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Rethinking Immigration May 1, 2009

Posted by The Armchair Economist in Uncategorized.
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I’ve always been pro immigration.  A believer in the free market, I felt illegal immigrants are merely providing a cheap labor force for service oriented jobs that our own citizens refuse to fill at whatever specified wage.  (for example; cooking, cleaning,  harvesting, constructing mcmansions, etc).  Those against immigration argue that illegals increase the tax burden on regular citizens because they are utilizing public services (ie: public transportation, schools, health care, garbage collection) without paying taxes.  In a way, the illegals ARE paying for it (in a much more direct way than taxes), in allowing everyone in this country to enjoy lower costs for wherever these immigrants are employed (food, housing, cleaning).  Thus its a wash in my mind, and everyone benefits: we get our cheap labor, and the immigrants get a better job than they would in their home country.  Similarly, the country these immigrants come from benefits from the remittances sent home act as monetary injections to stimulate the local economy.

However, having spent several weeks in Guatemala and having spoken to several people and hearing different perspectives, I’m wondering if the countries supplying the illegal immigrants would benefit in the long run with more stringent anti immigration laws from the US.

The basic premise for the illegals venture into the US is obviously to find work.  Although they make a wage most US citizens consider unlivable, these wages are in reality a fortune for these folks as well as their families back home.  In fact while most Americans tend to look down upon illegals, they actually hold a higher social status in Guatemala because they have a high paying  and stable income.  The economic situation is fairly bleak in guatemala, with most guatemaltecos being severely underemployed (I’ve heard that 27% live in extreme poverty(<$1/day) and another 40% live in poverty (~$2/day)).  Similarly, although there are labor laws and minimum wage laws, they are rarely enforced.  It is not difficult to understand the motivation for taking the risk of violence, death, and deportation a for the chance to work for $10/hr at a construction job.

To understand this, it helps to have some background on Guatemalan politics.  The country is essentially run by an oligarchy of ~35 families that dominate the economy.  Similarly, the government and congress is dominated by the oligarchy resulting in a facade of a democracy. In the time I was here, there was an instance where we had to convert our medical brigade mission from seeing sick patients to merely doing well check visits for kids at a school because the Presidents wife was at a nearby village handing out money to garner support in the next election, thus all of the adults in our village went over there to get their share.  Because so many of Guatemalans have trouble living day to day and are generally fairly politically unsophisticated,  the future of their country and the potential implications of political change aren’t exactly at the forefront of their minds.  As a result the oligarchy continues to dominate politics resulting in business friendly laws that minimize taxes (resulting in poor social services – poor health care access – poor education system reinforcing the cycle of an undereducated population and the persistence of a ruling oligarchy with a sham ‘democracy’).  Even when there are laws it has no bite, for example the minimum wage for an adult male is something like  48Q/day (~5$) the real rate is about half of that ~24Q/day.

Bringing this back to immigration, the appeal of the american dream means that in some villages there are almost no men.  This results in villages that consist almost entirely of the elderly, women, and children.  The need to take care of their children means these women can’t enter the labor force to find jobs.  It is also very common for the illegal immigrants, who are away from their families for months/years at a time, to grow distant from their families, oftentimes meaning they will look for companions in the US, resulting in dwindling funds being sent back to their wives/children.  Additionally, the remaining family in Guatemala become dependent on this source of income and are less motivated to find stable work.

Consider this dilemma. Remittances from Guatemalan emigrant topped $3 billion in 2005 (totalling 10% of GDP in 2004)exceeding the total volume of exports or income from tourism, averaging to ~$306/month per family.  The reliance of the Guatemalan economy on remittances reinforces the status quo, maintaining an artificial sense of social stability, preventing any real economic or social impetus for political action to replace the oligarchical rule that is preventing Guatemala from ever establishing the infrastructure necessary to progress beyond a third world nation.

That being said, this perspective is obviously heavily skewed towards guatemala and not all illegal immigrants are guatemalan. Just some food for thought to add to the mix of the immigration debate.

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