Surprised not to see rent control mentioned here as well, but it's yet another example of redistributing resources in ways that end up hurting cities rather than simply allowing the free market to build more abundant housing.
Immigration may not be zero sum, over the whole economy, but it sure feels zero sum locally sometimes. Maybe people can accept that as a tradeoff if it is done right, but it has been done the opposite of right. It really doesn't help the case that the government has decided to ignore its own laws on this on illegal immigration. California has even gone so comically far as to pass laws restricting employer use of e-verify to check immigration status.
And this also extends to legal visa programs. By law, H1-B visas are restricted to jobs where there is a labor shortage and it is not possible to hire a citizen. But then tech companies are laying off thousands of US citizens while continuing to employ and even apply for more H1-Bs in the same job. Every one of those visa applications is obvious and provable fraud by the hiring company. How can they say with a straight face that they can't find US citizens for those roles, when a week ago they employed those very citizens in those same jobs? But the government looks the other way.
It seems like the only time the government sees the need to obey the letter of the law is when millions of illegals flood the border filing false asylum claims. Apparently we have to let all of them in, and also pay for their rent and food, because that's just what the law says. No matter that they are obviously lying to take advantage, we just have to let them in because that's the law.
There is a cap of 85,000 new H1b visas. Last year big tech employers Meta, Alphabet and Meta added less than 2000 H1b employees, and the biggest employer was Amazon with 4644. As for layoffs, Alphabet had none, Meta 3400 and Amazon and Microsoft about 15,000 each. In previous layoffs about 30-40% of laid off tech workers were immigrants, and there isn’t a reason to think that has changed. Do you know that the laid off workers were citizens? I don’t think H1b program would reduce layoffs of workers, though if all existing H1bs were rescinded the employers would lose lots of there workers and some with specific skills (like Taiwanese experts at TSMC in Phoenix) that aren’t available in the national workforce and shutting down projects would hurt many American workers as well as the companies.
FAANG is the wrong place to look for H-1B abuse. Those companies hire internationally not because they're looking for cheap labor to displace American workers but because they need tens of thousands of extremely talented people, and while the US does produce an outsized share of them, the US has only 4% of the world's population and for that reason can't produce enough. Restricting themselves to hiring only local talent would just mean hiring fewer and doing less.
H-1B abuse does exist in the IT industry, but you have to look elsewhere to find it, mostly in "body shops" who provide contract labor. The FAANG companies do use a little of this (not much), but it doesn't show up in their employee numbers because those people are employed by the contract agencies. Most of that contract labor is used elsewhere, though. The FAANG companies just don't use much contract engineering labor (though they use a *lot* of contract labor for janitorial and food services; that's not H-1B).
Your core point that H-1B abuse isn't big enough to move the needle is still largely correct, but if you want to find it the top tier tech companies' employee rosters are not the place to look.
“In addition to employers exploiting the H-1B program while laying off tens of thousands of employees, outsourcing firms once again dominated the H-1B visa program in 2022, even among the top 30 H-1B employers. For more than 15 years, leading lawmakers from both parties have criticized outsourcing firms’ exploitation of H-1B and offered bipartisan fixes, yet the abuse continues unabated. Thirteen of the top 30 H-1B employers were outsourcing firms, and they were issued a total of 17,534 visas for new H-1B workers (21% of the total annual cap).”
“Additionally, H-1B workers who are petitioned for or employed at an institution of higher education or its affiliated or related nonprofit entities, a nonprofit research organization, or a government research organization, are not subject to this numerical cap.”
“The H-1B1 program provides for the temporary employment of nonimmigrant aliens in specialty occupations from Chile and Singapore, limited to 1,400 nationals of Chile and 5,400 nationals of Singapore.”
I wonder how Japan, China, S Korea, Taiwan, Iceland, etc all made it without waving in millions of poorly educated non-native speakers?
How does Australia harvest its grapes and produce wine without relying wholly on immigrants and is able to employ English speaking foremen?
The answer is they have better labor conditions and more capital investment (automated harvest and vine maintenance). America is only starting to do this now, decades behind Australia and Europe, and of course they are using European machines….because why would you set up an American company to machine-automate harvest when there are millions of illegal immigrants working cheaply under the table?
Saying a supply of cheaper, informal labor willing to toil under poor conditions doesn’t affect the civilian workforce is like saying it doesn’t impact the capital investment plans in, say, vineyard management. There are obvious tradeoffs between capital and labor and between legal labor and illegal labor
Of course we could live without immigrants, especially illegal immigrants if we chose to, though it might not be best for the country or its capitalists. And of course every productive worker (whether citizen or immigrant) should be a net add, though that depends in part on the generosity of benefits, the incentives for work and tax paying habits.
Maximizing the benefit for the country- having a good supply of legal immigrants with minimal benefits, good incentives to work, and our having the ability to deport(or not renew visas for) the unproductive or criminal immigrants and the ability to expand housing for them would be wise. That is not what is on the table as a policy. Training the domestic labor force so they have the skills and education to be productive would also be wise. Also not on the table.
Why would I go through the risk and trouble of investing in an EV startup when cheap subsidized Chinese EVs are available? Why would I go through the risk and trouble of training and educating a domestic workforce when cheap illegals are available?
We need to change the incentives to get companies to be more proactive in training and apprenticeships for high school graduates. Reducing supply of labor and increasing wages is one way. Subsidizing those efforts is another. Labor is always going to compete with capital and also with overseas/outsourced production. Taxing imports and not taxing exports (replace corporate income tax with gross domestic receipts tax, with deductions for domestic labor and CGS, and not taxing foreign receipts). There are lots possible policies and tradeoffs.
Global competition and free trade in labor and capital is good- probably best for the country in theory. But the country is not a person, nor a voter. We need to balance the welfare of our citizens against economic theory and profit incentives. Create too much friction and the danger is the economy, industry and workers become uncompetitive. No friction can also be bad. And remember we have guilds in medicine, academica, childhood education, etc that create lots of frictions and inefficiency. We could increase frictions so that low skilled labor fare better while reducing frictions in high paid guilds so that more people get to share in those opportunities.
I don’t have the answers, but what we are doing now isn’t working.
The US has more jobs to do than we have people to work those jobs. If we don't have immigration or work programs, then we pay more with either money or time. If the price of haircuts double people will just get less haircuts. If the DMV doesn't have enough applicants, you just wait in line for longer. If things can't be built in a timely manner, then financing costs mean less things get built overall.
I think you're right about colonialism, but I wish you'd explain how British rule in India fits in. I've read that wealth obtained from India had a lot to do with making Britain a preeminent power in the 18th and 19th centuries. If that's true, I suspect it's because the Raj was not just extractive (though it was that) but also positive-sum. But I'd love to see a knowledgeable explanation
Overall I would recommend Yaw Boadu (a Ghanian expatriate) digestable series of reviews of colonial histories (https://yawboadu.substack.com/: mostly African but not only).
As Yaw rightly points to the applied history, the abstraction of European states doing X isn't in correspondence with actuals - which particularly for the late 19th c. but not uniquely - were heavily driven and triggered by local operators esp. colonial military officers seeking personal ego/glory and dragging the state in after them via power logic -whereas e.g. the London governments of UK quite rationally tried to have a policy of "avoid direct rule, only do trade and defend turf against other imperial power plays [i.e. other Europeans]" - as direct rule tended to become drains on treasury, the London power center understood much better its state interest. But humans are humans and short-term ego plays (see Trump) oft override rational interest.
Pre colonial India did not export minerals or other natural resources other than tea and spices. Their main exports were hand woven textiles. The British colonizers dismantled that industry and instead exported the cotton, jute and other natural resources to supply their own factories. They also imposed high taxes on land, the bureaucracy they established and on agricultural output (up to 50% tax rates) which lowered Indias growth to be even with population growth. On the other hand, Britain got cheap raw materials and tax revenue as well as distribution of Indias other exports.
I don’t think Noah said colonization was a positive for the colonized, only that resource extraction is not what caused the negative results.
While it is fashionable amongst the academic Left to say Britiain dismantled an Indian cloth industry, comparative experience of artisanal production in the face of industrial that is not colonial does not tell a different story. The future Indians didn't have production that was competitive. They also like to assert the colonial powers 'kept' the colonies in low-value agri production, ignoring that this is in fact the economic default unless and until one can develop industrialised commercial agriculture, which itself needs the institutions to support such.
the real damage to colonies of the 19th century is in poor governance models and standards under essentially para-military rule that did not set good models for real industrialisation - that needs good rule of law, and capital accumulation. Not in extraction but in piss-poor governance by the often third-raters sent to colonial rule and engaging in corrupt profiteering.
Initially the colonial powers from Europe made their money from trade. The Portuguese would buy--and later produce--cinnamon and cloves in the Moluccas; Then transport them to Lisbon, where they produced fabulous profits. Spices from the Moluccas, silks and chinaware from Guangzhou, rubies and sapphires from Ceylon.
Later, the British in Bengal and Dutch in Java--both with high population density--produced more in rents & taxes than merely in trade goods. Both the Dutch and British in the East Indies farmed out most of the trading and territorial management to their respective East India Trading Companies. That were worth over $10 *trillion* in todays's money, and paid annual dividends on the order of 18%.
Because he’s not criticizing Trump or progressives. He’s criticizing zero-sum thinking, a very natural (and bipartisan) human cognitive flaw. Not everything is about American electoral politics.
The funny part about progressives is they're terribly zero sum most of the time, until a politically inconvenient situation occurs where there's truly a distribution problem and then they plug their ears and just insist it will all work out.
Like the student loan forgiveness thing. Someone has to pay for that!
Because the progressive movement has become almost as insane as the MAGA movement. It’s not liberals anymore, it’s total nut cases running progressive thought. They may not be as nasty as MAGA, they may intend well, but their impact is terrible, maybe not as bad as MAGA, but nevertheless Noah is right to call it out. He gives very clear evidence and cases demonstrating this.
There is not a fixed market on stupid economic ideas. Every ridiculous illegal, corrupt, illogical idea that Trump comes up with, doesn’t reduce the same kind of stupid ideas on the left. Although Trump has been stealing stupid ideas from Elizabeth Warren and Bernie Sanders lately, so maybe he believes that.
As he makes quite clear overall, the Proggies demarches are enabling of Trump (being both ineffective economically and wasteful) and derive from quite similar zero-sum thinking.
much of the wealth created in rich countries is created out of thin air - I'm not saying it's illusory, but it is the sum of the number of hands the money touches, not the actual money supply itself ($100 passing through 6 pairs of hands in 5 transactions eg worker gets it in paycheck, pays painter/decorator, who pays mechanic to fix truck, who takes partner out for a meal, worker there pays to travel, travel company buys fuel so it shows up on GDP as $500).
Tariffs and taxes are friction on the speed of transactions. To be fair the developing countries could also create wealth in the same way but hustle and savings are also a big brake on transaction speed.
The really great thing about this "wealth from thin air" is it doesn't even need to use up finite resources or create pollution. The price you pay for an experience such as a ticket to the theatre is mostly spent on the emotions and atmosphere, which use up almost no finite resources and no pollution.
You appear to be suffering from the innumeracy known as Money Illustion.
Money Supply is not a synonym for Wealth and Wealth is not synonymous with Money Supply. They are two different things and concepts. Regrettably confusion of the two leads to all kinds of error.
Noah created this post out of thin air, but lots of people pay $10/mo to him for it. But he actually spends it on things like rabbit food, which is tangible.
I have heard of the railway system in California that is not working but I would like to know why it is not working. One of the reasons for the increase of wealth in the 19th century was the railway systems which enabled people to travel to work, as well as move location if they wanted to.
We certainly need a way of resolving income problems. That so many are poor is a disgrace for the rest of us. Britain is currently moving into a European redistribution mode of high tax and high distribution but it may take a generation to resolve the issues of homelessness and bad health.
It's not working because the railroad has tradeoffs. People in the path will lose their houses, workers will die in construction, the environment will be damaged, etc. The Democratic party has basically decided that these are things that are not allowed. So as a consequence, the railroad isn't being built, or only at a painstakingly slow pace. One of the major reasons that NY can't build subway today is because they can't build it like they used to. The system was build mostly by tearing up the street and excavating down, which is massively cheaper than tunneling, But it is extremely disruptive to any businesses and residents on that street during the construction. 100 years ago the government would have said "too bad, the train is getting built", but the government of NY today has decided that it will not accept the tradeoff, so now it is entirely a legacy system that would be prohibitively expensive to build if done by today's standards.
Well yeah - even benchmarked against not-too-cheap EU infra spend, the US is across the board just catastrophically bad in terms of capital expenditure efficiency and time to build. Although there are examples of almost as bad (e.g. the Germans and building elec grid, not quite ending up as expensive as US, but in delays certainly at very American levels of paralysis)
It is not particularly hard to see: the rail line is being built not following any strong actual economic logic for a high-speed rail which by comparative examples (Japan, Europe generally, France early days) must be starting out connecting high-usage hubs to be competitive with alternatives.
The California high-speed rail is not doing this at all, it's got a line that's traced for short-termist political reasons to not-key-not-rational-for high speed rail, and not connecting from get-go (if it were ever to become operational) high-demand hubs at a service speed that would be competitive (note Noah speaks to the High Speed Rail, not to "railway system in California": The California High Speed Rail Authority has not managed to create any high-speed rail whatsoever despite billions of dollars in spending, but brags about how many jobs that spending has created. It’s all redistribution and no production.")
It also needs to be built on timely and capital effective basis.
California is essentially doing the exact opposite of all this - and waiving some combination of Generating Jobs and Climate Change! flag to distract / justify for what's a clearly bungled and economically-irrational approach.
And the HSR was routed to optimize political favors instead of geology. They sold it on connecting SF and LA (and San Diego next) but ignored the Tehachapi Mountains and Diablo range which would require long expensive tunnels and started building in the central valley were land is cheaper and faster to acquire but still too much. And it won’t ever be cost competitive with cheap airline flights between these metro areas.
yeah, what I was alluding to on short-termist political reasons.
The whole thing is a political boondoggle rife with economic innumeracy.
and I love high-speed trains, absolutely prefer them over flights when abroad as more travel efficient where they have been done on a transport logical basis.
but done as a climate-dreaming essentially purely political basis without any grappling with the myriad of factors that make Infra build in the US an expensive catastrophe and laddled on with Lefty Everything Bagelism what one ends up with is a self-discrediting effort.
Of course rest-of-world does show that if one is focus and logical, one can make a high-speed rail line work. Fuck - Morocco - lower-middle-income country has pulled this off for God's sake (okay with French partial trade-financing subsidy for the French kit). Built in logical start-to-finish between it's mega Port city where big new FDI is going into industrial platforms - Tangiers across from Gibralter down to Casablanca. I have taken it once - actually brilliant and on my ride, chock full of both locals (business class was full up) and foreigners (tourists and biz people going to their factories in Tangiers)
Also looking at build out in Europe if one rewinds to more like 80s-90s and which network lines were working well.
Pouring federal money into fixing Amtrak NE corridor would make vastly more sense given anyway the airports are maxing out on slots (certainly I greatly prefer Union Station to Union Station then going through Lauguardia hell)
Indeed, the very _concept_ of high-speed rail in California didn't match up with either of the most well-known examples of high-speed rail built in the 20th century.
Japan's Shinkansen was built in what was then a relatively poor country where trains were still the main means of intercity travel. It was badly needed because Japan's legacy railways were full to capacity (and were additionally limited by being narrow-gauge). Since new standard-gauge railways (the word "Shinkansen" literally means "New Main Line") were completely incompatible with legacy rail anyway, the Japanese sensibly decided they should be as flat and as straight as possible.
The French LGVs were by contrast built two decades later in a much richer country that already had a high level of car ownership, and were designed explicitly to lure travellers away from cars and airlines (to reduce France's dependence on foreign oil: the same reason why France was building tons of nuclear power plants at the same time). They were assisted in this by the fact that the original LGV Sud-Est (from Paris to Lyon) passed through benign terrain, to the extent that the line has no tunnels at all!
The primary objective is not to build a railway. There are many competing objectives and a huge pile of money to ladle out. building a railway is maybe number 5 on the list of objectives, if that.
Same thing for our homeless problem. The last thing they want is to actually reduce homelessness, as it would cut off the siphon of money funding the complex.
Noah falls into his own trap, the economists trap, of viewing statistics in the aggregate.
Yes, immigration boosts gdp or employment statistics. But what does it do for the individuals underneath those numbers? It suppresses their wages, prevents them pressing for rises, enables businesses to find someone who will do the work for less, or for compromised benefits. It applies to tech engineers fighting H-1B migrants as surely as it applies to laborers fighting illegals.
The energy in the immigration debate isn't because its bad for the country's statistics, its because its bad for _me_!!!!
This isn’t just a failure of politicians, it’s a failure of accountability among the people who embrace populist thinking. Zero-sum economics is seductive because it offers moral absolution: if the world is a fixed pile of resources, then someone else must be to blame for why you don’t have more.
The villains change across ideologies, but the mental shortcut is the same.
What gets avoided is the hard work: building institutions that function, investing in capacity, accepting tradeoffs, and owning the fact that prosperity comes from competence, not grievance. Zero-sum stories don’t just fail economically — they fail because they teach people to outsource responsibility
Rich? Ha! $30 trillion in debt, what is that for 330 million people, including my 1 yo grandson? $90,900 per person. What a joke, here’s the classic scene from Animal House when the bill comes due. https://youtu.be/LARx7M9s15w?si=Kl4AKCy8Ll-BDBkV
The belief that the bill must inevitably "come due" is another form of zero sum thinking. I'm not saying that we can continue growing the debt indefinitely at the rate we have, but state fiscal policy really doesn't work the same way family financial policy does.
Surprised not to see rent control mentioned here as well, but it's yet another example of redistributing resources in ways that end up hurting cities rather than simply allowing the free market to build more abundant housing.
Immigration may not be zero sum, over the whole economy, but it sure feels zero sum locally sometimes. Maybe people can accept that as a tradeoff if it is done right, but it has been done the opposite of right. It really doesn't help the case that the government has decided to ignore its own laws on this on illegal immigration. California has even gone so comically far as to pass laws restricting employer use of e-verify to check immigration status.
And this also extends to legal visa programs. By law, H1-B visas are restricted to jobs where there is a labor shortage and it is not possible to hire a citizen. But then tech companies are laying off thousands of US citizens while continuing to employ and even apply for more H1-Bs in the same job. Every one of those visa applications is obvious and provable fraud by the hiring company. How can they say with a straight face that they can't find US citizens for those roles, when a week ago they employed those very citizens in those same jobs? But the government looks the other way.
It seems like the only time the government sees the need to obey the letter of the law is when millions of illegals flood the border filing false asylum claims. Apparently we have to let all of them in, and also pay for their rent and food, because that's just what the law says. No matter that they are obviously lying to take advantage, we just have to let them in because that's the law.
There is a cap of 85,000 new H1b visas. Last year big tech employers Meta, Alphabet and Meta added less than 2000 H1b employees, and the biggest employer was Amazon with 4644. As for layoffs, Alphabet had none, Meta 3400 and Amazon and Microsoft about 15,000 each. In previous layoffs about 30-40% of laid off tech workers were immigrants, and there isn’t a reason to think that has changed. Do you know that the laid off workers were citizens? I don’t think H1b program would reduce layoffs of workers, though if all existing H1bs were rescinded the employers would lose lots of there workers and some with specific skills (like Taiwanese experts at TSMC in Phoenix) that aren’t available in the national workforce and shutting down projects would hurt many American workers as well as the companies.
FAANG is the wrong place to look for H-1B abuse. Those companies hire internationally not because they're looking for cheap labor to displace American workers but because they need tens of thousands of extremely talented people, and while the US does produce an outsized share of them, the US has only 4% of the world's population and for that reason can't produce enough. Restricting themselves to hiring only local talent would just mean hiring fewer and doing less.
H-1B abuse does exist in the IT industry, but you have to look elsewhere to find it, mostly in "body shops" who provide contract labor. The FAANG companies do use a little of this (not much), but it doesn't show up in their employee numbers because those people are employed by the contract agencies. Most of that contract labor is used elsewhere, though. The FAANG companies just don't use much contract engineering labor (though they use a *lot* of contract labor for janitorial and food services; that's not H-1B).
Your core point that H-1B abuse isn't big enough to move the needle is still largely correct, but if you want to find it the top tier tech companies' employee rosters are not the place to look.
Around 20 to 40% of H1b visas go to contracting/ outsourcing companies, not employers.
See https://www.epi.org/blog/tech-and-outsourcing-companies-continue-to-exploit-the-h-1b-visa-program-at-a-time-of-mass-layoffs-the-top-30-h-1b-employers-hired-34000-new-h-1b-workers-in-2022-and-laid-off-at-least-85000-workers/#:~:text=In%20addition%20to%20employers%20exploiting,of%20the%20total%20annual%20cap).
“In addition to employers exploiting the H-1B program while laying off tens of thousands of employees, outsourcing firms once again dominated the H-1B visa program in 2022, even among the top 30 H-1B employers. For more than 15 years, leading lawmakers from both parties have criticized outsourcing firms’ exploitation of H-1B and offered bipartisan fixes, yet the abuse continues unabated. Thirteen of the top 30 H-1B employers were outsourcing firms, and they were issued a total of 17,534 visas for new H-1B workers (21% of the total annual cap).”
This is not a good use of these visas.
I'm surprised the number is that small!
Some of that is incorrect. The 85,000 cap is just for a subset of H1bs.
H1bs are unlimited for universities, government research, and non profits.
There is also a separate cap of a few thousand for specific countries.
Not according to the government, there is a hard cap of 65,000 regular H1b visas and 20,000 advanced degree H1b visas.
https://www.uscis.gov/newsroom/alerts/uscis-reaches-fiscal-year-2026-h-1b-cap
Nope. My statement is according to the government, and it matches your link. The 85,000 is for the regular cap plus the masters cap.
There are no caps on H1bs for government research, universities, or non profits. See https://www.uscis.gov/working-in-the-united-states/h-1b-specialty-occupations under the H1b cap tab
“Additionally, H-1B workers who are petitioned for or employed at an institution of higher education or its affiliated or related nonprofit entities, a nonprofit research organization, or a government research organization, are not subject to this numerical cap.”
There are additional quotas for Chile and Singapore. See https://www.dol.gov/agencies/whd/immigration/h1b1#:~:text=Overview,a%20new%20Labor%20Condition%20Application.
“The H-1B1 program provides for the temporary employment of nonimmigrant aliens in specialty occupations from Chile and Singapore, limited to 1,400 nationals of Chile and 5,400 nationals of Singapore.”
I wonder how Japan, China, S Korea, Taiwan, Iceland, etc all made it without waving in millions of poorly educated non-native speakers?
How does Australia harvest its grapes and produce wine without relying wholly on immigrants and is able to employ English speaking foremen?
The answer is they have better labor conditions and more capital investment (automated harvest and vine maintenance). America is only starting to do this now, decades behind Australia and Europe, and of course they are using European machines….because why would you set up an American company to machine-automate harvest when there are millions of illegal immigrants working cheaply under the table?
Saying a supply of cheaper, informal labor willing to toil under poor conditions doesn’t affect the civilian workforce is like saying it doesn’t impact the capital investment plans in, say, vineyard management. There are obvious tradeoffs between capital and labor and between legal labor and illegal labor
Of course we could live without immigrants, especially illegal immigrants if we chose to, though it might not be best for the country or its capitalists. And of course every productive worker (whether citizen or immigrant) should be a net add, though that depends in part on the generosity of benefits, the incentives for work and tax paying habits.
Maximizing the benefit for the country- having a good supply of legal immigrants with minimal benefits, good incentives to work, and our having the ability to deport(or not renew visas for) the unproductive or criminal immigrants and the ability to expand housing for them would be wise. That is not what is on the table as a policy. Training the domestic labor force so they have the skills and education to be productive would also be wise. Also not on the table.
Why would I go through the risk and trouble of investing in an EV startup when cheap subsidized Chinese EVs are available? Why would I go through the risk and trouble of training and educating a domestic workforce when cheap illegals are available?
We need to change the incentives to get companies to be more proactive in training and apprenticeships for high school graduates. Reducing supply of labor and increasing wages is one way. Subsidizing those efforts is another. Labor is always going to compete with capital and also with overseas/outsourced production. Taxing imports and not taxing exports (replace corporate income tax with gross domestic receipts tax, with deductions for domestic labor and CGS, and not taxing foreign receipts). There are lots possible policies and tradeoffs.
Global competition and free trade in labor and capital is good- probably best for the country in theory. But the country is not a person, nor a voter. We need to balance the welfare of our citizens against economic theory and profit incentives. Create too much friction and the danger is the economy, industry and workers become uncompetitive. No friction can also be bad. And remember we have guilds in medicine, academica, childhood education, etc that create lots of frictions and inefficiency. We could increase frictions so that low skilled labor fare better while reducing frictions in high paid guilds so that more people get to share in those opportunities.
I don’t have the answers, but what we are doing now isn’t working.
The US has more jobs to do than we have people to work those jobs. If we don't have immigration or work programs, then we pay more with either money or time. If the price of haircuts double people will just get less haircuts. If the DMV doesn't have enough applicants, you just wait in line for longer. If things can't be built in a timely manner, then financing costs mean less things get built overall.
I think you're right about colonialism, but I wish you'd explain how British rule in India fits in. I've read that wealth obtained from India had a lot to do with making Britain a preeminent power in the 18th and 19th centuries. If that's true, I suspect it's because the Raj was not just extractive (though it was that) but also positive-sum. But I'd love to see a knowledgeable explanation
Overall I would recommend Yaw Boadu (a Ghanian expatriate) digestable series of reviews of colonial histories (https://yawboadu.substack.com/: mostly African but not only).
As Yaw rightly points to the applied history, the abstraction of European states doing X isn't in correspondence with actuals - which particularly for the late 19th c. but not uniquely - were heavily driven and triggered by local operators esp. colonial military officers seeking personal ego/glory and dragging the state in after them via power logic -whereas e.g. the London governments of UK quite rationally tried to have a policy of "avoid direct rule, only do trade and defend turf against other imperial power plays [i.e. other Europeans]" - as direct rule tended to become drains on treasury, the London power center understood much better its state interest. But humans are humans and short-term ego plays (see Trump) oft override rational interest.
Pre colonial India did not export minerals or other natural resources other than tea and spices. Their main exports were hand woven textiles. The British colonizers dismantled that industry and instead exported the cotton, jute and other natural resources to supply their own factories. They also imposed high taxes on land, the bureaucracy they established and on agricultural output (up to 50% tax rates) which lowered Indias growth to be even with population growth. On the other hand, Britain got cheap raw materials and tax revenue as well as distribution of Indias other exports.
I don’t think Noah said colonization was a positive for the colonized, only that resource extraction is not what caused the negative results.
While it is fashionable amongst the academic Left to say Britiain dismantled an Indian cloth industry, comparative experience of artisanal production in the face of industrial that is not colonial does not tell a different story. The future Indians didn't have production that was competitive. They also like to assert the colonial powers 'kept' the colonies in low-value agri production, ignoring that this is in fact the economic default unless and until one can develop industrialised commercial agriculture, which itself needs the institutions to support such.
the real damage to colonies of the 19th century is in poor governance models and standards under essentially para-military rule that did not set good models for real industrialisation - that needs good rule of law, and capital accumulation. Not in extraction but in piss-poor governance by the often third-raters sent to colonial rule and engaging in corrupt profiteering.
Initially the colonial powers from Europe made their money from trade. The Portuguese would buy--and later produce--cinnamon and cloves in the Moluccas; Then transport them to Lisbon, where they produced fabulous profits. Spices from the Moluccas, silks and chinaware from Guangzhou, rubies and sapphires from Ceylon.
Later, the British in Bengal and Dutch in Java--both with high population density--produced more in rents & taxes than merely in trade goods. Both the Dutch and British in the East Indies farmed out most of the trading and territorial management to their respective East India Trading Companies. That were worth over $10 *trillion* in todays's money, and paid annual dividends on the order of 18%.
I don’t get why you often start out criticising Trump’s latest policies and end with bashing progressives consistently
Because he’s not criticizing Trump or progressives. He’s criticizing zero-sum thinking, a very natural (and bipartisan) human cognitive flaw. Not everything is about American electoral politics.
The funny part about progressives is they're terribly zero sum most of the time, until a politically inconvenient situation occurs where there's truly a distribution problem and then they plug their ears and just insist it will all work out.
Like the student loan forgiveness thing. Someone has to pay for that!
Because the progressive movement has become almost as insane as the MAGA movement. It’s not liberals anymore, it’s total nut cases running progressive thought. They may not be as nasty as MAGA, they may intend well, but their impact is terrible, maybe not as bad as MAGA, but nevertheless Noah is right to call it out. He gives very clear evidence and cases demonstrating this.
There is not a fixed market on stupid economic ideas. Every ridiculous illegal, corrupt, illogical idea that Trump comes up with, doesn’t reduce the same kind of stupid ideas on the left. Although Trump has been stealing stupid ideas from Elizabeth Warren and Bernie Sanders lately, so maybe he believes that.
indeed the cross pollination between Trump and Warren with Trump having the sheer talent of making dumb ideas even dumber is something to behold.
As he makes quite clear overall, the Proggies demarches are enabling of Trump (being both ineffective economically and wasteful) and derive from quite similar zero-sum thinking.
Because if he reversed the order people would stop reading and his peers might cancel him.
True, but I don't think the complaint is about the order.
Very well written piece. Thank you
much of the wealth created in rich countries is created out of thin air - I'm not saying it's illusory, but it is the sum of the number of hands the money touches, not the actual money supply itself ($100 passing through 6 pairs of hands in 5 transactions eg worker gets it in paycheck, pays painter/decorator, who pays mechanic to fix truck, who takes partner out for a meal, worker there pays to travel, travel company buys fuel so it shows up on GDP as $500).
Tariffs and taxes are friction on the speed of transactions. To be fair the developing countries could also create wealth in the same way but hustle and savings are also a big brake on transaction speed.
The really great thing about this "wealth from thin air" is it doesn't even need to use up finite resources or create pollution. The price you pay for an experience such as a ticket to the theatre is mostly spent on the emotions and atmosphere, which use up almost no finite resources and no pollution.
You appear to be suffering from the innumeracy known as Money Illustion.
Money Supply is not a synonym for Wealth and Wealth is not synonymous with Money Supply. They are two different things and concepts. Regrettably confusion of the two leads to all kinds of error.
Noah created this post out of thin air, but lots of people pay $10/mo to him for it. But he actually spends it on things like rabbit food, which is tangible.
I suppose rabbits are a kind of tangible asset....
I have heard of the railway system in California that is not working but I would like to know why it is not working. One of the reasons for the increase of wealth in the 19th century was the railway systems which enabled people to travel to work, as well as move location if they wanted to.
We certainly need a way of resolving income problems. That so many are poor is a disgrace for the rest of us. Britain is currently moving into a European redistribution mode of high tax and high distribution but it may take a generation to resolve the issues of homelessness and bad health.
It's not working because the railroad has tradeoffs. People in the path will lose their houses, workers will die in construction, the environment will be damaged, etc. The Democratic party has basically decided that these are things that are not allowed. So as a consequence, the railroad isn't being built, or only at a painstakingly slow pace. One of the major reasons that NY can't build subway today is because they can't build it like they used to. The system was build mostly by tearing up the street and excavating down, which is massively cheaper than tunneling, But it is extremely disruptive to any businesses and residents on that street during the construction. 100 years ago the government would have said "too bad, the train is getting built", but the government of NY today has decided that it will not accept the tradeoff, so now it is entirely a legacy system that would be prohibitively expensive to build if done by today's standards.
Well - it is not working because the Californian Democrats and Government (synonymous at present) were unable to execute trade-offs.
this is a self-imposed penalty - Noah has touched on this stuff before of course - but also Yglesias, Klein - and the Niskanen Center people.
It's painful of course to see shambling on in waste of credibility and capital.
Other European cities have tunneled for new metros at a fraction of the NYC cost, of course.
Well yeah - even benchmarked against not-too-cheap EU infra spend, the US is across the board just catastrophically bad in terms of capital expenditure efficiency and time to build. Although there are examples of almost as bad (e.g. the Germans and building elec grid, not quite ending up as expensive as US, but in delays certainly at very American levels of paralysis)
It is not particularly hard to see: the rail line is being built not following any strong actual economic logic for a high-speed rail which by comparative examples (Japan, Europe generally, France early days) must be starting out connecting high-usage hubs to be competitive with alternatives.
The California high-speed rail is not doing this at all, it's got a line that's traced for short-termist political reasons to not-key-not-rational-for high speed rail, and not connecting from get-go (if it were ever to become operational) high-demand hubs at a service speed that would be competitive (note Noah speaks to the High Speed Rail, not to "railway system in California": The California High Speed Rail Authority has not managed to create any high-speed rail whatsoever despite billions of dollars in spending, but brags about how many jobs that spending has created. It’s all redistribution and no production.")
It also needs to be built on timely and capital effective basis.
California is essentially doing the exact opposite of all this - and waiving some combination of Generating Jobs and Climate Change! flag to distract / justify for what's a clearly bungled and economically-irrational approach.
And the HSR was routed to optimize political favors instead of geology. They sold it on connecting SF and LA (and San Diego next) but ignored the Tehachapi Mountains and Diablo range which would require long expensive tunnels and started building in the central valley were land is cheaper and faster to acquire but still too much. And it won’t ever be cost competitive with cheap airline flights between these metro areas.
yeah, what I was alluding to on short-termist political reasons.
The whole thing is a political boondoggle rife with economic innumeracy.
and I love high-speed trains, absolutely prefer them over flights when abroad as more travel efficient where they have been done on a transport logical basis.
but done as a climate-dreaming essentially purely political basis without any grappling with the myriad of factors that make Infra build in the US an expensive catastrophe and laddled on with Lefty Everything Bagelism what one ends up with is a self-discrediting effort.
Of course rest-of-world does show that if one is focus and logical, one can make a high-speed rail line work. Fuck - Morocco - lower-middle-income country has pulled this off for God's sake (okay with French partial trade-financing subsidy for the French kit). Built in logical start-to-finish between it's mega Port city where big new FDI is going into industrial platforms - Tangiers across from Gibralter down to Casablanca. I have taken it once - actually brilliant and on my ride, chock full of both locals (business class was full up) and foreigners (tourists and biz people going to their factories in Tangiers)
Also looking at build out in Europe if one rewinds to more like 80s-90s and which network lines were working well.
Pouring federal money into fixing Amtrak NE corridor would make vastly more sense given anyway the airports are maxing out on slots (certainly I greatly prefer Union Station to Union Station then going through Lauguardia hell)
Indeed, the very _concept_ of high-speed rail in California didn't match up with either of the most well-known examples of high-speed rail built in the 20th century.
Japan's Shinkansen was built in what was then a relatively poor country where trains were still the main means of intercity travel. It was badly needed because Japan's legacy railways were full to capacity (and were additionally limited by being narrow-gauge). Since new standard-gauge railways (the word "Shinkansen" literally means "New Main Line") were completely incompatible with legacy rail anyway, the Japanese sensibly decided they should be as flat and as straight as possible.
The French LGVs were by contrast built two decades later in a much richer country that already had a high level of car ownership, and were designed explicitly to lure travellers away from cars and airlines (to reduce France's dependence on foreign oil: the same reason why France was building tons of nuclear power plants at the same time). They were assisted in this by the fact that the original LGV Sud-Est (from Paris to Lyon) passed through benign terrain, to the extent that the line has no tunnels at all!
You can read more about the different national traditions of high-speed rail at Alon Levy's blog at https://pedestrianobservations.com/2021/05/30/the-different-national-traditions-of-building-high-speed-rail/ .
The primary objective is not to build a railway. There are many competing objectives and a huge pile of money to ladle out. building a railway is maybe number 5 on the list of objectives, if that.
Same thing for our homeless problem. The last thing they want is to actually reduce homelessness, as it would cut off the siphon of money funding the complex.
Noah falls into his own trap, the economists trap, of viewing statistics in the aggregate.
Yes, immigration boosts gdp or employment statistics. But what does it do for the individuals underneath those numbers? It suppresses their wages, prevents them pressing for rises, enables businesses to find someone who will do the work for less, or for compromised benefits. It applies to tech engineers fighting H-1B migrants as surely as it applies to laborers fighting illegals.
The energy in the immigration debate isn't because its bad for the country's statistics, its because its bad for _me_!!!!
This isn’t just a failure of politicians, it’s a failure of accountability among the people who embrace populist thinking. Zero-sum economics is seductive because it offers moral absolution: if the world is a fixed pile of resources, then someone else must be to blame for why you don’t have more.
The villains change across ideologies, but the mental shortcut is the same.
What gets avoided is the hard work: building institutions that function, investing in capacity, accepting tradeoffs, and owning the fact that prosperity comes from competence, not grievance. Zero-sum stories don’t just fail economically — they fail because they teach people to outsource responsibility
Manufacturing productivity is booming under Trump, while it was flat in the the Biden years of 2023 and 2024. Might be worth a mention.
Rich? Ha! $30 trillion in debt, what is that for 330 million people, including my 1 yo grandson? $90,900 per person. What a joke, here’s the classic scene from Animal House when the bill comes due. https://youtu.be/LARx7M9s15w?si=Kl4AKCy8Ll-BDBkV
The belief that the bill must inevitably "come due" is another form of zero sum thinking. I'm not saying that we can continue growing the debt indefinitely at the rate we have, but state fiscal policy really doesn't work the same way family financial policy does.