Establishment Economists Threaten Trump: Deportations Will Spike Inflation

Establishment economists are threatening President-elect Donald Trump with a new round of inflation if he restores Americans’ civil right to a secure national border.

But the free market will manage the inflation threat by hiring Americans in place of deported migrants, and by investing in productivity-raising machinery, responded EJ Antoni, an economist at the Heritage Foundation.

“I see no reason why the adjustment would not happen almost immediately,” he told Breitbart News.

In 2017, for example, shortly after Trump first cracked down on migration, meatpacking giant Tysons Food allocated $500 million to begin automating its slaughterhouses and by raising wages many other companies also hired sidelined workers, including ex-convicts, and disabled people.

Democrat-aligned economists and media outlets raised the alarm this week as Trump appointed immigration reformers to key posts.

“If you’re talking about deporting millions of people, that is an invitation to labor shortages and bottlenecks,” former treasury secretary Larry Summers told CNN on November 15. “If he carries through on what he said during his campaign, there will be an inflation shock significantly greater than the one the country suffered in 2021,” he declared.

“If [agriculture sector] workers are deported, the food industry will probably have great difficulty replacing them,” New York Times economist Paul Krugman wrote on November 11. “The industry will have to offer much higher wages [to hire American workers] — and, of course, these higher wages will be passed on in higher [inflated grocery] prices.”

Their threats are being echoed by CEOs who hire migrants:

The claimed economic damage from migration is also being echoed by business reporters who largely avoided migrants’ economic impact throughout Biden’s presidency.

“Trump’s Immigration Plans Could Bring an Economic Toll,” a New York Times economics reporter wrote on November 13. “If Mr. Trump accomplishes anything close to what he has pledged [on migration], many economists expect higher prices on goods and services and possibly lower employment rates for American workers,” the article claimed.

Both Summers and Krugman have long supported the establishment’s economic strategy of extracting migrants from poor countries to stimulate the U.S. consumer economy.

That Extraction Migration strategy is good for elite investors on Wall Street — but has been terrible for and unpopular among many millions of ordinary Americans who voted Trump into power.

Now both economists are defending that Extraction Migration strategy with warnings about deportations and inflation — while they also ignore obvious economic factors that can prevent inflation.

Those factors include greater corporate investment in productivity, the shift of Americans from low-value jobs to higher-wage jobs, and the hiring of several million men who have been pushed out of the workforce over the last few decades.

Job-Switching Americans

Deported migrants cannot be replaced by Americans, Krugman insists:

That [backup] workforce isn’t there. We have essentially full employment among native-born Americans. There is no reserve of Americans to take these jobs, by and large jobs that native-born Americans would be very reluctant to take.

But the U.S. economy employs 170 million people, including roughly 6 million Biden migrants. That huge labor force ensures successful companies can hire workers from unsuccessful companies.

In addition, “there are roughly 18.5 million working-age U.S.-born men [who are] not in the labor force,” Steven Camarota, the research director at the Center for Immigration Studies, told Breitbart News.

Those people are not even counted as unemployed because they have given up searching for jobs, he said.

This population of workforce dropouts helps create other civic problems, such as drug deaths, lower rates of marriage, and declining births, he said:

They don’t have partners anymore who push them to work, right? They don’t have children they have to support. The [civic] norm of supporting children and partners if you have them is way down. We know that the men most likely not to work are those who are unmarried, those who have children, and those who don’t live with their children.

“We could maybe bring 5 million of them back into jobs,” he said. “That might be a reasonable kind of goal.”

Trump’s Vice President, Sen. JD Vance (R-OH), slammed the employers’ divisive claim that migrants fill jobs that Americans do not want. In October, he told a surprised New York Times journalist:

One of the really deranged things that I think illegal immigration does to our society is it gets us in a mind-set of saying we can only build houses with illegal immigrants when we have [sidelined] seven million — just men, not even women, just men — who have completely dropped out of the labor force.

Moreover, many Americans have been pushed out of white-collar jobs because of illegal and legal white-collar migration. If Trump enforces the border laws at U.S. airports, employers can rehire the U.S. college grads they fired.

Many older Americans have retired, and some may be drawn back into work by the promise of higher wages that can augment Social Security checks.

Productivity

Neither Krugman nor Summers mentioned the reality that companies can solve labor shortages by investing in labor-saving machinery.

“There are certain occupations that are really very heavily immigrant,” Krugman said, adding:

top of the list would be food. Agricultural workers, about three quarters are immigrants and probably about half of them are undocumented. Meat packing is probably between 30 and 50 percent undocumented immigrants. So the whole food supply chain is reliant on people who are going to be rounded up and put in camps.

When Trump shrank the inflow of migrants in 2017, wages rose and companies started buying more labor-saving machinery, such as automated cow-milking devices. In Lincoln, Nebraska, Costco opened a new slaughterhouse to process millions of chickens with technology developed in Iceland for its seafood industry.

Watch:

In fact, a labor shortage can be a good thing for economic growth and prosperity, BlackRock founder Larry Fink said at a pro-globalist event in April hosted by the World Economic Forum in Saudi Arabia:

“We always used to think [a] shrinking population is a cause for negative [economic] growth … But in my conversations with the leadership of these large, developed countries [such as China, and Japan] that have xenophobic anti-immigration policies, they don’t allow anybody to come in — [so they have] shrinking demographics — these countries will rapidly develop robotics and AI and technology …

If a promise of all that transforms productivity, which most of us think it will — we’ll be able to elevate the standard living in countries, the standard of living for individuals, even with shrinking populations.

However, “if you have a huge flood of [migrant] labor into the market, especially if it’s all low-skill labor, you reduce the incentive for business capital investment,” said Antoni.

In Biden’s four years, labor productivity grew by only 0.7 percent annually, according to Jason Furman, a Harvard economist who worked for President Barack Obama. The Biden failure is displayed in Charleroi, Pennsylvania, where a rush of Biden migrants allows a food company to profit from a cheap, l0w-tech, food-processing plant. AmericanCompass.org reported:

A Charleroi business owner invited CBS News into his factory to see the work being done by migrant workers. Though only a few seconds of video is shown in the CBS report, the main task one sees workers doing in the video is manually moving bowls of food from one conveyor belt onto another. It’s not difficult to imagine automation playing a greater role in that process.

“I have a hard time getting anyone to talk about productivity, let alone productivity related to migrants,” Antoni said.

The slow productivity growth under Biden helped minimize wage gains for Americans. The resulting poverty helped Trump win in November.

The same process of immigration, poverty, and political unrest is underway in Canada and the United Kingdom. In both countries, productivity and wages have fallen as millions of migrants were imported to expand the countries’ consumer economies. Unhappy voters in the U.K. evicted the Prime Minister this year, and Canadian voters are expected to force the retirement of Justin Trudeau in 2025.

Migrants’ Impact on Inflation

Biden’s deputies imported migrants to help suppress wages and wage inflation amid Congress’s massive spending.

However, those migrants boosted inflation in the housing sector. The migration-inflated rents prompted many younger Americans to back Trump in November. “He was seen as a change agent, as an alternative to a status quo marked by inflation and the migrant crisis,” Rep. Ritchie Torres (D-NY) told the Atlantic.

As Trump sends Biden’s migrants home, rents will drop, he will help reverse the inflation that is threatened by Krugman and Summers — while also providing a windfall bonus to millions of young Americans who rent housing.

In Canada, Prime Minister Justice Trudeau is trying to save his career by curbing his migration flood. That is good news for ordinary Canadians, Robert Kavcic, a bank economist, told CBC News. “The first thing you’re going to see here is a lot of the pressure that we’ve been facing in the Canadian economy starting to get alleviated … specifically pressure on rents,” he said.

Florida

Krugman warned that the enforcement of immigration laws by Gov. Ron. DeSantis has been “disastrous” for the state’s agricultural sector:

I’ve been looking a little bit of a dress rehearsal for some of this [Trump policy] in DeSantis’ Florida, where he’s done a crackdown. The results for Florida agriculture have already been disastrous.

But Floridians are gaining wages and benefits because DeSantis cracked down on the use of illegal labor, ABC Action News reported in September 2024:

Career Source of Hillsborough and Pinellas [a government-funded training program] says local employers are offering more incentives such as transportation and childcare subsidies.

“Jobseekers, what they’re looking for is employers that offer flexibility in schedule, living wage and a company that they want to work for versus need to work for,” [Caeer Source official] Mario Rodriguez said.

That trend of fewer migrants and higher wages has been good news for Republicans and Trump, who won the state in a November landslide.

The rising wages are also forcing companies and farmers to invest in more labor-saving technology that helps to calm worker shortages and further push up voters’ wages. Many research companies are already rolling out new generations of labor-saving equipment that can free up many workers for other jobs. “More than 706,000 jobs in Florida will be cut or impacted by automation and technology in some way,” the South Florida Business Journal reported in October.

Arizona

In the mid-2000s, a citizen ballot in Arizona forced state officials to crack down on illegal labor.

Because of the 40 percent drop in illegal labor, the wages earned by Americans rose significantly, according to a 2016 analysis by Moody’s Analytics, which strongly supports more migration. A 2016 investigation in the pro-migration Wall Street Journal reported:

The median income of low-skilled whites who did manage to get jobs rose about 6% during that period, the economists estimate … wages rose about 15% for Arizona farmworkers and about 10% for construction between 2010 and 2014 … Some employers say their need for workers has increased since then, leading them to boost wages more rapidly and crimping their ability to expand … graduates [at a federal job-training center] now often mull two or three jobs offers from construction firms and occasionally start at $14.65 an hour instead of $10.

Housing prices fell, allowing more young Americans to start families, according to the Journal:

“It was like, ‘Where did everybody go?’ ” says Teresa Acuna, a Phoenix real-estate agent who works in Latino neighborhoods. Real-estate agent Patti Gorski says her sales records show that prices of homes owned by Spanish-speaking customers fell by 63% between 2007 and 2010, compared with a 44% drop for English-speaking customers, a difference she attributes partly to financial pressure on owners who had been renting homes to immigrants who departed.

Productivity climbed as companies invested in machinery, said the Journal:

[Farmer] Rob Knorr couldn’t find enough Mexican field hands to pick his jalapeño peppers. He sharply reduced his acreage and invested $2 million developing a machine to remove pepper stems. His goal was to cut the number of laborers he needed by 90% and to hire higher-paid U.S. machinists instead … He says mechanization is his future. He continues to pour time and money into a laser-guided device to remove stems from peppers, which pickers now do by hand in the field. Another farmer in the area developed a mechanical carrot harvester.

 

Conclusion

“It is very difficult to find accurate analysis in this area, because pretty much everyone seems to approach it from the standpoint of their own agenda,” said Antoni.

For people who favor “illegal aliens coming to this country — which is essentially what this administration has been doing for the last four years — they come out with what are essentially fraudulent economic analyses that only look at the alleged benefits of illegal immigration and don’t look at any of the costs,” he said.