$24,000,000,000.00 (That's Billion) Sent "Home" To Mexico
By patriotroom Posted in Immigration — Comments (35) / Email this page » / Leave a comment »
In 2007, "remittances," money sent back by Mexican workers to families in Mexico, beat out tourism as the second largest source of foreign money into the country. Only oil exports accounted for more.
That is $24 billion that was taken out of the American economy. It was not spent in American stores. Best Buy sold fewer televisions. Ford sold fewer cars and trucks. Winn Dixie and Safeway sold fewer groceries. U.S. Steel sold less steel. And yes, even Exxon/Mobil sold less gasoline than it could have. Those fewer sales curtailed the growth of jobs for Americans in those companies. It was taken completely out of our economy.
Most of this $24 billion was earned by illegals. That is not my statistic, it comes from the Mexican Government. According to the Washington Post.
Still, an estimated 400,000 to 650,000 Mexicans -- three-quarters of whom are undocumented -- cross the border each year to look for work in the United States, according to Mexican government estimates.
And it has really helped out down in ol' Mexico.
The money has transformed the landscape of many small towns, paying for new houses and new kitchens, cars and childcare, medical care and clothes.
So we know they paid the mortgages in Mexico. What about all the Mexicans in America that are having their homes foreclosed on in record numbers? How many mortgage payments were sent to Mexico instead of to American mortgage companies? How many American neighborhoods could have kept up their property values if not for so many of these foreclosures?
So not only did the money not stay in the United States, it was earned without paying federal or state income taxes, Social Security taxes, or Medicare taxes. And while the the money was being sucked out of our economy, Americans also paid for the illegals' health care, education, welfare, and all of the government benefits and infrastructure to support them.
And $24 billion was in 2007 alone. The chart from the Post article shows (by my estimate) about $137 billion was sent to Mexico over the last decade.
To give you an idea how much we are talking about, $24 billion is more than the entire Gross Domestic Product of the country of El Salvador and almost as much as Honduras and Bolivia, combined. Some figures, all GDP in millions of dollars from 2007. (For the mathematically challenged, the first two numbers are the billions. The gray vertical line is my ineptitude with the MS Paint program).
The irony is that the the Washington Post story is not about how this is affecting Americans. It is all about how the slowing U.S. economy is causing a drop in remittances and its effect on Mexico.
The drop-off in remittances to Mexico, which economists believe could accelerate this summer if the U.S. economy continues to falter, is swelling into a catastrophe here in the central Mexican state of Zacatecas, which has Mexico's highest migration rate. Hit with particular ferocity are small villages that have been virtually abandoned by all but the elderly parents of migrants. In the Zacatecan village of Lo de Luna, a collection of crudely built brick homes six miles from the nearest paved road, seniors such asErnesto Hernández have been left nearly destitute.
Hernández, 80, doesn't take his diabetes medicine anymore. It costs too much, and he'd rather buy food than pills.
Ever since his son, Alfonso, lost his home in the United States to foreclosure a few months ago and stopped sending money for medicine and farm supplies, life has been "a disaster, a total disaster," Hernández said.
But we haven't even gotten to the good part yet. Experts seem to think the net effect of all this is to cause more Mexicans to come here, not fewer.
Economists here believe the decline in remittances is already pushing thousands into extreme poverty and could lead to a significant increase in migration as desperate Mexicans, deprived of support from abroad, flee to an ever more difficult U.S. job market.
"It is a vicious, perverse circle," Juan Manuel Padilla, a demographer in the economics school at the University of Zacatecas, said in an interview. "Work opportunities here are nonexistent, so this is going to cause more migration to the United States, even though it is getting harder to find work over there."
Let's play the dictionary game. From Merriam-Webster.
Parasitism: (noun) An intimate association between organisms of two or more kinds; especially: one in which a parasite obtains benefits from a host which it usually injures.
Now we'll listen to the economists and see if our definition applies.
But some economists also say the giant sums sent to Mexico have created a sense of complacency, especially among government officials who have failed to right the country's wobbly economy.
"This is demonstrating that there is an increased dependence on remittances and a great vulnerability for the country," said Rodolfo García Zamora, an economics professor at the University of Zacatecas and one of Mexico's leading authorities on remittances. "Neither the government nor the families who are affected have a good alternative to remittances."
If not dealt with properly, some parasites can kill you.
Bill Dupray at The Patriot Room
1) its the most efficient form of "foreign aid." It goes right to families and the poor instead of to some government agent's cousin's son. It is earned income, not just a gift. And it is spent by poorer families on what they need, not what the government thinks they should need.
2) People making this money are buying a lot of things in the U.S. as well, thus increasing demand for goods. You can't talk about people earning money and sending it home if you don't talk about the money they spend in the U.S. as well.
3) This is not a zero sum game. If a worker did not create that wealth, it may not have been created at all. The pie grows every year because we have more people creating more wealth. The idea that the pie is one size and every dollar one person gets comes out of the pocket of another person is a fundamental flaw in the economic thinking of the left. I hope the right doesn't go down that path of ignorance. The wealth creation happening because workers are working inside a capitalist society should be applauded, not derided.
None of this takes away from the fact that people illegal working should not be working. But that's a rule of law issue, not an economic issue. The economics are in favor of allowing more people to migrate to where they can create the most wealth for their work. Thanks to our successful capitalist system, that means economics alone would lead to an inflow of working immigrants.
Also if it wasn't a rule of law issue, then the easiest solution (which fixes most of the "don't pay taxes, taxpayers cover their expenses" etc arguments) is to legalize all of them. Lift the cap on immigration and those problems disappear.
Illegal immigration is a law and order issue, not an economic issue.
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This argument would work a lot better if we really lived in a pure capitalist society. But the fact is, there is a huge socialist component to our economy beginning with our public schools.
The net economic effect of the illegal migration is undoubtedly a larger GDP but within that big picture are very distinct winners and losers. The winners are the immigrants themselves and the people who hire them. The employers get a tremendous cheap labor subsidy from other taxpayers who are stuck with the social costs imposed by the illegals. It is a classic case of the tradgedy of the commons. Internalize profits and externalize costs. At the end of the day it results in an enormous wealth transfer from the poor and the middleclass to the rich.
The losers are middleclass taxpayers who pick up the tab and the poor who compete for the same jobs and suffer both less opportunity and lower and stagnant wages. The middleclass then suffer the double whammy of having to supplement the income of the poor who would otherwise have been earning higher wages and been self supporting.
I believe it was Milton Friedman who observed that mass immigration was incompatible with a welfare state.
The winners are the immigrants themselves and the people who hire them.
Right...and who buys from these employers?
Everybody.
So everybody benefits.
And yes, it would be better without welfare problems, but that's an argument against welfare, not against immigration.
"I ain't never votin' fo another Democrat so long as I can draw breath! I'll vote for a dog first!" - Leola Thomas
:thumbs up:
I love how nativists immediately jump to protectionist arguments when it comes to immigration, even when they would normally object to such arguments.
There are reasons to be concerned about immigration. This ain't one of them.
"I ain't never votin' fo another Democrat so long as I can draw breath! I'll vote for a dog first!" - Leola Thomas
I will start calling you by an appropriate name; Brain dead idiot,
If immigration, even illegal immigration, is such an unalloyed good, then why are we screwing around with a few million Mexicans. They are not rally all that cheap. Hell, why don't we just import several tens of millions of dirt poor people from Zimbabwe, Zaire, and Sri Lanka. They will work for peanuts and then we could be REALLY rich!
How many do you think is enough? After all you seem to think that any number of Mexicans flooding our cities is a good thing so how about One Hundred million? Hell why not half a billion, then we would really be prosperous.
One little snag though, My city and state are currently having to raise my taxes. And medical expenses are through the roof, as well as auto insurance because you see, so many of these wonderful illegals have kids in school, use other social services, many are in jail, many use emergency rooms, and drive and get in accidents with no licence or insurance.
So why don't we have a special tax on the 45 states who are NOT on the southern border so that you can help us out with the costs. Or maybe we can just tax stupid libertarians who think there is no downside to illegal immigration.
People like Geraldo Rivera point out to "nativist" sentiment in previous waves of immigration and use it like a talisman. But those earlier arguments, that too much immigration caused economic and social chaos, had merit. As a result after each wave of immigration we had a slow down in immigration to allow a time for assimilation.
Time again for a slowdown.
"Nothing works like freedom, Nothing succeeds like liberty"
Kyle
The fact that the rate at which illegals work for is less then us citizens sure makes it an economic issue as well as law and order issue.
Yes. Which is good.
It's the exact same principle as free trade.
The debate is, or should be about, negative externalities, not "Stealing American jobs," which is protectionist nonsense.
"I ain't never votin' fo another Democrat so long as I can draw breath! I'll vote for a dog first!" - Leola Thomas
It is a very dynamic system and if illegals were not here, legal citizens and residents would do the work at market price and more would stay here. Those workers would also buy everything the illegals buy (and more) because they are not taking it out of the American economy.
Bill Dupray at The Patriot Room
we could devise a system to monitor foreign transfers and require that the person making the transfer is in the US legally.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.
Why can't we devise a system of withholding a percentage for Federal taxes for those who cannot prove the money has already been taxed?
So, you want me to have to provide to Western Union not only proof of citizenship but also a copy of my tax returns? This just gets better and better.
-exits
You really want the government to monitor every single monetary transaction which happens to cross our borders? I should have to prove my citizenship to send my girlfriend who lives in Santiago, Chile a couple of hundred bucks? I think that that sounds terrifying.
I was actually having sort of a related conversation with a friend just the other day on the topic of national ID cards. A real, fundamental distrust of the government and an instinct to minimize its power and consequent role in our lives used to be an intrinsic, defining part of conservatism. My impression is that that's really not the case anymore. Republicans talk about low taxes, but beyond that they seem happy to cede to the government just about any power it wants, so long as they think it'll use it towards an end to which they approve.
My impression was that this shift mostly occurred as a result of September 11th and mostly applied to security issues. I guess that it's spread to immigration as well. Sigh.
-exits
This is of course the company that became incredibly important as the telegraph provider. After the telephone was invented, they became the manufacturing arm of the Bell System, but of course they retained the telegraph business.
Now, about all they have left is the money-transfer business, and a big part of it goes to Mexico, of course.
Here's the fascinating part: Western Union is one of the larger employers in the state of Colorado. And Colorado, like most states, has two US Senators. The Senate, as we know, is where special interests go to get relief from the public's general interest.
And that means of course that Western Union isn't about to see any significant additional regulation or other curtailment of their business.
You say…
“Also if it wasn't a rule of law issue, then the easiest solution (which fixes most of the "don't pay taxes, taxpayers cover their expenses" etc arguments) is to legalize all of them. Lift the cap on immigration and those problems disappear.
Uncapped, unregulated legal/illegal immigration cannot work in our country because of our generous social programs. Simply legalizing those that are here and throwing open the legal immigration faucet without limits or qualifications would only compound the current problem many fold.
Also as a side effect it would completely doom the conservative movement as I suspect all these new citizens from socialist countries would immediately side with the Democrats.
I think it'd be foolish to try to get back to it now, especially when we're using fiat money instead of gold.
There are real arguments against illegal immigration being tolerated. This isn't one of them.
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"If we want to take this party back, and I think we can someday, let’s get to work." – Barry Goldwater
back to Mexico for all I care. Part of capitalism is collecting the $33 Billion in taxes that would go along with that. That is my only point. There may be no such thing as a free lunch but lots of people seem to be getting them.
Bill Dupray at The Patriot Room
So I'm supposed to lament lost TAX REVENUE?
No sale.
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"If we want to take this party back, and I think we can someday, let’s get to work." – Barry Goldwater
If that's your problem, then I presume you're in support of a full and quick amnesty so that we can start collecting taxes on this labor. Right?
Honestly, that is one argument for amnesty. No longer in the shadows. No longer committing a myriad of crimes to mask the original crime. No longer avoiding taxes, needed forged documents, etc.
If all you're worried about is tax revenue, we should grant full amnesty tomorrow and start collecting.
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is not mutually exclusive with legalization. We should be able to collect taxes on income earned by anybody. We don't have to legalize everybody to do that. I am not necessarily in favor of a guest worker program, but that is one way to do it. The key is to make the employers check for valid social security numbers, a valid guest worker number, or whatever, and fine the bejesus out of them if they hire someone without the papers. Why should the Mexicans be illegal AND not pay taxes? It is an insult to Americans who obey the law generally and who would rather not pay any taxes either.
Bill Dupray at The Patriot Room
I hear this argument quite a bit that illegal aliens don't pay taxes but I just don't see how. It would seem that their employers would withhold their taxes like they do with legal workers.
nilram
The vast underground economy sees to that. Many illegals work without paying any taxes completely under the table.
There's all sorts of ways to go after businesses that do this sort of thing, but our elected politicians do not have the backbone to do it.
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Proud member of the Barry Goldwater wing of the party !
Many do pay taxes. If they have documents such that there employers don't know (and don't try to hard to find out), they are treated like regular employees with taxes and all.
However, some industries hire independent contractors (not employees) that ostensibly pay their own taxes just like self-employed workers.
Further, there are some areas that are entirely off the books. They get paid in cash per project.
The latter two don't pay income or social security taxes. Of course, many of them wouldn't owe much in income taxes (and might actually make money from the Earned Income Tax Credit). Overall, it might be a net negative if these low-income workers were within the income tax system.
It should be noted that all people in the U.S. pay sales taxes. And all homeowners pay property taxes on their home but many of these people do not own their own home by renting or living with someone who does own their home.
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This isn't just something about illegals. It is naive to think that the employers would just withhold; it is to their benefit to have the employee work under the table - no workers comp, no FICA match, no UI, much less record keeping. It can be a dangerous game, but lots of employers "work under the table" entirely, especially in construction, agriculture, auto repair, etc. It is the rare skilled craftsman in America that doesn't do some side work for cash and in seasonal industries it is a way of life in the off-season, made all the better by the fact that you can collect your UI and make a lot of money doing side work for cash. Of course, law abiding sort that I am, I'd never do it, but I know people who'd never think of paying taxes and doing all that paperwork just to get a little remodeling done, or painting, roofing, landscaping, bodywork. You know, the jobs Americans won't do.
In Vino Veritas
To the extent that black labor markets are a problem at all, they have nothing to do with illegal immigration.
You get black markets when regulated markets impose too many costs to make economic sense. Get rid of all the stupid labor laws and taxes, and the black markets will go away.
I hate to sound like I'm condoning illegal behavior (I'm not), but we obviously haven't found the right balance between protecting the non-financial interests of workers and the political clout of labor unions (which are the objectives of labor regulation), and making sure that people can actually make a living.
Year 2000 census indicates there were 18 million Mexicans in the US. Lets say, for the sake of argument, that there are 24 million today. That's only $1000 each per year that we've paid Mexico for all the extra labour and economic activity. You're right, it does smack of parasitism.
And now we're taxing their labour to subsidize ethanol which is pricing their parents remaining in Mexico out of their evening tortillas. When does the madness stop?
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They are much richer in per capita terms than most of the "developing" world. Africa has an average of about $1,000 per capita. Mexico is roughly $8,500 per capita. The US is $46,000 per capita.
Comparing Mexico to the US makes Mexico look very poor. But it is the richest country in Latin America and better off than most of the Middle East and all of Africa in per capita terms To give a comparison, Mexico is as rich per capita as Russia.
Also since Mexico is large in population (100M), it's overall GDP is very large. It is the 14th largest economy in the world at $840B/yr. This is more than Australia or Turkey and in the range of India (w/ 1B people) at $910B and South Korea at $890B.
Or to put it as bluntly as possible, Mexico is 3 times richer than China in per capita terms ($8,500 v. 2,400).
So yes it's a "developing" country if there are only two group of countries. But most scholars consider it a "middle income" nation.
Finally, here is decent place to read about the general economy of Mexico. Specifically, NAFTA helped create an elongated economic boom in the US and Mexico. Mexico has grown at over 5% a year since then. And trade has skyrocketed on both sides of the border. Most of the wealth and income gains have been in Northern Mexico where the average income is about the national average of $8,400.
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The problem with Mexico is not that it's "poor", it's that it's comparatively poor to the U.S. because the U.S. is so rich. There hasn't been a time in modern history that there has been such a gigantic wealth gap between neighboring countries.
Mexico is improving rapidly, however, and will continue to do so if we don't f*&k it up with protectionist policies.
"I ain't never votin' fo another Democrat so long as I can draw breath! I'll vote for a dog first!" - Leola Thomas
that its wealth is so badly distributed and the distribution is so corrupt. It still operates on a patron-client system where somebody is stepping on every transaction and you have to pay for the opportunity to work. I suspect all the new industrial work in northern Mexico has something resembling a true waqe system, but I'd be willing to bet that you have to pay somebody to get the job and in many instances have to pay somebody a piece of your wage to keep the job. Hell, there's plenty enough of that in the US; try getting a job on a big construction project without paying the union dispatcher, and I don't mean just paying the initiation fees.
In Vino Veritas
I wonder what the NET swing would be between all that spending remaining local and higher labor costs. But yeah, something's really screwey.
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