Walled Off From Reality

Trump’s claims about immigration economics are without merit.

John Miller

Mexico’s leaders have been taking advantage of the United States by using illegal immigration to export the crime and poverty in their own country. The costs for the United – States have been extraordinary: U.S. taxpayers have been asked to pick up hundreds of billions in healthcare costs, housing costs, education costs, welfare costs, etc. … “The influx of foreign workers holds down salaries, keeps unemployment high, and makes it difficult for poor and working class Americans—including immigrants themselves and their children—to earn a middle class wage.
— “Immigration Reform That Will Make America Great Again,” Donald Trump campaign website

Donald Trump’s immigration plan has accomplished something many thought was impossible. He has gotten mainstream and progressive economists to agree about something: his claims about the economics of immigration have “no basis in social science research,” as economist Benjamin Powell of Texas Tech’s Free Market Institute put it. That describes most every economic claim Trump’s website makes about immigration: that it has destroyed the middle class, held down wages, and drained hundreds of billions from government coffers. Such claims are hardly unique to Trump, among presidential candidates. Even Bernie Sanders has said that immigration drives down wages (though he does not support repressive nativist policies like those proposed by Trump and other GOP candidates).

Beyond that, even attempting to implement Trump’s nativist proposals, from building a permanent border wall to the mass deportation of undocumented immigrants, would cost hundreds of billions of dollars directly, and forfeit the possibility of adding trillions of dollars to the U.S. and global economies by liberalizing current immigration policies. That’s not counting the human suffering that Trump’s proposals would inflict.

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The Plutonomy Is Doing Fine

Matias Vernengo

The new issue of the Credit Suisse Global Wealth Report (2015) has been published. Below is the distribution of global wealth.

regional composition of global wealth distribution

Nothing has changed much since we posted the previous version here. As I commented regarding the previous version, the poor are fundamentally in Africa, India, and Asia-Pacific (mainly Bangladesh, Indonesia, Pakistan, and Vietnam), while the wealthy are in the United States, Europe and Asia-Pacific (i.e. Japan). China has more people in the middle section of the wealth distribution than at the extremes.

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What We’re Reading, What We’re Writing

What We’re Writing

C.P. Chandrasekhar and Jayati Ghosh, Understanding “Secular Stagnation”

Martin Khor, Debate on TPPA Will Continue

Sunita Narain, Dengue, Another Climate Alert

Matias Vernengo, Branko Milanovic on Global Inequality

What We’re Reading

Nina Eichacker, Too Good to Be True: What the Icelandic Crisis Revealed about Global Finance

Robert Pollin and Shouvik Chakraborty, An Egalitarian Green Growth Programme for India

Franklin Serrano, Brazil´s Sudden Neoliberal U-Turn

Rachel Thrasher, Dario Bevilacqua, Jeronim Capaldo, Trade Agreements and the Land: Investment Agreements and Their Potential Impacts on Land Governance

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Trading Away Land Rights

TPP, Investment Agreements, and the Governance of Land

Rachel Thrasher and Timothy A. Wise

In 2009, the government of Mozambique put a moratorium on large-scale land acquisitions, a belated response to a wave of protests triggered by so-called “land grabs” by foreign investors. The moratorium, which lasted two years and restricted only land deals larger than 25,000 acres (10,000 hectares), calmed tensions while the government sought to resolve the inconsistencies between the great land giveaway and the country’s progressive land law, which recognizes farmers’ land rights even when they do not hold formal titles.

Some of those investors were from the United States, and it is a wonder that they didn’t sue the Mozambican government for limiting their expected profits. They could have under the Bilateral Investment Treaty (BIT) between the United States and Mozambique.

As U.S. trade negotiators herd their Pacific Rim counterparts toward the final text of a long-promised Trans-Pacific Partnership Agreement (TPP), the investment chapter remains a point of contention. Like the 1994 North American Free Trade Agreement (NAFTA) and most U.S. trade agreements since, the TPP text includes controversial provisions that limit the power of national governments to regulate incoming foreign investment and give investors rights to sue host governments for regulatory measures, even those taken in the public interest, that limit their expected returns. A host of BITs with a far wider range of countries, including Mozambique, contain similar provisions.

The impact of such agreements on land grabs and land governance has received scant attention until recently. As new research from the International Institute for Environment and Development (IIED) and Tufts University’s Global Development and Environment Institute (GDAE) shows, the kinds of investment provisions in the TPP and in most BITs can severely limit a government’s ability to manage its land and other natural resources in the public interest. They can also interfere with the implementation of newly adopted international guidelines on land tenure.
As GDAE’s research shows, there are alternatives to such restrictive investment rules. Mozambique, for example, could withdraw from its BIT with the United States and instead draw on the less constraining investment provisions offered by the Southern African Development Community (SADC).

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No Case for Complacence

C.P. Chandrasekhar

Though restricted to a single day, the 1625-point collapse of the Sensex on 24 August 2015, which was the largest single-day decline in six years, appears to be a signal that all is not well with the Indian economy. More troubling is the steep depreciation of the rupee from Rs. 63.8 to Rs. 66.7 to the dollar over the fortnight ending August 25. The government has tried to brush these developments under the carpet claiming that the disease is global and the Indian economy is strong enough to resist contagion. All that is needed is to stick with reform, it argues.

What emerges, however, is that as a result of continuous and incremental liberalisation, including of transactions on the capital account, the Indian economy is extremely vulnerable to even minor shocks such as flagging growth in parts of the world economy or policy measures such as an interest rate hike that encourage the exit of investors from financial markets in developing countries. That makes the current global environment one that can be extremely damaging for India.

The world’s investors are on the run, away from equity, to gold and bonds, especially U.S. Treasury bills, indicating that the flight is to safety. The result has been a collapse in equity markets worldwide. Given the whimsical behaviour of investors, this may be seen as of little consequence. But the fears that have overcome investors this time seem more significant because of the factors prompting them. These include: evidence and implications of a major slowdown and crisis in China; the consequences of that for emerging markets, especially commodity producers and countries that have attracted large capital flows during the period that followed the financial crisis of 2008-09; and, the resulting spin-off effects on the US, and the negative feedback loop that would be triggered by the likely U.S. response to its predicament.

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Nature and Wealth

Overcoming Environmental Scarcity and Inequality

Edward B. Barbier

Regular Triple Crisis contributor Edward B. Barbier is the John S. Bugas Professor of Economics at the University of Wyoming. His new book Nature and Wealth: Overcoming Environmental Scarcity and Inequality has just been published by Palgrave MacMillan.


Pope Francis’s encyclical Laudato Si (Praise Be to You) has created headlines worldwide for identifying environmental destruction and global inequality as the “two evils” afflicting humanity today.

My latest book, Nature and Wealth: Overcoming Environmental Scarcity and Inequality, similarly argues that the world economy today is facing two major threats:

  • increasing environmental degradation, and
  • a growing gap between rich and poor.

Drawing on historical and contemporary evidence, I argue that these two threats are symptomatic of a growing structural imbalance in all economies, which is how nature is exploited to create wealth and how it is shared among the population. The root of this imbalance is that natural capital is under-priced, and hence overly exploited, whereas human capital is insufficient to meet demand, thus encouraging wealth inequality.

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U.S. Climate Goals: A Reckoning

The editors of Triple Crisis blog received the following letter from regular contributor Sunita Narain and her co-author Chandra Bhushan about their recent report on U.S. government policy on climate change. “Captain America: U.S. Climate Goals—A Reckoning.” They raise tough criticisms of the weak and halting steps that the U.S. government has taken, and express apt concern about whether U.S. ways of production and consumption can long persist—let along be replicated around the world—without causing irreversible and catastrophic harm. Make sure to check out the links, to a summary of key findings and to the full report. —Eds.

We are sending you a link to our just released report, Capitan America in which we take a close and careful look at the U.S. government’s action plan on climate change.


There is also a link to our presentation on our key findings.


We write this report knowing that the threat of climate change is real and urgent. We know this because we in South Asia are already seeing horrific impacts of changing weather, hitting the most poorest and most vulnerable. We strongly believe the world needs an effective and ambitious climate change deal. In this context we ask if the U.S. climate action plan is ambitious, equitable or sufficient? We ask this because it is said that even if U.S. Intended Nationally Determined Contribution (INDC) is not ambitious, it signals a change in the country’s position. And that it will build momentum in the future. The question is if the U.S. is on track to make real reductions in greenhouse gas emissions?

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The Financial Sector is Too Big

Philip Arestis and Malcolm Sawyer

Has the financial sector become too large, absorbing too many resources, and enhancing instabilities? A look at the recent evidence on the relationship between the size of the financial sector and growth.

There has been a long history of the idea that a developing financial sector (emphasis on banks and stock markets) fosters economic growth. Going back to the work of authors such as Schumpeter, Robinson, and more recently, McKinnon, etc., there have been debates on financial liberalisation and the related issue of whether what was relevant to financial liberalisation, namely financial development, “caused” economic development, or whether economic development led to a greater demand for financial services and thereby financial development.

The general thrust of the empirical evidence collected over a number of decades suggested that there was indeed a positive relationship between the size and scale of the financial sector (often measured by the size of the banking system as reflected in ratio of bank deposits to GDP, and the size of the stock market capitalisation) and the pace of economic growth. Indeed, there have been discussion on whether the banking sector or the stock market capitalisation is a more influential factor on economic growth. The empirical evidence drew on time series, cross section, and panel econometric investigations. To even briefly summarise the empirical evidence on all these aspects is not possible here. In addition, the question of the direction of causation still remains an unresolved issue.

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The GM Food Labeling Law to End All Labeling Laws

Timothy A. Wise

This week the U.S. Senate is expected to begin consideration of a controversial bill that would, in the guise of “safe and accurate food labeling,” make the labeling of genetically modified foods nearly impossible. It would undercut state-level labeling initiatives, such as the one approved in Vermont. The Real News Network sat down with  Timothy A. Wise to discuss the ongoing battle over GM food, based on his recent article, “The GM Food Labeling Law to End All Labeling Laws.” Wise has followed the controversy as part of his research on A Rights-Based Approach to the Global Food Crisis, with articles on the scientific controversy (here and here) and a series on the industry push to get GM maize approved for planting in Mexico (articles 1, 2, 3). Wise was interviewed at the Political Economy Research Institute (PERI) at the University of Massachusetts, where he is a Senior Research Fellow.

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Puerto Rico’s Colonial Economy

Arthur MacEwan

Arthur MacEwan is a professor emeritus of economics at the University of Massachusetts-Boston and the author of Neo-liberalism or Democracy? Economic Strategy, Markets and Alternatives for the 21st Century (1999), Debt and Disorder: International Economic Instability and U.S. Imperial Decline (1992), and (with John Miller) Economic Collapse, Economic Change: Getting to the Roots of the Crisis (2011).

Puerto Rico is a colony of the United States. Colonial status, with some exceptions, is not a good basis for economic progress.

Recently, the details of the Puerto Rican economic mess, and especially the financial crisis, have become almost daily fodder for the U.S. press. Yet, the island’s colonial status and the economic impact of that status, which lie at the foundation of the current debacle, have been largely ignored.

Puerto Rico, like other colonies, has been administered in the interests of the “mother country.” For example, for many years, a provision of the U.S. tax code, Section 936, let U.S. firms operate on the island without incurring taxes on their Puerto Rican profits (as long as those profits were not moved back to the states). This program was portrayed as a job creator for Puerto Rico. Yet the principal beneficiaries were U.S. firms—especially pharmaceutical firms. When this tax provision was in full-force in the late 1980s and early 1990s, it cost the U.S. government on average more than $3.00 in lost tax revenue for each $1.00 in wages paid in Puerto Rico by the pharmaceuticals. (What’s more, the pharmaceuticals, while they did produce in Puerto Rico, also located many of their patents with their Puerto Rican subsidiaries, thus avoiding taxes on the profits from these patents.)

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