Central America´s Business Blog

There are three ways in which North American immigration can develop over the next ten years. One way creates no big problems. The second involves an important step forward in relations between the United States and its southern neighbors. The third is ugly.

The easiest case involves no increase in the number of Mexican and Central American migrants, who come to the United States illegally.
Illegal immigration creates various problems for the United States, even at current rates of about 500,000 each year.
But the United States and the immigrants have been living with this situation for so long that both sides have more or less learned to live with it.
The more complicated scenarios involve a big increase in the number of migrants and what this could do to the American system of worker benefits.
On one hand, it seems that if Mexicans and Central Americans were allowed to work in the United States, they would stop coming once all the jobs were taken.
But if millions more immigrants poured across the border, the most recent arrivals would probably be willing to work for less than the ones who came before – in which case there would always be more jobs.
Employers who took advantage of these workers by paying less than the minimum wage and/or not providing benefits such as severance, vacation or sick pay would be breaking the law.
But there would be no way for the United States government to prosecute much of this illegal activity, since it would likely involve millions of small businesses all over the country.
If a lot more migrants came to the United States would, many Americans would demand strict border controls – until they realize that closing (or trying to close) the border is hard.
A big border fence would be a public relations disaster in Latin America, especially in the countries most affected.
Felipe Calderon won Mexico’s 2006 presidential elections by a tiny margin over his socialist opponent.
If Mexicans react badly to the image of a huge, grim barrier, the next election could result in a government much less friendly to the United States, which doesn’t need a Hugo Chavez clone on its southern border.
Also, a mega-fence would have a price tag in the billions of dollars, plus the annual cost of maintaining and patrolling it, with no assurance that it would do much to slow down the flow of migrants, who – even if they get caught and are deported – can just turn around and try again (we assume that tightened security wouldn’t include the United States Border Patrol machine-gunning poor Mexicans and Guatemalans looking for work).
The United States would be better off with Plan B - reducing the pressure to emigrate, by helping make Mexico, Guatemala, Honduras and El Salvador richer – call it a modern version of the Marshall Plan, which 60 years ago rescued Europe’s war-shattered economies, mostly by giving them a lot of money.
But Western Europe before the war had generally done things that gave its people high living standards.
Mexico and the poorest Central American countries at any time during the past century could have adopted these or other productive policies, but didn’t – so writing checks is probably not the answer.
A better plan would be to have the United States and its southern neighbors create a North American Economic Zone.
With approval by the governments of the countries involved, foundations set up by the United States would pay for and help supervise programs in areas that could include credit for small businesses, education and training programs and health services.
An EZ would cost money in the beginning.
But if the programs were run well, they could soon pay for themselves.
At the same time, Mexican and Central American migrants in the United States who have committed no serious offence would become legal residents, with the right to apply for citizenship.
Populist leaders in Mexico and Central America would almost certainly demonize the EZ concept - especially the idea of having Americans supervising projects in their countries - as an attempt by the United States to colonize them economically.
But in many cases, they haven’t managed their economies well by themselves.
Besides, European countries accepted joint control of programs paid for by the Marshall Plan.
Then there’s the question of what happens if the United States is faced with a lack of cooperation by its neighbors, combined with a refusal or inability to control migrants leaving their territories.
In Plan Ugly, the United States takes a hard line, claiming that these countries are threatening its sovereignty and stability – and that in the circumstances it has to protect its interests, with a wall – or worse.
The easy way is better than the hard way.