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Reason for Mexican Immigration? Let the Economy Tell the Story Versu s

Reason for Mexican Immigration? Let the Economy Tell the Story Versus

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Page 1: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

Reason for Mexican Immigration?Let the Economy Tell the Story

Versus

Page 2: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

OUTLINE

• Disclaimer/Methodology

• Mexico’s Position

• United States’ Position

• Economic Evidence

• Cost/Benefit to Each Nation

• Way Ahead

• Bottom Line

Page 3: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

METHODOLOGY

• Politically Charged Issue

• Let the Economic Facts Tell the Story

• Variety of Sources to Balance the Slant– Center for Immigration Studies (Neutral)– Bureau of Labor Statistics (Neutral)– National Economics Encyclopedia (Neutral)– Dr. Looney’s Website--Migration Section (Neutral)– Brookings Institute (Left of Center)– RAND Corporation (Conservative)

Page 4: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

MEXICO’S POSITION

• Best Case…Open Borders, Free Flow of Workers

- Relieves Mexico of social obligations for large poor population (60% defined as poor)

- Remittances benefit Mexico ($23B in 2006)

- Acts as relief/buffer to stabilize political/economic situation in Mexico

Page 5: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

MEXICO’S POSITION

• Fall Back Position…Increased opportunity for legal Immigration

– Guest Worker Program: Facilitate legal seasonal workers…workers return to Mexico with increased wealth to open businesses and build houses

– Oppose new Y visa proposal as too restrictive

Page 6: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

US POSITION

• Controlled borders (28 general visa categories)• Preference to migrants with degrees/specialized skills• Guest Worker Program (Proposed, 2007)

– Two-Year Temporary Y Work Visas• Renewable up to three times• Must return to Mexico for a year in-between

– H2 Visas (Current)• H2A: Temporary/seasonal agriculture workers, 1 Yr/3yr on extension

– Must return to Mexico at end of seasonal period

• H2B: Temporary/seasonal Non-agricultural workers, 1 Yr/3yr (66K)– One time jobs, bridge project, road crew

– H1 series visas for temporary skilled employment

Page 7: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

Problems With Current System

• US employers see H2 system as burdensome– Paperwork and responsibility– Must pay employee’s travel to and from Mexico– Must pay legal wage rates/taxes

• Porous border allows for entry/bypass of system– More workers want in than the US has demand for– Those who can’t get a visa don’t wait for the door to

open, they let themselves in

• 12 million Illegal aliens/6 million are visa overstays

Page 8: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

WHY DO THEY COME?• Only border between third-world and first-world on the

planet, largely uncontrolled, 2,000 miles– GDP Purchase Power Parity

• US, # 9, $46,000• Mexico, #75, $12,500

– Unemployment• US, 4.6%• Mexico, 3.7%, 25% under-employed

– Inflation• US, 2.7%• Mexico, 4.0%

– Freedom House Freedom Scores• US, 1.0• Mexico, 2.5 with Serbia and Ukraine

Page 9: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

WHY DO THEY COME? – Manufacturing

• Grew 183% in Chile, 196% in S. Korea, 307% in China, 2.7% in Mexico

– Registering a Business• 5 days in US, 22 in S. Korea, 27 in Chile, 48 in China, 58 days in

Mexico– Transparency

• Mexico is 65th most honest place to do business, tied with Ghana, Cuba is less corrupt

• 34% of Mexican businesses paid “extra fees” to Govt officials– Education

• 62% of educated Mexicans polled would leave and live in the US– Wages

• Mexican worker earns $10/day in Mexico, $8 to $10 an hour in US• 60% of Mexican society classified as poor

Page 10: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

Cost/Benefit to Mexico

• Costs– No pressure to reform government– Opportunity losses, workers engaged in foreign productivity– US employment provides no incentive to advance skills– Disruptive to Mexican families

• Benefits– Removes pressure to add more jobs– Remittances stabilize the economy ($23B)– Reduces a large population of unemployed/disgruntled people– Immigration used as bargaining position to obtain more US aid

Page 11: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

Cost/Benefit to the US

• Costs– Reduced wages for low-skill US workers– Negative impact on US welfare programs

• Low Tax payer, High Social Program Consumer– Increased costs to border security– Increased need for infrastructure like schools, but no tax base to support – Skewed tax costs– Increased crime– Nation divided

• Benefits– Keeps farm wages down

• Consumers pay less for agricultural goods– Some service industry wages held down

• Cheaper Services for US Customers– Gives some states like California a competitive edge in production

Page 13: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

WAY AHEAD FOR MEXICO?

Page 14: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

MEXICO, WHAT IS MORE REALISTIC?

• The Canadian’s aren’t sneaking across the border– Mexico has to reform politically/economically– Must invest in human capital programs– Incentivize return of migrant workers for

Mexico’s advantage

Page 15: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

UNITED STATES, WHAT IS MORE REALISTIC?

• Comprehensive immigration policy that guards our interests first– Temporary workers pay bond to enter, refundable upon

departure– Reduce Mexico’s annual visa quota by each overstay– Go after source of illegal labor magnet, US employers– Reduce social program eligibility, another magnet

• US is too hard to live in without a job and social welfare– Change laws to prohibit citizenship for births to non-US

citizens while on temporary visas– Execute program to reform Mexico’s economy vs. handing

out blind aid

Page 16: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

BOTTOM LINE

• Root Problem is Economic in Nature– As long as there is a wide gap in economic parity

between US and Mexico…they will come

• Requires Balanced Economic/Political Solutions– Stupid policies net stupid results

• Fences, Machine Guns and Security Patrols Didn’t Work for the Soviets, Ask the Germans

Page 17: Reason for Mexican Immigration? Let the Economy Tell the Story Versus

QUESTIONS??