00:00You know, suboptimal economic policy for a couple of years can really have these long tail effects.
00:07And in some ways, you don't see the full effects for years out.
00:11Part of the reason why we think that this will permanently lower productivity in the United States is because we
00:18are losing out not only on the productivity growth that comes from new immigrants, but also from their children.
00:23But we're not seeing really any impact.
00:26I think what we were initially told by economists was, you know, certain industries such as construction, agriculture that really
00:34depend upon immigration, legal and illegal, would see the impacts.
00:39I don't think we've seen it, have we?
00:41I mean, I think we've seen it pretty clearly on the slowdown on the hiring side.
00:45Your question does allow me to get onto one of my favorite topics, which is to get up on my
00:50sort of like high horse about the aggregate productivity data, which I think people have been using in general to
00:59make their preferred point.
01:00You know, like AI is driving productivity up.
01:03Immigration is not driving, having any impact on productivity.
01:06And I think it's really important to remember that that data is really flawed, right?
01:12You know, the way it is measured is not ideal.
01:14It's very volatile.
01:16And so I think when we're trying to think about these like much bigger questions, we really need to be
01:22relying on better sources of data like things like the employment situation report.
01:26You say the emotional word that so many of our listeners have lived.
01:31It's not about the immigrants.
01:33It's about the productivity of their children and their grandchildren.
01:38Discuss.
01:40I mean, I think you actually you brought up Turkish immigration to Germany, and I think this is really important.
01:46You know, the Gastarbeiterprogramm made a huge difference.
01:49But what you have seen in Germany, which doesn't have birthright citizenship in the same way, is that they have
01:55not been able, because they haven't wanted to, fully integrate the children and grandchildren of immigrants into their workforce.
02:04And so they have not benefited, in the same way the United States has for centuries, from the fact that
02:10we are really, really good at assimilating immigrants and attracting the kinds of immigrants who really want to become American,
02:19invest, start businesses, do those things that drive economic growth in the United States.
02:25But there's a lot of Americans who agree with our president, enough is enough.
02:30Discuss that tension.
02:33I mean, I think it's hard, right?
02:34You know, it's very easy for economists to sit here and go, you know, like, oh, the optimal economic policy
02:41is X.
02:42And then, you know, people have strong emotional responses about that one way or the other.
02:48It's the same thing that happens on a smaller scale when economists say that we should remove the tax exemption
02:54for employer-sponsored health insurance.
02:57You know, I think on immigration, it has been interesting, if you look historically, once you get a foreign-born
03:04population that's approaching, say, 20% of the population, people in the United States seem to start getting itchy and
03:12you have these sort of backlash nativist movements.
03:15And so I think there's a question that's sort of intention about how much immigration makes sense for driving economic
03:22growth and how much immigration will the populace decide they're willing to tolerate, even if those things are intention.
03:29Martha, in your longer-term models, do you assume that immigration policy stays as it is today, i.e. restrictive,
03:37or that it maybe eases over time?
03:40No, I mean, I think that's one of the points that we're really trying to make in this research, is
03:44that we assume that immigration policy returns to baseline in 2029, and you still get this long-term effect, right?
03:54If we don't let in, you know, immigrants who are going to be really productive and their children right now,
04:00people are going to go elsewhere.
04:02They're going to establish themselves in other countries.
04:05And so, you know, it's not the case if someone moves to Canada and we open up again in 2029,
04:10that people are going to go, oh, great, I can just move to the United States now.
04:13We've likely permanently lost that person.
04:16Martha, just before we let you go, can we just do an update on your claim on tariffs?
04:23What's our blended tariff right now?
04:26Oh, man, off the top of my head, I think it's like 12%-ish.
04:29You know, it's in that space.
04:31It's a little bit hard to tell, right, because we don't know what's going to happen with Section 122.
04:36Are they going to try to extend it in some way?
04:38Are they going to announce new things, et cetera?
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