Arizona SB1070 is not the Problem

Other states may implement similar laws

**This blog entry was written previousely and is being reposted here.  I will post all of my previous articles here in the coming weeks. RRB**

I have been watching the discussions as they relate to Arizona’s new law, SB1070.  There are a lot of misconceptions and misrepresentations with respect to the law passed. But more important than that, all these discussions miss the real and pressing problem that we are dealing with.  Illegal immigration is merely a symptom of a much greater and more serious disease.  Mexican governmental economic policy and the business environment in Mexico are the real issue that we should be confronting and more importantly pressuring Mexico to solve. 

Rome is burning and no one even sees the smoke.  No one wants to recognize the most obvious issue, the reason that millions of illegal immigrants come to the United States is that the economy in Mexico is neither strong enough, vibrant enough or dynamic enough to keep its own citizens employed.  And the reason companies don’t start businesses in Mexico is because they are plagued by onerous regulation and Mexico is perceived to be an insecure and dangerous place to do business.  Additionally, the Mexican government is happy with the status quo, and sees the hemorrhage of immigrants to the United States as a very positive thing.  

In 2003, Mexican immigrants, both legal and illegal, sent 12 billion dollars from the United States to their families in Mexico. After a meeting with Mexican-American businessmen, former President Fox announced to the press, at the time, that these transfers “are our primary source of foreign revenue, much more than oil, tourism or foreign investment.” [1]

In 2009, the amount sent to Mexico reached 21.1 billion dollars, 15.7% less than was sent in 2008. [2] Mexico’s revenues from tourism reached 11.275 billion, less than the 13.28 billion dollars for 2008. [3]

 
PEMEX, Mexico’s nationalized oil company, announced that “it lost 16.6 billion pesos ($1.3 billion) in the fourth quarter of 2009, pushing the full year loss up to 46.1 billion pesos.”  It was also reported that “The annual result was an improvement from 2008 when the company lost 119.5 billion pesos.” [4]

The problem confronting, not only the citizens of Arizona, but the entire United States, is that Mexico’s economic policy along with its business climate is 8000 pound gorilla sitting in the corner. We have to ask ourselves why?

Why can’t a country like Mexico, with so many natural resources, get out of the economic morass that it has been in for decades?

How is it possible in today’s global economy that an oil company can lose upwards of 12.6 billion dollars?

What is wrong with the Mexican Economy that its citizens don’t see any opportunity or way to get ahead in life?

Why is it so difficult for foreign companies start up in Mexico?

There are many factors but, at the end of the day, the problem comes down to pure economics, and the business climate in Mexico. For example, the total tax rate for companies in Mexico is 51% and the average time for a commercial dispute to work its way through the courts is 415 days. [5]  In a ranking of 183 countries, Mexico is 90^th  for ease of starting a business; 136^th in ease of hiring employees; 99^th in ease of registering property;  and 106^th in paying taxes.  The only ranking in which Mexico breaks the top 25 is in closing a business; it comes in, in 24^th place. [6]  Huge corporations may be willing to absorb these huge start-up costs, but small and medium size companies don’t have the financial resources to overcome such daunting challenges and are unlikely to accept such huge disadvantages when it may be easier, and more cost effective, to do business elsewhere. 

Each and every one of us wants to be successful and leave our kids something better than we had before them; and, so in this sense I can understand why illegal immigrants come from everywhere to the United States.  But no nation can or should permit its laws to be ignored, and allow illegal aliens to come and go as they please with blatant disregard for the law.  It is hypocritical for Mexico, and in particular President Calderon, to criticize Arizona when: a) the laws in Mexico are exponentially more draconian and b) the problem is not the Arizona law but the lack of positive government action to loosen and free up markets for businesses in Mexico.  The problem is not now or ever will be United States immigration law, the problem is Mexico and its socialist markets along with over regulation and lack of property rights for foreigners, investors and businesses.

There is no simple solution, Mexico is currently under tremendous pressure fighting narco-traffickers, and I applaud President Calderon’s efforts.  But, the President and the government of Mexico must start by taking the necessary steps to encourage business and entrepreneurship in Mexico, by rolling back onerous regulations, giving foreign companies and individuals property rights and privatizing national monopolies.  Mexico must take ownership of the illegal immigration problem in the United States, which has been going on for decades.  Unfortunately, the Mexican government continues to take the easy road and is unlikely to do anything to change the status quo.  In part because illegal immigration to the United States by its citizens is a cash cow that it does not want to end.  The Mexican government doesn’t have to invest a thing, and in return it receives billions of dollars of revenue every year.  It is a disgrace that the Mexican government would rather blame the Americans for the problem rather than look in the mirror and take responsibility for its economic and national policies which fail to give their own citizens the opportunity to succeed. 

I am dumbfounded why people don’t want to see the truth, that the illegal immigration problem is purely economic, and the entity responsible to fix it is the Mexican government.  The saddest fact of all is: the number one export from Mexico isn’t oil, agriculture or textiles… it’s its people.  Mexico exports its citizenry in exchange for money sent back to Mexico to keep the economy afloat.