text: Attempting to Make Sense of Immigration in the USA
  Level 2 - Value Investor
  Welcome Avatar! For fun, we’re going to try and address the immigration debate in the USA. We’ve spent some time in major cities the last month from NYC to LA to Chicago and it was interesting to see how many foreigners were present.
  While it’s likely true that we saw more than usual (only people chilling at 11am are usually biz owners or tourists) it was still a big change from 5 yeas ago.
  We’re well past the “covid boost” of people going back to international travel and the number of foreign vs. domestic was eye popping. Too big to ignore.
  Part 1: Immigration the Goal and the Problem
  Before anyone says “we never needed immigration”, we’d say you’re crazy. Anyone who has run a business for longer than a year knows that the best competitive advantage is the best and the brightest. Claiming that there are no smart people in other countries is a pretty sad and naïve argument. Similarly, saying that we should just let the borders flood with illegals is also insane (sorry but there is a thin line between low-end workers and turning to crime).
  The Goal: The goal for any country is to keep the best technology, people and talent in your country. It is really that simple. If you want to remain as a global power, you need to attract and *retain* the top people.
  Some Incentive Problems: The problem is that you don’t want to have all of the capital leave your country. For example, if you have a new person come in, make $250,000 and 60% of all that money just goes back to a different country… You’re kind of shooting yourself in the foot.
  Sure you make some tax revenue but the value creation (money is just stored time), is going to another country.
  More Specifics: With the big picture out of the way *correct* immigration would lead to the following: 1) skilled labor is brought in where there is a need and lack of quality in the country, 2) jobs are created as poaching the best and brightest leads to future companies, 3) countries with population decline issues can offset the headwinds and 4) potentially filling labor shortage holes for positions people do not want to take.
  We’re not going to buy all the Diversity and Inclusion stuff. Largely nonsense. The goal is to poach the top people, use that to create more companies/jobs and create “brain drain” from competing nations. Said differently, countries are just competing against one another in the same industry! Once viewed in a simplistic manner like that, you can view intelligent immigration as taking top talent from a competing company.
  Part 2: Solving for Some of the Issues
  Due to rapid changes in technology, a lot of the positions considered to be in “high regard” are no longer relevant. By way of example, having someone work as an Investment Banking Analyst/Associate no longer makes any sense. If the person is well connected and could bring in M&A transactions or other major deals (VP and above) then it’s likely a good idea.
  This is a way of saying, it’s probably time to change the rules around who is considered a high skill person and what is a low skill person. Unless it’s going to lead to sales/revenue we’re of the belief it’s best to avoid. In short, raise the hurdle on what a high skilled worker is.
  Tiering the Immigrant Values
  We have a tiered tax system for income, have no idea why it shouldn’t apply to immigrants (yes being serious). For example, if someone is a genius and can create hundreds of jobs, this should be rewarded with faster citizenship, benefits for keeping the money in the USA and perhaps leniency for bringing their spouse/mother/father to the country as well.
  Compare this to someone who is just taking a job that an American can do. Right now we are giving H1-Bs to jobs/careers that are pretty much irrelevant. Anyone who went to a decent university can take the slot as an investment banking analyst/associate. People saying otherwise are coping hard. There is no revenue generation in the role, it is about processing information and being a “yes man” 99% of the time.
  Job Creator Immigration: The vast majority should go here. If you’re starting a company and are from a rich family, this is probably ideal. You can start an American company that sells products to Americans + the country the immigrant is coming from. This a positive sum by a large margin. You are getting more tax revenue, the money is being taxed in the USA and you can put some ring fencing around capital flight rules.
  Job Taker Immigration: Since this is a high-level post, we’re not foolish enough to know every single position in engineering/computer science/physics. If there are positions that quite literally cannot be done by Americans we’re all for it. We doubt that all of them are profoundly difficult to do. There should be a way to filter these out. Assuming that’s the case you’d reduce the number of *high-paying* jobs being taken by immigrants that can be done by Americans.
  To take it to an extreme, the people taking jobs that Americans could easily do, you might even consider a higher tax rate! Before any H1-Bs get mad there is zero shot anyone of importance will listen to a cartoon bull so you’re safe.
  We’re just attempting to prove the same point.
  Jobs that are being removed from Americans should be de-emphasized. Job creators should be elevated, lifted and brought into the economy.
  Generally speaking better to see private sector growth vs. government growth.
  Compare this chart..
  To this chart…
  The long story short is you want private growth not government leech growth.
  Part 3: Onto the Low End
  Oddly, the problems at the top end are a bit easier to solve in our opinion. When you start looking at the middle and lower end it becomes difficult.
  Higher low/middle end immigration leads to lower cost of illegal labor, higher cost of basic housing (tons of people living in a single home/apartment) and a tendency for more crime. It doesn’t take much research to learn that you don’t want to live right next to the border with a heavy narco presence.
  General Strategy: The only real way to solve this is to probably increase the punishment level for hiring illegal workers. Right now, there is basically no oversight and no significant punishment that we’re aware of. When you combine those two things you get a natural tendency to cheat and take advantage of the cheaper labor.
  Based on our preliminary high-level look, it seems like it is petty crime. If you have to pay a few hundred bucks in fines for hiring an illegal… this really isn’t going to deter anyone. If the cost of labor is dropping by thousands over the course of a couple weeks, the majority will gamble on the few hundred bucks.
  As stated many times in the past, if the punishment is tiny it is essentially just a tax.
  Part 4: Population Issue
  Now for the final part, if the low end was difficult, the population issue is even harder! Right now we have trillions of dollars of debt and the government is unprofitable (building more debt).
  This is really important to remember because it creates a short term problem.
  Bring in Immigrant? Get immediate tax revenue.
  Have an American Born? Get immediate tax loss due to child tax credits.
  Quite the conundrum to be in. We want the population to go up, but we don’t have the fiscal situation to support more tax breaks.
  Government Data Above: As all of you know, government data is pretty worthless. Therefore we’re guessing a low-immigration set up with new tax structures for immigration would work. Of course we’re biased since we just wrote this post.
  With AI/tech taking more and more jobs in the future, you probably don’t need huge population growth to drive higher productivity. The top talent can use the AI/software tools to generate high amounts of income (read tax revenue) and you can reduce reliance on foreign labor.
  Tech tools owned by US companies is certainly better than cheaper outsourced labor.
  Conclusion and Comments
  If you have any suggestions on how to address the issues in the USA let us know in the comments. Per usual, we have a wide variety of interests and this one was glaring after some travel to major US cities.
  Please do not turn the comments section into unrelated topics, thx!
  Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are *opinions* written by an anonymous group of Ex-Wall Street Tech Bankers and software engineers who moved into affiliate marketing and e-commerce.
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