Immigration, Economy & Capital
September 3rd, 2010
Recently I have been embroiled in the debate over immigration and undocumented Immigrants. This has led me to thinking about the overall situation of the economy and the recession.
The level of undocumented immigrants entering from Mexico is down in recent years.(1) The borders still remain porous because illicit drug importation has not decreased.(2) The maquila operators are affected by the recession, but not by drug wars.(3) The recession has led to desperate people, without the outlet of coming to the USA, to work for the drug cartels.(4)
The recession and stricter border controls and the use of E-verify in some states has led to the decrease in immigration.(5)(6) But the option to work for the drug cartels is a desperate choice.
Somewhat ironically a recent Federal Reserve report shows immigrant labor has over the long run pushed native speakers into better paying occupations demanding higher English language skills. Although the statistics show a short term lowering of capital intensity as businesses take advantage of the cheaper labor. This contradicts most opinions that illegal immigrants are taking jobs away from the US Citizens. They are taking jobs that do not demand communication skill and expand opportunities for English speakers to move into senior and supervisory positions. Thus pushing the US citizens into higher paying jobs rather than shunting them aside.(7)
There maybe an overall growth managerial jobs for US citizens that pushes up the overall income, but workers are reported to be increasing their hours which has been a factor in increased productivity and wages.(7) The Federal Reserve report does not address the actual numbers of persons who get an increased income. In other words if a few people make a lot more money and a lot of people make a little less, it may push up the average income overall but not reflect the income of the majority of people. This is exactly what they do, take overall averages without taking into account the actual numbers of people who come out ahead and who don't. This seems to be a missing piece of the data.
This is the summary of the Federal Reserve Report
"The effects of immigration on the total output and income of the U.S. economy can be studied by comparing output per worker and employment in states that have had large immigrant inflows with data from states that have few new foreign-born workers. Statistical analysis of state-level data shows that immigrants expand the economy's productive capacity by stimulating investment and promoting specialization. This produces efficiency gains and boosts income per worker. At the same time, evidence is scant that immigrants diminish the employment opportunities of U.S.-born workers."(7)
This does not address the social justice issue. Immigrants are not getting the benefits that legal workers have in the legal economy, no health insurance, no unemployment benefits and no social security benefits or medicare. There is also the matter of fairness to the laboring classes doing the dirty work in terms of citizenship as a goal.(8)
This from the article on Undocumented Workers in the Monthly Review.
"The burgeoning informal economy in the United States is introducing new elements into familiar historical patterns of exploitation. While the U.S. economy has traditionally been fueled by immigrant labor, the current dependence on undocumented labor is unprecedented. Although the masses of Western and Eastern Europeans who immigrated to do America's dirty work in the past were rewarded with citizenship for their sacrifices, there is no indication that the current Mexican and Central American workers can expect the same. Naturalization is not part of the deal. Dirty and poorly paid work in the contemporary informal economy is not an initiation into the mainstream U.S. working class. The current wave of undocumented immigrants who work in the informal economy today are more likely than not to stay in the informal U.S. economy—as long as they are needed."(8)
Regardless of why immigration has decreased recently, there is an ongoing problem with the creation of an informal economy that is eroding the formal workplace with a consequent cost to the local tax base and an increased burden on the public facilities especially in health care. The article concludes that up to 15% of the workers in Los Angeles are in the underground economy with 65% of them being illegal immigrants.(8)
Immigrant employment may have a positive effect on the overall economy but the effect of the underground economy on the local infrastructures can be detrimental and that cost must be taken into account. The underground economy whether made up of illegal immigrants or US citizens seems to have become essential to keeping capital producing profits. This underground economy has spread from the third world to the first world and is now part of our daily lives.
There is a long term economic problem with jobs being outsourced overseas.(8) What results is a continuous loss of union jobs.(9) This is part of the continuous downward pressure on wages relative to cost of living.(10)
This is from Dr. Jack Rasmus, National Writers Union, UAW 1981, AFL-CIO.
"The overall picture is abundantly clear: real average hourly ages of more than 100 million of American workers' are less today than 25 years ago; real wages of college educated workers have risen only modestly in the late 1990s and fallen since under Bush II; and real wages of the 10 million lowest paid workers have declined more than 21%."(10)
The recession may be keeping immigrants out of the country but they are increasingly finding work in the illicit drug industry to make up for the jobs they are losing in the USA. This reflects the hodge podge effect of an economy which has not been rationally planned.
Granted even the more highly planned and regulated economies in Europe have their problems due to the recession and pressure from third world immigrants just as we have here.(11)Which leads me to suggest that we need to start considering what kind of world we want for our future. There is the path of reaction and closed borders that will simply add to the contraction of the economy. There is the path of capitalist expansion which is the path of increasing disparities between the rich and poor and more of the same with wars and workers mistreated. Or there is a socialist path of legalizing drugs, giving amnesty to illegals, directing the economy with the maximum employment of all who can work as a goal as opposed to maximizing profits.
We need to break the back of the illicit economy which is driven by the logic of capital to get the most value out of the workers and pay the least amount. It is very clear that capitalism requires this influx of cheap labor to grow. When it contracts it needs to be able to shut the valve and spit the excess people out.
One aspect of what needs to be done is to rationalize the relationship between the USA, Canada and Mexico. Free trade while maintaining the inequity of income of the workers was obviously a ploy to break the back of the unions of the USA with the double whammy of cheap immigrant labor and exporting jobs wholesale overseas. If we had laws that forbade exporting jobs outside the region with a concerted plan to bring Mexican and American wages and benefits up to the Canadian level, then we might be able to get a handle on this. Included would be strict environmental legislation. The money would have to come from taxing the rich and radical cuts in defense, but also increasing taxes on luxuries and penalizing private automobile use while increasing public and mass transit where practical. This would dry up much of the demand for oil.
Green democratic socialism(12) is a realistic option to replace NAFTA and neo-liberalism. We either bring us all up together or we increase the disparity between rich and poor, resulting from capitalism, and that will eventually lead to an explosion much more violent than what we see already in the world.
Going backwards with fortress America, dreaming of a pleasant world of an imagined 1950's when everyone knew their place never was real even back then, and is not a realistic possibility. We can head for more wars and totalitarianism. Or we can try a green democratic socialist alternative.
(1) From Pew Hispanic Center report on immigrant decrease.
http://pewhispanic.org/reports/report.php?ReportID=126
(2) From Department of Justice illicit drug import reports.
http://www.justice.gov/ndic/pubs38/38661/swb.htm
http://www.justice.gov/dea/concern/18862/index.htm
(3) From El Paso Times on Effect of Recession on Maquilas.
http://www.elpasotimes.com/ci_14526631
(4) From Reuters on women being recruited by drug cartels.
http://news.yahoo.com/s/nm/20100903/wl_nm/us_mexico_drugs_women_1
(5) From Time Magazine article on Recession impact on Immigration.
http://www.time.com/time/nation/article/0,8599,1811660,00.html
(6)From Pew Hispanic Center report on Job loss among Hispanics.
http://pewhispanic.org/reports/report.php?ReportID=88
(7) From Federal Reserve report on effect of immigrants on economy.
http://www.frbsf.org/publications/economics/letter/2010/el2010-26.html
(8) From Monthly Review article on Underground Economy
http://monthlyreview.org/0706vogel.htm
(9)From In These Times Article on Union Job Loss
http://www.inthesetimes.org/working/entry/5464/recession_pushes_union_membership_down/
(10) Jack Rasmus on Wages
http://www.kyklosproductions.com/articles/wages.html
(11) Newsweek article on Immigration and population.
http://www.newsweek.com/2010/02/18/the-incredible-shrinking-continent.html
(12)From Guardian article about Green Socialism.
http://www.guardian.co.uk/commentisfree/cif-green/2009/aug/30/green-socialism-uk-renewable
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