Who will pay for a ludicrous wall?
Stanford CDDRL
82

You have clearly given some thought to the issues. I am surprised, however, that your last line is not in keeping with your other thoughtful points. You seem to completely dismiss the first half of the article, which is about the very basic notion of tax incidence. I was trained by Chicago Boys and they taught me well. I believe it is our obligation to inform and educate the American public that a project of this magnitude will cost them dearly. It is impossible to create a tax “paid” by Mexico that will not have incidence on American taxpayers. And it is impossible for the administration to build a wall without Congressional appropriations. So the simple truth is that Americans will end up paying for the wall. What percentage of the costs will be borne by Mexicans or Americans depends on estimating elasticities and sources of funds.

Now going into the substantive points you raise, I agree that we need a full fledged cost benefit analysis. And I think we urgently need to move past a shouting match across the aisle or ideological divides, and discuss seriously the consequences of this crazy project. The costs you talk about are very difficult to measure, because we do not really know a lot about whether international policies make a dent on drug addiction in the US. For example, I doubt that the closing of the Colombian routes in the Caribbean changed US drug consumption behavior, and know of no serious study evaluating this. I imagine there are probably studies about the effect of prohibition in the 1920s. I suspect those studies find that prohibition increased the price of alcohol (and in a typical Gary Becker effect, increased the incentives for crime), reducing the demand for the occasional drinker. But I am doubtful that prohibition reduced the alcoholism rate. Drug addiction in the US is a health problem, not an issue of border security.

In a constructive dialogue my response to your points would be that the administration must prepare a serious study (as instructed by the executive order) and find out, for example, following your suggestion, what the elasticity of drug consumer demand in the US looks like, and whether a barrier would have an effect on that demand. My instincts tell me that drug consumers in the US will continue finding ample supply. My hypothesis is that the largest effect of the wall will be on the poor Central American migrants (remember, the Mexican net flow is negative, that is a fact), including unaccompanied children and women, not on drug cartels. We have already some evidence suggesting this. As you point out, the Yuma barriers stopped most would be migrants. What you fail to mention is that migrants shifted their routes towards the desert, with a deadly human toll. Drug smugglers will look for new ways to enter their merchandise, and they have deep pockets to look for safe alternatives. My concern is not with smugglers, but with the humanitarian imperative of avoiding preventable deaths of poor migrants. Those deaths in the desert should be in the conscience of anyone who supports the wall.