The Senate finally delivered its prescription for the nation’s illegal-immigration crisis before they left town for Memorial Day. Its many obfuscations notwithstanding, the proposed legislation is essentially an amnesty bill for ten million lawbreakers and an invitation to at least another 20 to 30 million of their family members over the next decade alone. It is as close as the Senate could come to enshrining an open-border policy and, as such, a travesty the nation will pay dearly for if it is allowed to stand. It is also a testimony that many of our political establishment seem to have taken leave of their senses on this issue. Consider the spectacle of the mayor of New York City warning us darkly from the editorial pages of the nation’s most important business newspaper that our economy would collapse if the illegals were deported. In other words, according to Michael Bloomberg, the republic’s economic well-being depends on millions of foreigners breaking our laws on a daily basis. Perhaps most disturbing of all was the nearly universal reluctance of our senators to tell the American people the simple truth that Milton Friedman succinctly expressed years ago: “You cannot simultaneously have free immigration and a welfare state.”
The evidence that, in our current bloated welfare regime, unskilled illegal immigrants cost considerably more than they contribute to society is so overwhelming that only those with vested interests continue to argue otherwise. Not so well known is another disturbing trend that this amnesty will exacerbate dramatically. The huge numbers of illegal immigrants increasingly represent a permanent uneducated and unskilled underclass that is neither capable nor interested in integrating. You can already see the future today in the Los Angeles Unified School District, where 75 percent of the students are Latinos, one third do not speak English, and only 39 percent graduate from high school, despite the fact that half of all students are “socially promoted” year after year.
Yet the American people are not the only ones who are going to pay a huge price for the cowardice of their politicians. So will Mexico–so much so that it is not an exaggeration to argue that our southern neighbor is inexorably sliding into the swamp of failed states. When it ends up there, the implicit collusion of the U.S. and Mexican political establishments in the unprecedented transfer of population that illegal immigration represents will have played a key role.
Today, this surely sounds counterintuitive. Indeed, the Mexican government more or less explicitly sees the export of its intractable problems–from unemployment to poverty and from failing to educate its youth to not providing basic healthcare–via illegal immigration as an easy solution. And a profitable one at that. Last year, formal bank remittances alone brought $20 billion to Mexico from the U.S., and the actual figure is much higher if informal transfers are added. Thus, immigrant remittances are already the largest budget revenue stream for Mexico and, combined with oil revenues, have transformed the country into a quasi rentier state. Mexico thinks that’s just grand, and its president has taken to calling the illegal immigrants sending money home “heroes,” though evidently not the kind of heroes he would like to keep in their own country.
The reality, unfortunately, is very different and deeply disturbing. After a promising start, following the implosion of the corrupt PRI party, Mexico again finds itself, as many times before, in the classical predicament of what economists call “moral hazard.” In this case it stems from the reluctance of the governing elite to tackle the ineluctable structural problems the country faces because of the false security provided by its ability to export its problems to the north and its new rentier status. So the reforms promised by Vicente Fox with much fanfare have stalled, and his proposals must now be considered a failed experiment. Yet in the absence of a dramatic break with the failures of the past, the past will come back with a vengeance, and it may be doing just that.
Most Americans who have seen but the glitz of Cancun and Mazatlan have no idea how close to a failed state Mexico already is. As other low-wage, developing countries have opened up economically and spurted ahead in the era of globalization, Mexico’s monopolistic, pseudo-socialist system of government has kept its economy and living standards stagnating. Between 1980 and 2000, as a recent CSIS study shows, its GDP per capita has grown only 15 percent, compared, for instance, to China’s 400 percent or Korea’s 230 percent. Stymied by a corrupt bureaucracy and virulent anti-market attitudes, it is rated by the World Bank as one of the very worst (129 out of 133) countries for doing business in, and to the extent it creates jobs at all, it is mostly in the underground economy.
Just as disturbing, Mexico’s abysmal performance in education and science and technology is seriously compromising its future in the information age. In 2002, only 13 percent of the prime labor-force cohorts (24 to 64) had a high-school education, and with a measly 0.4 percent of GDP spent on research and development, Mexico has effectively opted out of the crucial science and technology competition.
Worse is to come. Mexico is entering a demographic maelstrom that will dramatically transform the country in the decades ahead. The high fertility rates that contributed to the quadrupling of its population since WWII have plummeted from 7.2 (children per woman) in the 1960s to 2.2 in 2004, and, according to some demographers, is already below the 2.1 replacement level today. The result is an inevitable and rapid aging of the Mexican population that by 2050 will be older than America’s. Long before that, the state will face a huge social crisis in providing for even the most rudimentary needs of tens of millions of elderly. It is ill-prepared to do that. With the sole exception of the pampered civil servants, Mexico has neither a social security nor a healthcare system that is truly functional. Only 20 percent of the elderly today receive any kind of pension and the majority have neither a pension plan nor health insurance–or any savings, for that matter. The CSIS study reports that only 4 percent of Mexican elderly men and 2 percent of women have any assets at all.
There is simply no way for Mexico to avoid an existential crisis if it does not fundamentally and urgently reform its ossified socio-economic system and put the country on the road to sustained economic development. Sitting back and clipping oil and remittances coupons won’t do it–unless, of course, its venal elites come to believe that they can shove their elderly population north of the border tomorrow, just like they’re doing with their young today. The Senate immigration bill ought to provide them with a modicum of hope that it may be doable.
—Alex Alexiev is vice president for research at the Center for Security Policy.