Charles’ Note: The juice has to be worth the squeeze.
The benefit must be worth the cost.
These are basic concepts in business. It doesn’t matter if you’re the CEO of a Fortune 500 company or a guy running a junkyard. You expect a return on your investment. And that return must be worth it.
I ponder this as I watch Senator Rand Paul talk about the Big Beautiful Bill’s proposed $175 billion in border enforcement spending. He calls it a “blank check” to Washington… an invitation to government waste. He says the border can and should be secured more cheaply.
The man makes a point.
As I wrote in Thursday’s Navigator, the biggest factor driving inflation isn’t tariffs. It’s a labor shortage. Our labor force has had no meaningful growth in five years. Take immigrants out of the picture, and our labor force has actually shrunk.
I’m in Dallas right now. It took me half an hour to flag down a waitress to order a coffee this morning. The café doesn’t have enough employees. And it’s like this everywhere in the U.S. Companies can’t find enough staff to run their businesses properly.
I get it. A country needs a secure border. That’s common sense. But deporting 10 million workers at a time when companies are hurting for labor would seem like cutting off your nose to spite your face.
That’s why I turn to Bill Bonner to help me make sense of it all. As founder of Bonner Private Research, he’s made a 40 year career of helping his readers understand the absurd a little better. He’s a living legend in the world of investment research and analysis. His insights are always thought provoking.
We remind ourselves that the empire is slipping… and has been for the last 25 years. Donald Trump was elected to try to turn it around.
If he were to succeed, it would change the Primary Trend, which would cause us to change our long-term investment outlook. So, as if gleaning through a dumpster for a half-eaten sandwich, we keep studying the Trump agenda, looking for something we missed.
So far, nary a crust.
Donald Trump’s pensée is win-lose xenophobia. There are problems everywhere… and every one of them is caused by someone else. In order to win, we need to make him lose.
Without so many immigrants in the labor pool, for example, wages for U.S. citizens would rise. And without so many imports, made by foreigners, consumers would Buy American.
Then, sales, profits, and jobs – furnished by U.S.-based companies – would increase.
Such a simple problem. So ready for a solution.
What to do? Just round them up – the “illegals.” Send in the ICE… all suited out in battle gear. Deport those lawbreaking SOBs. And ban immigration from the places we don’t like.
Trump plans to deport 10 million “illegals.” He’s got $70 billion in the Big, Beautiful Budget Abomination (BBBA) set aside for that purpose.
Hold on… here’s brick number one. ABC with more math:
A new report from the American Immigration Council, an immigration rights research and policy firm, estimates that to deport even one million undocumented immigrants a year would cost over $88 billion dollars annually, for a total of $967.9 billion over more than ten years.
That’s nearly $100,000 for each deportee… and a trillion dollars to be added to U.S. debt. Is that a good investment?
Fortune:
According to a Deutsche Bank analysis of data from U.S. Customs and Border Patrol, the number of encounters at the Southwest border has plunged to 12,000 people per month since Trump’s inauguration from an average of 200,000 during the year-and-a-half period between January 2022 and June 2024.
Remember, the pool of homegrown labor is stagnant. There has been no increase in the number of jobs going to native born workers in the last five years. Without the foreigners, the U.S. economy would scarcely have grown at all.
Master trader Jonathan Rose sent out an urgent “buy” recommendation on a left-for-dead gaming stock… BEFORE Elon Musk sent out a tweet about the same stock. That tweet helped to send GameStop soaring as high as 10,633%. And anyone who followed Jonathan’s research could have made a ton of money. So how did Jonathan “see” something coming — and alert his followers to buy GameStop before Elon’s tweet and the stock’s epic run-up? He used a strange market anomaly he discovered as a floor trader on a $300 trillion exchange in Chicago. How does it work? And how can you go for your first 10X gain using this anomaly starting as soon as seven days from now? Jonathan will teach you everything you need to know. Click here for details.
Remember too that the “we think, they sweat” vanity took root in U.S. soil more than twenty years ago. Now, it covers the ground.
So, who among our “thinkers” will do the work that these 10 million sweaty immigrants were doing?
Maybe, someone who just got a degree in DEI counseling from a local university? Or someone who just got out of jail and decided to go straight?
American consumers will have to pay to deport someone and then pay more for someone else to do what he had been doing.
Not only that. The Democrats’ “Joint Economic Committee” tried to tally the costs. Its conclusions:
Depending on how many immigrants are deported, these mass deportations would:
Reduce real gross domestic product (GDP) by as much as 7.4% by 2028
Cause labor shortages in key industries, removing 225,000 workers in agriculture and 1.5 million workers in construction
Push prices up to 9.1% higher by 2028, and
Cost 44,000 U.S.-born workers their jobs for every half a million immigrants who are removed from the labor force.
What are those estimates worth? Probably not much. But if you stop foreigners from depressing wages in the U.S., they’ll depress wages back at home.
And then… brick number two:
As prices for American-made products go up, foreign made products become more attractive!
In other words, by getting rid of millions of low-wage workers in the U.S., lower-wage economies overseas will have a larger price advantage… and Americans actually have an incentive to NOT Buy American.
Those damned foreigners! Ripping us off again.
As of last year, about $25 trillion worth of merchandise was crossing borders every twelve months… at tariff charges averaging below 3%. But Team Trump sees trade deficits heading toward $1 trillion per year. They’re “ripping us off,” they say
The solution is obvious – impose tariffs… trade barriers… right? Importers can “eat” the extra charges, right?
Maybe for a little while. But soon, sellers will restore their margins by raising prices.
Then, the “tariff tax” will be included in the prices that U.S. consumers pay. And with less purchasing power, Americans will be poorer.
But wait, here’s another brick in the wall…
Reducing trade deficits also means reducing the number of U.S. dollars that end up in foreign hands. Those dollars are typically recycled into U.S. bonds. That’s the way the fake money model works.
The U.S. “prints” the money. Americans borrow it. They buy foreign-made products (often better or cheaper than their Made-in-America competitors). And then the overseas dollars are used to buy U.S. debt.
It was always a scam… but it helped fund U.S. deficits, keep interest rates low, and U.S. asset prices high.
