvalued in comparison to other currencies. Lower the value of the Dollar and the Mexicans will stop coming. It is that simple.

    • Illegal aliens working for $10 an hour suck up way more taxpayer-provided benefits than taxes they pay. Do a web search on:

      “Benefits Paid and Taxes Received By Unlawful Immigrant Households, By Age of Head of Household”

      At every age illegal alien households cost US taxpayers more than twice as much as those illegals pay in taxes.

      Build a big, beautiful wall to stop the leeches.

      • If the illegal immigrants actually do productive work on the cheap, however, they are adding to the aggregate value of the country. For instance, my landlord paid some Mexicans sub-minimum wage to put new crap siding on the building I live in; it would have cost him four times as much to have regular workers do it. As a result he saved a pile of money which he can now use to tear down the house and build a cheeseglitz condo in its place, for the units of which he can charge dumb people from out of town yet bigger money, and then do the same thing elsewhere. His present tenants lose, of course, but they aren’t rich, so who cares? Meanwhile he supports Trump, so that the Mexicans can get thrown out before they can get anything besides their crap wages. Everyone should be happy.

        • Your landlord got a sweet deal thanks to US taxpayers. Meanwhile your landlord supports Obama because he wants to keep those sweet, taxpayer-funded illegals rolling in so he can keep on getting that work done on the cheap. And Obama complies by offering work permits to millions of illegal immigrants. And almost certainly your landlord is supporting Hillary because she’ll continue Obama’s actions welcoming illegal aliens.

        • The link gives us the results of a study conducted by the Institute on Taxation and Economic Policy. From their website, we are told they use the same models as the Congressional Budget Office.

          And yet, they come to entirely different conclusions. Hmm…

  4. Is this guy serious? I live in what used to be an all-White area in SoCal, it was sweet! Now, blacks and browns have taken over, the result? Crime, graffiti; they literally crap in their own nest by throwing litter everywhere (the few remaining Whites are always cleaning it up), illegals selling tamales shouting “tamales!” at the top of their lungs at least five times a day, bass from their fancy rides rattling your windows; it’s a multicultural hellhole. Now, I don’t mind what color my neighbors are, per se, if they’re cool, but they don’t speak English and hang Raiders banners from their balconies, making the area look more trashier. I’m sure the author is probably living large writing his no-borders b.s. from a comfy White enclave. Make a little more room, Northwest Front, I’s a comin!

  5. What a load of hogwash.
    If walls didn’t work then many countries wouldn’t have them.
    That includes the Vatican.
    And it’s not just about building a wall and leaving it unguarded.
    You also have to have people guarding it so people don’t grapple over or dig under.
    It would be far easier to patrol a real wall than it is to patrol a fence that they can dig under,cut through,climb over or just drive right over.
    A big beautiful 25 foot wall that is also 6 feet underground would work wonderfully and it would cost peanuts compared to the amount of the money than the government throws away.

    • People and countries do irrational things all the time. You’re not addressing the FACTS of opportunity cost. And what would it even achieve? Shutting people out who can work to grow the U.S. economy??? It just doesn’t make any sense.

      • In a country with over 50% of first generation legal immigrants on welfare and over 34% of second generation legal immigrants on welfare and stagnant wadges for 80% of all workers, is it any wonder that irregular migration is a concern and needs to be controlled. Build the Wall…

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