1 00:00:00,440 --> 00:00:04,600 In 2024, a major concern amongst voters in both Europe and the 2 00:00:04,600 --> 00:00:09,040 United States was immigration. According to a Gallup survey, 3 00:00:09,200 --> 00:00:13,960 2024 was the first year since 2005 that a majority of 4 00:00:13,960 --> 00:00:17,520 Americans wanted there to be less immigration, and the 5 00:00:17,520 --> 00:00:21,160 percentage opposing immigration hit the highest level since 6 00:00:21,160 --> 00:00:25,200 2001. The US is home to the world's 7 00:00:25,200 --> 00:00:28,920 largest foreign born population, where, according to the Census 8 00:00:28,920 --> 00:00:33,960 Bureau, immigrants make up 14.3% of the population. 9 00:00:34,360 --> 00:00:38,880 As of 2022. Mexicans made-up 23% of the 10 00:00:38,880 --> 00:00:44,480 total immigrant population, Indians made-up 6%, Chinese 5%, 11 00:00:44,480 --> 00:00:48,560 and Filipinos 4%. The majority of these people are 12 00:00:48,560 --> 00:00:52,440 legally in the country, but experts estimate that there are 13 00:00:52,440 --> 00:00:56,600 between 11 million and 13 million illegal immigrants in 14 00:00:56,600 --> 00:01:00,480 the United States, and between 8 and 10 million illegal 15 00:01:00,480 --> 00:01:04,959 immigrants work in the country, which is as much as 6 percent of 16 00:01:04,959 --> 00:01:09,440 the entire US workforce. Nearly half of the illegal 17 00:01:09,440 --> 00:01:14,040 immigrants live in four states, California, Florida, New York 18 00:01:14,080 --> 00:01:18,080 and Texas, with many working in agriculture, in the service 19 00:01:18,080 --> 00:01:22,800 sector and in construction. Immigration has been a signature 20 00:01:22,800 --> 00:01:26,480 issue for Donald Trump, who's advocated for slashing both 21 00:01:26,480 --> 00:01:31,320 legal and illegal immigration. Trump famously vowed to build a 22 00:01:31,320 --> 00:01:36,160 wall along the US Mexico border to stop drugs and gangs from 23 00:01:36,160 --> 00:01:39,400 getting into the country. He was unable to get funding 24 00:01:39,400 --> 00:01:43,360 from Congress to do this, which led to a government shutdown in 25 00:01:43,360 --> 00:01:48,120 2019 and the declaration of a national emergency, which 26 00:01:48,120 --> 00:01:50,920 allowed him to divert funds to build the wall. 27 00:01:51,280 --> 00:01:55,640 Biden campaigned on overturning Trump's immigration policies 28 00:01:55,840 --> 00:01:59,320 and, once elected, a reduced immigration enforcement within 29 00:01:59,400 --> 00:02:03,240 the country, focusing instead on addressing the drivers of 30 00:02:03,240 --> 00:02:07,840 migration from Central America. The Trump administration used a 31 00:02:07,840 --> 00:02:12,040 public health law to allow U.S. officials to quickly turn back 32 00:02:12,040 --> 00:02:15,720 migrants at the border on public health grounds at the start of 33 00:02:15,720 --> 00:02:19,440 the pandemic in 2020. The Biden administration 34 00:02:19,440 --> 00:02:23,520 initially kept this restriction in place but tried to end its 35 00:02:23,520 --> 00:02:27,640 use in 2022. Republicans sued and the courts 36 00:02:27,640 --> 00:02:31,400 kept the rule in place. In 2023, when the Biden 37 00:02:31,400 --> 00:02:35,080 administration announced that it was ending the national pandemic 38 00:02:35,080 --> 00:02:38,720 emergency, these border restrictions went away. 39 00:02:39,320 --> 00:02:43,160 That year, Customs and Border Protection apprehended almost 40 00:02:43,160 --> 00:02:46,520 two and a half million people illegally crossing the southern 41 00:02:46,520 --> 00:02:51,320 border, which was a record high. Well, historically the people 42 00:02:51,320 --> 00:02:54,480 illegally crossing the southern border were Mexicans seeking 43 00:02:54,480 --> 00:02:57,880 work. Between 2013 and 2021. 44 00:02:58,040 --> 00:03:02,720 Most immigrants came from Asia, particularly China and India, 45 00:03:02,920 --> 00:03:06,960 and most were seeking asylum. A Biden administration rule 46 00:03:06,960 --> 00:03:10,720 prohibiting non Mexican migrants from seeking asylum at the 47 00:03:10,720 --> 00:03:14,120 southern border if they hadn't first applied for it and been 48 00:03:14,120 --> 00:03:18,440 denied in at least one other country along their route ended 49 00:03:18,440 --> 00:03:22,520 a lot of that immigration. Mexico once again regained its 50 00:03:22,520 --> 00:03:26,560 status as the top country of origin, with a growing number of 51 00:03:26,560 --> 00:03:30,960 Central Americans joining them. While Trump made border control 52 00:03:30,960 --> 00:03:35,440 a signature issue, he deported just 1.2 million people during 53 00:03:35,440 --> 00:03:39,880 his first term in office, which was lower than Obama deported in 54 00:03:39,920 --> 00:03:43,960 either of his two terms. A surge in unaccompanied minors 55 00:03:43,960 --> 00:03:48,760 arriving at the US border began in 2014, and Obama faced 56 00:03:48,760 --> 00:03:52,240 criticism at the time for detaining children in poor 57 00:03:52,240 --> 00:03:56,240 conditions and deporting more than 3,000,000 immigrants, which 58 00:03:56,240 --> 00:03:59,160 was more than either Clinton or Bush had done. 59 00:03:59,840 --> 00:04:03,120 While Biden technically repatriated more illegal 60 00:04:03,120 --> 00:04:07,400 immigrants than either Obama or Trump did, the majority were 61 00:04:07,400 --> 00:04:10,960 turned back due to Trump's public health law, which Biden 62 00:04:10,960 --> 00:04:16,079 tried to end in 2022 and actually ended in 2023, after 63 00:04:16,079 --> 00:04:18,920 which a surge of migrants crossed the border seeking 64 00:04:18,920 --> 00:04:22,720 asylum. Trump promised mass deportations 65 00:04:22,720 --> 00:04:26,600 on the campaign trail, but deportations like he's promised 66 00:04:26,840 --> 00:04:30,400 are more complicated than increased border security, as 67 00:04:30,400 --> 00:04:33,680 they involve finding illegal immigrants, arresting and 68 00:04:33,680 --> 00:04:37,480 detaining them, and, if he's to be taken at his word, getting 69 00:04:37,480 --> 00:04:42,040 rid of 6% of the US workforce. None of this will be cheap to 70 00:04:42,040 --> 00:04:45,560 do, and it can be expected to have wide-ranging economic 71 00:04:45,560 --> 00:04:48,680 consequences. Sarah O'Connor wrote an 72 00:04:48,680 --> 00:04:52,800 excellent piece in the FT last month about how economists have 73 00:04:52,800 --> 00:04:56,440 spent years lecturing a skeptical public that migrants 74 00:04:56,440 --> 00:05:00,480 don't suppress wages, as while they do increase the supply of 75 00:05:00,480 --> 00:05:04,280 Labor, they also increase the demand for goods and services. 76 00:05:04,400 --> 00:05:08,520 So in the end, one offsets the other, and wages stay roughly 77 00:05:08,520 --> 00:05:11,240 the same. Now that Trump is planning to 78 00:05:11,240 --> 00:05:14,720 deport millions of illegal immigrants, they're saying that 79 00:05:14,720 --> 00:05:19,440 this will cause labor shortages, increasing wages and inflation. 80 00:05:19,680 --> 00:05:23,080 She asks in her article. How can both of these claims be 81 00:05:23,080 --> 00:05:26,440 true? Similarly, analysts are warning 82 00:05:26,440 --> 00:05:29,320 that Trump's policies are inflationary and will hit 83 00:05:29,320 --> 00:05:32,000 economic growth. But investors, on the other 84 00:05:32,000 --> 00:05:35,840 hand, are betting that his plans will boost earnings and lift the 85 00:05:35,840 --> 00:05:39,840 stock market even higher. Once again, one of the two must 86 00:05:39,840 --> 00:05:42,320 be wrong. The first thing we need to 87 00:05:42,320 --> 00:05:46,160 address is the question of is there actually an open border, 88 00:05:46,160 --> 00:05:47,800 as some people have been claiming? 89 00:05:48,040 --> 00:05:51,520 And why have so many migrants been crossing the southern US 90 00:05:51,520 --> 00:05:55,680 border in recent years? There is, of course, not an open 91 00:05:55,680 --> 00:05:57,840 border. There are US laws in place 92 00:05:57,840 --> 00:06:01,080 making it illegal to cross the border without permission. 93 00:06:01,360 --> 00:06:05,360 What's changed under Joe Biden is the way in which laws were 94 00:06:05,360 --> 00:06:08,120 enforced. I spoke off the record with an 95 00:06:08,120 --> 00:06:11,520 immigration attorney who explained the increased number 96 00:06:11,520 --> 00:06:15,480 of border crossings is partially driven by the better treatment 97 00:06:15,480 --> 00:06:19,360 of illegals, who today mostly turn themselves in once they've 98 00:06:19,360 --> 00:06:21,720 crossed the border and claim asylum. 99 00:06:22,320 --> 00:06:26,400 Apparently, the rise of social media means that successful 100 00:06:26,400 --> 00:06:30,000 migrants are able to tell people back in their home country how 101 00:06:30,000 --> 00:06:33,360 to get across, which attracts even more migrants. 102 00:06:33,840 --> 00:06:37,960 The asylum process has always existed, but under prior 103 00:06:37,960 --> 00:06:41,760 administrations, asylum seekers had to prove that they had a 104 00:06:41,760 --> 00:06:46,120 legitimate claim straight away. Right now, people cross the 105 00:06:46,120 --> 00:06:50,600 border, ask for asylum and get released pending a trial, and 106 00:06:50,600 --> 00:06:54,240 due to court backlogs, it can take up to seven years for their 107 00:06:54,240 --> 00:06:57,520 cases to be decided. Once they've turned themselves 108 00:06:57,520 --> 00:07:01,760 in and applied for asylum, they are now legally in the United 109 00:07:01,760 --> 00:07:05,400 States and can apply for work permits, which takes at least 110 00:07:05,400 --> 00:07:09,440 180 days. They are not eligible for 111 00:07:09,440 --> 00:07:13,640 federal benefits, food stamps or Social Security, but there are 112 00:07:13,640 --> 00:07:16,480 some exceptions for unaccompanied minors and 113 00:07:16,480 --> 00:07:20,400 survivors of torture who are eligible for some benefits. 114 00:07:20,800 --> 00:07:25,000 I'm told that in the past it was considered so unpleasant dealing 115 00:07:25,000 --> 00:07:29,280 with US authorities under Trump and Obama that it deterred many 116 00:07:29,280 --> 00:07:32,640 migrants from even considering entering the United States. 117 00:07:33,080 --> 00:07:37,080 The booming U.S. economy of the last few years, evidenced by the 118 00:07:37,080 --> 00:07:41,040 recent jobs report which blew through expectations, has 119 00:07:41,040 --> 00:07:44,360 attracted migrants who face significantly greater 120 00:07:44,360 --> 00:07:47,360 difficulties in their home countries than in the United 121 00:07:47,360 --> 00:07:50,760 States. According to the DHS, people 122 00:07:50,760 --> 00:07:54,640 from over 168 different countries have crossed the 123 00:07:54,640 --> 00:07:58,120 southern border into the United States over the last three 124 00:07:58,120 --> 00:08:01,440 years. The number of migrants peaked in 125 00:08:01,440 --> 00:08:06,000 December 2023, and according to data from US Customs and Border 126 00:08:06,000 --> 00:08:09,520 Protection, the number of illegal migrants plummeted in 127 00:08:09,520 --> 00:08:13,120 2024. The decline came after policy 128 00:08:13,120 --> 00:08:16,600 changes on both sides of the border, where authorities in 129 00:08:16,600 --> 00:08:20,680 Mexico stepped up enforcement and President Biden issued an 130 00:08:20,680 --> 00:08:24,720 executive order over the summer making it harder for migrants to 131 00:08:24,720 --> 00:08:27,400 seek asylum and remain in the country. 132 00:08:27,760 --> 00:08:32,000 While this issue can seem quite politicized and rhetoric around 133 00:08:32,000 --> 00:08:35,440 immigration can get quite heated, hopefully you can see 134 00:08:35,440 --> 00:08:39,159 from this brief history that both Republicans and Democrats 135 00:08:39,159 --> 00:08:42,280 have been trying to get the balance right between the need 136 00:08:42,280 --> 00:08:46,120 for workers in the United States and the resources available. 137 00:08:46,440 --> 00:08:50,280 It's worth remembering that both the share of the US population 138 00:08:50,280 --> 00:08:54,520 that's of working age and the ratio of workers to retirees are 139 00:08:54,520 --> 00:08:58,600 declining as Americans live longer and have fewer children. 140 00:08:59,200 --> 00:09:03,680 As the American population ages, America needs more immigrants 141 00:09:03,760 --> 00:09:07,840 for the economy to continue thriving, otherwise it runs the 142 00:09:07,840 --> 00:09:12,520 risk of ending up like Japan. Immigration reform has been 143 00:09:12,520 --> 00:09:16,720 needed for quite some time. The last major legislation to 144 00:09:16,720 --> 00:09:21,880 make it through Congress came under Ronald Reagan in 1986 when 145 00:09:21,880 --> 00:09:25,920 his administration granted legal amnesty to 3,000,000 146 00:09:25,920 --> 00:09:31,120 undocumented residents. In 1990, George Bush Senior more 147 00:09:31,120 --> 00:09:35,760 than doubled the cap for immigrant visas from 270,000 to 148 00:09:35,760 --> 00:09:40,880 700,000. In 2007, George Bush Junior 149 00:09:40,880 --> 00:09:44,000 tried to pass an Immigration Bill which didn't make it 150 00:09:44,000 --> 00:09:47,840 through the Senate. In 2013, Obama tried to pass a 151 00:09:47,840 --> 00:09:50,520 bill which stalled in the House of Representatives. 152 00:09:50,920 --> 00:09:55,080 Trump and Biden both put forth plans which went nowhere. 153 00:09:55,840 --> 00:09:59,000 While Trump ramped up anti immigrant rhetoric on the 154 00:09:59,000 --> 00:10:02,840 campaign trail, the measures he's proposing would not 155 00:10:02,840 --> 00:10:06,760 actually be the most extreme anti immigrant policies in U.S. 156 00:10:06,760 --> 00:10:09,640 history. The Chinese Exclusion Act of 157 00:10:09,640 --> 00:10:14,600 1882 effectively banned Chinese immigration to the United States 158 00:10:14,760 --> 00:10:18,960 for 83 years until its repeal in 1943. 159 00:10:19,560 --> 00:10:24,680 The Immigration Act of 1924 was more extreme too, establishing 160 00:10:24,680 --> 00:10:28,960 national origin quotas to limit the number of immigrants allowed 161 00:10:28,960 --> 00:10:33,240 into the United States to 2% of the number of people of that 162 00:10:33,240 --> 00:10:36,760 nationality in the country as of 1890. 163 00:10:37,320 --> 00:10:41,000 This was enacted to preserve the racial composition of the 164 00:10:41,000 --> 00:10:45,320 country and was praised by an Austrian immigrant who had moved 165 00:10:45,320 --> 00:10:50,040 to Germany named Adolf Hitler, who is very much not a friend of 166 00:10:50,040 --> 00:10:53,960 the show. He praised the act in 1928 for 167 00:10:53,960 --> 00:10:56,680 banishing strangers of the blood. 168 00:10:57,320 --> 00:11:02,360 Tom Holman, Trump's borders are who worked under both Obama and 169 00:11:02,360 --> 00:11:06,320 Trump in the past, has said that the administration will begin 170 00:11:06,320 --> 00:11:10,560 deportations with the worst first, meaning migrants who are 171 00:11:10,560 --> 00:11:14,160 in the country illegally and have been convicted of crimes. 172 00:11:14,440 --> 00:11:18,640 On Fox News, he also said that worksite raids would have to 173 00:11:18,640 --> 00:11:21,800 happen, too. Some of his comments on visa 174 00:11:21,800 --> 00:11:25,520 programs have made employers worried that Trump could reduce 175 00:11:25,640 --> 00:11:29,720 legal immigration, too. There's a range of possible 176 00:11:29,720 --> 00:11:32,400 outcomes. Over the next four years, Trump 177 00:11:32,400 --> 00:11:36,240 could limit the length of time for which a visa is valid and 178 00:11:36,240 --> 00:11:39,920 make it harder to get visas with increased fees and waiting 179 00:11:39,920 --> 00:11:42,280 times. This would reduce the number of 180 00:11:42,280 --> 00:11:45,920 people granted green cards. He can also limit the number of 181 00:11:45,920 --> 00:11:50,160 refugees accepted. Trump plans to restart his 182 00:11:50,160 --> 00:11:54,520 policy requiring migrants at the southern border to await court 183 00:11:54,520 --> 00:11:58,680 hearings in Mexico, which would require cooperation from the 184 00:11:58,680 --> 00:12:01,920 Mexican government. He says that he'll end a 185 00:12:01,920 --> 00:12:04,880 government scheme that lets migrants make appointments to 186 00:12:04,880 --> 00:12:09,920 apply for asylum using an app. He also intends to end programs 187 00:12:09,920 --> 00:12:14,040 offering some nationalities work permits but not a path to 188 00:12:14,040 --> 00:12:18,120 citizenship. The mass deportations that Trump 189 00:12:18,120 --> 00:12:21,440 has promised can't happen without extra funding from 190 00:12:21,440 --> 00:12:24,520 Congress. Trump's Borders R Holman has 191 00:12:24,520 --> 00:12:28,560 acknowledged that the breadth of that operation largely depends 192 00:12:28,560 --> 00:12:31,120 on how much money Congress provides for it. 193 00:12:31,440 --> 00:12:34,800 Trump has vowed to end birthright citizenship too, 194 00:12:35,040 --> 00:12:38,200 saying that he would take executive action to circumvent 195 00:12:38,200 --> 00:12:42,160 the 14th Amendment, which guarantees citizenship to people 196 00:12:42,160 --> 00:12:46,040 born in the United States. Birthright citizenship was 197 00:12:46,040 --> 00:12:51,840 introduced in 1868 to guarantee citizenship to all former slaves 198 00:12:52,040 --> 00:12:54,920 and to any child born on US soil. 199 00:12:55,400 --> 00:12:59,840 Birthright tourism has been controversial in recent years as 200 00:12:59,840 --> 00:13:03,880 wealthy foreign women fly to the United States off non tourist 201 00:13:03,880 --> 00:13:07,920 visas and stay just long enough to give birth and obtain birth 202 00:13:07,920 --> 00:13:10,400 certificates and passports for their children. 203 00:13:11,120 --> 00:13:15,600 Most other countries don't offer this right, and usually at least 204 00:13:15,600 --> 00:13:19,120 one of a child's parents must already be a citizen. 205 00:13:19,480 --> 00:13:22,840 Nearly all of the countries with unrestricted birthright 206 00:13:22,840 --> 00:13:27,680 citizenship are in North America or South America, and the US and 207 00:13:27,680 --> 00:13:31,800 Canada are the only two NATO countries with this right. 208 00:13:32,480 --> 00:13:36,320 Ending birthright citizenship would probably not be able to be 209 00:13:36,320 --> 00:13:39,680 done by executive order, as Trump has suggested, and would 210 00:13:39,680 --> 00:13:43,800 likely require a constitutional amendment or a very different 211 00:13:43,800 --> 00:13:46,480 interpretation of the Constitution by the Supreme 212 00:13:46,480 --> 00:13:49,320 Court. Trump has talked about stripping 213 00:13:49,320 --> 00:13:52,680 citizenship from people who have illegitimately received 214 00:13:52,680 --> 00:13:55,560 birthright citizenship too, which would make them 215 00:13:55,560 --> 00:13:58,000 immediately subject to deportation. 216 00:13:58,280 --> 00:14:02,440 While people can be stripped of citizenship under U.S. law, it 217 00:14:02,440 --> 00:14:06,400 happens under very specific circumstances, like running for 218 00:14:06,400 --> 00:14:10,040 political office in a foreign country, entering into military 219 00:14:10,040 --> 00:14:13,440 service in a foreign country, committing an act of treason 220 00:14:13,440 --> 00:14:16,280 against the US, and things like that. 221 00:14:16,960 --> 00:14:20,560 Changing the rules around birthright citizenship probably 222 00:14:20,560 --> 00:14:25,280 wouldn't happen very quickly. The bigger question is how would 223 00:14:25,280 --> 00:14:29,720 Trump's mass deportations, if enacted, affect the US economy? 224 00:14:30,240 --> 00:14:34,000 There would obviously be huge costs associated with rounding 225 00:14:34,000 --> 00:14:37,480 up 8 to 10 million people, holding them in detention 226 00:14:37,480 --> 00:14:40,440 facilities and processing them through the courts. 227 00:14:40,640 --> 00:14:44,360 Additionally, it would be hugely disruptive for an economy to 228 00:14:44,360 --> 00:14:49,000 lose 6% of its workforce, especially in an environment 229 00:14:49,120 --> 00:14:53,320 where labour is in tight supply. You can think of an economy as 230 00:14:53,320 --> 00:14:56,880 being like a machine that combines labour, capital and raw 231 00:14:56,880 --> 00:14:59,800 materials to produce goods and services. 232 00:15:00,000 --> 00:15:04,440 If we suddenly remove 6% of the labour from that equation, we 233 00:15:04,440 --> 00:15:08,320 end up with lower output. On top of that, deporting 234 00:15:08,320 --> 00:15:12,200 millions of people who consume goods and services would also 235 00:15:12,200 --> 00:15:17,000 reduce demand in the economy. Tom Holman Trump's borders are 236 00:15:17,200 --> 00:15:21,520 says that he'll need 100,000 additional detention beds, about 237 00:15:21,520 --> 00:15:25,480 double the existing number to process the deportations he's 238 00:15:25,480 --> 00:15:28,800 planning. This number seems way too small. 239 00:15:28,920 --> 00:15:32,280 If the plan is to deport more than 10 million people over the 240 00:15:32,280 --> 00:15:36,720 next four years, the American Immigration Council estimates 241 00:15:36,960 --> 00:15:41,720 that the US would need to build and maintain 24 times more ICE 242 00:15:41,720 --> 00:15:45,480 detention capacity than currently exists to deport 243 00:15:45,480 --> 00:15:50,040 1,000,000 immigrants a year. This is the reason that prison 244 00:15:50,040 --> 00:15:53,560 company stocks rallied so much when the election results were 245 00:15:53,560 --> 00:15:57,520 announced. The AIC estimates that to carry 246 00:15:57,520 --> 00:16:01,840 out even 1,000,000 deportations a year, ICE would need to hire 247 00:16:01,840 --> 00:16:06,440 around 30,000 new enforcement officers, which would instantly 248 00:16:06,440 --> 00:16:09,640 make it the largest law enforcement agency in the 249 00:16:09,640 --> 00:16:13,680 federal government. At present, there are 3.7 250 00:16:13,680 --> 00:16:19,840 million cases pending before 735 US immigration judges, and this 251 00:16:19,840 --> 00:16:23,480 backlog means that immigrants weighed an average of three 252 00:16:23,480 --> 00:16:27,000 years for a decision. People who lose their cases can 253 00:16:27,000 --> 00:16:30,440 appeal, and their deportations take even longer. 254 00:16:30,840 --> 00:16:33,520 Trump would need to significantly increase the 255 00:16:33,520 --> 00:16:37,520 number of judges and find ways to expedite court cases. 256 00:16:38,480 --> 00:16:41,400 Transporting migrants back to their home countries is 257 00:16:41,400 --> 00:16:45,000 expensive, too. In 2023, the head of ICE told 258 00:16:45,000 --> 00:16:50,080 Congress that an average removal flight costs about $17,000 an 259 00:16:50,080 --> 00:16:52,800 hour. It's estimated that mass 260 00:16:52,800 --> 00:16:56,720 deportations on the scale being discussed would cost around a 261 00:16:56,720 --> 00:17:00,920 trillion dollars and take at least 10 years to complete. 262 00:17:01,280 --> 00:17:04,839 In order to pay for this, Trump could possibly declare a 263 00:17:04,839 --> 00:17:10,040 national emergency, like he did in 2019 to use defence funds to 264 00:17:10,040 --> 00:17:13,720 help fund the border wall. There would be other costs 265 00:17:13,720 --> 00:17:16,359 associated with mass deportations, too. 266 00:17:16,640 --> 00:17:21,040 According to the Institute on Taxation and Economic Policy, 267 00:17:21,280 --> 00:17:26,040 undocumented immigrants pay just under $100 billion in federal, 268 00:17:26,040 --> 00:17:30,640 state and local taxes per year. Most of these taxes go to the 269 00:17:30,640 --> 00:17:34,040 federal government, so undocumented immigrants are good 270 00:17:34,040 --> 00:17:37,960 for the federal budget but often weigh on state and local 271 00:17:37,960 --> 00:17:41,400 governments, who are responsible for supplying schooling and 272 00:17:41,400 --> 00:17:45,560 healthcare and other services, but don't receive as much tax 273 00:17:45,560 --> 00:17:49,320 revenue in return. Stephen Miller, who's expected 274 00:17:49,320 --> 00:17:53,000 to take a leading role in implementing Trump's immigration 275 00:17:53,000 --> 00:17:57,680 agenda, has claimed that mass deportations would create jobs 276 00:17:57,680 --> 00:18:00,240 for Americans and increase wages. 277 00:18:00,720 --> 00:18:04,040 There are some real world tests on the effects of mass 278 00:18:04,040 --> 00:18:08,520 deportations on labour market outcomes for US born workers. 279 00:18:08,760 --> 00:18:13,200 One of the best ones being by East Lock, Mansoor and Velasquez 280 00:18:13,200 --> 00:18:16,960 of the University of Colorado, who studied the roll out of 281 00:18:16,960 --> 00:18:21,320 Obama's deportations which were implemented county by county 282 00:18:21,520 --> 00:18:27,160 between 2008 and 2014. The timing of the removals was 283 00:18:27,160 --> 00:18:31,440 based on how close the counties were to ICE offices and how 284 00:18:31,440 --> 00:18:35,200 quickly the IT infrastructure needed could be set up in a 285 00:18:35,200 --> 00:18:38,160 county. The study found that there were 286 00:18:38,200 --> 00:18:42,840 eight jobs lost for US born workers for every 100 287 00:18:42,840 --> 00:18:46,280 deportations. This was analysed over a four 288 00:18:46,280 --> 00:18:50,480 year time scale and there was no sign of recovery in jobs for US 289 00:18:50,480 --> 00:18:54,840 born workers over that period. The reason for this, according 290 00:18:54,840 --> 00:18:58,560 to the study, is that unauthorized immigrant workers 291 00:18:58,560 --> 00:19:01,720 and US born workers are not substitutes. 292 00:19:01,720 --> 00:19:04,200 They're not competing for the same jobs. 293 00:19:04,600 --> 00:19:08,560 Unauthorized immigrants take low paying, dangerous and less 294 00:19:08,560 --> 00:19:13,560 attractive jobs more frequently than both US born workers and 295 00:19:13,600 --> 00:19:18,160 authorized immigrant workers. When employers are unable to 296 00:19:18,160 --> 00:19:22,440 hire unauthorized workers, they often have to scale back their 297 00:19:22,440 --> 00:19:26,880 businesses, which causes job losses for Usborne workers. 298 00:19:27,480 --> 00:19:31,640 Caregiving and household service jobs are very common amongst 299 00:19:31,640 --> 00:19:35,680 unauthorized immigrants and when they go away, people end up 300 00:19:35,680 --> 00:19:39,560 cleaning their own homes, mowing their own lawns and often find 301 00:19:39,560 --> 00:19:43,240 it cheaper to look after children and elderly relatives 302 00:19:43,240 --> 00:19:45,680 at home rather than pay for care. 303 00:19:46,080 --> 00:19:49,680 A decline in the supply of childcare workers led to a 304 00:19:49,680 --> 00:19:53,000 reduction in the number of college educated mothers in the 305 00:19:53,000 --> 00:19:55,000 workforce, according to the study. 306 00:19:55,840 --> 00:19:58,720 The paper shows that unauthorized immigrants 307 00:19:58,720 --> 00:20:03,240 contribute to local demand for goods and services too, like 308 00:20:03,240 --> 00:20:08,080 haircuts, food and cars, meaning that deportations lead to less 309 00:20:08,080 --> 00:20:11,480 revenue for local hair stylists, grocery stores and car 310 00:20:11,480 --> 00:20:15,840 dealerships, causing them to hire fewer US born workers. 311 00:20:16,480 --> 00:20:21,440 Finally, deportations impact tax revenues and facilitate the 312 00:20:21,440 --> 00:20:25,600 solvency of the Social Security and Medicare systems, as illegal 313 00:20:25,600 --> 00:20:29,560 immigrants who work pay into these systems while not being 314 00:20:29,560 --> 00:20:32,000 eligible to receive any benefits. 315 00:20:32,480 --> 00:20:36,440 The US agriculture industry relies heavily on temporary 316 00:20:36,440 --> 00:20:40,680 foreign workers to harvest farm produce and are warning that 317 00:20:40,680 --> 00:20:45,040 deportation plans could create mass labor shortages, crippling 318 00:20:45,040 --> 00:20:49,560 farms and raising food prices. Warwick McKibben of the 319 00:20:49,560 --> 00:20:53,360 Australian National University looked at the economic 320 00:20:53,360 --> 00:20:57,120 implications of the planned deportations, building a global 321 00:20:57,120 --> 00:21:01,160 macro model to compare different scenarios where over the next 322 00:21:01,160 --> 00:21:06,560 two years either 1.3 million workers are removed or 7.5 323 00:21:06,560 --> 00:21:10,800 million workers are removed. It's quite a detailed model as 324 00:21:10,800 --> 00:21:15,000 mass migration effects both the US and other countries, 325 00:21:15,000 --> 00:21:19,000 affecting production networks, financial flows, and leads to 326 00:21:19,000 --> 00:21:22,720 adjustments in other countries that then feedback to the US. 327 00:21:23,280 --> 00:21:27,000 His model shows that removing a lot of workers from an economy 328 00:21:27,000 --> 00:21:30,280 causes a drop in GDP, as you'd expect. 329 00:21:30,480 --> 00:21:33,800 When workers disappear from a sector like agriculture or 330 00:21:33,800 --> 00:21:37,080 services, he shows that the capital that's currently 331 00:21:37,080 --> 00:21:41,320 deployed in that sector can't be quickly redeployed elsewhere, 332 00:21:41,520 --> 00:21:45,560 and so the return on capital in the United States falls as 333 00:21:45,560 --> 00:21:49,400 there's less economic activity associated with that capital. 334 00:21:50,160 --> 00:21:53,760 His model shows that mass deportations would have an 335 00:21:53,760 --> 00:21:57,320 effect on the business cycle too, as when the return on 336 00:21:57,320 --> 00:22:02,120 capital declines, incomes fall, shareholder returns fall, and 337 00:22:02,120 --> 00:22:05,000 overall spending in the economy declines. 338 00:22:05,320 --> 00:22:09,160 According to his model, the effect on the business cycle has 339 00:22:09,160 --> 00:22:12,400 a remarkably small spillover to other countries. 340 00:22:12,840 --> 00:22:17,840 With 1.3 million deportations, he estimates that USGDP would 341 00:22:17,840 --> 00:22:24,240 fall by 1.2%, and with seven and a half million deportations, GDP 342 00:22:24,240 --> 00:22:28,680 would fall by 7.4%. His model shows that the 343 00:22:28,680 --> 00:22:32,320 deportations would be inflationary too, and once 344 00:22:32,320 --> 00:22:36,080 again, more deportations leads to more inflation. 345 00:22:36,320 --> 00:22:39,880 He assumes that the Federal Reserve responds to inflation by 346 00:22:39,880 --> 00:22:44,080 hiking rates, but is limited as to what they can do due to the 347 00:22:44,080 --> 00:22:47,400 slowing economy. With regard to the inflationary 348 00:22:47,400 --> 00:22:51,080 effects, you can see with the coloured lines on this chart 349 00:22:51,240 --> 00:22:55,480 that this is inflationary for other economies too, but the 350 00:22:55,480 --> 00:22:58,280 greatest impact occurs in the United States. 351 00:22:58,840 --> 00:23:02,440 Interestingly, under this analysis, removing a lot of 352 00:23:02,440 --> 00:23:06,560 workers from the US economy improves the trade balance, one 353 00:23:06,560 --> 00:23:09,360 of the things that Trump has said that he wants to do. 354 00:23:09,840 --> 00:23:13,280 The reason this happens is that when the return on capital in 355 00:23:13,280 --> 00:23:17,240 the United States falls, foreign investment stops flowing to the 356 00:23:17,280 --> 00:23:21,040 US economy, going instead to where expected returns are 357 00:23:21,040 --> 00:23:23,760 higher. This causes the US dollar to 358 00:23:23,760 --> 00:23:27,720 weaken, which boosts exports and reduces imports. 359 00:23:28,280 --> 00:23:31,960 The farming sector would be hit hardest by deportations. 360 00:23:31,960 --> 00:23:36,440 A report from the University of California, Davis estimates that 361 00:23:36,440 --> 00:23:39,760 almost 1,000,000 of Americans, two and a half million farm 362 00:23:39,760 --> 00:23:42,160 workers are unauthorized immigrants. 363 00:23:42,520 --> 00:23:46,240 Dairy and poultry farms are particularly reliant on them, 364 00:23:46,520 --> 00:23:50,280 but the loss of these workers could be offset by increased 365 00:23:50,280 --> 00:23:53,840 automation. Construction costs in America 366 00:23:53,960 --> 00:23:58,640 would likely rise too, as 1.5 million unauthorized migrants 367 00:23:58,640 --> 00:24:01,800 work in that industry, which would be much harder to 368 00:24:01,800 --> 00:24:05,000 automate. Housing experts already say that 369 00:24:05,000 --> 00:24:08,960 the US is not building enough new homes, but obviously the 370 00:24:08,960 --> 00:24:12,240 reduction in building would be offset by a reduction in 371 00:24:12,240 --> 00:24:14,960 population. But not every American would 372 00:24:14,960 --> 00:24:18,680 want to live in the types of homes or in the locations where 373 00:24:18,680 --> 00:24:21,160 undocumented workers currently live. 374 00:24:22,040 --> 00:24:26,200 Mckibben's study is very interesting, but it does contain 375 00:24:26,200 --> 00:24:29,440 a lot of assumptions and a lot of moving parts, so it's 376 00:24:29,440 --> 00:24:32,520 unlikely to be a perfect predictor of outcomes. 377 00:24:32,720 --> 00:24:36,440 But it does help illuminate how a labour shock would impact the 378 00:24:36,560 --> 00:24:38,960 US economy. I'll put a link to a 379 00:24:38,960 --> 00:24:42,440 presentation by McKibben in the video description for those of 380 00:24:42,440 --> 00:24:46,280 you who are interested. One of the big impacts of either 381 00:24:46,280 --> 00:24:50,520 a flood of immigration or mass deportations is that they cause 382 00:24:50,520 --> 00:24:54,800 shocks which have economic effects in border states. 383 00:24:54,800 --> 00:24:58,320 When A rush of new migrants arrive, problems arise from 384 00:24:58,320 --> 00:25:01,880 there not being enough housing, school places, or employment for 385 00:25:01,880 --> 00:25:05,400 the new arrivals. Similarly, when a large number 386 00:25:05,400 --> 00:25:08,760 of immigrants who have become embedded in a community suddenly 387 00:25:08,760 --> 00:25:11,600 leave, it has harmful effects too. 388 00:25:12,320 --> 00:25:16,520 According to Pew Research, nearly 80% of unauthorized 389 00:25:16,520 --> 00:25:20,040 migrants in the United States have lived there for more than a 390 00:25:20,040 --> 00:25:22,920 decade. Many of these people are deeply 391 00:25:22,920 --> 00:25:27,480 integrated. 6% of all American school children have at least 392 00:25:27,480 --> 00:25:32,000 one unauthorized parent, meaning that 4.4 million American 393 00:25:32,000 --> 00:25:35,280 children would be affected by deportations. 394 00:25:35,720 --> 00:25:40,200 While immigration has been a heated topic, roughly 60% of 395 00:25:40,200 --> 00:25:44,480 American voters still say that undocumented immigrants already 396 00:25:44,480 --> 00:25:48,560 in the country should be allowed to stay in the country legally, 397 00:25:48,800 --> 00:25:52,480 either with a path to citizenship or a right to a work 398 00:25:52,480 --> 00:25:55,640 visa. In Sarah O'Connor's piece in the 399 00:25:55,640 --> 00:25:59,120 Financial Times on whether migrants were undercutting the 400 00:25:59,120 --> 00:26:03,000 wages of domestic workers or not, she described how the 401 00:26:03,000 --> 00:26:06,800 arrival of migrants can change the nature of certain types of 402 00:26:06,800 --> 00:26:09,160 work. She gives the example of how 403 00:26:09,160 --> 00:26:12,880 employers in certain sectors, like meat packing in the UK, 404 00:26:13,120 --> 00:26:17,400 responded to the availability of Eastern European migrant workers 405 00:26:17,600 --> 00:26:21,800 by changing or expanding in ways that they might not otherwise 406 00:26:21,800 --> 00:26:24,200 have done. When the migrant workers 407 00:26:24,200 --> 00:26:29,400 arrived, British meat processing plants shifted to 12 hour shifts 408 00:26:29,560 --> 00:26:33,520 and began opening facilities in more remote locations because 409 00:26:33,520 --> 00:26:36,760 they could find migrant workers willing to work there and the 410 00:26:36,760 --> 00:26:40,280 real estate was cheaper. She describes how farmers in the 411 00:26:40,280 --> 00:26:45,040 UK responded to the availability of seasonal workers by planting 412 00:26:45,040 --> 00:26:48,360 more labour intensive soft fruits than before. 413 00:26:48,920 --> 00:26:52,280 She points out that many of the sectors that employ migrant 414 00:26:52,280 --> 00:26:56,560 workers have very tight profit margins as they sell to grocery 415 00:26:56,560 --> 00:27:00,640 chains who negotiate very low prices but they then pass on to 416 00:27:00,640 --> 00:27:03,920 their customers. In the wake of Brexit, many 417 00:27:03,920 --> 00:27:07,560 hoped that wages for British workers would rise now that the 418 00:27:07,560 --> 00:27:09,640 Eastern European workers were gone. 419 00:27:10,080 --> 00:27:13,960 But that didn't really work out. Farmers instead had to deal with 420 00:27:13,960 --> 00:27:17,400 crops rotting in their fields and complained about having to 421 00:27:17,400 --> 00:27:20,640 slaughter healthy animals due to labor shortages. 422 00:27:21,120 --> 00:27:24,320 The British government eventually gave in and handed 423 00:27:24,320 --> 00:27:27,280 out more visas to recruit migrant workers. 424 00:27:27,840 --> 00:27:31,760 With mass deportations, it's likely that the cost of food and 425 00:27:31,760 --> 00:27:36,480 housing will rise in the United States as labor shortages occur. 426 00:27:36,640 --> 00:27:40,320 It's also possible that certain American made goods could be 427 00:27:40,320 --> 00:27:44,320 swapped for imports if local production became too expensive. 428 00:27:44,760 --> 00:27:48,440 We'll just have to wait and find out if investors or economists 429 00:27:48,440 --> 00:27:51,760 are right about how Trump's plans will affect the stock 430 00:27:51,760 --> 00:27:56,280 market and the economy. It seems to me that Trump keeps 431 00:27:56,280 --> 00:27:59,600 an eye on the stock market as a measure of his performance in 432 00:27:59,600 --> 00:28:02,960 office, and for that reason he might back down from certain 433 00:28:02,960 --> 00:28:05,960 ideas if they appear to be hurting the economy. 434 00:28:06,520 --> 00:28:10,400 Trump is also likely to face legal challenges in rounding up 435 00:28:10,400 --> 00:28:13,960 immigrants and push back from other politicians over the 436 00:28:13,960 --> 00:28:16,600 extreme costs of his deportation plans. 437 00:28:16,880 --> 00:28:20,440 And for that reason, I think the worst case scenarios outlined in 438 00:28:20,440 --> 00:28:23,200 the various studies are unlikely. 439 00:28:23,800 --> 00:28:27,640 It's always worth remembering that politicians always talk big 440 00:28:27,640 --> 00:28:31,160 on the campaign trail, but they don't always follow through on 441 00:28:31,160 --> 00:28:34,120 their promises. Elon Musk, Trump's head of 442 00:28:34,120 --> 00:28:38,520 procurement reform, has already begun backtracking on his claims 443 00:28:38,680 --> 00:28:41,440 of how much he could cut from the federal budget. 444 00:28:42,160 --> 00:28:45,400 Thanks for tuning in to this week's podcast, with a special 445 00:28:45,400 --> 00:28:48,960 thanks to my supporters on Patreon who make it all happen. 446 00:28:49,200 --> 00:28:52,400 If you'd like to support the show, there's a link in the show 447 00:28:52,400 --> 00:28:54,600 notes. Have a great week and talk to 448 00:28:54,600 --> 00:28:56,160 you again soon. Bye.