During his presidential campaign, Donald Trump promised not only to 'build a wall' to seal the southern U.S. border, but to make Mexico pay for it, at a cost of some $10 billion to $38 billion. Mexico on Thursday reiterated it's refusal to foot the bill.
Yet, a market-based immigration policy allowing Central Americans who passed a background check to purchase work visas at market rates (instead of paying thousands to human smugglers) could generate revenues for the federal government in excess of $40 billion, or more than enough to pay for that wall. You can read the details in an earlier article I wrote for CNBC.
But here's the best part: With a market-based visa system, President Trump could materially end illegal immigration within a month or two, even without a wall. Here's how it would work.
Illegal immigration is a variety of black market. Black markets always arise as the direct result of government policy, when governments either cap prices or restrict volumes. For example, during Super Storm Sandy, a number of East Coast governors put price caps on scarce gasoline, creating a black market within a matter of hours.
Young men with gasoline cans would stand in line at gas stations and wait their turn. As soon as they filled up, they would walk around the corner and sell the gasoline to motorists at a 200 percent profit. When governments allowed market prices to prevail again, black market activity disappeared just as fast. The black market existed only because of government policy.
In the case of immigration, the sorry truth is that the government provides only about one third as many visas as needed by U.S. businesses, primarily in agriculture and construction, even as these businesses are unable to find Americans to fill these jobs. President Trump argues that Americans want 'good jobs'.
Well, illegal immigrants do not get 'good jobs'. They are taking the jobs no one else wants. This includes almost anything outdoors (not involving a football), for example picking fruits and vegetables, dairy and other agriculture, construction, lawn work, and indoors, house cleaning. Most of these jobs pay around the minimum wage, and often involve travel and difficult working conditions. Very few Americans aspire to these jobs anymore—that's how we know we're a rich country.