Posted on 05/11/2006 4:34:24 AM PDT by Tolik
Economists have long pointed out that relying on oil as a natural resource can be a long-term disaster for a developing nation. The income from exporting petroleum provides cash infusions that can distort a country's economy and mask structural problems while impeding reform. Petrodollars act like a lethal narcotic: A formerly impoverished country depends on short-term relief from oil profits at the risk of being reduced to an enfeebled addict.
Easy oil income also often promotes dictatorial government by allowing nationalist thugs to buy pricey weapons to threaten neighbors or to buy off internal dissent with lavish cash subsidies. Take away oil from Venezuela and Hugo Chavez would be just another failed Castro. Evo Morales is able to offer the old bankrupt socialism to poverty-stricken Bolivia largely due to the country's natural gas reserves.
Mexico also suffers from this unhealthy oil-exporting syndrome, as the government uses profits from its inefficient state-run industry to spread around subsidies in lieu of enacting long overdue wealth-creating measures. But worse still, Mexico suffers a double whammy by also receiving between $10 billion and $15 billion annually in remittances from its expatriate population in the United States.
Exporting its own poor turns out to be about the cash equivalent each day of selling on the open market about half a million barrels of $70 a barrel oil. The muscles of Mexico's former residents can prove just as deleterious as oil derricks to the long-term health of the country's economy.
Millions of unemployed Mexicans are now dependent upon money wired from the United States, where low-skill wages are now nine times higher than in Mexico. On the national level, such subsidies, like oil windfall profits, allow just enough money to hide the government's failure to promote the proper economic conditions - through the protection of property rights, tax reform, transparent investment laws, modern infrastructure, etc. - that would eventually lead to decent housing and well-paying jobs.
It may be counterintuitive to think that checks from hard-working expatriates are pernicious. But for a developing nation, remittances can prove as problematic as the proverbial plight of the lottery winner - sudden winnings that were not earned. In short, remittances, along with oil and tourism - not agriculture, engineering, education, manufacturing or finance - prop up an otherwise ailing Mexican economy. This helps explain why half of the country's 106 million citizens still live in poverty.
The billions of dollars Mexicans in the U.S. send back to their country pose another economic and ethical dilemma. Many illegal aliens in the U.S. allot nearly half their weekly paychecks to relatives in Mexico. But such deductions come right out of the workers' food, housing and transportation budgets here. So to survive, illegal aliens in the U.S. must endure cheap, substandard and often overcrowded housing. They cannot easily purchase their own health care or invest in safe and reliable cars.
Because the United States is a caring nation, the state often intervenes to offer illegal aliens costly entitlements - emergency-room medicine, legal help and subsidized housing and food - that provide some sort of parity to all its residents.
And when aliens are often paid in cash - that is off the books - the problem of remittances only worsens: The beneficiary Mexico still gets help from workers' pay, while the benefactor United States does not collect taxes.
Along with the lack of English, illegal status and insufficient education, remittances explain the poverty of many Mexican aliens in the U.S. In the American Southwest, it is now possible to see apartheid communities of Mexican nationals whose standard of living does not meet national norms.
Americans are often blamed for such disparities, as we saw in the recent immigration protests. But the tragedy is more complicated than the failure to offer workers sufficient compensation - especially when such communities are often the recipients of millions in federal dollars to improve schools, roads and police forces that cannot be maintained through customary taxation of local residents.
It might be cruel should remittances somehow come to an end. But it may be even crueler in the long run not to deal with a broken system that facilities such massive transfers - both for millions here in dire need of retaining all their earnings, and millions more in Mexico in more dire need of vast structural reform.
Victor Davis Hanson is a classicist and historian at the Hoover Institution, Stanford University, and author, most recently, of "A War Like No Other: How the Athenians and Spartans Fought the Peloponnesian War." You can reach him by e-mailing author@victorhanson.com
Let me know if you want in or out.
Links: FR Index of his articles: http://www.freerepublic.com/focus/keyword?k=victordavishanson
His website: http://victorhanson.com/ NRO archive: http://www.nationalreview.com/hanson/hanson-archive.asp
A lose Lose proposition for America and all Americans and the evil enemy is our southern neighbor. Or as one TV show coined it, the neighbor from h*ll.
Many of those ex-peons, now free men will go back to Mexico with higher expectations, and even those who do not -- there family and companions of youth who stay in Mexico will also have expecattions raised. The elite in Mexico have set themselves up the bomb -- their days are past, the reconquista has a most definite target, that is the real, practical reconquista. That target is the ten families, the elite, the union jefes in their high towers.
One of the few sensible things I have read about the immigration debate, because it identifies the real problem: Mexico. We are never going to deal with the problem as long as we address only the symptom (people streaming across the border seeking work) and not the problem (a dysfunctional neighbor country that offloads its population).
I have never understood why we don't penalize Mexico, either through trade or from some of the foreign aid we no doubt give it, for the cost to our border states of supplying health care, etc. Furthermore, Mexico is very resistant about repatriating its people when they are caught, and obviously there is massive corruption along the border that lets the coyotes come and go freely - but nothing ever happens to Mexico as a result. Why not penalize Mexico until it starts cooperating?
This would also do a lot to support the rule of law in Mexico, which is fast in danger of becoming a lawless territory.
There is another aspect and that is fecundity. Though w may have 11 million illegals here, there are four times that number waiting in Mexico. Send them just enough money to stay alive and what do you get?...babies that turn into lots more poor Mexicans.
save
A country that attacks its friends will wind up with none. I continue to be amazed how little value some "smart" people place on a peaceable border and a country that is our largest trading partner...trade that employs legitimately millions on both sides. Sure there are problems but to characterize as "invasion" "enenmy" and all that is over the top and counter productive. The problem with illegal immigration has been going on for nearly a hundred years...we need the labor..they come..if we didn't demand it they wouldnt come.
Now the respected Mr. Hanson comes up with theory that remmitances...hurt Mexico.... For goodness sakes these remmitances are supporting childern, families..he makes it sound like they are on the dole..like its some kind of welfare program. Worse he says because the laborer sacrafice we here have to "pick up the tab" this is making us the victim of the sweat and scarafice of poor workers trying to make do for their family.
Glib facts like "Mexico should reform"...are just that ..Mexico is a capitalist country, protects property rights and has now a booming ecnomny...its a poor country making enormous progress...
The enemny is are avowed enemies..islamofacists....not poor mexicans that want to wash dishes, pick fruit and clean toilets.
Mexico is a racist Narco-Kleptocracy, with a few thousand very wealthy people and a hundred million living in abject poverty.
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Mexico is a racist Narco-Kleptocracy, with a few thousand very wealthy people and a hundred million living in abject poverty.
"racist" we should talk... "narco-kleptocracy" impossible to discuss the failed war on drugs without acknowledging US demand and US policy that prompts corruption.
as the the disapairity in income...is writing suggesting some kind of Cuba style government in mexico to redistribute wealth?
The flip side to that argument is that the people with the most desire and incentive to change Mexico from within are now in the U.S. That, to me, is the best argument for building a 3000 mile wall. It is a complicated mess, I will agree.
"The enemny is are avowed enemies..islamofacists....not poor mexicans that want to wash dishes, pick fruit and clean toilets"
You forgot to mention stealing our wellfare, stealing our medical benefits, driving our cost of education through the roof.
These people are stealing from us to support their countrymen, they are very much the enemy, regardless of your good-hearted intentions.
And the US's... :-(
Evidently not OUR property rights.
In all seriousness, a booming economy? That's why Mexican physicians come to the US? (And they do. I've met them, cleaning toilets.)
Can you explain the difference between the way Mexico treats illegal immigrants from Guatemala and the way they want us to treat illegal immigrants from Mexico? Don't Guatemalans do jobs Mexicans don't want to do or what?
"Mexico is a capitalist country, protects property rights"
NOT!
http://www.freerepublic.com/focus/f-news/1629915/posts
The problem with your post is that you are looking at this issue as if we're dealing with two different countries. The reality is that we're only dealing with a single entity that includes the United States, Canada, and Mexico. The Canada serves as a source of natural resources for the U.S., and Mexico is a source of cheap labor.
One of the greatest ironies of the debate over this issue is that it is usually framed in terms of the burden these illegal immigrants place on public services (schools, hospitals, welfare, etc.) that really have no place in a free, independent country anyway!
You ever been to Mexico?
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