California Gov. Gavin Newsom recently pointed out the problems with mass immigration. Just don’t expect him to realize it.
In late June, Newsom came out in support of a national billionaires tax. In contrast, he’s opposed to the billionaires tax that will be on the California ballot this year. Set aside the political implications of this move and consider the problem Newsom claims to be trying to solve.
“Record corporate profits flowed into stock buybacks and executive compensation,” he wrote. “Workers’ real wages stagnated, and vibrant middle-class communities were hollowed out. It is time to stop pretending otherwise.”
What’s remarkable is how closely these complaints mimic the objections President Donald Trump has raised about immigration.
While conservatives aren’t categorically opposed to corporate profits, not all profit is praiseworthy. In his 1850 book “The Law,” French economist Frederic Bastiat warned against “the fatal tendency that exists in the heart of man to satisfy his wants with the least possible effort.” He calls this plunder and warns that the government can be turned into a vehicle for “legal plunder.” Some examples include direct subsidies to private companies. Regulations and mandates frequently benefit some people over others.
Immigration is another example of government policy that can artificially boost corporate profits. An influx of immigrant workers — both legal and illegal — increases the supply of labor. This reduces prices or, in this case, wages. If America admitted only doctors, surgeons, dentists, lawyers and engineers, this could benefit low- and middle-income Americans. A greater supply of physicians could reduce the cost of health care.
But that hasn’t been happening. Legal immigration is largely based on family considerations. The Diversity Immigrant Visa Program is based on location. Assuming they intend to work and not just collect welfare, illegal immigrants are usually low-skilled. The H-1B visa program is supposed to attract skilled immigrants. Instead, many companies have abused the program to import cheaper labor.
The result is that mass immigration has put downward pressure on wages for many low- and middle-income Americans while allowing companies to reduce labor costs, which has helped boost corporate profits — precisely what Newsom objects to.
Newsom isn’t pointing out a new problem. He’s repackaging what Trump has been saying for a decade.
“Our current immigration system works at cross-purposes, placing downward pressure on wages for the working class,” Trump said in a 2019 speech.
“Some employers, using practices now widely adopted by entire sectors, have abused the H-1B statute and its regulations to artificially suppress wages, resulting in a disadvantageous labor market for American citizens,” Trump wrote in a September proclamation that put new restrictions on the H-1B visa program.
Ironically, Newsom’s office criticized Trump’s actions.
Trump has also pointed out that influxes of immigrants have swamped communities around the country. Whether or not they were eating the dogs, Trump was right that Haitian immigrants overwhelmed Springfield, Ohio. Even larger cities, such as Chicago, New York and Denver, struggled to deal with the Biden-era influx.
Newsom’s proposed wealth tax wouldn’t fix the problems he has identified. Look at Europe. Over the decades, many European countries passed wealth taxes. Most of them have repealed them. They found wealth taxes generated little tax money and were hard to administer.
If Newsom wants to reduce inequality, not just pander to the socialists seeking to control his party, he should support Trump’s efforts to reduce immigration.
Contact Victor Joecks at vjoecks@reviewjournal.com or 702-383-4698. Follow @victorjoecks on X.
