Krugman: How Destroying DACA Puts The U.S. Economy On The Japan Track

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Excerpted from a longer piece by Paul Krugman for The New York Times

Does it matter that Jeff Sessions, the attorney general, tried to justify Donald Trump’s immigration cruelty with junk economics?

It’s definitely not the main issue. Trump’s decision to rescind the Deferred Action for Childhood Arrivals policy is, above all else, immoral. The 800,000 beneficiaries of DACA — the so-called Dreamers — have done nothing wrong; they came to the United States illegally, but not of their own volition, because they were children at the time.

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Still, Sessions chose to put economics front and center in his statement, declaring that DACA, which allows the Dreamers to work legally, has “denied jobs to hundreds of thousands of Americans by allowing those same jobs to go to illegal aliens.” That’s just false, and the decision to lead with such a falsehood tells you a lot, not just about this decision, but about the Trump administration in general.

For one thing, what was stuff about jobs even doing in a statement by the attorney general?

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The claim was, as I said, junk economics. The idea that there are a fixed number of jobs, so that if a foreign-born worker takes a job he or she takes it away from a native-born worker, is completely at odds with everything we know about how the economy works. Hearing it from a conservative is especially surreal.

The truth is that letting the Dreamers work legally helps the U.S. economy; pushing them out or into the shadows is bad for everyone except racists.

To understand why, you need to realize that America, like other advanced economies, is facing a double-barreled demographic challenge thanks to declining fertility.

On one side, an aging population means fewer workers paying taxes to support Social Security and Medicare. Demography is the main reason long-run forecasts suggest problems for Social Security, and an important reason for concerns about Medicare. Driving out young workers who will pay into the system for many decades is a way to make these problems worse.

On the other side, declining growth in the working-age population reduces the returns to private investment, increasing the risk of prolonged slumps like the one that followed the 2008 financial crisis.

It’s not an accident that Japan, which has low fertility and is deeply hostile to immigration, began experiencing persistent deflation and stagnation a decade before the rest of the world.

Destroying DACA makes America more like Japan. Why would we want to do that?

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One thought on “Krugman: How Destroying DACA Puts The U.S. Economy On The Japan Track

  1. Excellent point about the possible parallel with Japan, whose Nikkei index is still, over 20 years later, running at about half its peak.

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