As noted earlier immigrants arrive with less debt and therefore help deleverage the country. However, I want to focus more on the fact that immigrants are also customers because this is always a hard sell.

And, let me cut to the chase and say in the short term we are really talking about Mexican immigrants here, so I am going to focus on that. I am a huge supporter of not just allowing but strongly encouraging South Asian immigration to the United States but that’s a whole different story.

Now we address the issue at hand. Here is the US trade deficit with Mexico:

FRED Graph

As you can see US exports to Mexico are less than US imports from Mexico, meaning we run a negative balance of trade. I apologize to my fellow economists for ignoring capital accounts and other details but I want to keep this particular post simple.

There are a of things going on here but one way to look at it is that Mexican labor is cheaper and so goods produced by Mexicans are cheaper. Thus its more likely that we buy from them than they buy from us.

If we move Mexicans to America their labor is still relatively cheap. Everyone experiences this.

However, now that they are in America they are buying American services. That means shopping at American stores. Renting American Apartments. Heating and cooling their homes with American power, etc.

So you can look at it this way. You can either have your turkeys gutted in Mexico and shipped to America. Or you can have them gutted in Texas. Either way the same guy is going to gut them. Immigration policy is not going to change that.

However, if he lives in Texas then at least his is renting a Texas apartment and shopping at a Texas Wal-Mart. And, if there is one thing the US needs right now its more housing demand and higher retails sales.

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