Donald Trump’s Wall Is No Bar to Migration from Mexico

by Adam Tooze – February 6, 2017

The Financial Times

One thing is for sure. Donald’s Trump’s proposed wall is going to be huge. It will also be expensive. The border with Mexico is nearly 2,000 miles long. Under George W Bush, the US fenced 670 of those. Experts differ on how much that cost but it was between $4bn and $7bn. Not surprisingly, they started with the easy bits. To finish the rest, and to make it a wall rather than a “sad” fence, could cost more than $15bn.

It will fulfil a shocking campaign pledge. It will satisfy a basic nationalist impulse. It may stop some eager workers from getting to the US. But if the aim is to put “America first”, the effects are likely to be contradictory.

We know from experience that what regulates the flow of Mexican labour is the state of the US economy. When central Americans come north, it is a sign of good times. And the good times may be about to roll as President Trump’s policy pumps money into the border region and concentrates it in construction, which has a heavily Latino workforce. More than 55 per cent of construction labour in Texas and New Mexico is Hispanic. Many are citizens or legal residents but in Texas the undocumented percentage is thought to be about half.

Contractors working on the wall may manage to stay within the law. But, thanks in large part to the departure of foreign workers since 2008, skilled construction labour is scarce in the US. And the wall is bound to drive up wages, making it more attractive for other employers to look elsewhere. As Mr Trump knows from his experience of Polish workers who cleared the site for Trump Tower in New York, it is a temptation that is hard to resist.

It is not just the labour market that will tighten. So will the market for building materials. Cement and concrete are local businesses: the stuff is too heavy to move more than 200 miles. So it is suppliers in the border region who will benefit. Many of them, unsurprisingly, are Mexican. Added to this, since the 1990s the global aggregate and concrete industry has undergone massive modernisation. Among the leading players are giant Chinese businesses, European corporations like LafargeHolcim and HeidelbergCement and Cemex of Mexico. It is not by accident that Cemex shares are up almost 70 per cent since the summer. This is a world-beating company that pioneered the use of just-in-time GPS-controlled delivery. Importantly, it owns many of the best-located depots on both sides of the border.

The lesson? Severing the ties of an internationally integrated economy is a messy business. You cannot stop the world and get off. Walling yourself in is a good way of discovering just how many ways you depend on the outside.

Lesson two is that a trade war with China is one thing. It is thousands of miles away. The desperate refugees of Syria and tens of thousands of Iraqis who threw in their lot with the Americans and thought they were entitled to friendship in return, are also thousands of miles away. They can be abandoned or confined to miserable airport waiting rooms. Severing the south-north continental flow of millions of people that has reshaped America is a different proposition altogether.

Border regions are naturally entangled. The only borders that are not hybrid melting-pots are those marked by oceans — a mere sea is not enough, as the Mediterranean illustrates — or by impassable desert, or by their human equivalent, something like the death strip of the Iron Curtain.

Much as some Trumpists may long for a death strip, they will crave in vain. Better to bet on people’s desire for self-improvement, the resilience of connections, their mobility and ingenuity — and to think seriously about an intelligent win-win immigration policy. Since this administration shows no signs of that, you may consider balancing your Mexican construction portfolio with the shares of the makers of tall ladders.

Read the article in the Financial Times