If Borders Were Open: The $78 Trillion Free Lunch

Yes, it would be disruptive. But the potential gains are so vast that objectors could be bribed to let it happen
.. Workers become far more productive when they move from a poor country to a rich one. Suddenly, they can join a labour market with ample capital, efficient firms and a predictable legal system. Those who used to scrape a living from the soil with a wooden hoe start driving tractors. Those who once made mud bricks by hand start working with cranes and mechanical diggers. Those who cut hair find richer clients who tip better.
.. “Labour is the world’s most valuable commodity—yet thanks to strict immigration regulation, most of it goes to waste,” argue Bryan Caplan and Vipul Naik in “A radical case for open borders”.
.. The potential gains from open borders dwarf those of, say, completely free trade, let alone foreign aid.
.. the reason why migration is so attractive is that some countries are well-run and others, abysmally so.
.. Workers in rich countries earn more than those in poor countries partly because they are better educated but mostly because they live in societies that have, over many years, developed institutions that foster prosperity and peace. It is very hard to transfer Canadian institutions to Cambodia, but quite straightforward for a Cambodian family to fly to Canada. The quickest way to eliminate absolute poverty would be to allow people to leave the places where it persists. Their poverty would thus become more visible to citizens of the rich world—who would see many more Liberians and Bangladeshis waiting tables and stacking shelves—but much less severe.
.. Gallup, a pollster, estimated in 2013 that 630m people—about 13% of the world’s population—would migrate permanently if they could, and even more would move temporarily. Some 138m would settle in the United States, 42m in Britain and 29m in Saudi Arabia.
.. migration is, in the jargon, “path-dependent”. It starts with a trickle: the first person to move from country A to country B typically arrives in a place where no one speaks his language or knows the right way to cook noodles. But the second migrant—who may be his brother or cousin—has someone to show him around.
.. When the 1,000th migrant arrives, he finds a whole neighbourhood of his compatriots.
.. in America the foreign-born are only a fifth as likely to be incarcerated as the native-born. In some European countries, such as Sweden, migrants are more likely to get into trouble than locals, but this is mostly because they are more likely to be young and male.
.. Immigrants are more likely than the native-born to bring new ideas and start their own businesses, many of which hire locals. Overall, migrants are less likely than the native-born to be a drain on public finances, unless local laws make it impossible for them to work
.. A large influx of foreign workers may slightly depress the wages of locals with similar skills. But most immigrants have different skills. Foreign doctors and engineers ease skills shortages. Unskilled migrants care for babies or the elderly, thus freeing the native-born to do more lucrative work.
.. mass migration would make the world as a whole less crowded, since fertility among migrants quickly plunges until it is much closer to the norm of their host country than their country of origin.
.. If the worry is that future migrants might not pay their way, why not charge them more for visas, or make them pay extra taxes, or restrict their access to welfare benefits? Such levies could also be used to regulate the flow of migrants, thus avoiding big, sudden surges.

This sounds horribly discriminatory, and it is. But it is better for the migrants than the status quo, in which they are excluded from rich-world labour markets unless they pay tens of thousands of dollars to people-smugglers—and even then they must work in the shadows and are subject to sudden deportation.

Economist: Trump: Will the West Survive

In Warsaw, America’s president barely mentions democracy

 Earlier American administrations defined “the West” with reference to values such as democracy, liberty and respect for human rights. Mr Trump and many of his advisers, including the speech’s authors, Stephen Bannon and Stephen Miller, apparently see it as rooted in ethnicity, culture and religion.
.. When George W. Bush visited Poland for his first presidential visit, in 2001, he referred to democracy 13 times. When Barack Obama spoke in Warsaw in 2014, he mentioned democracy nine times. For Mr Trump, once sufficed.
.. Mr Trump invoked the “blood of patriots”, and the ties of family and God. The rhetoric sounded strikingly similar to that used by the nationalist Law and Justice (PiS) party that governs Poland, and its leader, Jaroslaw Kaczynski.
..The crowd hurled insults at opposition politicians, booing when Lech Walesa, the anti-communist hero and a critic of the current government, left the square.
.. According to polling by Pew, just 23% have confidence in America’s president to do the right thing, down from 58% under Mr Obama.
.. At a news conference, he insisted that no one knows for sure whether Russia interfered with America’s presidential election (contradicting the conclusions of his own intelligence agencies).
.. Still, Mr Trump did unambiguously endorse NATO’s Article 5
.. But the greatest reason for Poland’s government to be delighted with Mr Trump was what he did not mention: PiS’s undermining of democratic institutions to entrench its own power. The party has stuffed the civil service and the diplomatic corps with loyalists and has weakened the independence of the judiciary. It has transformed the national broadcaster into a mouthpiece of the state. Independent journalists face new restrictions. The European Commission has warned the government that its reforms pose “a systemic risk to the rule of law.”

Transcript: Interview with Donald Trump

The Economist talks to the President of the United States about economic policy

No. I want people to come in legally. But I want people to come in on merit. I want to go to a merit-based system. Actually two countries that have very strong systems are Australia and Canada. And I like those systems very much, they’re very strong, they’re very good, I like them very much. We’re going to a much more merit-based system. But I absolutely want talented people coming in ..

.. We want a provision at the right time, we want people that are coming in and will commit to not getting…not receiving any form of subsidy to live in our country for at least a five-year period.

.. We also want farm workers to be able to come in. You know, we’re going to have work visas for the farm workers. If you look, you know we have a lot of people coming through the border, they’re great people and they work on the farms and then they go back home.

..  But beyond that it’s OK if the tax plan increases the deficit?
It is OK, because it won’t increase it for long. You may have two years where you’ll…you understand the expression “prime the pump”?

Yes.
We have to prime the pump.

It’s very Keynesian.
We’re the highest-taxed nation in the world. Have you heard that expression before, for this particular type of an event?

Priming the pump?
Yeah, have you heard it?

Yes.
Have you heard that expression used before? Because I haven’t heard it. I mean, I just…I came up with it a couple of days ago and I thought it was good. It’s what you have to do.

.. they open a plant someplace else and then they send the air conditioner or the car into our country with no tax, that’s not going to happen anymore. They’re going to have a very large tax to pay, in the vicinity of 35%.

.. So we’re not leaving. I don’t know if you saw what’s happening. Ford has announced massive expansions in the United States. General Motors cancelled a big plant in Mexico and a big plant in Europe. They’re all cancelling plans because I told them, I said…I get along with them great. But I said, “Look, we don’t mind if you leave the country. You can build all you want out of country, I hope you enjoy your plant. But when you build your car, you’re going to have a 35% tax when you bring it back in. And if your numbers work, we wish you well. But that’s what you’re going to have. You’re going to have a 35% tax.”

.. I haven’t been given massive credit for it yet, but I have been given some because I just see polls out in Michigan and different places

.. But that’s not a tax increase, that’s no tax. In other words, all you have to do is don’t leave and you won’t have a

.. We need infrastructure in our country. This country has wasted $6trn in the Middle East. Wasted. Like taking it and throwing it right out that window.

.. If you do need Democratic support for your tax plan, your ideal tax plan, and the price of that the Democrats say is for you to release your tax returns, would you do that?
I don’t know. That’s a very interesting question. I doubt it. I doubt it. Because they’re not going to…nobody cares about my tax return except for the reporters. Oh, at some point I’ll release them. Maybe I’ll release them after I’m finished because I’m very proud of them actually. I did a good job.

Hope Hicks [White House director of strategic communication]: Once the audit is over.

President Trump: I might release them after I’m out of office.

President Trump: By the way, so as you know I’m under routine audit, so they’re not going to be done. But you know, at a certain point, that’s something I will consider. But I would never consider it as part of a deal.

Right, got that.
I would never do it. That would be…I think that would be unfair to the deal. It would be disrespectful of the importance of this deal. Because the only people that find that important are the reporters.

Well, the Democrats say it’s important.
Well, don’t forget I got elected without it. Somebody said, “Oh but you have to do it,” I said, “Look where I am”. I was, you know, I was out front, I was asked that question, every debate, I said, you know, I’m under routine audit.

Mr Mnuchin: And the president’s financial disclosure has been longer than any…

President Trump: Plus my financial disclosure is 104 pages.

Ms Hicks: I think when people say that that makes it about the president and the politics versus the people, which is what we’re focused on.

.. Can I ask you about the focus of the tax cut because you’ve spoken about a massive tax cut for ordinary workers…
Right, this would be the biggest tax cut in the history of the country.

But the biggest winners from this tax cut, right now, look as though they will be the very wealthiest Americans.
Well, I don’t believe that. Because they’re losing all of their deductions, I can tell you.

But something like eliminating the estate tax.
I get more deductions, I mean I can tell you this, I get more deductions, they have deductions for birds flying across America, they have deductions for everything.

.. Would you consider a VAT for the United States?
Well the concept of VAT I really like. But let me give you the bad news. I don’t think it can be sold in this country because we’re used to an income tax, we’re used to a…people are used to this tax, whether they like it or don’t like, they’re used to this tax.

.. But the VAT is…I like it, I like it a lot, in a lot of ways. I don’t mean because of, you know, getting it back, you don’t get all of it back, but you get a lot of it back. But I like a VAT. I don’t think it can be sold in this country, I think it’s too much of a shock to this system. I can tell you if we had a VAT it would make dealing with Mexico very much easier.

.. Are you still considering a border-adjustment tax?
We are dealing with Congress…because it’s not really what I’m considering. I mean look, on health care, I think we have a great bill and there’s still a little bit further to go because we’re also dealing with the Senate, but the Senate I believe really wants to get something done because Obamacare is dead, just so we understand. Obamacare is absolutely dead. The insurance companies are leaving. Yesterday Aetna just announced they’re pulling out. You have states that aren’t going to have any insurance companies. You know when people say, “Oh, Obamacare is so wonderful,” there is no Obamacare, it’s dead. Plus we’re subsidising it and we don’t have to subsidise it. You know if I ever stop wanting to pay the subsidies, which I will.

.. One of the things that was so different about your campaign message compared to other Republicans was, you said things like “I want everyone to be covered”.
We’re not going to let people die on the streets.

But some people will look at this bill and say, hang on, a lot of people are going to lose their coverage.
OK. So we have a pool for people that are having difficulty. We have got a pool. It’s a high-risk pool. And this pool we just funded yesterday, we’re putting in $8bn, into the pool. So depending on what states do…because I would like to see states taking over health care, I think they could do a better job than the federal government.

.. So, the problem with Obamacare? He rushed it through

.. You look at Ireland. I own great property in Ireland that I bought during their downturn. And I give the Irish a lot, a lot of credit. They never raised their taxes. You know you would have thought when they were going through that really…they would’ve double and tripled their taxes. They never raised it a penny. And they got through it and they are thriving now. Ireland’s done an amazing job. A lot of companies have moved to Ireland and they like it.

.. I’ve had people tell me that the cutting of those regulations is more important to them than bringing it down from 35% to 15%.

.. The enthusiasm levels for manufacturers went up 27 points in two months. If it goes up a quarter of point it’s like a massive…it went up 27% in two months, up to 93%, they’ve never been even close. The enthusiasm for business is the highest it’s ever been.

How The Economist covers the world

I’ve been reading the Economist since I was a kid cutting charts out of it for school projects. I pay for their product happily, and they’re a shining example of what I’d love to see more newspapers and magazines become.

.. They’re also one of the few periodicals that, when I read about something I’m pretty knowledgeable about, doesn’t fall flat.

.. I used to read The Economist and it made me feel very informed of the world until one day I realized something. It came about because I happened to know a lot of prior detail about the article I was reading about South Africa and although I could not fault the facts listed and the depth of the article, the end result was that it was just plain wrong. The shocking thing for me was that if I didn’t know more about the area then I would have been convinced that I knew enough about the subject to form an informed opinion. I believe the trick to their magazine is to create subjective (one sided) articles but to give the impression that they are objective by offering up extensive research. Kind of like a scientist who only publishes results that suit their agenda. Those results may be accurate, detailed and impressive but that’s not the whole picture.

.. I want to know why the villains (people, corporations, governments) they attack justify their actions. Give me a soup of conflicting ideas to ponder instead of cherry picked truths.

.. It shouldn’t be your only news source, but they’ve never pretended to be dedicated to objectivity like Reuters or something.

.. What I don’t like at Economist the most is the divine-like inner voice they are using to report on a totally controversial area in a totally foreign topic and choose a side as if it’s very easy to choose sides. For example, you’re a banker reader in London, and they give you bundled, consumption-ready opinion about why Mr X in LaLaLand is a better match for governing the fiscal politics and not Ms Y.

It’s as if they are ruling the world rather than doing journalism.

.. When I was at University two individuals I knew, in different countries, WERE the Economist Intelligence Unit for those (small) countries. They were smart kids but they didn’t really have a clue. They were just really good at digesting a lot of media and once they were EIU had the credibility to pick up the phone to some pundits, who liked to see themselves quoted.

 .. Indeed they are notorious for the youth of their staff, and it is occasionally glaringly embarrassing. The writing is mostly of high quality. But they can get smart kids to work for them because it’s a great name to have on your resume and they work can be demanding… I can echo your comment: I was at a dinner party in London back in the mid 1980s and my host’s gf worked for the EIU covering east Asia. She was an oxbridge graduate in her mid 20s. She said she couldn’t understand why so many people in China, HK, SG etc seemed so anti-Japanese. That said a lot about the UK educational system!