Commentary: Opponents to Immigration Reform are Racists.

With this post, I take a small break from the exciting FX market to comment on the broader economics of immigration.  

Immigration reform is working its way through Congress.  While the consensus is that the bill in its current form will find broad bipartisan support in the Senate, its future in the US House of Representatives remains uncertain, despite polls showing that 75 percent of Americans support a path to citizenship for illegal immigrants.  The main cause of this disconnect is almost certainly a vocal and concentrated minority of voters with deep seated anxiety over potential changes in US demography.  At the same time, this minority tries to justifies its concerns over legalizing immigrants by spreading race based misconceptions and half-truths about the economics of immigration.  While it is good that overt racism is no longer an acceptable reason for opposing immigration, covert racism masked by economic myth and policy bunk is hardly a comforting alternative.  My purpose here is to expose this not so subtle racism which has manifested itself as hateful and dangerous rhetoric.  Upon examining the economics of immigration, we find that immigrants are a vital infusion of economic dynamism to the economy.  And in the end, we are left with the sad conclusion that those who oppose immigration, armed with faulty logical, flawed studies, and arguments which do not withstand scrutiny, are mainly motivated by racial anxiety and outright animus.    

 The economics of immigration are broadly misunderstood by opponents of immigration reform.  Some believe that immigration will cause an increase in unemployment.  The fact is that the consumption and other economic activities of immigratns will create many times the number of jobs that they fill.  Wage earners are ultimately consumers, and more consumers in the economy means more, not fewer jobs.  In a similar manner, the returning soldiers from the second world war were an economic boon.   Although many at the time predicted a return to 1933 unemployment rates, a huge cohort of young men needed homes, cars, education, and a host of other goods and services.  Industry rose to meet this demand, and took advantage of the increased labor force by hiring the vets themselves.  Investors made money, output rose, and jobs were created not just for the soldiers, but for everyone in the economy.  Indeed, despite a mild demobilization recession, between 1945 and 1949 nearly two and a half million jobs were created. 

Opponents also claim that immigrants come here to take advantage of social welfare programs while those who work avoid taxes.  They view immigrants as economic parasites and social misfits which came to the US because they could not succeed in their home countries.  But common sense and empirical data refute these spurious claims.  On taxes, the CBO estimates that immigrants pay more in taxes they receive in services. (Immigrants hurt local budgets by increasing education costs but make up for it by paying into federal coffers)  Common sense confirms this finding.  Immigrants are usually industrious and hard working.  It takes determination and grit to change cultures and languages as an adult, and it is also extremely disruptive to the social and family networks nearly all societies rely on.  The cost of this disruption is so great that most Mexicans prefer to stay in Mexico, even if moving to the US would mean higher wages.  In fact, net migration between the US and Mexico is currently zero.  

A final economic note is that remittances back to Mexico are not harmful to the economy.  Mexico is a major trading partner of the United States.  It sells eighty percent of its exports to the US, and the United Sates accounts for fifty percent of all goods and services imported to Mexico.  The broad economic integration ensures that money can flow freely between the two nations without acting as a "drain." Inevitably, the cash sent south finds its way north of the Rio Grande when Mexicans purchase foodstuffs or manufacturing equipment, two US export specialties.  

Finally, I wish to deconstruct the so-called "rule of law" argument brandished by many staunch opponents of immigration reform time.  This same groups also lauds our "generous" immigration system, which lets in many more legal immigrants than most other industrialized nations.  However, this kind of thinking fails to recognize the benefits immigrants bring, and only measure the cost some immigrants inevitable cause some local governments to incur.  We shouldn't reform the immigration system because we are nice or generous, on the contrary, failing to do so will continue to be a significant headwind for the economy for the reasons outlined above.  Failing to recognize the contributions of immigrants is just one further example of the underlying racism of those who oppose immigration reform.  Yes, many immigrants broke the law by coming here.  However, it is hypocritical to accept the benefits to the US economy brought to our shores by the "law breakers" via lax enforcement, and then to retroactively punish them with fines and long wait times to achieve full citizenship.  If the rule of law were really at stake, we never should have allowed this problem to fester for decades.  In short, we chose not to enforce our own immigration laws because they did not make economic sense.  Therefore, undocumented workers deserve to be treated with respect and deference, not like criminals.       

They will deny it up and down.  They will resort to code words like "rule of law" and "border security."  Others will invoke economic folklore.  Immigrants drive up unemployment.  Immigrants come here to collect food stamps.  Immigrants come here for a better life but drive down the quality of life for people already here.  Immigrant remittances home are a drain on the economy.  A more charitable man may give this vocal minority the benefit of the doubt.  Economic fallacy and myth often afflict even those who have spent a lifetime studying the dismal science.  However, misconceptions must come from somewhere, and all too often our errors reveal our underlying biases. The idea that the economy is essentially a competition between races for limited economic spoils is not only misguided view of how the economy works, it holds appeal for those with anxiety over the potential demographic changes immigration may bring.  Or put more pithily, most opponents of immigration reform are just a bunch of racist pigs.