By Patrick Gerard C. Simon-King
Does anyone else feel like the world is on the cusp of a monumental shift, and that it’s going to be quite scary? The first month of the year 2017 is marked with uncertainty—the shock and awe of each new United States policy announcement by President Trump; the probable shifting of geopolitical alliances; the rise of populism globally; and the seemingly unending issues with law-enforcement officials both here in the Philippines and abroad. These issues and others make for an interesting and ominous start to the year.
One of these issues is the executive order (EO) on immigration signed on January 27 by Trump. A direct quote from an article in USA Today explains that in the executive order, “Trump suspended all refugee resettlement into the US for four months and refugee resettlement from Syria indefinitely. He also suspended for three months entry by citizens of seven majority Muslim nations—Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen—on immigrant or nonimmigrant visas, including apparently people holding dual citizenship with other nations (https://www.usatoday.com/story/news/nation-now/2017/01/30/trumps-immigration-order-explained/97270650/).”
The rationale for Trump’s latest action is, of course, linked to the threat of terrorism, and the need to secure and safeguard the people of the US. That is an important and valid consideration given the state of our world nowadays—the war in Syria and Iraq, the refugee crisis impacting Europe, Islamic State of Iraq and Syria (ISIS), and other domestic terrorist groups and ISIS-inspired lone wolf terrorist acts. The threat is there, and the world knows it and is trying to deal with it. Yet, is solving problems by building walls, both real (the border wall with Mexico) and virtual (Trump’s EO) to keep out immigrants the best way forward? Whether they’re illegal immigrants allegedly taking jobs, or immigrants from the seven countries listed in Trump’s ban that could be potential terrorist threats, the target of Trump’s policies (from his presidential campaign pronouncements to his first few days in office as the Potus) are immigrants. Is immigration the bane of the economy? Is it all negative? What impact does immigration have on an economy?
Let us view this immigration issue from an economic perspective. Basic economics teaches the production possibilities frontier, or the PPF. The PPF is a graph that shows the various combinations of goods or output that an economy can possibly produce given its available resources, available level of technology and its efficient use of resources. One of the concepts the PPF highlights is economic growth. It shows that the economy can produce more goods (i.e., economic growth) by either having more resources to utilize in production or by improving and advancing its level of technology. Thus, let us look at the impact of immigration on the economy from these two angles: more resources and better technology.
More resources
More immigrants mean more laborers. More laborers mean more inputs that can be used for producing goods and services. These new laborers will then spend their incomes on goods and services. This increase in demand will help foster economic growth. Counterarguments to immigrant laborers are 1) that there will be slower growth in wages for native-born workers; and 2) that immigrants are taking away jobs from native-born workers. A study, “The Effects of Immigration on the United States’ Economy,” from the Wharton School, University of Pennsylvania, states that “…evidence suggests that when immigration increases the supply of labor, firms increase investment to offset any reduction in capital per worker, thereby keeping average wages from falling over the long term. Moreover, immigrants are often imperfect substitutes for native-born workers in US labor markets. That means they do not compete for the same jobs and put minimal downward pressure on natives’ wages.”
The article further states, “Despite these increases in labor supply, in many cases, immigrants appear to complement American-born workers rather than replacing them…. Even for low-skilled native-born workers in these industries, the effects of increased competition from immigrants are ambiguous, as many take advantage of their superior communication abilities and shift into occupations where these skills are more valuable, such as personal services and sales.”
Better technology
Innovation and technological advancements are pathways to economic growth and development. According to the same study from the Wharton School, immigrants are at the forefront of innovation. It cites that from a 2011 survey of the top 50 venture capital-funded companies, half had at least one immigrant founder and three-fourths had immigrants in top management and research positions. Another statistic mentioned was that, in 2011, 76 percent of patents from the top 10 US patent-producing universities had at least one foreign-born author. Immigration provides a skilled and innovative work force and this can lead to economic growth (https://www.budgetmodel.wharton.upenn.edu/issues/2016/1/27/the-effects-of-immigration-on-the-united-states-economy).
Immigration can be a positive force for the benefit of any economy. Immigrants, in their desire to better their situation, can result in the betterment for all.