The economics of the Mexican border

The administration intends to “build a wall” at the border separating the United States from Mexico. This comes at a moment when the population of illegal immigrants has actually fallen since the late 2000s and, by an imperfect count, crossings are at decades low numbers.

Nevertheless, to Americans most concerned about the phenomenon, certain facts and claims are overriding. Illegal immigrants drive down wages (probably true in certain sectors). Their presence shows the border is not secure (true). They are costly for local and state schools and Medicaid (true). “What part of illegal don’t you understand!” (Whatever). And Anglo anxiety about losing their culture is real and must be acknowledged (even some Mexican Americans quietly resent the newcomers).

But working out the balance sheet is more complicated, something I learned working on the team at the Arizona Republic that produced the award-winning 2003 series “Dying to Work.” (Hundreds of migrants die in the desert every year trying to reach American cities and towns, or rendezvous points established by smugglers).

Among the things my reporting illuminated was how the United States has an insatiable appetite for cheap, easily intimidated illegal immigrant workers. Not only are they cheaper than citizens, they can also be threatened with deportation if they don’t work long hours in abysmal, unsafe conditions. This meant more than even lower-income people in places such as Phoenix could afford lawn services and housekeepers. Large employers contracted with entities that would go into Mexico’s interior to recruit illegal workers. In Phoenix, the homebuilding, resort and restaurant sectors relied on illegal immigrants. Elsewhere, it was packing houses and, of course, agriculture.

Illegal immigrants actually do pay taxes — large amounts proportionately. They pay Social Security taxes for benefits they will never receive. They pay sales and other local and state taxes. Distrustful of banks, they keep their earnings with them, making them particularly vulnerable to robberies. Much of what they earned and could keep from robbers, they sent back to families in Mexico.

So in a pure calculation of costs vs. benefits, it was about a wash for the economy, with some scholars arguing that America actually saw a net gain when the labor and taxes were weighed against such expenses as health care and education.

Historically, the Mexican border was mostly porous. People came and went without trouble. With the exception of a few ugly episodes, nobody raised much of a fuss, especially after the Mexican Revolution (1910 to 1920). The Bracero Program allowed for Mexican farmworkers in the United States until 1964. Illegal immigration from Mexico began to rise substantially in the 1970s, however. President Reagan and Congress granted an amnesty to 3.2 million in 1986.

The same law was intended to tighten immigration controls. It didn’t work because American employers continued to want illegal workers, and many Mexicans wanted opportunity in El Norte. Another thing driving the impossibility of closing the border — something worked around even where there were walls and rigorous enforcement — was Americans’ appetite for drugs.

Finally, NAFTA destabilized much of Mexico’s small-scale rural economy with American imports of agricultural products and other goods. Mexicans thrown out of their traditional livings came north. By the late 1990s, they weren’t causing Anglos to lose their jobs, but their cousins who had come to America a few years before.

The trade agreement did create a vibrant economy near the border and in many Mexican cities. A Mexican middle class arose. Mexico, with the 15th largest GDP in the world, became richer and knitted into the North American economy. Unfortunately, many of the gains were offset by a corrupt government (heavily influenced by drug cartels), despite the efforts of reforming presidents such as Vicente Fox. Americans continue to litigate NAFTA’s effects on our economy, but NAFTA was certainly beneficial for Texas and California, as well as American investors and multinationals. Blame China and automation for the big loss in manufacturing jobs.

So build a wall if you must. Elections have consequences. But be aware of the contradictions in the policy.

For example, this is an administration that denies established science on climate change. If you didn’t like illegal immigration in the 2000s, just wait. The consequences of runaway burning carbon in the atmosphere are factors in the Middle East conflicts, with refugee populations headed to Europe. The U.S. military is worried about a refugee crisis on an “unimaginable scale,” which is perhaps the greatest security threat of the future. To paraphrase George W. Bush, it would be better to fight climate change over there than to hope we can fight its effects only when they hit home. Climate refugees from Mexico, Central America and South America are coming.

Also, maybe it’s time to consider some kind of major drug legalization. It would undercut the cartels and enhance Mexico’s stability. I know many law enforcement officers from my role as a crime writer, and all but one favor legalization. All the narcs and former narcs back this.

The administration is hostile to organized labor, with a fast-food mogul as Labor Secretary. Yet unions are essential to increasing the bargaining power of American citizens. Only 6.4 percent of private-sector workers were union members compared with about 35 percent in the 1950s. This was a key cause of the rise in American wages and the increase in the middle class.

And what about the employers? Republicans have a peculiar blind spot here. Arizona passed its draconian and harmful SB 1070 against brown people. The employers who hired them didn’t feel the pain. If you’re serious about stopping illegal immigration, then slap the CEOs of agribusiness and housing development companies in the same cell with Big Jake the bank robber. That will do more to stop illegal immigration than a wall. Which won’t work anyway.

Recessions also stop illegal immigration. And this kind of unserious policymaking could push us into one.


Today’s Econ Haiku:

Redmond fought the law

Your privacy is safer

So thanks, Microsoft


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