The Real Illegal Immigration Solution
The United States has been incompetent for over fifty years in its efforts to contain illegal immigration from Mexico and Central America, focusing on border barriers instead of addressing the causes and eliminating them. It’s been the equivalent of repeatedly putting up sandbags to deal with recurring floods instead of building drainage canals and reservoirs.
No one disputes the causes of the illegal immigration from south of our border: widespread poverty, economic underdevelopment, low wages, crime, high unemployment, all caused by a low level of education. The obvious sustainable solution is a “Marshall Plan” to provide an excellent education to all young Mexican and Central American youth through a major Peace Corps initiative, and to promote economic growth through infrastructure investments. A socially and economically prosperous Mexico and Central America would be of great benefit for all: illegal immigration would evaporate and trade would increase dramatically, greatly raising economic growth north and south of the U.S. southern border. (By the way, it seems no one has carefully read the laws and regulations on asylum: asylum applies only to people persecuted -usually by their own governments- due to race, religion, nationality, membership in a particular social group, or political opinion, not to people wanting to escape poverty or violence in their own country. The Holocaust, the most shocking persecution of all time, prompted the United Nations’ and the United States’ laws on asylum and informed them. Since there is no known government or other persecution in Central America or Mexico, asylum requests from their citizens are invalid on their face, “open and shut” cases not requiring hearings.)
Many will object that such a solution is a long term one, not an immediate one. But it is the only sustainable solution. Had it been fully embraced back in the early 1960’s after President Kennedy created the Peace Corps, the problem would have been solved by the 1990’s. It is illogical to postpone implementing the only available long-term solution.
The benefits of such a “Marshall Plan” would go beyond the illegal immigration and economic aspects. It would generate enormous goodwill towards the United States in Latin America, and it would provide many young Americans graduating from college a valuable and rewarding 2 to 4 year Peace Corps experience which would help them in their professional careers, directly or indirectly.
As for objections that such a “Marshall Plan” would be too costly, they are myopic. The Marshall Plan for Western Europe after World War II had an enormous return on investment for the United States, both in terms of our economy and of our foreign policy. The same result would derive from a “Marshall Plan” dedicated to Mexico and Central America.
One problem holding back the United States from making necessary investments in infrastructure at home and abroad is the failure of the economics profession to debunk the budget deficits obsession we have had for decades. After the $3 trillion of QE whereby the Federal Reserve financed the entire budget deficit between 2010 and 2013, everyone should understand that budget deficit and national debt concerns are greatly exaggerated. For example, many still feel we depend on foreign capital to finance our budget deficits. Recently, supposedly on the Chinese, and back in the 1980’s on Japan. We have just had an unequivocal demonstration that we have the Fed to finance our budget deficits whenever necessary, and do not at all depend on foreigners. In my Wall Street Journal article of May 3, 1985, No Addiction to Foreign Capital, I explained the fallacy behind the dependency-on-foreign-capital argument, and Fed Chairman Paul Volcker, after contesting my analysis, ended up changing his monetary policy in accordance with my article. How the economics profession still does not understand that the U.S. does not depend on foreign capital to finance its budget deficits is mind-boggling.
Another point widely misunderstood about QE is that it is essentially printed money by the Federal Reserve, and that Treasury bonds purchased by the Fed and held through maturity represent only “virtual” debt, not “real” debt. They cost the Treasury absolutely nothing in terms of interest cost or capital cost, since the Fed, being a government agency, returns all interest payments and all maturity payments to the Treasury annually. Whereas Treasury bonds held by private investors are real debt, those held by the Fed are only virtual debt which disappears in thin air at maturity. All Treasury bonds financed by QE never get passed on to future generations, contrary to common belief. Also contrary to common belief, QE is not inflationary even though it is printed money, so long as it is not excessive, i.e., leading to excess aggregate demand (“too much money chasing too few goods”, demand-pull inflation). Hard proof, apart from logic? The $3 trillion of QE between 2010 and 2013 did not cause inflation to rise at all, precisely because it was not excessive. Not only did inflation not rise, it remained at historic lows during the five years following the $3 trillion QE.
Providing an excellent education to all youth is the key to ending poverty and crime not only in Mexico and Central America, but also in the United States. As is having an enlightened economic policy which prevents long recessions and high unemployment from occurring. Having QE-financed tax rebates as the standard economic stimulus policy is the solution. Whenever the unemployment rate rises above 5%, the Fed, together with Congress and the president, should calculate how much of a tax rebate is required to stimulate consumption so that full employment returns quickly and long recessions are avoided. Had the $800 billion 2010 Obama stimulus consisted entirely of a QE-financed tax rebate, every taxpayer would have received a $5,000 check from the U.S. Treasury. A family of two taxpayers would have received two checks for a total of $10,000. That would have immediately ended the recession by stimulating consumption and stopping the housing/financial crisis in its tracks, as families in financial difficulty would have suddenly had the means to keep current on their mortgages.
The big question is why do we have incompetent government, in economic, social, and foreign policy. The results of the past fifty years are unequivocal: neither Democrats nor Republicans have been competent. The reason, which no one seems to realize, is that none of our presidents, senators, and representatives have been truly qualified. Who are truly qualified political candidates? Only those who are experts in economic, social, and foreign policy in their own right. How to judge whether political candidates are truly qualified? They must be able to explain all the mistakes in economic, social, and foreign policy over the past 100 years, and explain what would have been the correct policies. That should be the standard for being truly qualified. Our modus operandi is to have unqualified political leaders surrounded by “experts” of their own choosing, believing that optimal policies will be developed and implemented. That is deeply flawed thinking, as the results of the past fifty years prove. How can one logically expect unqualified presidents to be capable of selecting truly qualified expert advisors, and to be capable of optimally digesting and synthesizing expert advice from within and without their administrations? All the prospective Democratic and Republican presidential candidates for the 2020 election are unqualified, according to the proper standard. In today’s complex world, that is a recipe for continued disastrous results. When will Americans wake up and demand that all political candidates be truly qualified?
© Edward Sonnino 2019
January 16, 2019
