Mass Immigration and Ponzi Demography

Recently, I had a phone conversation with a long-time activist in the fight for sane immigration policy. He reminded me of something that is rarely mentioned in the discussion about why special interests promote liberalizing immigration laws. As I discussed in an earlier blog, many economic incentives drive mass immigration; the most frequently mentioned is cheap labor. I neglected to include another powerful driver, namely, the deeply misguided business strategy of trying to maximize profits by increasing the size of the customer base through population growth.

The open borders lobby often cites economic growth as a justification for increased immigration and eventual amnesty. Since all people consume goods—food, clothing, energy, shelter, cars, toys, diapers, electronics, or whatever—business earnings may grow based on more potential customers. Since immigrants tend to be younger on average than other demographic groups, they fall into the so-called prime demographic, 25 to 54 years of age, which makes them an even more appealing target market.

This approach to economic growth presents serious problems. The idea of expanding an economy, not through innovation, efficiency, or increased per capita demand but through increased population, is what some have called “Ponzi Demography.” As with any Ponzi scheme, it's unsustainable in the long run. Big business, often shortsighted, sees more population as an easy route to higher profits that avoids the hard work of creativity, improved productivity, or developing other ways to increase returns. The costs of lobbying government, waging public relations campaigns, and funding political action committees are a small investment in exchange for large and easy profits.

Unfortunately, while corporations may win by gaining additional revenue from newly arrived immigrants, taxpayers lose. Since so many immigrants, both legal and illegal, generate smaller tax revenues than they consume in government services, benefits, and ultimately, in entitlements, other taxpayers must make up the difference. Businesses reap the added profits and taxpayers bear the added costs, or as it is sometimes described, profits are privatized while the costs are socialized.

Of course, large-scale immigration-driven population growth can also have negative impacts on quality of life, education, availability of resources, the environment, infrastructure, labor markets, social stability, politics, and many other issues. While some businesses have much to gain by massive immigration-driven population growth, the vast majority of Americans lose.