An immigration 'debate' that wasn't, but should have been

The internet got mad over immigration, but mostly for stupid reasons, while ignoring the smart ones

The footnotes go deep on this one. The penultimate post of the year.

• an immigration non-debate that missed the actual hard questions worth debating

• we should be more selective, but there will be tradeoffs

• how to grow, without growing? there are ways

• growth like we’ve never seen (literally…we’re entering uncharted waters)

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An immigration debate that wasn’t, but should’ve been

If you were fortunate enough to avoid the twitterverse for the last few days, you would have avoided a mostly stupid debate about immigration.

It’s mostly stupid because there really wasn’t much of a debate, so much as ships passing in the night.

One “side,” let’s call it tech-MAGA, said “we need to make it easier to recruit the best and the brightest people in the world.”

The other “side,” call it populist-MAGA, said “H1-B has nothing to do with the best and the brightest, and mostly functions as a high velocity source of cheap, fungible labor.”

Then the first says, “we know. H1-B needs an overhaul, but we’re talking about the best and the brightest.”

These, of course, are perfectly consistent positions. “We need an immigration policy that optimizes for the best and the brightest, and not a roll-the-dice, low-level IT-mill,” is basically what everyone (including a lot of non-MAGA) seems to think, but that didn’t stop people from “arguing” aplenty.¹

Of course, part of why there was arguing, was that during the course of all of this, there were some nasty, vulgar things said about Indian tech workers (American or otherwise), which naturally provoked some nasty, vulgar things said about “native borns.” It is, after all, the internet, and the hoi polloi can speak their mind.²

Taking a look at the bright side, “fuck me?! nah, fuck you!” was the most American thing about all of it.

But, in terms of actual immigration policy disagreement (or what constitutes vulgar, nastiness)? There was basically none.³

We should be more selective, but there will be tradeoffs

It’s too bad, really, because there is actually a thorny question embedded in the immigration debate that does need to be addressed.

We can (and should):

• reduce the rate of immigration,

• pay closer attention to quality and fit,

• make assimilation a priority again, and

• restore both rule of law, and democratic control, over the process

. . . but we can’t do any of that without also bringing the growth of the the labor force to a relative crawl.

That’s a pickle, indeed.

In other words, it is absolutely true that job growth is a “foreign born” story, but that’s not because “native born” workers are piling up on the bench. The “native born” population is getting older, and the growth of able-bodied workers is flat-and-soon-down.

There is no “native born” job growth because there is no native born growth, period.

Prime-age workforce participation is basically at-peak:

Indeed

Prime-age LFPR is higher than it’s been since the Dotcom Bubble, a quarter century ago.

What that means is that basically all the working-age people who want to be working, are working. There is ‘no juice left to squeeze.’

And yet, labor-force growth is trending well-below the prepandemic average:

The labor force will grow ~50% slower this year than the 2017-19 average.

This is no mystery. This is simply the new-normal for an aging nation that forgot to babymake that is now slowing the pace of new arrivals.

Here’s another way of visualizing the dilemma:

Revelio

Hiring rates, attrition rates, and workforce growth, are all at a nadir.

No one is quitting, no one is hiring, and no one is firing—and unemployment is still very low. That can only happen if the rate of new entries into the work force slows to a trickle.

And so it has.

How to grow without growing?

In other words, there is a debate to be had about tighter immigration policy, and it’s “what do we do about an increasingly stagnant supply of new workers?”

Growing the labor force is one of the surest-fire ways of growing an economy.

It doesn’t necessarily grow on a gdp/capita basis, as the UK (and Canada) are currently discovering (at least not immediately), but the economy does grow:

FT

Like Canada, UK’s GDP has grown with immigration, but GDP/capita has not.

People-growth is the secret to growth. It’s like growing TAM. It’s magical, in that regard.

Plus, if you recall, the last time the economy “expanded” without the requisite people to manage that expansion, wages—and then prices—went through the roof. Like it or not, the Open Border Saved the Economy.

So, if we’re going to go another way (and again, everyone agrees we should), then we ought to consider how we’re going to do that, precisely?

Get the seniors and juniors back to the salt mines (but seriously)!

Now, is people-growth the only way to grow? Of course not.

Can we get more productive and/or do more with less? Maybe. More robotics and automation? Perhaps that too, and certainly more with time, but this stuff doesn’t happen overnight.

There is also, obviously, the great AI deus ex machina ending, as well.

But we’re going to have to do something(s), or alternatively, prepare to tread water for a bit.

In the near(er) term, we can certainly get some seniors back to work, and the “good news” is that the job-finding rate for seniors has dropped precipitously, of late:

Goldman Sachs

Job-finding rates for seniors appears to have dropped to a post-GFC low.

If seniors are looking for work, but not finding it, then that’s some upside to labor force growth right there. It’s not the most dynamic kind of labor force growth, but it still counts.

We could also get young people into the workforce sooner, instead of wasting time and money on “Higher Ed.”⁴

Likewise, as with seniors, if there’s any softness in the labor market, younger “new entrants” are also having a slightly harder time of it, so that too is a little ‘juice left to squeeze.’

Growth like we’ve never seen

Bigger picture, growing without growing isn’t impossible, but it’s foreign enough territory (lol) that we ought to be thinking harder about it.

What it looks like, what the tradeoffs might be, how to make it easier, how do we know whether it’s working or not? That’s especially true for the folks who think growth-by-acquihire-only has gotten outta hand. And that’s a lot of people, not just MAGA.

For Random Walk’s part, middling, healthcare-driven growth with secularly higher (service) inflation has been my best-guess as to the base-case, and that’s been a pretty sound call, thus far.

For the folks betting on some expansion right around the corner (rate-driven or otherwise), there needs to be some grappling with the fact that it will be the sort of expansion that does not (cannot?) include a lot of job growth.

It does not appear that anyone is grappling with that, because I don’t think we have a lot of experience with that. Usually, growth and job-growth just go hand-in-hand.

We do, of course, have a lot of experience pointing at China and the Europoors, and laughing at their economic malaise, while wondering what kind of stimulus Xi will try next, but as yet, there is no stimulating your way out of demographic winter.⁵

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Previously, on Random Walk

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1. Random Walk’s friend, Brad Hargreaves, ably described why the H1-B program, as it currently functions, is highly dysfunctional.

2. If anything, the lessons here are that doing a Great Replacement, lying about it, and mocking those concerned, will breed some distrust of “the powers that be.” Also, social cohesion is a real thing, and a substantial rewiring of the demos in a fairly short period of time inevitably breeds conflict. Lying about that either, doesn’t make it any less true.

There are better and worse ways of mediating that conflict for sure, and being vulgar and nasty falls squarely in the “worse ways” camp, but part of what having a shared culture means (by definition) is some agreement on how things—little things, big things—“ought to be,” plus trust that such agreement exists.

Eroding that shared culture is, by contrast, an explicit invitation to relitigate, well, everything. Perhaps that’s a good thing (and certainly it’s a good thing in at least some measure), but if anyone acts surprised and offended that the flipside of ending the peace is reopening the war then they are either (a) stupid; (b) too far from the battlefield to care; or (c) among the self-anointed commissars, disappointed in their inability to maintain discipline in the ranks, and therefore expressing a different sort of surprise.

Good take, imo.

3. Perhaps the most charitable version of the “debate” is a disagreement about the perceived relative weights of economic dynamism v. national identity and shared culture.

America the Shopping Mall v. America the Nation, as it were. Does America simply go to the highest bidder (i.e. anyone willing to work/sell for whatever prevailing wage/price), or is there a distinct American People or Nation, with it own specific interests vis-a-vis the world-at-large.

That’s a harder question (because most people believe the answer is “both”), and there’s ideological tension between “free market” sensibilities, and that brand of nationalism, that nonetheless run in the same coalition. It’s also really a disagreement about weighting (non-numerically) certain concerns, and non-numeric weights are very hard to communicate and ascertain. Even there, however, there appears to be substantial agreement among Tech MAGA and Populist MAGA—America is a nation, but it’s also the ‘land of opportunity’—but philosophically, the gap is probably wider than the brass-tacks of optimal immigration policy.

4. Fortunately, that already appears to be happening, as college enrollment continues to decline, although that might not be so good for some heavily indebted colleges.

Higher Education is the vocational track where Liz Warren, Inc. lends you a bunch of money to pay her cronies for an uber-expensive “toxic asset” a.k.a. a “degree” that’s worth less than the paper it’s written on. Then when the loan goes underwater, she demands that the public foot the bill (but shudders at the thought of you know, tightening underwriting standards or anything crazy like that). At the same time, if any actual employer were to offer free training, which might actually lead to gainful employment, that would be a horrendous and illegal exploitation of unpaid interns and apprentices. Pay tens of thousands per year for worthless training = American Dream. Get worthwhile training for free = exploitation.

Oh, and she will grandstand about how “Wall St.” has no accountability.

5. Although, ZIRP, was perhaps such an attempt.