Wednesday, August 17, 2005

So on my little break back home in Utah, I have noticed an increased number of people I did not see very much of in New York: Mexicans. All over the news you see cases of illegal immigrants gathering on the corners of 7-Eleven's hoping some guy who wants his deck painted will offer some cash in exchange for some good manual labor.

So this brings to light a bigger issue, illegal immigration. It is no surprise that there are an increasing number of illegal immigrants from south of the border. A new poll in Mexico shows that 40% of its residents would move to the US and 20% would be willing to do so illegally (Source: Link). Now something like this causes most people to think about tighter border controls but that doesn't do anything to solve the problem. The long-term goal here is to disincentivize Mexicans from moving to the US... but to even get close to solving that issue, we must first ask the question: Why are Mexicans so willing to move to the US?

That question is pretty easy: the US has the world's largest and most productive market. Let's ask another question then: why isn't Mexico undergoing the kind of rapid development that is seen in China, India, Brazil, and other advancing nations?

This time we have to focus on the half-empty part of the cup. It's obvious that the US has a better economy with more jobs etc. etc. etc., but lets' take a look at why living in Mexico sucks so much that 40% of the residents want to leave.

After a little research, I think I have pinned it down to Mexico's growth-stifling regulation (feel free to disagree, but you'll be wrong):
    • In Mexico it takes 58 days to start a business, compared to 5 in the US and 3 in Canada.
    • As a percent of per capita income, the costs of starting a business in Mexico is 16.7%, versus 11.7% in Brazil, 10% in Chile, and 0.6% in the US (hrm, do we need a scatterplot to see a correlation here?)
    • Despite what you may think, apparently it's really hard to fire Mexicans!!! (In Mexico of course). Laws in Mexico are so focused on the employee that the employer has to pay special severance fees, fines, penalties to the government, and provide ridiculously hefty amounts of paperwork in the form of advance-notice requirements to just fire an employee!!! That (according to Forbes) is equivalent to 83 weeks of the worker's wages!!! Jesus Christ... Pedro for President [of Mexico]!!!
    • Some other reasons: high cost & time to register property, high interest rates, and an overall flawed economic policy.
Okay, so from the above I think it's safe to say that if we as a Bible-loving-Xenophobia-embracing-Black-hating-Female-undercompensating-free-market-hypocrite of a country want to reduce the flow of illegal immigrants from our southern border, we should probably strongly urge its government to enact institutional reforms in order to bolster its economy and put Mexico in the same boat as other rapidly developing countries.

Bottom line: more economic efficiency in Mexico = less Mexicans outside of 7-Eleven. Now if only we could do something about those damn Asians...

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