by Edward Ring
The common refrain among supporters of the Democratic Party’s open borders policy is that immigration helps the economy. A very recent example of this was published in MSNBC Daily last month, where the author, David Bier of the Cato Institute, claims that “The Congressional Budget Office finds that the surge will boost the economy by $7 trillion and reduce the federal debt by nearly $1 trillion by 2034.” That’s actually an unimpressive statistic since the cumulative GDP of the United States over the next decade will easily exceed $300 trillion, but Bier is probably not wrong in his assertion that immigration increases GDP.
So what?
What Bier and most libertarians fail to emphasize in their analysis is not merely the quantity of economic growth caused by immigration but the quality of that growth. We should not be surprised. Adhering to orthodox dogma at the expense of real-world consequences is just another trait libertarians share with socialists, who are their equally doctrinaire, equally out of touch supposed ideological antagonists.
For example, libertarians support free trade without recognizing that it is impossible for our manufacturers to compete against subsidized imports, manufactured in the absence of environmental and labor standards applicable in the United States. Libertarians support the abolition of residential zoning laws while doing nothing to stop the proliferating array of subsidies and tax incentives that artificially incentivize developers to demolish homes to build apartments. And libertarians only tepidly challenge urban containment policies that prevent new suburb developments on open land outside of existing cities. In what is perhaps some odd bid to find common ground with socialists, they have even claimed the infrastructure needed for urban expansion would “subsidize the car.”
When it comes to immigration, libertarians call for open borders without first insisting on a critical prerequisite: immigrants should not receive government subsidies or special benefits. They should be able to support themselves immediately through private employment. Immigration to America today, unlike any previous waves of immigration, offers new arrivals an array of taxpayer-funded benefits that often exceed what is available to the average American citizen. This creates incentives for mass migration that would not otherwise exist. But in the attempt to assess how immigration affects the health of the American economy, this is merely surface phenomena.
The economic process playing out across the U.S. in cities like Springfield, Ohio, has attracted an ecosystem of government contractors, tax-sheltered NGOs, and public agencies that is remarkably similar to what has been dubbed the Homeless Industrial Complex. In both cases, there is an incentive on the part of these multi-billion dollar players, protected by government regulations and snarfing down government subsidies, to make the cost of living unaffordable for America’s working families. California is ground zero for this corruption.
When people decry California’s inability to come up with an alternative to a homeless population that has now risen to an estimated 186,000, the highest ever, they have to understand that the root cause is a corrupt alliance between government and politically connected corporations. Critics of California’s failing homeless policies must understand that the growth of state regulations on home construction, excessive local permit fees, protracted and capricious building approval processes, myriad obstructionist government agencies at all levels, the failure to maintain or expand enabling infrastructure, and the near total ban on urban expansion have made it impossible for unsubsidized developers to build affordable homes. Voila, the “affordable housing” industry was born — a corrupt, obscenely expensive, entirely unnecessary invention.
The most visible symptom of this deeper problem is California’s 186,000 homeless, who ought to all be offered beds in group shelters. These facilities could be built for a fraction of the $24 billion of taxpayers’ dollars that California has spent just between 2019 and 2023 on “permanent supportive housing,” which, at over $500,000 per unit, hasn’t made a dent in the homeless population. But solving the problem would put an end to the scam.
There is a parallel corruption informing America’s immigration policy. The equilibrium between working-class household income and the cost of homes and rental housing remains almost manageable in most of America, even though that is changing fast. And the reason for the change is the policies that began in California, which are now rolling their way across the country. Restrictions on growth, excessive regulations, and increasingly elaborate building codes are increasing the cost of building homes. More government agencies to oversee the expanded regulatory environment are causing permit fees to go up.
Also going up — way up — are the “impact fees,” which transfer the burden of paying for new roads and other infrastructure from the cities and states to the homebuilders who have to pass those costs on to the home buyers. Connector roads, parks, schools, and utility conduits used to be funded out of government budgets. Now those funds are instead allocated to personnel costs, thanks to the growing power of government unions, who unironically demand more pay and benefits so the government workers can exempt themselves from the cost of living increases they play a large part in causing. And all of these regulations are justified in the name of protecting the planet.
Exacerbating this trend, whereby large corporations, hedge funds, NGOs, and government agencies expand and thrive as the cost of living is systematically put out of reach for more and more American families, is immigration. Dumping millions of people into the nation makes America’s housing shortage worse, driving prices up even more. Crippling, stifling regulations prevent the market from responding at a scale anywhere close to what is required to restore affordability.
This is the corrupt economics of immigration in America today. And it gets worse. Since working American families can no longer afford to purchase or rent a home, neither can unskilled immigrants from destitute nations. But when they come into a town and start to work, the system gears up to subsidize their expenses. The companies where they take jobs are now part of the corrupt scheme. They lower wages, knowing they now have a workforce that receives government-subsidized housing, healthcare, and food assistance. Meanwhile, the American workers who are displaced, along with everyone living in the town whether or not they are employed, have to deal with a housing market that has suddenly become more costly. Complicit, often remote landlords raise rents and favor the immigrants from whom they are guaranteed all or a portion of their rent collections by the government.
Immigration into a welfare state, where housing development is crippled by excessive regulations, is not happening by accident. This is a corrupt scheme that confers advantages to a powerful coalition of players — investors, corporations, developers, NGOs, government agencies, and environmentalists. It appeases socialists by virtue of the central role of government regulations and subsidies.
Libertarians, on the other hand, ought to know better. Half a solution is worse than no solution at all. Open borders are only possible when there is no welfare state awaiting new arrivals. More to the point, the underlying economics that surrounds immigration reflect a corrupt system that libertarians fail to acknowledge, much less fight with everything they’ve got. It is a massive transfer of wealth upwards from America’s lower-income and middle-class communities into the hands of an oligarchy. This is not a healthy version of capitalism.
This is also not healthy economic growth. That California politicians like Kamala Harris have succeeded in selling this betrayal to the American people as necessary to solve the twin crises of “climate” and “equity” is a con job for the ages.
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Edward Ring is a senior fellow of the Center for American Greatness. He is also the director of water and energy policy for the California Policy Center, which he co-founded in 2013 and served as its first president. Ring is the author of Fixing California: Abundance, Pragmatism, Optimism (2021) and The Abundance Choice: Our Fight for More Water in California (2022).
Photo “Between 120-150 Migrants Were Apprehended in the Timespan of About an Hour After They Crossed the Rio Grand River in Los Ebonos” by U.S. Customs and Border Protection.
