Reason for Mexican Immigration Let the Economy Tell the Story

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

• Disclaimer/Methodology
• Mexicos Position
• United States Position
• Economic Evidence
• Cost/Benefit to Each Nation
• Way Ahead
• Bottom Line

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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. Looneys Website--Migration Section (Neutral)
• Brookings Institute (Left of Center)
• RAND Corporation (Conservative)

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MEXICOS POSITION

• Best CaseOpen 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

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MEXICOS POSITION

• Fall Back PositionIncreased opportunity for
  legal Immigration
• Guest Worker Program Facilitate legal seasonal
  workersworkers return to Mexico with increased
  wealth to open businesses and build houses
• Oppose new Y visa proposal as too restrictive

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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

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Problems With Current System

• US employers see H2 system as burdensome
• Paperwork and responsibility
• Must pay employees 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 cant get a visa dont wait for the
  door to open, they let themselves in
• 12 million Illegal aliens/6 million are visa
  overstays

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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

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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

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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/disgruntl
  ed people
• Immigration used as bargaining position to obtain
  more US aid

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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

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WAY AHEAD FOR US?
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WAY AHEAD FOR MEXICO?
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MEXICO, WHAT IS MORE REALISTIC?

• The Canadians arent sneaking across the border
• Mexico has to reform politically/economically
• Must invest in human capital programs
• Incentivize return of migrant workers for
  Mexicos advantage

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UNITED STATES, WHAT IS MORE REALISTIC?

• Comprehensive immigration policy that guards our
  interests first
• Temporary workers pay bond to enter, refundable
  upon departure
• Reduce Mexicos 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 Mexicos economy vs.
  handing out blind aid

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BOTTOM LINE

• Root Problem is Economic in Nature
• As long as there is a wide gap in economic parity
  between US and Mexicothey will come
• Requires Balanced Economic/Political Solutions
• Stupid policies net stupid results
• Fences, Machine Guns and Security Patrols Didnt
  Work for the Soviets, Ask the Germans

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• QUESTIONS??