Tuesday, May 02, 2006

Immigration doodles

There is so much crazy talk out there. And when I hear people saying, “It’s really quite simple” the hair on the back of my neck stands up.

I don’t think the immigration issue is that cut-and-dried. For many, it’s about national security pure and simple. For others, it’s about human rights. Personally, I think it’s about the political ramifications of economics.

While I am very fond of over-complicating things, it seems to me that there is a lattice work of issues here which impact each other.

However, I am unable to put it all together in one essay, because I lose my place so often when thinking about it.

Therefore, let me just tackle a couple of threads.

First, national security. The individuals who perpetrated the 9/11 atrocities did not sneak across the Mexican border, they did not have to. They were educated, middle-class men with money enough to fly in. However, today they might have to cross the U.S.-Mexico border because of upgraded security at airports. Further, we know that they procured fake government documents via an underground network created by and for illegal Mexican immigrants. It is impossible to achieve anything like ‘security’ when you cannot or will not control your borders.

Second, the rule of law. If we turn a blind eye to those entering the U.S. illegally, then why should anyone follow the prescribed path to legal status? What message do we send when we ignore our own laws? On the other hand, to round up and deport (actually, forget deport – just round up and take the names of) all 12,000,000 illegal aliens in the U.S. might be impossible. So then, do we send an even worse message by attempting to enforce the law – and failing? Alternatively, if we were determined to round them up, we would necessarily have to enact and employ laws so draconian that the people of the United States might demand their recision; which puts us back at being unable to enforce the law. Finally, it has been noted that something like 75% of the people in Los Angeles County jails are illegals. They perpetrate a sizeable portion of the street crime in many communities.

Third, foreign relations. Our embrace of NAFTA was more about keeping Mexico going than it was about U.S. economics. The economics of NAFTA made some sense for us, but it was far more a case of trying to prop up a neighbor which, if it collapsed, would send not thousands of people into our country on a daily basis, but tens of thousands. That it is in our best interests to give Mexico a “safety valve” and look the other way on illegal immigration may have been a compelling argument in 1996. But, 9/11 fundamentally changed the rules. Furthermore, Mexico has begun to behave like a trans-national welfare queen. It is estimated that the amount of money sent home by immigrants in the U.S. is equal to around 25% of Mexico’s annual GDP. While railing against the racist and inhumane immigration policies of the United States, they have taken no meaningful steps to reform their economy or political system. (To be fair, though, NAFTA and other U.S. policies have enabled Mexico to avoid making tough decisions and reforms) While we’re on it, let’s not forget their titanic hypocrisy when we compare the immigration laws of the two countries (of course, if the more draconian of their laws date to about 1996, then the U.S. probably insisted on them. We'll take Mexicans, but not Hondurans.). Be that as it may, today, in 2006, our options are increasing unpleasant. It begins to look like, regardless of what we do about illegal immigration, we can either prepare for a Mexican civil war, or we can prepare to make Mexico the 51st state. How’s that for a choice?

Fourth, the economy. This is where it gets tricky – and this is where you find the disconnect between Washington, D.C. and Main Street, USA. Let’s be clear: I am certainly not an economist - I’m just thinking things through as best I can. I am probably all wet on this, but I just know we’re not being told the whole story. I’ve heard this guy quote a study that says that illegal immigration hurts the U.S. because these people suck up social services, welfare, correctional and educational dollars from a system that they don’t pay into. I’ve heard that guy quote another study that says they do pay some taxes and they support businesses where they live such that they are a net gain for us. I don’t know. There is nothing definitive. But on the face of it, it certainly would seem that they get a pretty good deal from the U.S. taxpayer.

The President has said that we need these people because they do jobs that Americans won’t. I find that sentiment insulting to Americans and demeaning to immigrants. But I think I know what he’s really trying to say. On April 7th, the Bureau of Labor Statistics reported that unemployment in March was 4.7%. Because there is always a certain number of people who either can't or won't work, economists generally consider 5% unemployment to be ‘full employment'. So, the question isn’t whether Americans will do these jobs, but rather, what Americans are you going to find to do these jobs?

Consider this: If we were to wave a magic wand and make the illegals go away today, many businesses in the agricultural, hospitality and construction sectors, along with the lawn care/horticultural industry - among others - would have to go into the regular labor market to find help. It is not impossible that for many agricultural firms, labor costs could triple. These companies would find themselves priced out of the market and would either go under or leave the U.S. Now, it would likely be the case that prices for agricultural products would actually go down were this to happen. But, not everyone would benefit. Firms which support these farms could be badly hit. Also, hotels, restaurants, lawn care and construction firms – which cannot easily leave - would see a dramatic spike in costs. Raising prices to cover this, sales would suffer. Businesses in these areas would then curtail spending, hurting their supporting industries. Eventually, consumer level spending would slow down; and if consumer spending slows down enough, the rest of the world will slow down their funding of our trade and budget deficits. A recession would be a real possibility. And a recession means angry voters. (Ah, the political angle rears its ugly head)

Now, let’s say we don’t make the illegals vanish, but make them all citizens. (Poof!) I get the feeling that one dirty little secret nobody wants to talk about is that citizen-employees can demand considerably higher wages than can illegal aliens. In this scenario, unlikely though it may be, a significant portion of the economy might be faced – overnight – with 10(?), 20%(?) higher labor costs. The old devil, inflation, is ever nigh.

Thus, in my imaginings, it would seem that while we must gain control of our borders and have an accurate list of who’s here, the flow of immigrants must continue and their legalization (deporting them is practically impossible) will need to be such that an orderly, predictable and s-l-o-w ratcheting up of labor costs occurs. While we don’t want to admit it, the damning truth is that ‘We the People’ are not going to accept, “I told you so” if our ‘solution’ to illegal immigration contributes to an economic downturn. Which brings us to…

Fifth, politics. Because ‘something’ will always irritate ‘someone’; and these ‘someones’ vote, politicians go to great lengths to do nothing. At the same time, in order to convince the electorate that they are earning their pay – and ought to be reelected, they will go to great lengths to look like they’re doing something. Combining these two is the real art of politics. Regrettably, this combination almost always makes for really bad ideas. While, from the purely economic point of view, losing agricultural and other businesses that cannot compete is a natural and unavoidable part of the market economy, from the political/policy side the question is: Do we want to let these businesses go over seas or fold-up? If you're in Minnesota, you might say, yes. If you're in Southern California, however, you might say, Hell, no!! In the end, however, while you may postpone the inevitable, the laws of economics will always hold and prevail. Thus, my belief is, if they're going to die anyway, don't waste money and effort trying to keep them going. That's what an economist might say. But, politicians make policy - and economists make lousy politicians. In all likelihood, because the current spotlight on security won't let them, Congress won't be able to pull a smoke-and-mirrors trick like they did in 1986. So, if I were a betting man, I'd lay money that you will see huge subsidies to every last even potentially affected group in exchange for real immigration reform. Politically palatable? Yes. Smart? No.

Hey, like I told you, I’m just tossing out ideas. I don't have solutions, but without much more info, we are not going to even have a chance to make good decisions. If I’m totally wrong and this is a simple issue, great! I’d love for things to be simple, but in my experience they rarely are.


Post a Comment

<< Home