People drive economic growth. Which means President Trump’s problem isn’t the Fed, it’s his own administration’s deportations. Trump wants economic growth, but he doesn't want the people who make growth abundant.
Which is just a comment that whatever one’s opinion on immigration, a lack of it combined with aggressive ICE attempts to arrest and deport workers already here will have a very quick, and very negative impact on economic growth. The irony is that conservatives know why this is true without needing to ask why.
Think their frequent commentary informed by Robert Higgs about “regime uncertainty.” Implied in the latter is that if there’s uncertainty about the present and future thanks to unfortunate government policy, there’s necessarily a chilling effect on economic activity and commitment of capital to same.
No doubt people perhaps understandably think of capital as “money,” but money movements signal the movement of goods, services and people. We can then say that of all the “capitals,” people are the most important of all. Except that the flow of the people part into the United States has slowed, along with the willingness of the people here to reveal themselves for fear they'll be deporated. All production springs from human endeavor, but fewer humans are working.
That's because Trump and his administration are trying to remove the people part from the growth equation. No wonder the economy is slowing, except that we can’t blame the Fed. Where there’s production there’s always money and credit, which is a long way of saying that if Trump ceases trying to deport the people elemental to growth, what the Fed does or doesn't do will be immaterial.
To which some will reply that Trump’s deportation plan is about keeping jobs open for the natives. This is mistaken, and not solely because immigrant laborers are frequently willing to do what the natives aren’t.
No doubt there’s some truth to the above point, but it’s ultimately fallacious for presuming a zero-sum quality to work and opportunity that says the arrival of human capital comes at a fixed-pie cost in jobs lost for those already here. Such a view is nonsensical, and yes, inimical to economic growth.
That’s because humans are decidedly not a cost. They’re an input. The more humans, the more human specialization, with the end result being exponentially more production in concert with a great deal more pay for a growing number of humans dividing up labor.
Which is a short way of saying that in arresting and deporting willing workers from south of the border, President Trump’s administration is putting a lower-wage bull’s eye on American workers. Stated simply, they’re not nearly as valuable without the willing workers from Mexico and beyond.
None of this is theoretical as much as it’s simple economics. One man working alone can produce very little per hour or day, but several men working together can produce exponentially more. If anyone doubts the previous truth, they need only contemplate how Henry Ford was able to turn the incredibly obscure luxury item that was the automobile into a common good accessible to “the great multitude.” It was all about work divided.
The rush of workers into Detroit in pursuit of automobile-authored high wage rates didn’t amount to a race to the bottom, rather the exact opposite revealed itself. And it did because humans are once again an economic input, not a cost. The more the better, and the much better wages thanks to enhanced productivity born of work divided.
The relative lack of people today no doubt plays a role in the slowing economy stateside. People are capital, which means people are the always and everywhere answer to slow growth. Trump can have deportations or booming growth, but he can’t have both.
