Monday, May 3, 2010

Asymmetric Immigration

Mexican immigration to the US is an institutionalized economic assistance program to Mexico, abetted by special interest groups in the US. In a nutshell, Mexico imports its unemployment to the US. Mexico's unemployment rate is less than half the US (4% vs 9%). In addition, the remittances back to Mexico from both legal and illegal immigrants are over $260 billion since 2001, a very significant part of Mexico's foreign reserves and its currency supply. This remittance cash flow has funded the acquisition of Mexico's largest commercial banks by Wells Fargo and Bank of America.

Mexico supports this flow of people by official and unofficial means, allowing its consulates to hand out comic-book style brochures advising “migrant workers” on border crossing and issuing ID cards that illegals are using to open bank accounts and obtain driver’s licenses in the US.

The unofficial “reconquista” policy is that Mexico will reclaim, by demographics, territory they gave up by sale, conquest or treaty. Reconquistas believe that Mexican immigrants will remain loyal, or at least partial, to Mexico. Serious Mexicans understand this is not only nonsense, but a double-edged sword: Mexico is a very attractive retirement and second-home venue for US citizens, and there are many more of us. Furthermore, the populist Mexican party is exporting its voting base.

What US special interests benefit from this trade? Agriculture, the hotel industry and others that have specific exemptions for seasonal employment under US law are the direct legal beneficiaries. However, perhaps a third of the 22.7 million illegal immigrants are "employed" in areas where they take cash under the table. This is not always for the reduced wages portrayed by the sympathetic press. Much of it is simply a way to avoid the payment of payroll taxes on the part of employers, and the withholding of taxes on the part of the employees, so the net payment to the worker is at par or better.

I don't know if the net economic benefit to the US economy from having lower agriculture prices offsets the economic costs of illegal immigration. The economic costs are over $397 billion since 1997, or $17,500 per illegal immigrant ($1,345 per immigrant per year). In past years the US could well sustain this cost on the justifications of charity and neighborliness. No longer. The costs are escalating, joblessness in the US is becoming endemic, and further entitlements such as Obamacare are adding costs and inequities. Finally, the demographics of aliens who may become voters is a factor large enough to change the balance of power. Our last national elections have been determined by razor thin margins in the large cities where illegal immigrants tend to cluster.

Mexican immigration policy toward the US is not symmetrical. Illegal immigration is a felony, strictly enforced and subject to a penalty of two years in prison. No one is allowed in to Mexico as a resident unless they can prove they are financially self-supporting, healthy and sane. I've spent a lot of time in Mexico and loved it, loved the people. Yet there are a lot of restrictions on owning business, for example, and certain parcels of real estate are simply not available to US citizens.

Mexican business and family life is still dominated by the "patron" culture. The bulk of the population props up a narrow wedge of extreme affluence and power. The mestizos and native indians are at the bottom of the economic pyramid. Patrons are still largely white and of Spanish descent, well educated, multi-lingual and globally aware. These economic inequities seem to be improving only slowly.

Here is a link to an authoritative source of immigrant data:

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