Politics has always been a part of economics. That is why economics was originally called “political economy.”
In recent decades, though, it has become a formidable force in economic thought and we now have Democratic economists and Republican economists. And that is also why we now have diametrically opposed analyses of the economic impact of President Barack Obama’s executive order on immigration.
In a free market economy, consumer choice is considered a good thing. It is difficult to see much value though, in having a choice between “it will drag down the economy and ruin the job market for legal citizens,” and “it will boost the economy and improve the job market.” That’s not a choice; it’s a puzzle — and certainly not economics at its best.
Beyond the essential silliness of partisan economics, there is a reality. Part of economics involves the operations, or mechanisms, of an economy; understanding the nuts and bolts, rivets and welds of how an economy is held together and how it actually works. It isn’t the glamorous world of television cameras rolling while celebrity economists are asked their opinions about the future. It’s a world where things really happen, operations and transactions are recorded and are transformed into statistics.
The economy’s operations are also a pragmatic world, largely independent and untouched by the political world that surrounds it. The procedures, the tools, the forms, and the numbers are what they are. Generally speaking, they are not the product of ideology, compromise, argument, or public opinion polls. The lug nuts still have to fit the studs and hold the wheel on, whether the car is driven by a liberal or a conservative.
Much of this is forgotten in the airy atmosphere of big league politics and the ethereal world of today’s artisanal economics. But at ground level the reality of the economy’s operations is still there and will affect outcomes.
The recent unilateral action by President Obama on immigration has some ground-level economic and legal consequences which have not been thoroughly examined yet. The winning headline related to this story has got to be the one attached to a National Public Radio report: “Executive Order on Immigration Creates Need for Legal Advice.” You said it, brother. A little economic advice wouldn’t hurt, either.
One of the consequences involves the nature of the executive order itself. Essentially, it creates a subset of the illegal immigrant population in the U.S. and says, “If you have been living here for five years you can request that we not deport you.” The boundaries of the subset seem simple enough: it includes only those who have been living here in the U.S. for at least five years.
The executive order does not address those illegal immigrants who have been living here for, say, four years and eleven months, or, for that matter, why the time period of five years was chosen in the first place. Even more significantly, it does not specify what sort of documentation is required to support a claim of five-year residency.
The real kicker, though, is that, after coming forward and documenting residency, an illegal alien is not entitled to immunity from deportation. Instead he or she has the opportunity to request that deportation be temporarily deferred.
How illegal immigrants will weigh the risk of coming forward compared with the benefit of a request for a temporary deferment isn’t known. Still, the process has the scent of a bait-and-switch scheme attached to it.
Another significant consequence of the executive order is the question of documentation not only residency but also means of support. Are illegal aliens expected to “come clean” about whether they improperly received government assistance and payments of any sort? Did they work and did they do so under one or more falsified names and Social Security numbers? Who was their employer?
Essentially, we are asking the people in this subset not only to confess that they are here illegally but to document their criminal acts for us and rat out others in the process. An illegal immigrant might reasonably think instead that, “Five years and they haven’t caught me yet. What are the odds they’ll catch me now?”
Those who have worked illegally present a special economic problem: what happens to the Social Security contributions (taxes) that were deducted from their pay and that employers matched in taxes? Do the formerly illegal workers now have a claim to them? Does anyone?
The United Citizenship and Immigration Services (USCIS) now has responsibility for implementing the executive order and building a bridge between the president’s words and the real world of definitions, instructions, forms, and procedures. Some of the open economic and legal issues may be resolved there. There is always hope.
James McCusker is a Bothell economist, educator and consultant. He also writes a column for the monthly Herald Business Journal.
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