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Saturday, November 28, 2015

Immigration Rants

The United States is in a bind. As I listen to the reflexive anti-immigrant/refugee rhetoric I am reminded of some dire facts. The United States population replacement rate is well below what it needs to be in order to maintain a healthy and growing economy and to support the ever increasing number of retired and aged people. Generally economists estimate that a ratio of 4.5 workers between the ages of 20 and 60 is needed in order to support the current number of retirees with medical and social benefits. Just the opposite trend is occurring in industrial nations.

The “potential support ratio”—the number of people aged 20-64 divided by the number of people aged 65 or over— in many countries will plummet.
The ratio, the report authors noted, “can be viewed very roughly as reflecting the number of workers per retiree." In the U.S. the ratio today is 4.6, and it is projected to decline to 1.9 by 2100—fewer than half as many workers to support a retiree as there are now. Germany’s ratio will drop from 2.9 to 1.4. Rapidly growing nations will see even greater collapses: China from 7.8 to 1.8, Brazil from 8.6 to 1.5, India from 10.9 to 2.3. African countries face similar fates: Nigeria’s incredibly high level of 15.8 will sink to 5.4. (#2)

There are several ways to address this imbalance, most of them unpalatable. You can eliminate benefits like Medicare and Social Security for the elderly, a solution no one really wants, especially the elderly who form a strong voting block; you can increase the retirement age gradually until it reaches the average mortality age (when Social Security was begun the retirement age was set at 65 which was also the average age of death - ironically the SS Trust Fund would be flush with cash had not both federal and state governments unwisely borrowed against pension and SS trust funds to balance their budgets -- money that has never been paid back); or you can increase the number of younger workers, the easiest way of which is through opening up immigration. Of course this last course of action can lead to social upheaval as politicians play on the entropic fears of the general populace for whom change and perceived disorder are anathema. Stereotypical attitudes toward immigrants are not new to politics in this country, remember the anti-Catholic and anti-immigrant movement of the Know-Nothing party in the early nineteenth century, not to mention the vicious reactions to immigrants from Ireland and eastern Europe and Italy in the early twentieth century. There is always a grain of truth to stereotypes; you know the all-priests-are-pedophiles and all Italians-belong to-the-Mafia and all-Irish-are-drunks and all-Hispanics-are-drug-dealers kind of thinking.

But the fact remains that immigration is a very economical and fast way of maintaining or increasing the ratio of workers to retirees. (See #1 below for a study on the economic benefits.) Does it lead to competition for jobs, yes. On the other hand by legalizing as many as possible the underground economy that encourages sexual harassment and monetary exploitation is reduced and the amount of tax revenue increased. Even illegal immigrants pump substantial amounts of capital into cities and once withdrawn can devastate a community (see the fascinating studies of Postville, Iowa,** a town we have studied and where I know some of the county law enforcement officers.)

Unfortunately, the current political rants regarding immigration appeals to the underbelly of American society rather than encouraging a robust debate of the values and problems surrounding population, labor force, immigration, and retirement.



A sample of Postville articles and books:

Bloom, Stephen: Postville: a Clash of Cultures, 2000

Camayd-Freixas, Erik: US Immigration Reform and Its Global Impact: Lessons from the Postville Raid, 2013

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