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Incentives and Immigration

By John Tamny

With immigration reform a top agenda item in Washington this year, there's lots of debate over what to do about the illegal inflow of mostly Mexican workers into the United States. Unfortunately, much of the discussion ignores the very incentives that drive Mexican immigrants into the illegal category, not to mention how enhanced border enforcement would allow Mexican policymakers to avoid making the tough decisions that would stanch the outflow of workers to begin with.

Put plainly, border crossing is an economic necessity resulting from poor job prospects in Mexico. It's perhaps counterintuitive, but the fact that crossing the border from Mexico to work in the U.S. is illegal only increases illegal behavior. Economic factors clearly trump the fear of getting caught, and with border security and stateside enforcement increasing, Mexican workers now have enhanced incentives to remain hidden from the law once they're here.

The incentives become worse when we consider a Republican proposal to supposedly bring these workers above ground. According to a recent Wall Street Journal editorial, illegal immigrants under one plan will have to pay $3,500 in fines and fees to attain a three-year visa; and for permanent legal residency, they'll have to return home first, and then pay a $10,000 fine to re-enter the U.S. Acknowledging the perverse incentives, the Journal editorial noted that such "measures all but guarantee low compliance."

On the positive side of the ledger, a guest-worker bill sponsored by Sens. John McCain and Ted Kennedy acknowledges the market forces that drive immigration. If Mexican workers were free to offer up their services in the U.S., there would be very little incentive for them to illegally cross the border, let alone hide once they crossed. And as immigrants are ineligible for welfare, food stamps and Medicaid, the inflow would be a market-driven function of stateside demand for labor. For those who worry what more open borders might mean for terrorism, rather than chasing down legitimate workers who would suddenly be aboveground in their activities, border patrol agents could spend more time tracking those with real incentives to enter the U.S. illegally.

From former Colorado Gov. Richard Lamm on the left to Victor Davis Hanson on the right, one compelling argument against open borders has to do with the cultural implications of a mass influx of foreigners. The argument centers on our inability to assimilate their variegated customs into an American whole. A guest-worker program would arguably solve this problem.

Indeed, according to a September 2006 article by the Wall Street Journal's Miriam Jordan, tens of thousands of Mexicans already have special green cards that allow them to move back and forth between Mexico and the U.S. legally. The result is that when stateside demand for their labor rises, they're able to freely cross the border and work. When jobs are wanting, they move back to Mexico. With their right to work legal, the incentives are greatly reduced in terms of seeking permanent citizenship or bringing their children and elderly relatives with them. As such, any burden on culture, schools, and other accessible social services is reduced.

That an estimated 100,000 Mexican workers cross the border legally each day shows that the desire to work in the U.S. trumps the desire to live here. The problem for the broader Mexican population is that the incentives are all wrong. An expansive guest-worker program would allow Mexican workers to contribute to U.S. economic growth without the illusory and real problems that come with broad assimilation.

Moving to economic policies within Mexico that drive its workers to the U.S., some argue that the country's politicians should fix that which doesn't work so that there's less incentive for its citizens to migrate north to begin with. If so, draconian measures to close the border and deport Mexican workers will only create disincentives for the very reform many desire. If a way existed to keep ambitious Mexicans from migrating, it would only mean that Mexico's elected representatives would have less incentive to cut taxes, establish greater property rights, and generally make the changes necessary such that workers would want to stay in their native country.

Both sides of the immigration debate seemingly agree that more open borders would lead to more immigration, and that's exactly the point. Make no mistake that in opening our economy further, we would attract the youngest and most determined Mexican citizens eager to make better lives for themselves. Mexico's loss of some of its most economically productive citizens would greatly harm Mexico's economy, the result being that real reform there would begin quickly so as to reverse the flow. Conversely, if we keep the borders closed, Mexico's policy climate would more likely remain stagnant.

Whichever side one takes when it comes to Mexican immigration, tightened border control and greater enforcement hasn't worked in the past, and likely won't work in the future given the economic desires of our less fortunate southern neighbors. Acknowledgement of these market realities with the implementation of a guest-worker program won't lead to a perfect result, but for enhancing the incentives of all involved, it will turn what some deem a problem into an economic opportunity for both countries.

John Tamny is an editor at RealClearMarkets. He can be reached at jtamny@realclearmarkets.com.

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