In the teeth of unmitigated economic good news, the Dow lost nearly 100 points today, and the S&P 500 was down over one percent. The explanation put forward by conventional market watchers is that investors fear the Fed will raise interest rates more than expected to counteract the inflationary pressures of a tight labor market. That might make sense if the prices of gold and oil hadn’t both dropped. Long-term bond rates continued to edge up, but that is to be expected during an expansion. If they were flat or falling, we’d be hearing doom and gloom, as we did just a couple of months ago, about the inversion of the yield curve.
No, I suspect that the real cause of the market’s moodiness was a piece of economic news not reflected in statistics: The decline began at just about the moment when it became clear that the only immigration bills with a chance in Congress are the enforcement-only, close-the-borders-and-expel-the-illegals variety.
The restrictionists are unlikely to pass anything that will reduce the current illegal population by a large percentage, but the momentum is running their way. What that means is that we are on the road to a voluntary reduction in the size of the domestic work force and therefore of the U.S. economy. Cutting the number of workers will not make us richer. As I’ve discussed elsewhere, there are not enough employable, non-working legal residents to replace more than a fraction of the entire illegal work force. That means that the economy will lose the goods and services that the lost workers now produce. A small number of workers will benefit as labor scarcity drives up wages, but that is redistribution, not economic growth. The rest of us will be poorer.
It hardly need be said the our present immigration policy is a shambles. One might almost think that its goal was to harass anyone foolish enough to try to obey the law. Still, I’m bemused that immigration has suddenly leaped upward in the roster of Big Issues, with the effect of either splitting the Republican Party disastrously (according to David Frum) or giving it a trump card issue in November (per Mickey Kaus). Prosperity and low unemployment don’t naturally prompt worries about cheap labor taking away jobs. Nor can the development be credibly linked to post-9/11 national security concerns. There’s a natural worry about terrorists crossing the border from Mexico, but why would suicide bombers choose that difficult and somewhat dangerous route when they can walk across a wholly unpoliced 3,000 mile border with Canada?
President Bush’s motive for seeking a guest worker program is, at least, discernible. Aside from his general free trade convictions, he would like to give the National Action Party a visible political success to boost its candidates in this year’s Mexican elections. PAN is a pretty decent friend of the United States, while the other two major Mexican parties represent Castroism and corruption. Giving voters a reason to like it seems like a sensible realpolitik idea, and the proposed program is very modest in scope. It ought not really to be controversial.
But it is, especially among a large segment of conservative Republicans, including many, such as the editors of National Review who can’t be dismissed out of hand as nativists or protectionists. It’s astonishing to hear populist rhetoric in a quasi-socialist vein from such quarters, chiding “corporate interests” for seeking “cheap labor”. Will they next demand that Wal-Mart unionize or praise municipal “living wage” mandates?
It’s strange, too, that supporters of liberalization in the Third World are oblivious to the impact of American restrictionist measures on the Mexican economy. A sharp reduction in remittances from the U.S., now estimated at three percent of the Mexican GDP, would almost certainly reverse the economic growth of the past six years. Will that inspire Mexicans to rally behind President Fox’s real, albeit limited, steps toward a freer economy? Or will the Castroite Left use the ensuing recession as a springboard to power? Decide for yourself which is the more likely scenario.
In the long run, Mexico needs a large dose of free enterprise, but a mauled economy will remain stuck in short-run thinking. At the moment, several million Mexicans are pursuing the economically rational course of selling their labor where it will command the highest price. The best outcome will be for them to accumulate capital, go home to start their own businesses and spread the economic and political ideas that they have picked up north of the border. Mexico can hasten the evolution by becoming friendlier to business. America can stop it by expelling the capitalist leaven.
Many conservative restrictionists have, I realize, motives for their position that go beyond economics. They are repelled by the racism of groups like La Raza that hoist the “pro-immigration” banner. Rallies of illegal aliens waving Mexican flags, smarmy psuedo-piety from modernist Christian liberals and the bien-pensant habit of treating immigration laws as unworthy of obedience are not the way to win popularity with a right-of-center (or center-of-center) audience. But irritation is not a sound basis for policy making. Every cause has its unattractive fringe. (The restrictionist camp has its anti-Catholic and openly racist elements, but it wouldn’t be fair to call David Frum a bigot just because Donald Collins is.)
The other non-economic bugbear is multiculturalism, for which I have as little patience as any man. It does seem to me, though, that anyone who fears that an influx of Mexican dishwashers, cabbage pickers and textile workers will greatly alter the American way of life has missed the predominant cultural trend of the last hundred years, which has been the overwhelming of local traditions and folkways by American wares. Mexico is becoming Americanized a lot faster than the U.S. is turning into Mexico.
There is a genuine threat to our culture, but that is the threat from within, from all of the native-born Americans who hare after post-modernism, New Ageism, feminism, Marxism and similar anti-civilization ideologies. Lower class Mexicans, to the extent that they are a factor in the greater cultural war, are more for us than against. They haven’t yet grown sophisticated enough to toss aside the last 3,000 years and seek the victory of barbarism in one generation.
Having said all that, it’s hard to mourn the Rube Goldberg-ish “reform” bill that died in the Senate, which, on first impression, lives down to all the canards about designing horses by committee. I’d like to offer my own proposal:
Stop worrying about guest workers, visa limitations, etc. Let anyone who wishes go to an American consulate and, for a small fee to cover the cost of a background check, obtain a U.S. “foreign national identity card” (as high-tech and forgery-proof as technology makes possible). Getting the card would require giving fingerprints and DNA samples. It would be denied to applicants with serious disqualifications (major criminal violations, ties to terrorist organizations, untreated infectious diseases and the like). Those whose ambition of finding work in America was obviously a pipe dream would be tactfully counseled to seek opportunities elsewhere (and warned that the card comes with no welfare entitlements attached).
Holders of an FNID could enter the U.S., work here and obtain driver’s licenses (clearly marked with their foreign status). They could not vote, hold government jobs, or receive welfare benefits. (Cardinal Mahoney could feed them if he wanted to.) If they became destitute, they would have the right to a free meal, a change of clothes and transportation back home.
Wages earned by an FNID holder would be subject to Social Security and Medicare tax, but they would not be covered by those programs. Instead, their taxes would be set aside in individual accounts for their benefit, which they could draw on after reaching age 62 or to pay medical expenses.
FNID holders would be required to report their current addresses to Homeland Security and make occasional personal appearances at DHS offices. Failure to report or commission of a crime would be grounds for revocation of the card and immediate expulsion from the country (tempered by leniency for reasonable cause).
Persons currently living illegally in the U.S. would be eligible to obtain FNID’s upon payment of a moderately higher fee. To the extent that they had traceable FICA/HI payments, those amounts would be transferred to individual retirement/medical accounts, from which the extra fee could be deducted.
Legal immigrants, who have been playing by the rules and often suffering great annoyance as a consequence, would be rewarded by accelerated eligibility for citizenship and other incentives (which I haven’t yet figured out).
Conditions for obtaining citizenship would not change. For instance, time in the country as a FNID holder would not count toward the residency requirement.
Though refinements are doubtless needed, a system like this seems to me to combine economic rationality, enforceability and attention to national security needs. It wouldn’t solve all problems or satisfy those who simply want a smaller, whiter America
Addendum: One detail of this proposal that needs work is what to do about people who repeatedly come into the country, can’t find jobs and then take advantage of the free meal, clothes and transportation that I’ve suggested. I was going to say, after three or four times they should be shipped to Guantanamo Bay – except that that might prove to be an incentive.
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