1. Reason for Mexican Immigration? Let the Economy Tell the Story Versus

2. OUTLINE Disclaimer/Methodology Mexico’s Position United States’ Position Economic Evidence Cost/Benefit to Each Nation Way Ahead Bottom Line

3. METHODOLOGY Politically Charged Issue Let the Economic Facts Tell the Story Variety of Sources to Balance the Slant –Center for Immigration Studies (Neutral) –Bureau of Labor Statistics (Neutral) –National Economics Encyclopedia (Neutral) –Dr. Looney’s Website--Migration Section (Neutral) –Brookings Institute (Left of Center) –RAND Corporation (Conservative)

4. MEXICO’S POSITION Best Case…Open Borders, Free Flow of Workers - Relieves Mexico of social obligations for large poor population (60% defined as poor) - Remittances benefit Mexico ($23B in 2006) - Acts as relief/buffer to stabilize political/economic situation in Mexico

5. MEXICO’S POSITION Fall Back Position…Increased opportunity for legal Immigration – Guest Worker Program: Facilitate legal seasonal workers…workers return to Mexico with increased wealth to open businesses and build houses – Oppose new Y visa proposal as too restrictive

6. US POSITION Controlled borders (28 general visa categories) Preference to migrants with degrees/specialized skills Guest Worker Program (Proposed, 2007) –Two-Year Temporary Y Work Visas Renewable up to three times Must return to Mexico for a year in-between –H2 Visas (Current) H2A: Temporary/seasonal agriculture workers, 1 Yr/3yr on extension –Must return to Mexico at end of seasonal period H2B: Temporary/seasonal Non-agricultural workers, 1 Yr/3yr (66K) –One time jobs, bridge project, road crew –H1 series visas for temporary skilled employment

7. Problems With Current System US employers see H2 system as burdensome –Paperwork and responsibility –Must pay employee’s travel to and from Mexico –Must pay legal wage rates/taxes Porous border allows for entry/bypass of system –More workers want in than the US has demand for –Those who can’t get a visa don’t wait for the door to open, they let themselves in 12 million Illegal aliens/6 million are visa overstays

8. WHY DO THEY COME? Only border between third-world and first-world on the planet, largely uncontrolled, 2,000 miles –GDP Purchase Power Parity US, # 9, $46,000 Mexico, #75, $12,500 –Unemployment US, 4.6% Mexico, 3.7%, 25% under-employed –Inflation US, 2.7% Mexico, 4.0% –Freedom House Freedom Scores US, 1.0 Mexico, 2.5 with Serbia and Ukraine

9. WHY DO THEY COME? –Manufacturing Grew 183% in Chile, 196% in S. Korea, 307% in China, 2.7% in Mexico –Registering a Business 5 days in US, 22 in S. Korea, 27 in Chile, 48 in China, 58 days in Mexico –Transparency Mexico is 65 th most honest place to do business, tied with Ghana, Cuba is less corrupt 34% of Mexican businesses paid “extra fees” to Govt officials –Education 62% of educated Mexicans polled would leave and live in the US –Wages Mexican worker earns $10/day in Mexico, $8 to $10 an hour in US 60% of Mexican society classified as poor

10. Cost/Benefit to Mexico Costs –No pressure to reform government –Opportunity losses, workers engaged in foreign productivity –US employment provides no incentive to advance skills –Disruptive to Mexican families Benefits –Removes pressure to add more jobs –Remittances stabilize the economy ($23B) –Reduces a large population of unemployed/disgruntled people –Immigration used as bargaining position to obtain more US aid

11. Cost/Benefit to the US Costs –Reduced wages for low-skill US workers –Negative impact on US welfare programs Low Tax payer, High Social Program Consumer –Increased costs to border security –Increased need for infrastructure like schools, but no tax base to support –Skewed tax costs –Increased crime –Nation divided Benefits –Keeps farm wages down Consumers pay less for agricultural goods –Some service industry wages held down Cheaper Services for US Customers –Gives some states like California a competitive edge in production

12. WAY AHEAD FOR US?

13. WAY AHEAD FOR MEXICO?

14. MEXICO, WHAT IS MORE REALISTIC? The Canadian’s aren’t sneaking across the border –Mexico has to reform politically/economically –Must invest in human capital programs –Incentivize return of migrant workers for Mexico’s advantage

15. UNITED STATES, WHAT IS MORE REALISTIC? Comprehensive immigration policy that guards our interests first –Temporary workers pay bond to enter, refundable upon departure –Reduce Mexico’s annual visa quota by each overstay –Go after source of illegal labor magnet, US employers –Reduce social program eligibility, another magnet US is too hard to live in without a job and social welfare –Change laws to prohibit citizenship for births to non-US citizens while on temporary visas –Execute program to reform Mexico’s economy vs. handing out blind aid

16. BOTTOM LINE Root Problem is Economic in Nature –As long as there is a wide gap in economic parity between US and Mexico…they will come Requires Balanced Economic/Political Solutions –Stupid policies net stupid results Fences, Machine Guns and Security Patrols Didn’t Work for the Soviets, Ask the Germans

17. QUESTIONS??