What Are They Fighting Over? Walls and Border Walls Edition

In this class, we cover current events as they relate to macroeconomic policy. It’s hard to believe, but the current debate over “the wall” is an issue for class this semester, since the government is partially shut down over this, and that has (modest) macroeconomic consequences.

So, what does Trump want, and what is Pelosi refusing to cooperate with? (Keep in mind, that she has constituents she’s trying to satisfy, and controls a very blunt instrument).

• Trump wants $5B for “a wall” on our southern border. To make the math clear, I’m going to rewrite that as $5,000M.
• That is a one-time expense. Yes, there would be other expenses for other sections in the future. And yes there would be a flow of expenses to maintain what is built with the $5,000M.
• Foxnews.com reports that DHS plans to add 215 miles of new and/or improved wall with the money. That works out to about $25M per mile.
• We already have a lot of wall on that border. Check out this fantastic interactive graphics from The New York Times. The border is roughly 2,000 miles long, the western third mostly sits on federal government land (mostly BLM), and almost all of that is completely walled already (some of the money is intended to make those parts harder to pass through).
• Yes, Republicans are kind of correct that Democrats supported building those barriers. However, do note what was funded before was what Trump now regards as inadequate, and that part of the current proposal is to fix that up.
• Newer and better estimates show that the “official” numbers from the Census Bureau to scope the size of our illegal immigrant population appear to be grossly understated (if you’re on the low side by half, I wonder how the Census Bureau has any voice in this debate at all).
• We also employ 16K Border Patrol agents along the southern border. Let’s ballpark that: 16K agents, getting compensated at $100K/yr on average, works out to $1,600M/yr. In most organizations, labor is 2/3 of the cost, so figure $2,500M/yr: so an annual expense flow that quickly swamps what Trump is asking for.
• Ummm … don’t forget that we have (sound barrier) walls all over our interstates. In fact, we have more of those than we do border walls on the southern border (about 4 times as much). These are cheaper though, costing about 10% of what border walls do. Ballparking it out, they would cost about $10,000M to build all at once. But we build them incrementally; for example they spent roughly $500M on them between 2008 and 2010.
• Mexico does not have a border wall on its southern border (with Guatemala): this is an internet hoax. However, the border is very rugged, so most people follow the roads, and Mexico has had longstanding issues with its own illegal immigration. Yes, there has been serious (but guarded) talk in Mexico, for a long time, that maybe they need to build a wall too. The new Mexican administration is against this.

The upshot of all this is that … whether you like the idea or not … walls are not very expensive. I’m not sure if they are cost-effective, but a lot of governments seem to think they are: they are building them all over the world (many longer than ours), it’s been a big trend of the last 20 years, and check out this map from the Wikipedia page on border barriers to get a sense of the scope:

 

I do not know how to measure the cost-effectiveness of our current border barriers. But, it’s very interesting that both the poor and the improved estimates of the illegal immigrant population both level off after the bipartisan passage of the funding that built the barriers we now have. To me, that suggests they did their job.

BTW: Denmark wants to build a fence on its border with Germany!!! It will be 44 miles long, and is intended to keep wild boar from migrating north. At least that’s what they say: Denmark (with the happiest citizens in the world, has taken a hard turn against immigrants, so it’s useful to ask if the boar wall will serve a double purpose, given that Denmark is already fairly successful at shutting down illegal immigration at this border).

N.B. The whole discussion above about one-time expenses vs paying the Border Patrol is an example of the whole stock-flow distinction covered in Chapter III of the class Handbook, and is related to Bastiat’s arguments about both the broken window fallacy, and what is seen and not seen.

Personal and Professional Opinion: honestly, I really wish I didn’t have to talk about this issue. I don’t care that much: on net I think there are solid estimates that immigration is beneficial on net. But macroeconomically, we should be clear about two things: 1) it’s the gradient of well-being difference between countries that leads to immigration, and 2) around the world the swelling numbers of illegal immigrants reflect higher incomes in poorer countries that make travel possible at all. So, from # 1, we’re never going to get rid of this problem unless we make the U.S. poorer and Latin America richer. And, last time I checked poor people getting richer was a good thing, so # 2 suggests this issue is never going to get smaller (wall or not).