Commentary | Economic Growth

What to Really Do about Immigration

Opinion pieces and speeches by EPI staff and associates.


What to Really Do about Immigration

Half a million Mexicans will cross the border annually for the next 15 years.
Here’s a plan to enable them to stay home

By Jeff Faux

The backlash against illegal immigration — which looks like the Republicans’ only hope for a wedge issue in next November’s election — is largely aimed at Latinos, of whom the vast majority are Mexicans. In fact almost 60 percent of all undocumented workers in the United States are from Mexico, and close to 12 million of that country’s nationals now live in the U.S. Fix the Mexican part of the problem and the divisive politics of illegal immigration shrink dramatically.

But the news from south of the border is not good. The number of Mexican workers continues to grow faster than the number of Mexican jobs that pay enough to earn a living. And there is no end to this problem in sight. A November 2007 Mexican government report concluded that even if the overall economy grows steadily, low wages and social inequality will continue to generate heavy out-migration to the U.S. at the current annual rate of roughly 500,000 — for the next 15 years!

Moreover, Mexico’s overall growth is flagging. The International Monetary Fund estimates that Mexico grew slower in 2007 than all but one nation in Latin America. For 2008, it expects Mexico to be at the bottom — below even Haiti. The next few years look particularly grim as well. The slowdown in the U.S. economy is already rippling though Mexico. In the first nine months of 2007, rich Mexicans invested more capital out of the country than rich foreigners invested in Mexico. Remittances from Mexican workers in the U.S. — next to oil revenues (and not counting drugs), the biggest source of the country’s foreign exchange — have leveled off. Mexico may also be heading toward its own major financial crisis brought on by sub-prime credit-card loans from the almost totally foreign-owned Mexican banks to consumers who don’t earn enough to pay them back.

In January 2008, the last restrictions on imports of corn, wheat, and beans will be lifted, as required by the North American Free Trade Agreement. Despite promises that NAFTA would dramatically reduce Mexican out-migration, it actually accelerated it. Imports of food by highly subsidized U.S. and Canadian agribusinesses have driven millions of people out of Mexico’s rural areas. In the absence of jobs in the cities, many moved north where in desperation they risk their lives to cross the border in search of work. Even more will now be coming.

Mexico is a not a naturally poor country. It has plenty of resources, including oil, hardworking people, and a domestic market of over 100 million potential consumers. Mexico’s problem is that it is ruled by an oligarchy of rich families in a system of hyper-crony capitalism. By facilitating business partnerships between the rich and powerful in all three countries, NAFTA reinforced that system, putting off the need for the Mexican elite to share the benefits of growth with their country’s people.

The dirty little secret of Mexican out-migration to the U.S. is that it has been encouraged by the oligarch-run governments of Mexico, as a safety valve to get rid of ambitious, frustrated workers who otherwise could be trouble at home. “If the Americans seal off the border,” the wife of a high-ranking Mexican official told me at a dinner recently, “there will be a revolution here.” Others around the table nodded. “So,” I asked, “the Mexican government is encouraging illegal immigration?” Her husband diplomatically changed the subject, but virtually everyone in Mexico knows that the racketeer coyotes who organize the border crossings could not operate without at least tacit government approval.

Immigration, by definition, is a phenomenon of both sides of a frontier. Yet our egocentric American politics defines the question as if it can be entirely answered within our borders by unilateral U.S. government decisions. Thus framed, it is a debate that Democrats cannot win, because they have no credible response to non-Latino voters’ fear that immigration across the southern border is spinning out of control.

The generic solution of the Republican right is simple and easy to understand: Deport people who are here illegally and build an impenetrable wall along the border.
In contrast, the Democratic bumper-sticker solution to illegal immigration is to legalize those who are here. This is certainly a sensible proposal, since wholesale deportation is impractical. But it doesn’t deal with the future. Indeed, it is not unreasonable for the average voter to think that legalizing those already here would increase the incentive for those who still want to come.

This has led some Democrats — including liberals like Sen. Ted Kennedy — to endorse George Bush’s proposal to legalize future flows with a program of temporary “guest workers.” Popular resistance to such a program is high, however, and the House of Representatives last year said no. This year the Senate approved a bill that would allow a maximum of 200,000 temporary workers from all countries to work here at any one time. This is the highest number that could conceivably gain enough political support for passage, and it is too small to accommodate anything near the number of Mexican workers who will be heading for the border in the next decade or so.

This leaves the Democrats with nothing to say about the future. The confused response of the otherwise cool and well-prepared Hillary Clinton to the question of issuing driver’s licenses to undocumented immigrants illustrates the danger. The Democrats will look weak — unable to stand up to their Latino constituency and at the same time dragged by the backlash further toward the GOP harder line. No one should underestimate the capacity of the Republican campaign apparatus to drive this visceral wedge deep and hard into the electorate’s consciousness.

To get out of this box, Democrats need to redefine the issue as a problem on both sides of the border. Specifically, this means a call to revise the failed NAFTA in order, among other things, to stimulate economic growth in Mexico and assure that its benefits are widely shared within the country.

The bargain that undergirded the creation of the European Union could serve as a rough model. When the EU was being negotiated, many in France, Germany, Great Britain, and other wealthier countries feared that they would be flooded with workers from poorer nations like Spain, Portugal, Ireland, and Greece. To    generate job growth in the poorer countries. It worked. Despite the EU’s provision for free movement of labor across the borders, when offered reasonable economic opportunities, workers in the poor countries stayed home.

The aim of a renegotiated NAFTA would be to provide for a similar fund for investment in Mexico in exchange for changes in Mexican law and institutions that would allow the income of Mexican workers to rise as their economy grows. These would include guarantees for free trade unions, enforceable minimum wages, and an increase in education, and other social spending. The cost would be about $100 billion, although much of it would be in the form of loan guarantees rather than cash. Not an insignificant sum, but certainly affordable.

Advocating a NAFTA renegotiation should not be a big stretch for any of the three Democratic front-runners. All have supported it in vague terms already. And in all three signatory countries, there are important political forces that would support a new agreem
ent. Polls show that most people in all three countries think that NAFTA was a bad deal for them. In the U.S. and Canada, labor and environmental groups want stronger social protections. In Mexico, many groups have been agitating for a revision of the agricultural provisions of the agreement, only to be told to forget about it because the Americans would never renegotiate NAFTA.

The Mexican big business elites — like their U.S. and Canadian counterparts — would of course rather leave things as they are. But the current Mexican president “won” election (many believe it was stolen) last year over his leftist rival by one-half of 1 percent. It would be very hard for his Mexican government to reject an open invitation by the next president of the United States to conclude a new bargain designed to lift up Mexico’s own workers, especially if it were coupled with a threat to seal off the border were it rejected.

Sooner or later, the U.S. will have to include Mexico in any serious effort to control illegal immigration. By starting this conversation now, the Democrats can wrest the initiative out of the hands of the right wing and build a consensus for a policy prescription that fits the geography of the problem. The alternative is to let the resentment fester and hope that the Republicans will keep their attack dogs leashed. Fat chance.

Jeff Faux is the founding president, and now Distinguished Fellow, of the Economic Policy Institute in Washington, D.C. 


See related work on Economic Growth

See more work by Jeff Faux