Sunday, June 18, 2006

The Remittances Poison

Remittances are an addiction that poisons Mexico. As in all addiction, there is denial. Mexican politicians point to improvements in roads, schools, and investment in small businesses as positives for remittances, while using such improvements as excuses for not making fundamental changes to solve chronic Mexican problems of property rights and investment. If Mexican politicians couldn’t abuse the United States’ relaxed enforcement of immigration laws as a safety valve for their impoverished citizens, they would have long ago been voted out of office or thrown out by revolution.

In the United States we have politicians who pimp illegal immigration to get votes from legal immigrants. Just as the Mexican politicians look on illegal emigration to the United States as an excuse for doing nothing, so too do politicians in the United States look on illegal immigration as a reason to do nothing. Even if the illegal immigrants don’t get amnesty and eventual citizenship, the politicians that support them will get the votes of the rapidly growing by high birthrate Hispanic population. In Mexico a politician stays in power, in the United States Democratic politicians see a route to regain power.

So who suffers? We all do. The towns and villages of Mexico are stripped of young workers and fathers. Businesses are not started, businesses are not grown, children rarely see their fathers, and their only male role models are old men, the disabled, and the losers left behind. The only economic activity is generated through the consumption of the remittance checks.

In the United States, the illegal immigrants live a life of desperation and poverty. Many young men share room in squalid shacks, with barely enough money left each month after the remittance check is sent to pay for rent, food, and the relief offered by tired prostitutes. Employers take advantage of them, landlords take advantage of them, and their crime rate is several times higher than for the general population.

Their host communities take advantage of the low wages they pay the illegal immigrants, but that depresses the pay of legal low-income workers. The legal low-income workers and the illegal immigrants both place enormous burdens on social welfare systems, and flood hospital emergency rooms.

Roughly half of the money paid to illegal immigrants leaves the community. Instead of being spent in local stores, instead of taxes going towards local needs for schools and police protection, instead of being invested to grow businesses, the remittances go to villages where a substantial portion is spent on consumer goods. Roads don’t get built, schools aren’t improved, and in the final analysis, illegal immigration and resulting remittances create lose-lose situations at both ends of the illegal immigrant chain.

Only the politicians win.

For more on the problems of remittances:
Pati Poblete, on Remittance problems in the Philippines
San Francisco Chronicle readers react to Pati
More from Pati
Are Remittances As Bad As Oil? by Victor Davis Hanson (You have to register to read this article - it is well worth the effort)

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