Venezuelan immigrants are not the solution to the US labor shortage

Hey, everybody, Peter Zion here coming to you from Chile, Colorado where the fall has definitely set in. Today we’re going to talk about the situation on the southern border as regards a very specific group of people, but then xwayland. For those of you who don’t follow South America, Venezuela used to be one of the most advanced countries in the developing world with excellent health care, education and infrastructure. But in 1988, a populist by the name of Hugo Chavez, won an election and took the country down the path into populous desolation, complete with a gutting of the industrial base, the destruction of the oil sector.

Infrastructure fell apart over the next 20 years. And as of three, four years ago, the country actually fell into famine, which is just bonkers. Because this is a country that used to export about 3 million barrels a day of crude and be a significant food exporter as well. Today. Well, as of the first of the year, oil output had dropped down to nearly a half a million barrels a day, they’ve increased that by maybe a third to half at this point. Well, but they import over 80% of their food. And while they’re in a bit of an ideological war with the United States, most of that food comes from the United States via Colombia, which is a country that the socialist ideologues in Venezuela say that are their enemies anyway, the whole place is falling apart. Something like 7 million people have already fled the country out of a pre famine population of over 40 million, and more coming every day. Most of those people single largest chunk, over 2 million have gone to Colombia. Most of the remainder are elsewhere in South America, and roughly a half a million have made the very long, very dangerous trip. Through the Colombian jungles and mountains through the Darien Gap was a section of lowland jungle where Panama meets South America, then all the way up through all of Central American all of Mexico in order to reach the United States.

A couple of months ago, the bight administration granted them a degree of protected status because these are not your normal migrants. When we think of migrants today, on the southern border, we’re not thinking of Mexicans, Mexicans are way too skilled. And the situation at home, despite the crime, economically actually is pretty decent. We haven’t had positive migration out of Mexico to the United States in 15 years now, in fact, it’s been negative in most of those years, with more people going home than the other way around. Or American snowboarding, for example.

Venezuelans are different, most of the Mexicans who migrated in the 80s and the 90s. In the 2000. The 2000 10s didn’t come from northern Mexico, which is the wealthy part of the country or central Mexico, which is the political zone, but the southern areas that have kind of been left behind. They’re of a different ethnic stock a lot more indigenous blood, education levels are lower. And that’s why Mexicans in the United States have a reputation for doing manual labor. The Mexicans who have doctorates for the most part, stay home or work in northern Mexico, and there are a lot of thumb.

Anyway, the flows more recently had been Central American countries, most notably Honduras, Guatemala, and El Salvador, all countries that are flirting with failed state status. And so their infrastructure is poor education is poor economic outcomes are thin, agriculture is limited tropical, which is very low value added does not require skilled labor force. And so these are people who are desperate to look for anything else. And so ironically, America’s capacity to interdict migrants is seen as a plus, because it means their state capacity here in the United States, which they don’t have at home. And as long as their countries are failing, they’re going to continue to look for ways to come here.

Venezuelans are in a different category. Any Venezuelan who is over age 45 is one who was educated in the pre Chava as days. And that means he or she benefited from one of the most sophisticated educational experiences in the entirety of the developing world, before Chavez drove the entire place into the ground. So these are people with tradable skills, master’s and doctorate degrees, and they are walking 3000 miles for a chance to avoid famine.

So I’ve often said that the only way to keep the Central Americans out is to basically shoot anyone with a tan who tries to cross the border. That wouldn’t work for Venezuelans, because where they’re coming from has fallen so far, its standard of living, arguably is now below that of the Central American states and is going to get worse. We are looking at outright state collapse in Venezuela. And everyone who has something that’s portable, mostly a skill set is on their way to somewhere else.

So a few things to keep in mind. Number one, we are facing the labor shortage in the United States that will not let up for a minimum of 20 years. At some point the American political system is going to have to deal with that and our options are Your goods, fewer services, especially for retirees, and much, much higher inflation, or a degree of immigration reform. Now, I don’t think we’re gonna get that in the near term.

We’re coming up on a political election year. Both the Trump team and the Biden team are furiously anti migrant, because they’re trying to court the unions into their political coalition’s and the unions are arguably one of the two top most anti migrant and immigration groups in American politics today. So we’re not going to get it anytime soon. And of course, in the short term, Congress is not functioning because we don’t have a speaker for the house. So there’s that too. But these are the sorts of people honestly that the United States has always said that it wants skilled labor, not unskilled labor.

Second, no matter what happens on the border, no matter what our policies are going to be, these people are going to keep coming because their state is literally dying behind them. And what limited capacity, we have to fly them home just starts the journey again, because their alternative is to starve. So that’s not great.

Perhaps third most importantly, is that the nature of Mexico has really evolved in the last five years, Mexican birth rates started to fall 3035 years ago when NAFTA was operationalized. Which means that the Mexican birth rate has been falling steadily that entire time, and now is only just barely at replacement levels. That means Mexico has become a net destination for inward migrants. And so for the first time, and all of these conversations about the border, we actually have the Americans of the Mexicans more or less coming to the table with a similar point of view. And that is going to provide some interesting opportunities, especially since we can’t get any sort of legislative change.

When it comes to managing the flows. I don’t mean to suggest for a second that the situation on the southern border is a bout to solve itself hardly. But it is about to change pretty significantly, in ways that we’re gonna have a hard time wrapping our minds around. We’re seeing more and more skilled migration coming up from the south. And that’s not what we have set in our mind. So changes to come. We’ll see where it leads you