Tuesday, July 01, 2008

Problem solved...

Pat Buchanan can pause for breath. The wave of Hispanic immigrants is slowing.

Unfortunately, the cost may be a vibrant, expanding economy.
Such figures miss those who cross successfully and recount those detained several times, but they show a clear trend. So does evidence from remittances. Mexico’s central bank reports that, after years of eye-popping growth, the amount of cash sent home by migrants inside America is falling. Last year such flows were worth $24 billion—more valuable than tourism. But in the first quarter of this year the year-on-year figure was down 2.9%, according to a new report by Goldman Sachs.

Better scrutiny of flows across borders after 2001 probably exaggerated the real rate of growth, so it was bound to taper eventually. But even with that in mind, it is clear that migrants really are sending less money home. A poll of migrants across America published by the Inter-American Development Bank in April confirmed that fewer are sending money back regularly: in 2006 three-quarters of migrants did, this year only half report doing so. Nor is it only Mexico; Brazil, the second-largest recipient of remittances in the region, saw them slide by 4% last year, to $7.1 billion.

Two factors, each as ugly as the other, probably explain the double downturn in flows of people and money: hostility to migrants, especially illegal ones, and America’s deepening economic gloom. The impact of the former is plain: state-level laws that make it illegal to employ migrants without documents, ever more aggressive raids on businesses that hire such workers, and better technology to share information that will lead to catching them. [More]
Of course it is not so simple as to suggest we scuttle our economy to keep outsiders from wanting to come in. But oddly enough, that thinking could be completely wrong. It was the influx of cheap labor that fired the engines of our economy according to some.
Letting in a low-skilled immigrant to mow my lawn will indeed lower average productivity in this country. But I will be better off.

To the extent that low-skilled immigrants are significant, standard productivity indicators can be misleading. For example, suppose that France lets in a bunch of low-skilled immigrants and puts them on welfare, while we let in a bunch of low-skilled immigrants and put them to work. Then our GDP per capita will be higher, but France's GDP per worker will be higher and their GDP per hour of work will be higher. If you use the latter as a measure of productivity, you would say that France is following a brilliant strategy, and we should copy it.

To get closer to a relevant measure of national economic performance, you might invent something like endowment-adjusted consumption per working-age adult. By adjusting for endowment, you correct for the lower skills of immigrants. By using consumption, you get a measure that is closer to the quality of life. And by using working-age adults, you don't treat high unemployment of low-skilled workers as a good thing.

But it's important to remember that you personally don't get to consume GDP per capita. You get to consume based on the purchasing power of what you produce. If immigrants lower the cost of goods and services for us, then bully for immigrants. [More]
The "rise of the rest" could very well solve our illegal immigration problem. And we may miss it.
Bad news travels fast. Word from communities south of the border is that a life-gambling trip to the United States in search of work is not worth the effort.

America's weak economy and its strong communication system have done more to stem the flow of immigration than Lou Dobbs and could have ever imagined. The question becomes, do we really need a wall? There will be fewer immigrants coming our way, and with fewer workers, who'll build it? It turns out that bad news through word-of-mouth is stronger than the Patriot Act.

And here's the greatest irony: if the wall is scrapped because of a lack of need, we could thank the immigrant grapevine for saving the Constitution from decimation. Granted, our Constitution won't be safe until the Patriot Act and those who hide behind it to propagate their fear, are gone. But until that happens, our weak economy seems to be doing yeoman's work along the border. [More]
Let's hear it for recession.

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