Mexico Needs Reform, Not Mass Emigration

Every pair of feet that cross the Rio Grande is a testament to the utter failure of the Mexican government.  It has failed to provide economic opportunity to millions of its people.  And those people are doing what comes naturally to the wretched: migrating to find better lives.  It so happens that the United States, with its freer economy, is a mighty engine of prosperity and a no—brainer lure to the downtrodden.

Of course, the Mexican government is delighted to push this migration and offload its poor on United States.  According to Steve H. Hanke, a Professor of Applied Economics at The Johns Hopkins University, over 27 percent of Mexico's labor force works in the United States.  These workers are sending home $20 billion in remittances.  This sum equals one third of the total wage earnings in the formal sector of the Mexican economy and 10 percent of Mexico's exports.

The United States is the proverbial safety valve for a government that has a storied history of incompetence and corruption.  One study, cited by William P. Kucewicz on NRO, estimates that

'corruption, a lack of financial transparency, an inferior legal system and other institutional inadequacies add 5 percent to the cost of doing business with Mexico versus the United States.' 

Five percent is no small chunk of change when, collectively, transactions range in the billions of dollars. It is an unaffordable weight upon the economy. Imagine if the money were devoted to business investment or education.

Consider, too, that though privatization efforts began in the 1980s, the government still owns enough of the economy to make a difference, including Petroleos Mexicanos (PEMEX), the nation's petroleum company, which has been letting its reserves of oil shrink.  Otherwise, it over—regulates and overtaxes the rest.  Politicians and bureaucrats make nice livings running this mess of an economy.  If you're part of the government, or have strong ties to it, you won't be splashing across the Rio Grande any time soon. Thanks to the ranks of the unemployed, servants are pretty cheap.

Fat and happy as they may be with the status quo, Mexico's elites recognize a danger, a danger they've been exporting to the United States: millions of poor Mexicans.  Without the United States, the discontented masses are likely to erupt into political action, as was previewed in the recently disputed presidential election.  The contest between the establishment's Felipe Calderon and leftist Andres Manual Lopez Obrador points to a future where the poor, desperate for change, coalesce behind leftists, given the lack of better alternatives.  After this year's election, the elite will want more of the poor out of the country.

Should the leftists eventually win a presidential election, their policies will do nothing to improve the lot of the underclass, which is about half the country's population, other than apply a few band—aids.  An economy that suffers from too much government already will suffer far worse under leftist control. 

If the last century taught us anything, it is that statism kills economic growth.  Economies grow when producers keep most of what they earn.  Redistribution of wealth sounds good, but doesn't mean much when there is little to redistribute.  Cuba is a fine example of this.  And Big Government and corruption go hand—in—hand. Under the left in Mexico, there will be less and less to distribute, aggravated by the anticipated decline of Pemex production.

The trick is to free Mexico's economy, implement thorough reform of tax and regulation policies and put the government in its proper role of referee and provider of essential services, which includes education and skills training.  Privatize Pemex or at least allow foreign explorataion of Mexico's oil reserves. And there needs to be a big campaign that sweeps corruption from the halls of government.

For the elite, reforma sounds nice tripping off their tongues, but enacting the systemic reforms that are necessary to free the Mexican economy and clean up government smacks a little too much of revolucion.  And a revolution that breaks the government's grip on the economy, curtails power and dries up income for politicians and bureaucrats doesn't make for the Good Life, Mexican style. Not for them.

The only way true reform will happen is if pressure is applied to Mexico's elites.  That pressure can come in many ways, but one sure way is to keep Mexico's poor in Mexico.  As long as the United States is Mexico's safety value, enough pressure may be siphoned off to avert change.

It doesn't take a genius to figure out why Mexico protests the construction of a fence along its border with the United States.  A fence, along with enhanced technology to monitor the border, and with a beefed up border patrol, means more illegals caught and turned back.  That means the United States isn't playing nice, isn't doing its part in helping Mexico's elites avoid the hard choices and tough policy prescriptions that would mean so much to the nation's poor.

Getting closer to sealing the border certainly helps the United States in the near term, and it forces Mexico to face its deep—seated problems.  But in the long haul, it is important for the United States that Mexicans want to stay in Mexico.  No border can be sealed entirely, and, over time, the costs of doing so may be burdensome.  And most human beings, equipped with ingenuity, will eventually find ways around obstacles.  Permanently staunching the flow of illegals depends on a free and growing Mexican economy and a largely corruption—free government.

Pressure for Change 

Securing the border, slapping stiff fines on businesses that hire illegals and random high profile roundups of illegals are all important elements in a strategy of keeping Mexicans in Mexico.  But those measures alone are insufficient.  The United States needs to help freedom—loving, reform—minded Mexicans succeed.

It is high time for the United States to pursue an honest policy toward Mexico, one that openly identifies a government—dominated economy and corruption as the primary culprits in the illegal immigration crisis.  Mexicans deserve to know why their economy has failed and how that failure has hurt them.  The United States should let Mexican reformers know that we understand the need for a comprehensive agenda for change, because it's never enough to just tell people what's wrong.  And no one wants to leave solutions to the leftists, who will promise the sky to disgusted and desperate Mexicans.

Other ideas involve establishing a Mexico Reform Institute to assist Mexicans in acquiring the knowledge and skills to effect change.  The United States could sponsor all sorts of information expressly to promote reform and urge action. Everything from conferences on the subject to Voice of America broadcasts in Spanish.

The Mexican—American community should be a vast resource. It must be an integral part of the strategy. The US Government tolerating misery in Mexico has been no boon for Mexican—Americans, after all. Pride in their own achievements in America can become a part of their desire to help those on the other side of the border bring Mexico to its full potential as a North American nation characterized by liberty and prosperity.

Finally, though this may seem a bit peevish, make illegals agents of change in Mexico.  Illegals who are caught should be given a pre—departure education, a dozen pamphlets each and a few dollars and told to distribute the pamphlets in their towns and villages.  If the Mexican government can provide its poor with brochures on how to enter the United States illegally, then the United States can give illegals 'Roadmap to Prosperity' pamphlets in return.

So, you're a step ahead of me?  You say that Mexican elites and American liberals will wave the bloody flag of chauvinism—meddlesome, arrogant gringos at it again.  But what's more meddlesome than millions of Mexican illegals in the United States?  What's more arrogant than a government intent on casting off its poorest citizens rather than freeing its economy and ending corruption.

Call this a variation on the Bush Doctrine.  If terrorism can't end unless change occurs within societies that foster terrorism, than the same can be said of illegal immigration.

It's time for Mexico to change.

Jeffrey Schmidt is a 24—year veteran of politics and public affairs.  He consults with corporate clients on federal and state tax and regulation issues and lives in Pittsburgh, Pennsylvania.

Every pair of feet that cross the Rio Grande is a testament to the utter failure of the Mexican government.  It has failed to provide economic opportunity to millions of its people.  And those people are doing what comes naturally to the wretched: migrating to find better lives.  It so happens that the United States, with its freer economy, is a mighty engine of prosperity and a no—brainer lure to the downtrodden.

Of course, the Mexican government is delighted to push this migration and offload its poor on United States.  According to Steve H. Hanke, a Professor of Applied Economics at The Johns Hopkins University, over 27 percent of Mexico's labor force works in the United States.  These workers are sending home $20 billion in remittances.  This sum equals one third of the total wage earnings in the formal sector of the Mexican economy and 10 percent of Mexico's exports.

The United States is the proverbial safety valve for a government that has a storied history of incompetence and corruption.  One study, cited by William P. Kucewicz on NRO, estimates that

'corruption, a lack of financial transparency, an inferior legal system and other institutional inadequacies add 5 percent to the cost of doing business with Mexico versus the United States.' 

Five percent is no small chunk of change when, collectively, transactions range in the billions of dollars. It is an unaffordable weight upon the economy. Imagine if the money were devoted to business investment or education.

Consider, too, that though privatization efforts began in the 1980s, the government still owns enough of the economy to make a difference, including Petroleos Mexicanos (PEMEX), the nation's petroleum company, which has been letting its reserves of oil shrink.  Otherwise, it over—regulates and overtaxes the rest.  Politicians and bureaucrats make nice livings running this mess of an economy.  If you're part of the government, or have strong ties to it, you won't be splashing across the Rio Grande any time soon. Thanks to the ranks of the unemployed, servants are pretty cheap.

Fat and happy as they may be with the status quo, Mexico's elites recognize a danger, a danger they've been exporting to the United States: millions of poor Mexicans.  Without the United States, the discontented masses are likely to erupt into political action, as was previewed in the recently disputed presidential election.  The contest between the establishment's Felipe Calderon and leftist Andres Manual Lopez Obrador points to a future where the poor, desperate for change, coalesce behind leftists, given the lack of better alternatives.  After this year's election, the elite will want more of the poor out of the country.

Should the leftists eventually win a presidential election, their policies will do nothing to improve the lot of the underclass, which is about half the country's population, other than apply a few band—aids.  An economy that suffers from too much government already will suffer far worse under leftist control. 

If the last century taught us anything, it is that statism kills economic growth.  Economies grow when producers keep most of what they earn.  Redistribution of wealth sounds good, but doesn't mean much when there is little to redistribute.  Cuba is a fine example of this.  And Big Government and corruption go hand—in—hand. Under the left in Mexico, there will be less and less to distribute, aggravated by the anticipated decline of Pemex production.

The trick is to free Mexico's economy, implement thorough reform of tax and regulation policies and put the government in its proper role of referee and provider of essential services, which includes education and skills training.  Privatize Pemex or at least allow foreign explorataion of Mexico's oil reserves. And there needs to be a big campaign that sweeps corruption from the halls of government.

For the elite, reforma sounds nice tripping off their tongues, but enacting the systemic reforms that are necessary to free the Mexican economy and clean up government smacks a little too much of revolucion.  And a revolution that breaks the government's grip on the economy, curtails power and dries up income for politicians and bureaucrats doesn't make for the Good Life, Mexican style. Not for them.

The only way true reform will happen is if pressure is applied to Mexico's elites.  That pressure can come in many ways, but one sure way is to keep Mexico's poor in Mexico.  As long as the United States is Mexico's safety value, enough pressure may be siphoned off to avert change.

It doesn't take a genius to figure out why Mexico protests the construction of a fence along its border with the United States.  A fence, along with enhanced technology to monitor the border, and with a beefed up border patrol, means more illegals caught and turned back.  That means the United States isn't playing nice, isn't doing its part in helping Mexico's elites avoid the hard choices and tough policy prescriptions that would mean so much to the nation's poor.

Getting closer to sealing the border certainly helps the United States in the near term, and it forces Mexico to face its deep—seated problems.  But in the long haul, it is important for the United States that Mexicans want to stay in Mexico.  No border can be sealed entirely, and, over time, the costs of doing so may be burdensome.  And most human beings, equipped with ingenuity, will eventually find ways around obstacles.  Permanently staunching the flow of illegals depends on a free and growing Mexican economy and a largely corruption—free government.

Pressure for Change 

Securing the border, slapping stiff fines on businesses that hire illegals and random high profile roundups of illegals are all important elements in a strategy of keeping Mexicans in Mexico.  But those measures alone are insufficient.  The United States needs to help freedom—loving, reform—minded Mexicans succeed.

It is high time for the United States to pursue an honest policy toward Mexico, one that openly identifies a government—dominated economy and corruption as the primary culprits in the illegal immigration crisis.  Mexicans deserve to know why their economy has failed and how that failure has hurt them.  The United States should let Mexican reformers know that we understand the need for a comprehensive agenda for change, because it's never enough to just tell people what's wrong.  And no one wants to leave solutions to the leftists, who will promise the sky to disgusted and desperate Mexicans.

Other ideas involve establishing a Mexico Reform Institute to assist Mexicans in acquiring the knowledge and skills to effect change.  The United States could sponsor all sorts of information expressly to promote reform and urge action. Everything from conferences on the subject to Voice of America broadcasts in Spanish.

The Mexican—American community should be a vast resource. It must be an integral part of the strategy. The US Government tolerating misery in Mexico has been no boon for Mexican—Americans, after all. Pride in their own achievements in America can become a part of their desire to help those on the other side of the border bring Mexico to its full potential as a North American nation characterized by liberty and prosperity.

Finally, though this may seem a bit peevish, make illegals agents of change in Mexico.  Illegals who are caught should be given a pre—departure education, a dozen pamphlets each and a few dollars and told to distribute the pamphlets in their towns and villages.  If the Mexican government can provide its poor with brochures on how to enter the United States illegally, then the United States can give illegals 'Roadmap to Prosperity' pamphlets in return.

So, you're a step ahead of me?  You say that Mexican elites and American liberals will wave the bloody flag of chauvinism—meddlesome, arrogant gringos at it again.  But what's more meddlesome than millions of Mexican illegals in the United States?  What's more arrogant than a government intent on casting off its poorest citizens rather than freeing its economy and ending corruption.

Call this a variation on the Bush Doctrine.  If terrorism can't end unless change occurs within societies that foster terrorism, than the same can be said of illegal immigration.

It's time for Mexico to change.

Jeffrey Schmidt is a 24—year veteran of politics and public affairs.  He consults with corporate clients on federal and state tax and regulation issues and lives in Pittsburgh, Pennsylvania.