Immigration Costs Mexico Jobs, Too

[w¡n9Nµ7 §£@¥€r 123]

Income from immigrant remittances forms a growing part of Mexico's economy. It helps Mexican consumers all right, but it also hurts job creation there. How's that? Take a look at Mexico's peso.

A few weeks ago, the Bank of Mexico announced a curious phenomenon. As Mexico's overseas remittances dropped in the wake of the May 10 Mother's Day holiday, the peso dropped along with it, falling from 10.7990 to the dollar on May 14, to 10.7941 on May 15.

It was no coincidence. The value of Mexico's peso is strongly tied to the amount of money Mexican workers send home from overseas. But unlike changes in the U.S. dollar, when the peso wobbles, so does Mexico's economy.

This year, the money Mexican workers in the U.S. will send home is expected to grow at a much slower rate, says the Inter-American Development Bank. In March this year, it was up only 0.6%. Last year at that time, it rose 27%, according to Mexico's central bank.

Back in 1994, after the peso's meltdown, a flood of remittances from the U.S. — they rose sharply in the years right after that economic catastrophe — helped restore Mexicans' lost purchasing power. It also helped bolster Mexico's battered currency.

Now, a big drop in remittances could spell trouble for Mexico.

That's because a lot could be lost. Peso-power fueled by surging remittances has driven the rise of Wal-Mart in Mexico, helping to make life significantly better for Mexico's expanding middle class.

Remittances also let Mexicans buy more goods from abroad than they produce at home — in 2006, Mexico's current account showed a $400 million deficit, unusual for a developing country that has signed 43 free-trade pacts and has an export strategy for growth.

But most export-oriented emerging countries run surpluses, exporting more than they consume. In Mexico, $23 billion in remittances last year reversed that natural outcome, creating a big consumer market that pushed them into the red.

Illegal immigrants in the U.S. are paying for Mexico's consumer binge. Currently, some 10% of all Mexican households get remittances from the U.S. Foreign workers now make up 16% of the Mexican work force. If they stayed home and worked in Mexico they would be building Mexico's economy — not that of the U.S. Instead, they live in poverty here, overwhelming U.S. social services agencies and making Mexico's economy much weaker than it should be.

By the way, Mexican businesses are also hurt by the peso's remittance-driven strength. The strong peso has priced many Mexican goods out of the U.S. market.

These export-led businesses are important to Mexico because they could be growing and creating export-based jobs there. Instead, U.S. consumers buy cheaper from China, India and Africa.

Mexican businesses have to charge more for their goods because of the strong peso. Worse, because they're being deprived of profits from exports, they have less money for efficiency-enhancing investments or expansion. The remittance cash that drives the strong peso, meanwhile, ends up in short-term bank accounts and is mostly used for buying consumer goods — not investing.

In effect, the high peso means a Mexican television-set manufacturer must compete against China's behemoth TV makers, and do so handicapped by Mexico's stronger currency — a huge disadvantage.

When even a tiny currency shift can mean the difference between buying Mexican or buying Chinese, there's no question that illegal immigration and its effects are holding Mexico back from joining the ranks of fast-growing developing nations like China and India.

As the U.S. moves toward stiffer enforcement of its immigration laws, remittances have already begun to fall sharply. The silver lining in all this is that by keeping Mexican workers at home, U.S. immigration reform will give Mexico's businesses a fair shot at competing in global markets.

Mexico's economy is only truly sound when its people can work at home — and Mexico's businesses can use them and the profits they generate to expand and modernize the country on real terms.

http://www.investors.com/editorial/editori...265936092878927

[one...two...tree 2,762]

Mexico's economy is only truly sound when its people can work at home — and Mexico's businesses can use them and the profits they generate to expand and modernize the country on real terms.

I remember reading an essay back in college that was titled, "Why Can't People Feed Themselves?"

This whole notion of modernization towards a growing economy puzzles me. How do you get family farmers to create wealth? I think most people in this world just want a sustainable future - it's not like the farmer is hoping that 20 years down the road he'll be rolling in a Mercedes. I think the concept of converting an economy that grows is really a fallacy - there's somebody, somewhere that's getting the raw end of deal - usually off in some Third World country.

Edited June 6, 2007 by Steven_and_Jinky

[JoeMama 0]

I would really love to see Mexico boost it's economy and make life better for the people who live there. The only problem is the corrupt government officials. How much are they going to keep for themselves out of all of it as things turn this way? Maybe this will finally give the Mexican citizens reason to start a revolution to change things that us foreigners over here can be proud of them!

[one...two...tree 2,762]

I would really love to see Mexico boost it's economy and make life better for the people who live there. The only problem is the corrupt government officials. How much are they going to keep for themselves out of all of it as things turn this way? Maybe this will finally give the Mexican citizens reason to start a revolution to change things that us foreigners over here can be proud of them!

What are they being corrupted with?

[JoeMama 0]

I would really love to see Mexico boost it's economy and make life better for the people who live there. The only problem is the corrupt government officials. How much are they going to keep for themselves out of all of it as things turn this way? Maybe this will finally give the Mexican citizens reason to start a revolution to change things that us foreigners over here can be proud of them!

What are they being corrupted with?

MONEY

[Boiler 47,905]

I noticed that the Peso had improved a bit, but this was only in comparison with the dollar.

It would be fairer to say that the Peso had not devalued as much as the dollar has.

CIR could of course substantialy reduce remittances, all those fees would be going to US Gov instead

And a Guest Worker programme I presume would be open to all nationalities, So Mexico would get a relatively small number.

But then there seems no eason to believe that there will be any significant long term reduction in illegal immigration.

[one...two...tree 2,762]

I would really love to see Mexico boost it's economy and make life better for the people who live there. The only problem is the corrupt government officials. How much are they going to keep for themselves out of all of it as things turn this way? Maybe this will finally give the Mexican citizens reason to start a revolution to change things that us foreigners over here can be proud of them!

What are they being corrupted with?

MONEY

Whose money, Joe? I'm asking you to be more specific.

[JoeMama 0]

I would really love to see Mexico boost it's economy and make life better for the people who live there. The only problem is the corrupt government officials. How much are they going to keep for themselves out of all of it as things turn this way? Maybe this will finally give the Mexican citizens reason to start a revolution to change things that us foreigners over here can be proud of them!

What are they being corrupted with?

MONEY

Whose money, Joe? I'm asking you to be more specific.

I know you wish to argue the situation. But I don't leave it short of the US government, US citizens, Mexican nationals, drug cartels, and other foreign interests that have some stake in Mexico. There's no accountability for government officials there. It's easy pickings and a big pay-off for those officials. It's too good of thing for them currently the way it has been. The Mexican government's care is blantantly shown amongst their citizens. Why else would they risk their lives and go through the trials and tribulations only to find work to take care of their families? They should not have to endure such a situation. I am all for whatever they can implement that will be a positive step for the good of their country and their citizens. Maybe then, we can start cleaning up the mess that's just sitting around in our own country.

[w¡n9Nµ7 §£@¥€r 123]

Maybe then, we can start cleaning up the mess that's just sitting around in our own country.

They're hardly "just sitting around"...

[JoeMama 0]

Maybe then, we can start cleaning up the mess that's just sitting around in our own country.

They're hardly "just sitting around"...

True...there are more verbs involved like talking, walking, sh!tting, standing, pissing, laying around, running, flying, talking, b!tching, breeding, stealing, bleeding, spitting, vomitting, cyring, driving, washing, cutting, working, etc.

[mawilson 2,133]

I think the concept of converting an economy that grows is really a fallacy - there's somebody, somewhere that's getting the raw end of deal - usually off in some Third World country.

Steven,

Somebody somewhere has to get the raw end of the deal to finance our lavish lifestyles.

There's only so much money to go around -- if you tried to take our wealth (money, cars, homes, etc)

and divide it equally among everyone in the world, then everyone in the world would be equally poor.

We wouldn't want that now, would we?

[one...two...tree 2,762]

I think the concept of converting an economy that grows is really a fallacy - there's somebody, somewhere that's getting the raw end of deal - usually off in some Third World country.

Steven,

Somebody somewhere has to get the raw end of the deal to finance our lavish lifestyles.

There's only so much money to go around -- if you tried to take our wealth (money, cars, homes, etc)

and divide it equally among everyone in the world, then everyone in the world would be equally poor.

We wouldn't want that now, would we?

Or maybe we'd all go around saying to each other, "Good trade!"

[Alex+R 0]

I think the concept of converting an economy that grows is really a fallacy - there's somebody, somewhere that's getting the raw end of deal - usually off in some Third World country.

Steven,

Somebody somewhere has to get the raw end of the deal to finance our lavish lifestyles.

There's only so much money to go around -- if you tried to take our wealth (money, cars, homes, etc)

and divide it equally among everyone in the world, then everyone in the world would be equally poor.

We wouldn't want that now, would we?

I hate that conception that we either have to have "equal distribution of wealth" OR maintain our lifestyle. We could end poverty now while barely making a dent in our way of living in the US. Actually when you think about how easy it could be, it's rather pathetic that we're not doing it.

[mawilson 2,133]

I hate that conception that we either have to have "equal distribution of wealth" OR maintain our lifestyle. We could end poverty now while barely making a dent in our way of living in the US. Actually when you think about how easy it could be, it's rather pathetic that we're not doing it.

People need to be hungry and poor to do the work we want them to do. Once they get out of poverty,

they start demanding more.

[Alex+R 0]

I hate that conception that we either have to have "equal distribution of wealth" OR maintain our lifestyle. We could end poverty now while barely making a dent in our way of living in the US. Actually when you think about how easy it could be, it's rather pathetic that we're not doing it.

People need to be hungry and poor to do the work we want them to do. Once they get out of poverty,

they start demanding more.

Sure, but of course, you'd have to be a complete arsehole to value a slightly bigger car over a nation of skeletons or two getting enough food. I do think Americans could be persuaded to help impoverished countries. Arsehole selfish attitudes are the #1 obstacle to ending poverty, IMO.

I just don't think it's the "starve them to death or else we'll all be living in grass huts" exaggeration that a lot of people make it out to be.