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.

On the Dehumanization of Immigrants

Britain is in the grip of a worrying trend.

Our own Prime Minister compared migrants in Calais to insects when he called them a “swarm”.

Meanwhile, internet comment sections relating to the refugees are filled with hatred and venom. Asylum seekers are referred to as “invaders”, and the trolls encourage the British authorities to shoot them, to machine gun them, and hang them on meat hooks.

This dehumanization of immigrants frightens me. Not simply because dehumanization of large groups of people often foreshadows violence. It frightens me because this is just the tip of the iceberg. There is a lot more of this hateful stuff bubbling beneath the surface of our society. Anti-immigrant sentiment has been swelling in Britain for the last two decades, gently encouraged by tabloid journalists and other intellectually lazy people looking for an easy scapegoat for the economic and social problems of the age. As Richard Seymour noted last year in The Guardian, “77% of people in the UK want immigration reduced, and 56% want it ‘reduced a lot‘”.

Britain has been subject to soaring inflows of immigration in the past twenty years. This has meant large-scale changes to the fabric of society, some of which people may like, but many of which they may not. And there is an additional burden on public services. IPSOS-Mori, for instance, found that there is a strong correlation across Europe between anti-immigrant sentiment and people’s perception of strain on public services. In that sense, anti-immigration sentiment in itself may not be entirely irrational.

Still, it does ignore the fact that there may be cleaner solutions to Britain’s problems than simplistically blaming immigration, and trying to clamp down on human movement. None of the strains on public services, health care and infrastructure would exist if only the government would properly scale investment in infrastructure and public services to demand. Immigrants pay more taxes than they draw out in services, so immigration has hardly made such investment unaffordable. Not to mention the billions of pounds in cheap lending that the private market made available to the government at negative real rates during the last parliament — money that could have been invested in infrastructure and public services — but which the government passed on.

As America — with its millions of undocumented migrants — is discovering, trying to stem flows of humans is very hard. People are slippy, and they go where they wish. Walls and fences are impediments, but they are not absolutes. People can be incredibly singleminded. The stories of the migrants in Calais who have escaped warzones, famines and despots in Africa and the middle east to slip into Europe, and across the Channel are a testament to the resilience of the human will. That resilience is why the anti-immigration internet trolls are setting their sights upon machine guns and meathooks and other such savagery. Walls and barbed wire and officers with searchlights and sniffer dogs isn’t working.

In the bigger picture, as anti-immigrant sentiment has swelled, there may be an overflow into the demonization and ostracization of ethnic minorities, even those who are here legally. Even those who were born here. Even those such as myself who were born here and are the children of white, English mothers. Even, perhaps, to white Britons who favour multiculturalism and immigration. The data shows that Britain is getting more racist, with 1 in 3 admitting to racial prejudice, up from 25 percent in 2001.

In the long run, I have no doubt that the economic benefits of migration — it’s estimated that completely open borders would roughly double global GDP via more efficient matching of workers and firms — will win out and that humanity will become increasingly transnational, and postnational, and ultimately interplanetary.

But for now, with this tidal wave of anti-immigrant and increasingly racist sentiment, I feel frightened at what my own country — a country that I have lived in my entire life — might be becoming.