Illegal Immigrants

The US Congress is in the midst of debating what is being billed as an Immigration Reform bill. The specifics of the bill are many and complicated, and at this point it appears unlikely that it will pass. There is support, and also opposition, from both sides of the aisle, and the coalition against the bill will likely end up with more members than the coalition supporting it.

There are more facets to the debate on immigration than there are jailbirds lining up to slap Paris Hilton around. Amnesty, path to citizenship, taxes, fees, family passage, separation of children from their parents, deportations, border security, wages, work permits, the list is nearly endless. But to date I have yet to hear any discussion about the catalyst for the entire situation, nor ways to control it.

Money.

Why do immigrants come to this country? Money. And in the case of the Mexican immigrants that make up over 90% of arrivals every year, it is specifically the practice of earning money and sending it back to Mexico that is the goal.

Think about it. The cost of living in the US is congruent with our wages, when compared to the situation in Mexico. You earn $5 an hour here, and a day’s worth of milk for your family costs $1. In Mexico you earn $2 an hour, but a day’s worth of milk for your family costs $0.40. In short, there is no benefit to coming here and spending the money you earn here.

There is a very tangible benefit to coming here, spending as little money as possible here, and sending the rest back to your family south of the border. You can increase your income exponentially when compared to your home country, and when that income is sent home it buys much, much more.

That is the reason why the transfer of funds from the US to Mexico amounts to tens of billions of dollars per year. Yes, that’s right, tens of BILLIONS of dollars per year.

From an economic standpoint, that’s a catastrophe. These are undocumented workers who pay no taxes, and send huge amounts of their earnings over the border. It may as well be stealing the money, removing it from the money supply, and eliminating that sum from benefiting from the multiplier (go ask an economist).

As long as this situation is workable, there will continue to be illegal immigrants coming into this country. So what are our options? Raise the wages and cost of living in Mexico — not going to happen very quickly. Lower wages and cost of living here — um, no. What’s left?

Make it financially inviable to transfer money across the border. How? Put limits on the dollar amount that can be transferred, and who can transfer it. Make people show proof of citizenship when transferring money, both on the sending side and the recipient side. This will allow emergency transfers to vacationing American Spring Breakers who get themselves into some trouble with the local authorities. Bank-to-bank transfers must be between accounts owned by businesses, and must be in sizes greater than $50,000.

Anything not conforming to these rules, tax it at 50%. That will place a disincentive substantial enough to stop, or significantly reduce the transfers crossing the border into Mexico. Eliminate that possibility, and all of a sudden coming to the US to work doesn´t look so appetizing anymore.

We would need to take steps to prevent physical removal of currency from the country also. This would require circulating hard currency that has a detectable RFID transmitter in it, so anyone passing through a border checkpoint can be instantly and invisibly screened for the amount of money they have on their person, or in their car or luggage. A serious expense, to be sure. More expensive than the money we lose to cross-border transfers every year? Probably not.

And for those who still decide to come here to work, it will mean they bring their entire family. This, despite pleas to the contrary, is a good thing. It means instead of one person buying our products and services right here in the U-S-of-A, it means there are two or more. Earning money here and spending money here, even if they are not (yet) paying taxes here. That is a boost to the economy, and is much, MUCH better than one person sending a quarter, a third, even half of their earnings back home to Mexico, never to be seen again.

I realize that there are ways around this: non-currency transfer mechanisms like money orders, bank checks (two things you could put citizenship checks on), or commodities like silver, gold, or diamonds. But by putting these restrictions in place we would be putting a significant barrier to cross-border transfers. We would also be changing the illegal immigrants’ world from breaking the law once coming across the border illegally, to breaking the law repeatedly trying to get money back across the border. That will increase the risk for the illegal immigrant, and provide more opportunity to catch them.

I’m an immigrant myself, came here from Canada with my family when I was 11. Legal from the get go, mind you, and not really exposed to the different aspects of the messy discussion that is taking place right now. However I do feel that this does give me standing to say the following: the illegal immigrants currently in the US are not going home without some incentive to do so. Deporting them is not an option.

If we are serious about solving the problem, we need to address it from the economic side instead of the law-and-order side. Fences, trenches, guard dogs, motion sensors, none of that will have the effect that could be achieved by an economic disincentive like what I am proposing. Put something like that in place, and the first thing you will see is thousands, if not millions of illegal immigrants packing their bags and heading south. Take away their incentive to behave illegally, they’ll stop. Simple as that.

Not Too Late

Those of you wanting to skip the conspira-socialist tirade and see something genuinely amazing, skip to the end. Otherwise, start that e-mail to your Congressman… NOW!

NPR is enlightening me about a lot of things these days, and one of the little tidbits I caught the other day was about oil refineries. The US hasn’t built a new oil refinery in close to 3 decades, and the lack of oil refining capacity is what is at fault for the current spike in gas prices.

Well, to be honest, it is the big oil companies intentionally reducing capacity at their existing refineries right before and into the middle of the summer driving season that is at fault for the surge in gas prices. But capacity is the problem, one way or the other.

The reason the oil companies haven’t built any new refineries, and won’t be building any in the near future, is what I heard on the radio. To build a new refinery from the ground up takes about (in the opinion of the oil industry expert that was the subject of the interview I heard) seven years. So even if the oil companies broke ground tomorrow, it would be another seven summers before the actual refining capacity increased.

But that’s not the reason the oil companies won’t build one. There is a concept in business that, in layman’s terms, is the point at which the profit you earn from a capital investment matches the monetary outlay to build the thing in the first place. Think of it as the real estate break even point. That point, for an oil refinery, has its break even point at about 12 - 14 years. And that’s assuming that today’s inflated retail prices for auto-ready gasoline stay constant. They won’t, they will eventually go back down somewhat, which will extend that break even point even longer.

So basically the decision to build any new refineries is a no-brainer for oil companies: they won’t, period. Seven years of spending to have to wait for twice that long, or longer, to recover the initial investment? Forget it. A typical timeline for recovery of a capital investment is 5 years or less, depending on the industry and the economic situation. So forget it, it ain’t gonna happen. Unless…

Unless we do what we should have done at the onset of the first oil crisis back in the 70’s: nationalize the refining capacity and delivery pipeline and expand it to ten times its current size.

As a nation we are at the mercy of these oligopolist oil companies, who are collectively manipulating the price of gas with these “unplanned maintenance” sessions, and whatever other feeble excuses that they manufacture to boost profits. If refining capacity was leased to these companies by the government, lowering the barriers to entry and opening up the market to smaller players, that would expand competition and lower retail prices permanently. The only thing that would affect the price of gas would be the price of the raw oil on the open market, something these oil companies would have a difficult time manipulating.

It’s not too late: there will be a Democrat in the White House in the next two years. If the Democratic party can solidify its control of both houses and put one of its own in the Presidency, it would be a quick Executive Order to seize the current oil refineries and begin construction on 50 new ones, followed by 50 more. Every household in the country, plus the industries whose profits are affected by fuel prices, would benefit from this move, Socialist though it may be.

But think of it: these oil companies are acting as a monopoly in the present circumstance, and there isn’t an AG in the country who would try to go after them. We’re lucky they haven’t cranked the price up to $20 a gallon, because they very easily could do exactly that. This is, in the truest sense of the word, a matter of national security: this economy goes down, the rest of the world follows. Stabilizing the price of gas (and diesel, and jet fuel) is something this country must prioritize, and fast. The easiest way to do that is to take the tools of price manipulation out of the hands of the profiteers. Nationalization is the only way to legally accomplish that.

Write your Congressman.

*     *     *     *     *

Want to see how your grandkids’ cars will be powered? Check this out. It’s the most viable hydrogen-based solution yet devised, and it’s ready for roll-out.

     http://news.uns.purdue.edu/x/2007a/070515WoodallHydrogen.html

Note that the guy who developed this has a blue-chip pedigree and a list of commercially and scientifically stupendous accomplishments, including everything from cell phone and DVD technology to components of the Mars rovers. He knows a winner when he sees it, and this is going to fly.

Buy stock in aluminum mines on the open of the next session. It will pay off twenty-fold when this goes commercial. You heard it here first.