Macroeconomics Expert Shares Insight on Immigration and U.S.-Mexico Trade Relations

On January 18, nearly 150 business leaders gathered for the Chamber’s Cross-Border Vision for 2017 Luncheon. The event featured a keynote presentation from Dr. Lee E. Ohanian, Professor of Economics at UCLA and former advisor to the presidential campaigns of John McCain, Mitt Romney and Jeb Bush. After the keynote presentation, IBA Committee Leader Heidy Salum led a Q&A session between Dr. Ohanian and the audience.

A few takeaways from Dr. Ohanian’s presentation:

  • The two main factors contributing to the United States’ economic prosperity are investments (equipment, technology, innovation, human capital, government investments) and constant productivity growth
    • Business productivity growth, however, is no longer at 2.5 percent
    • Instead, we now face a 0.8 percent increase in productivity each year
    • Increasing the productivity rate will be President Trump’s main challenge
  • UCLA Economics Professor, Dr. Lee E. Ohanian

    UCLA Economics Professor, Dr. Lee E. Ohanian

    Income growth in the United States depends on productivity and how many extra people are in the workforce

  • Economic studies report the benefit of international trade to the average U.S. household is $10,000 per year
  • President Trump has threatened both China and Mexico with tariffs
    • Doing so would “shoot ourselves in the foot” – goods cross the United States and Mexico as much as 14 times before they’re sold in the marketplace
    • We have a very complex and rich international supply chain with Mexico and other countries
  • Chamber-IMG_2684The U.S. history of trade protectionism is not good for the American consumer
    • For example, the U.S. sugar industry was never competitive in the global marketplace (and never will be)
    • However, the U.S. sugar industry has benefited from tariffs since 1789
    • As a result, American sugar is up to 180 percent above the world price and the entire U.S. confection industry has vanished
    • For every sugar job we saved, we lost 3 confection jobs
  • Many of Trump’s policies appeal to people who have had a difficult time; however, promises of trade barriers give a false sense of hope
    • “The train of globalization has left the station, and there’s no closing those barn doors.”
  • Cross-Border Vision Luncheon for 2017What should we do to help those who are hurting?
    • Invest in human capital infrastructure
    • American students are not competitive with international students
    • For math and science fields, students from the United States globally rank 37th and 47th respectively
    • Uzbekistan – without the same economic resources – ranks better than California
  • The only way we can effectively replace baby boomers is through high-skilled immigration
    • We need to make it easier for immigrants to open businesses – half of Fortune 500 companies are founded by immigrants or children of immigrants
    • Startups are where economic growth comes from – each year, business startups account for more than all of net job increases
    • “If we cut off immigration, the United States will be in trouble.”

We’re extremely grateful to Dr. Ohanian for taking the time to speak with us, and to everyone who attended and took part in our engaging discussion. A special thank you also goes to our event sponsors; Blue Shield of California, Cox Business, Sempra International, Wells Fargo, and Scripps Health.

For more photos and commentary from the event, visit our event photo album on Facebook and check out our #XBorderLunch hashtag on Twitter.