Trump’s plan to pay for the border wall is seductively simple. He proposes holding hostage remittances - the money immigrants in the U.S. send back to their countries. The idea is that Mexico is forced to pay the ransom by footing the bill for the border wall. This may sound good to some, but if something seems too easy or too good to be true, it probably is. More importantly, it misses the point of why immigrants are willing to overstay a visa or cross the border in the first place.
But first, about Trump's plan. If border fence advocates scratch half a millimeter below the surface what they’ll find is a plan that completely ignores macroeconomic theory and turns a blind eye to logistical nuts and bolts.
Let’s start with the logistics. What Trump calls for is for every cent that is wired out of the United States to be tracked by companies such as Western Union. More specifically he stipulates that the blockage of remittances be policed by these companies where they would have to determine who was in the country legally and illegally.
We’re talking about $25 billion. And as President Obama responded to the idea of tracking remittances, “good luck with that.”
And let’s just say Trump was able to find a way to track all remittances via wire transfers. Immigrants would undoubtedly find informal and alternative channels to get their money to loved ones abroad.
Beyond the logistical issues, Trump’s plan is flawed because it misses the bigger picture of why immigration happens in the first place. Here's the thing: Immigrants came to the United States in high numbers in the last few decades because there was economic opportunity. There were J-O-B-S for immigrants, and whether we want to admit it or not, there were jobs for those lacking legal documents.
Trump (or anyone else) who wants to build a wall has to understand the simple push and pull dynamic of immigration.
Recently Sarah Palin stumped for Trump in Wisconsin. It was classic Palin but there was a new twist that she introduced — the idea that the United States is “inducing and seducing immigrants with gift baskets of teddy bears and soccer balls.”
It’s an odd metaphor but the idea that immigrants come to the United States because there is a pull is dead on. Mexican immigrants have been induced and even seduced to cross the border because there are American employers who have wanted them. If employers didn’t want or couldn’t hire undocumented workers the flow would slow to a trickle.
In fact, the invisible hand of push/pull forces is seen by the fact that today net migration from Mexico to the United States is negative. The pull factors of a robust U.S. economy weakened as a result of the Great Recession. At the same time, Mexican push factors have lessened — falling fertility rates, desire for family reunification and a growing perception that conditions in Mexico are just as good as in the United States.
Increased enforcement of immigration laws has also tamped down on the inducement to come to the United States. Building a wall and putting more boots on the ground does decrease the number of border crossers.
But it would be a whole lot more cost effective and less dangerous if immigration reforms focused more on the role of employer demand. What is more sensible, spending 10 billion on a wall — knowing that Mexico would never pay for it —or enforcing and tackling the issue of employment laws?
The idea of having Mexico pay for the wall is great political strategy on Trump’s part. He gets to highlight his marquee issue of immigration and at the same time sticks it to Mexico. The problem is melodrama like this doesn’t work, and it certainly does not fly on the world stage.