Illegal Immigration and the Economy

The last couple of posts, Corporations Don't Pay Taxes and Economic Growth and Inflation, have been laying some groundwork for this post. The true change in wealth of a country and it's people can be looked at as a simple equation:

Economic Growth - Inflation = Change in wealth

Think about the impact of illegal immigration on the equation above. As illegals enter the country the demand for the necessities of live (food, shelter, and clothing) immediately increase generating growth in the economy, along with the growth in the economy inflation will also be increased. To meet this demand new jobs are generated or in the longer term productivity is increased and the economy grows. Some of these jobs are taken by the illegal immigrants displacing citizens and legal residents in the country.

Applying the Law of Supply and Demand to labor, the increase in supply of labor due to the illegal immigrants makes labor plentiful and there is no need for companies to increase wages to the workforce. At the same time there is inflation due to the increased demand for materials to supply the growing economy. In this case, goods we want to purchase increase in price with no corresponding rise in labor wages. For most Americans that means life gets harder and harder.

One way I decide if issues, any issue, are beneficial is to take it to the extreme. Here the extreme would be that enough illegal immigrants enter the country that labor becomes so plentiful employers can actually lower wages. The post Corporations Don't Pay Taxes walked through how businesses determine what price should be charged for a particular product. Imagine there is a large enough work force the employers can lower wages enough to cancel out increases in material cost. There would economic growth without inflation. For the average person, however, it's still getting harder and harder to purchase the necessities of life due to the decrease in wages.

Yesterday, @iamthegray asked if I could imagine a scenario in which there is economic growth with little or no inflation. At first I couldn't but overnight it came to me. In this case, however, the increase in wealth isn't shared by the average person but localized in the hands of those that own the companies producing good. You know the saying --- "The rich get richer and the poor get poorer".

Democrats support things like abolishing ICE and opening the borders to anyone that wants to come into this country. They will tell you that there is no link between illegal immigration and wages, saying this post is just the ramblings of a crazy old right wing extremist. They could be right, I'm almost 60 and consider myself to be somewhat conservative, but hardly an extremist. I believe we need to control but not eliminate immigration into this country for economic reasons but also safety. In the interest of keeping this post to a reasonable length, since I know I loose interest in longer posts, tomorrow I will show some research graphs that support why I believe the ideas in this post.