The Wealth Pump In Action

Peter Turchin described the wealth pump as the process where immigrants are used to depress wages and, thereby, allow more money to flow to the elites. I came across a couple articles cited by Instapundit that pertain to this very issue.

    First up, "Illegal Immigration ‘Surge’ Will Put ‘Downward Pressure’ On Wages For Years, CBO Says" from The Daily Caller. The key part:

    The Congressional Budget Office (CBO) projects that the ongoing surge in immigration, both legal and illegal, will put “downward pressure” on inflation-adjusted wages through 2034, according to a recently released report.

    The downward effect on real wages will continue until 2027, at which point it will “partially reverse,” with immigration still expected to cause average real wages to be lower in 2034 than they otherwise would be, according to CBO. CBO did predict some positive impacts of immigration, as well, such as increased GDP growth and an expanded labor force. 

The point of this whole exercise is that most of that increase in GDP will wind up flowing to the wealthy elites instead of workers. The article continues:

    The surge in new workers is expected to reduce the amount of available capital, resources like factories or machinery, per worker, as well as work in low paying areas of the economy, both of which will exert a downward pressure on wages, according to CBO. The impact of these variables will decline over time as CBO expects additional capital to be built and workers to gain more skills.

    The combined effects of immigration “will cause average real wages to be slightly lower than they would have been otherwise” in 2034, according to CBO. The agency also expects immigrants to “stimulate construction of new homes during the second half of the 2020s.”

    Some economists have argued that the arrival of legal and illegal immigrants is causing housing prices to increase in the United States, The Wall Street Journal reported.

Ya think? This housing shortage is one of the reasons that private equity funds, such as Blackstone and Pretium Partners, have been buying up residential properties. 

    Second was a 2016 piece by Jerry Kammer entitled "How about a Few Pinocchios for the Washington Post's Editorial Nonsense about Jobs?," which contains this quote from Jared Bernstein, who was an economic adviser to Vice President Biden (!) before joining the Center for Budget and Policy Priorities:

One thing we learned in the 1990s was that a surefire way to reconnect the fortunes of working people at all skill levels, immigrant and native-born alike, to the growing economy is to let the job market tighten up. A tight job market pressures employers to boost wage offers to get and keep the workers they need. One equally surefire way to sort-circuit this useful dynamic is to turn on the immigrant spigot every time some group's wages go up.

This diversion of wealth from workers to the wealthy elite seems to be the main point on which both political parties can agree.