Focus 580; Mexico: Current Issues

In this our focus will be talking about Mexico a little bit about Mexican politics and about the relationship between Mexico and the United States. And our guest for the program is Gordon Hanson He is professor of economics in The Graduate School of International Relations and Pacific studies and in the Department of Economics at University of California San Diego. He's particularly interested in the economic consequences of Mexican migration to the United States and he is joining us this morning by telephone as we talk with Professor Hansen questions comments certainly are welcome. All we ask of callers is people just trying to be brief so that we can get as many as possible to keep the program moving but of course anybody who is listening is welcome to call the number here in Champaign Urbana 3 3 3 9 4 5 5 we do also have a toll free line. And that is good. Anywhere that you can hear us and that is 800 to 2 2 9 4 5 5 again. Here in Champaign Urbana 3 3 3 9 4 5 5 and toll free 800 to 2 2 9 4 5 5.

Professor Hansen Hello. Good morning thanks for talking with us. Thanks for having me on the president. We now are approaching or it's a it's a we in Mexico they're approaching another presidential election they'll be elections next year. President Fox has sent a fox was first elected in the summer of 2000 and in Mexico the term of the president six years and one can only serve one term. So he can't run again. And one of the things that I thought I would like to start out with is to talk a little bit about present a fox. The fact that when he became president I think a lot of people said this was this was he was a revolutionary This was something of a revolution in in large part because it was the first time that the longtime ruling party had lost but also perhaps of the cause they thought the dissent of Fox had some ideas and that would be revolutionary. Now this many years later say

five little more than five years after he was elected what can you say about percent of Fox and whether indeed he has turned out to be a revolutionary or not. Well I think in a lot of people's minds a President Fox's greatest accomplishment was getting elected in the first place. And that he achieved and breaking a string of 70 years of of rule by a single party and he helped put and and to an authoritarian pattern in Mexican politics now. So that accomplishment in and of itself is something that will ensure him a prominent place and Mexican history. But then. To expect to cap that off with major process reform is is is and has proven to be extremely difficult. Mexico has now found itself as a functioning democracy where one party doesn't control all branches of government and that's that what that's meant is that

we've seen the messy politics that's characteristic of democracies with lots of fighting and not very much progress on the legislative front. Well that's a guess that raises the question about whether whether things were with some people in Mexico be prepared to make the argument that when the PRI was the dominant party that somehow things were better. Well the PRI got got things done. Now the problem was that so depending on who was in power and what the agenda was that could be a good thing or that could be a bad thing. But also mentally there was that the methods that the PRI used to keep itself in power in terms of using electoral fraud in terms of buying off key interest groups to keep them from joining the political opposition were corrosive. They prevented Mexico from developing political institutions that you expect to see in an economy in a country that's vibrant an economy that's that is capable of growing

an economy. In a country that that represents the interests of its citizens and so well it's it's it's one must say that the PRI achieve certain successes in helping modernize Mexico in the sense that it's time had come come to an end and it was a time for Mexico to make that difficult transition from single party rule to democratic rule. The PRI apparently has made a little bit of a comeback at least. There have been some stories recently about a significant about two wins that the PRI has had maybe one more significant than the other which was winning the governor's position in one of the states of Mexico. This doesn't this doesn't however suggest that the PRI is likely or does it suggest that the Prius likely ever to have the kind of political power that it did in the near term it's unlikely that the PRI will have the sort of power that it had in the

past. In part that's. Because Congress again in the Congress in Mexico is divided between three parties and this was President Fox's problem his party did not have a majority in Congress. And so he needed to work with lawmakers from other parties and in order to foster coalitions to help get bills passed. Now Mexico doesn't have any tradition of this sort of legislative coalition building something that is has been standard for for a long time in the United States and in many other countries. And President Fox who is a skilled campaigner didn't seem to be particularly skilled in the craftsmanship of politics. You know something that Lyndon B Johnson was exceptionally good at something that Ronald Reagan was exceptionally good at in terms of getting Congress to agree to pass different items of legislation so what we've seen the PRI do is make a comeback. Be very focused on

trying to win the next presidential election coming up in 2006. However even if it wins it's going to end up without a majority of seats in the Congress and it's going to have a similar problem that President Fox's well so or not the point where there. Magine anyone having a majority as it is always going to be the case that there is going to have to be coalition building and cooperation going on between interests that might in some sense be competing. Both the fact that we have three parties in Mexico who are all staking a claim to the presidency and control of the Congress I think is testimony to the political divisions that exist within the country. Mexico like like much of Latin America is a country of extremes of wealth. The wealthy in Mexico are as wealthy as any any group of rich business people in the world and the poor in Mexico are are destitute

as a result that those extremes are reflected in and politics with groups that are staunchly conservative groups that tend much more towards the left and sort of a muddled center. So for the time being they We've got parties that are trying to figure out where in that fractious political environment do you stake your claim. I think in the long run three important parties is not a stable situation and that we're going to ultimately see the parties break apart and new coalitions form and the emergence of of two dominant groups at least is as long as Mexico keeps its its its current system of government. But in the end the medium run what we've got is is three parties none of which is capable of having control over them. The political system. And so there's going to be a need for horse trading there's going to mean be a need for coalition building that slows things down. But

what's good about it is that it helps the country develop those democratic institutions. That one needs in order to ensure that everyone's interests are represented. Our guest in this part of focus is Gordon Hanson He's an economist but Fessor of economics in The Graduate School of International Relations and Pacific studies at the University of California San Diego we're talking about Mexico. Questions are certainly welcome. 3 3 3 9 4 5 5 here in Champaign Urbana toll free 800 to 2 2 9 4 5. Well having having said what. We have about about Mr. Fox about President Fox going one point to one point to some things that you were you would think his administration has been a success or is something that they would point to as a success as a success. I think there are a couple of important accomplishments that the Fox administration has achieved. One is the passage of what's known as

what the equivalent of our Freedom of Information Act in the United States known as the transparency law in Mexico. And it allows public citizens to request information about how money is spent in Mexico. This information has never been available before and what it's meant is that the public has been able to hold elected officials accountable because they're able to see exactly how much money they have at their disposal and what they do with it. And it's caused numerous minor scandals when it's been discovered that politicians have been living very lavishly or devoting spending on on relatives and pet projects that would have very little public support. And that's been an important transformation in Mexico. Now politicians are under threat of having corrupt practices the past exposed. I think an important thing that happened in Mexico is that the haka ministration have helped build a strong

civil service that is a system of governmental administration that's not based purely on political appointees. It's based on a long term qualified group of government officials who see their career as being in government and not serving a particular party. One of the things that I was interested in having you talk a little bit about as we look ahead to the presidential elections next year is the case of the mayor of Mexico City Andres Manuel Lopez Obrador and his popularity. He has chances of being elected president and also the what the political establishment has done what some people would argue what the political establishment has done to sideline him or to attempt to sideline it. So the story of Lopez Obrador what it is is very interesting and it

it's telling about different pasts that Mexico might take politically in in the future. He is somebody who is a politician of the left. But what is unknown is how far to the left. Some like to characterize him as similar to President Lula in Brazil somebody who has definitely pursued social welfare policies to try and redistribute some income to the poor. But he's also pretty pursued sound fiscal policy. And been a relatively efficient manager. Some recent troubles notwithstanding other other folks who are more alarmist like to say now what hope is over though it is going to do is try and recreate what Chavez is doing in Venezuela which is to bring the state back in to control the reins of the economy in Mexico. So those people painting those scenarios as sort of indicative of of a political tension that exists in Mexico. There is a

sense in which you know the ruling party which characterized itself as representing coming out of the Mexican Revolution and representing the poor in Mexico never did represent the poor in Mexico. They represented the elites. And now that the possibility of a truly populist politician coming to power really scares some people. And what they've been willing to do is engage in dirty tricks to try and provoke prevent that from coming about. Well the this case and I've I've read about it and I guess I'm not sure that I completely understand what happened has to do with the fact that there were they were building a road to a hospital and somebody who owned the land nearby got a court order saying that the construction should be halted but Mr. Lopez Obrador went ahead and said no we're going to build this road which for which he received a great deal of popular support then it looked like in fact he maybe wouldn't be able to run because he would either be either was charged with a crime or he might actually be on trial

at the time and that caused so much trouble that. That was set aside for the moment I guess. I'm not quite sure I'm completely up to speed on this or whether that was completely set aside or whether the government just sort of said well we'll deal with it later. So that he's still able to run and in a sense that mollified all those people that were particularly his constituents that were so angry about what happened. Where where exactly does the story stand. It's more or less resolved. You know the details are are that as mayor Lopez over there was continuing a public works project that had been started by his predecessor which involved the state using its right of eminent domain to take up a piece of private property to build an access road to public to a public hospital. There was a lawsuit against that in an injunction against the taking of the land and there is some dispute about that. And it was a minor

skirmish and which. And which Lopez Obrador may have committed a very minor infraction. But one which would have been easily resolved in court rather than allowing it to be easily resolved in court as a civil matter a dispute between a private property owner and the government. The Fox administration tried to turn it into a criminal matter in order to bar Lopez over to overthrow him from running for president. And was it very obvious that that's the way. That's the way a lot of people in Mexico saw it. They said it was a it was a transparent attempt to make sure that he would not be able to run that base that that's how everybody saw it and it was a fact that you think that's what it was I think is a pretty accurate representation. You know there was there was there was a certain amount of of horse trading going on in the background and that the ruling party the former ruling party the PRI and President Fox's party upon essentially

agreed to form a coalition to take out the leftist mayor of Mexico City and prevent him from being a candidate so that the two of them the paan and the PRI could fight it out in the next presidential election. That sort of backroom deal has been very common in Mexico in the past. And in the past politicians have been able to get away with it. And what was what was surprising is that President Fox somebody who supposedly representing the Democratic ideals of the New Mexico was willing to engage in those sorts of dirty tricks. Now by all accounts he wasn't the strategy they were using wasn't his idea it was some of his political underlings who have presidential ambitions of their own. But still he was willing to sign off on it at least for a while so it wouldn't have benefited him because he can't run again but it might have benefited his party if they were interested as I'm sure that they are in continuing to hold the position of the president. Sure and he was also concerned about his legacy where he did pass off the presidency

to what his his party members what Mexico would see as a dangerous leftist. I think he himself would have seen his legacy is tarnished. But in the end the popular reaction to this was so strong and so unexpected that President Fox had to back down and and this that act also has made people nervous because what it's perhaps a sign of is a populism in Mexico which hasn't been seen for many decades. Reasserting itself and playing an important role in politics and as in any environment populism can be very unpredictable in terms of the sort of leaders that pushes forward. Well then I suppose in my mind raises the question To what extent this was an indication of support for the Democratic Revolutionary Party and Mr. Lopez Obrador or maybe some of it was just this feeling that that what the what the pun and and the president

were doing was just simply wrong unfair not playing by the rules and that it was people feeling that that the the the pond was simply overreaching. Was it that or was it people who genuinely felt supportive of Mr. Lopez Obrador. Well I think it was a little of both. But one thing to keep in mind is all of this played out in Mexico City which is where Lopez over to the right has his political most of his political support. His party the leftist party the PR de It is not truly a national party. They have strong representation in a number of important states in Mexico. They don't have very strong representation in many states in the north. And a number of states in the center of the cut. Tree so what. Because this happened in Mexico City where there are so many supporters of the mayor he was able to get people out into the city into the streets and

added on top of that was the dissatisfaction with the old style dirty tricks making a reappearance in and Mexican politics. Given that his strength is mostly in Mexico City where he is the mayor is he a viable national candidate at this point we don't know. He's he's doing well in in the polling. But as we all know polling a year ahead of elections isn't terribly meaningful. There's another wild card that can be thrown into the 2006 election and that is vote by Mexican immigrants in the United States which is that recently been made possible by by absentee ballot. And this is another thing another accomplishment the other hockey ministration helping push that through which again broadens the Democratic base. And and in Mexico nobody knows what fraction of Mexican immigrants in the United States will vote in a Mexican election although their political leanings don't seem to be all that different from from Mexico as a whole.

Well this I'm glad you touched because it was one of the things that I want to ask about and indeed the. Being how much difference might this make that you were talking about. You know it's estimated that something like 11 there are 11 million Mexicans in the United States. But how many of them will vote and for whom they would vote does it as I say raise the question in my mind was well how much difference I make on this. Could this make or break the election in Mexico for one candidate or another. Well it will certainly matter for outcomes and in specific states because the immigrant community from Mexico in the United States tends to about a little over 50 percent of the individuals I've met of Mexican immigrants in the U.S. come from about nine states and Mexico. And so those and even now Mexican immigrants in the U.S. as a

whole are only about 10 percent of Mexico's population a much higher fraction the population and in a number of of the populous states and Mexico's west. And so the immigrant vote in those states could be decisive in determining who wins seats in Congress who becomes governor are what the the political top issues the states look like. Now when it comes to the presidency. There it is there I think the you know the vote abroad probably work against the PR deed. The leftist party of Mexico City's mayor Lopez Obrador. Just because that's a party without sort of your standard organizational infrastructure that the other parties have making it harder for them to campaign not only nationally but then also certainly campaigning in the United States. We are at our midpoint in this part of focus 580 And let me again introduce our

guest. We're talking with Gordon Hansen he's professor of economics in The Graduate School of International Relations and Pacific studies. Also in the Department of Economics at University of California San Diego we're talking about Mexico and questions are welcome. 3 3 3 9 4 5 5 here in Champaign Urbana. We do also have the toll free line that's good anywhere that you can hear us around Illinois Indiana. Eight hundred to two. 2 2 9 4 5 5 The Apparently the interior minister of Mexico Santiago Creel has said that he would be interested in representing his his party the pun Mr. Fox's party as the presidential candidate next year. There are no there perhaps there may be some others you think it's likely that this is the man who is who is going to be the the pond's PRESIDENTIAL CANDIDATE I think it is but he's the front runner at this point. But the three candidates from the ponit put themselves forward.

None of them have have inspired much in the way of political outpouring. None of them look like particularly strong candidates and then from the PRI you have a man in the name of the money but also who is currently the head of the PRI who has a troubled past. He's been associated with corruption and scandals and an election for the city. Governor of the state of tough going and Mexico and it is sort of representing old style authoritarian tactics within the PRI. If you look at any of the presidential hopefuls for the upcoming election all have their flaws which suggest that it's going to be a very hard fought campaign and it's going to be a campaign in which in which Pack Tactics and in which money play a very important role. Well we have a couple of callers here to bring into the conversation first someone listening over in

Indiana and we'll go there first line number four. Hello. Oh two questions which I think are similar. First one is Has the Bush administration made its feelings known to the Mexican authorities or our leaders about what they want. And secondly if they were to try to do something to hurt this fellow who's a populist candidate what procedures might they use. And if so have they already done that or do you see thing on the horizon that they're going to do that. My guess would be that they did learn it would not want a populist leader in Mexico and you know just simply because of the oil interests there as far as that goes. Thanks a lot. I think. A very interesting question. I mean you're absolutely right that the Bush administration would not like to see a populist president of

Mexico at the same time. The one thing that would probably guarantee that Lopez Obrador wins the presidency of Mexico is for the U.S. to come out against him publicly. In Mexico there is tremendous sensitivity about U.S. meddling in Mexico's political system and in Mexico's economy and the so I think at this point the Bush administration is is correctly keeping things pretty quiet on the public front. I'm sure there is lots going on behind the scenes in terms of strategizing about how to help one candidate or another. But there will be very little that happens publicly because that would almost undoubtedly backfire. We've seen that an example of of that support for political opposition backfiring in the case of Venezuela where the Bush administration's

actions to help the opposition have actually helped Charles Chavez strengthen his position in the country and take an even more aggressive role in bringing state control over the economy and politically repressing his his Those who oppose him. Well I would say. As you say the Bush administration wouldn't want to be seen as actively working against Mr. Lopez Obrador but it's I suppose it's possible that if they could find something to boost Mr. Fox and his party the pundit that might be good. That might be seen as good for them is there anything that the administration can do in the next year that might have an effect like that. Well the the big issue is immigration reform. This was the promise on which President Fox really staked his presidency. He trusted that his close personal friendship with President Bush and would help lead to meaningful reform of immigration

policies in the United States which would be seen very positively in Mexico increasing foxes standing at home. Now what happened was those policies and Bush's proposals for immigration reform were all put on hold after the events of September 11th in 2001. And what we've seen since then is the Bush administration tentatively suggest that it might think about putting immigration reform proposals back on the table. But now what we have is Social Security reform taking president's possibly tax reform taking precedence and certainly the upcoming battle over the Supreme Court justice nominations. Drawing the energies from the Bush administration away from thinking about policies which might affect Mexican politics is one of the things that I know that you're particularly interested in and have done a lot of writing on and research on. And I wanted to make sure that we get to and what President Bush apparently said

the beginning of last year that this was something that he wanted to that is immigration reform is something that he wanted to work on. And then of course we know that he had dedicated an awful lot of his personal time to the issue of Social Security and spent a lot of time talking about that. And there apparently are some people in Congress who are interested in the subject and in advancing some kind of legislation to do what the president. President Bush and President Fox have both talked about is to create what would in effect be a kind of a guest worker program for the United States although again as you say there are so many other issues on the table so many other subjects that I think some people in Washington don't really expect that much of anything this year would happen on that issue. So you pretty much see that's it's it's something that's that's on the agenda for discussion but as far as action is concerned you wouldn't expect anything to happen any time soon. If you want to clear a room full of politicians all you need to do is mention the words

immigration reform. Nobody wants to get close to this issue politically because it is so it is such a politically divisive issue. The Republican Party is divided about immigration policy. The Democratic Party is divided about immigration. The party policy even environmental groups are divided about immigration policy. They're the two central issues that must be dealt with. Are what do we do about a population of illegal immigrants in the United States which is about 11 million people today. And two how do we meaningfully meaningfully reform and enforcement policies in particular. How do we penalize employers that hire illegal immigrants. Dealing with dealing with either issue. It draws political fire from water both sides of the political spectrum and at this point very few people are willing to stand up and put their name on a bill that would really kind of stash away change the way that US deals with aggression.

Let's talk with someone else the next caller up here is in Chicago. Line 1 Hello. Yes hello my question has to do with immigration and since you're in the area of economics I was asking about going to want to ask about the relationship between immigration and the American banking system. I recall back in the 1970s and 80s American banks had made you know huge loans to Mexico and other Latin American countries and were in serious trouble because of the economies down there were not able to repay these loans. And imagine these loans are still outstanding and it would seem to me that you know from what I understand just as regard to Mexico from my my understanding is that the currency which is sent back from the immigrants in this country to Mexico is the second largest source of revenue for Mexico after oil it's even greater than tourism from what I've learned. And so what I'm saying what I'm asking is if. You know we didn't have these immigrants here.

Banks would be in serious trouble some of these large American banks which were in serious trouble before this wave of immigration would be in very serious trouble today and would probably not present a crisis to the American economy in the sense of the deflationary effect of depression. If these banks were to collapse already American taxpayer would have to you know bail him out like they build out other other corporations. And I'm just one is that your understanding of the situation. The issue of immigration from Mexico and making banking and banks in the United States is a very interesting one. It is true that in the past Mexico had amassed large debts to foreign banks and U.S. banks in particular but Mexico over the last 15 years or so over the last 10 years in particular has been able to deal with those debts pretty successfully today. Mexico is viewed as as a pretty good credit risk. Now part of the way it's been able to do that is by having very strong strong growth and expand its exports. And

as you mention one important source of that growth has come from income that Mexican immigrants earn in the United States and send back to their family members in Mexico. Now were U.S. banks come in as U.S. banks have realized that a Mexican immigrant community in the United States and the money they send home is is a growth opportunity. And U.S. banks have been very aggressive about trying to bring Mexican immigrants into the banking sector. And what's interesting about this is that these immigrants come from families in Mexico who do not participate in the banking system. So it's by through the process of immigration and through their connection of with U.S. banks that we've got a whole segment of Mexican society that's really operated outside of the formal financial system which has been brought into that system which is helping generate extra savings and channeling that savings into investment and helping both economies grow. Well what I was going to ask you was if you were no you know like many people are proposing you

know send back the immigrants didn't to me that would create a crisis in the financial sector and since we're you know Mexico the economy would be in danger of collapsing if just this were to happen and also in that sense with the outstanding loans which they have to American banks that would have a ripple effect in our economy would it be correct to say Oh well first I would I'm not one who would advocate sending 11 million immigrants home. Right I understand it. I mean and I think you're right that that would have devastating consequences for the Mexican economy. Mexico's Mexico depends on the income that workers in the United States generate for the country and a large return migration from the United States would be devastating for the economy. But important thing to keep in mind it would be also be devastating not for the U.S. economy as a whole so much for the effects wouldn't wouldn't would be important but not but not huge but it would matter tremendously

for certain regions in the United States that have come to depend on immigrant labor to keep industries alive. Now that used to be just agriculture and California and Texas but now it includes meat packing and Iowa and poultry processing in Arkansas and construction in Georgia and North Carolina and tourist industries in Florida. All of those industries depend on on on immigrant labor and would be hurt tremendously by the loss of access to labor. Could I ask one other question. Yeah if you'd be quick you regard the influence on a pension system you know with the baby boomer generation coming to retirement and the low pop the low reproduction rates in this country to small families in this country would in a true that we do really need a large immigrant population in this country to support the future of the pension system such as Social Security and without this immigrant population you would have a problem with this so security to learn.

Well. Adding immigrants to the population does help you deal with with a pension crisis. The US situation isn't nearly as dire as it is in Japan or Europe where some of the baby that followed their baby boom has meant that they're just not going to be enough workers to support those in retirement. And in the coming years in the United States the situation isn't quite as drastic. The U.S. could could solve its problem with Social Security with relatively minor changes in Social Security taxes and Social Security benefits. Now immigration immigration could help on the margin but one thing to keep in mind is that many of the immigrants coming in are immigrants who earn pretty low incomes. And so their net contributions to the U.S. tax system isn't all that large. Once you when you look at the tax contributions they make and then

net out the spending that goes for public education and all this other stuff that group ends up being a net drain on the on on US governmental resources. So I have a solution if you want to use immigration to solve the Social Security problem you have to bring in high income high skilled immigrants to do that in relatively large numbers. How important to them Mexico. An economy is the money that the Mexicans working in the United States send back home. So for Mexico's economy overall. That money that flows from the U.S. back to Mexico is close to 3 percent of Mexico's gross domestic product product. So 3 percent of Mexico's national income comes from earnings from from Mexico amorous in the United States. Now when you look at specific States and Mexico that number is considerably higher it's closer to 20 percent. So in and there are there whole regions of Mexico where one of the major

sources of income is money the family members in the United States and home. Let's talk with someone else what the next caller. Why and for my question has to do with the corruption in Mexico first of all how corrupt exactly is the government the political parties out there. Specifically how much does drug money affect the political process down there. And also I want to know about the various speeches sees an armed forms of government down to the insurgents legitimate and illegitimate ones the army the Federalists were being run with politically and to what extent are they controlled by the local powers that be either legitimate or illegitimate. Throwing a fit will thank you. That's a very important corruption and the role of the military in the police and and national life are very important issues in Mexico today. You know corruption in Mexico is an unfortunate fact of life. It's something that's been around for a long time but I think you know as the caller suggests you want to distinguish between the type of

corruption that's associated with with drug money which is with it which is relatively recent and the type of corruption that's a everyday part of life in a country. It is. Whose democratic institutions are or are still developing. What. What drug money has done in Mexico is bring a major new source of resources to bear to try and buy basically access to the US market Mexico as a distribution point for cocaine that's produced in n Colombia and that sent to the United States. And there are series of course of cartels in Mexico which handle distributions at several points along the U.S.-Mexico border. Now the those cartels have paid off politicians they've paid off police they've paid off the military in order to be able to do their thing to move drugs through Mexico into the United States. But that corruption is doesn't reach into

every aspect of life necessarily. Because you what you want is a drug runner is to get your drugs through. You don't necessarily care who the governor is or what policy he's following on education or social welfare or labor rights or whatever what you care about is will he let your planes land on air strips in the states and get your drugs through. So while corruption has had a very important impact on the police and the military I don't know that it's really corrupted the country's political institutions. Now that said the fact that Mexico's police and the and armed forces are less trustworthy than they once were is a tremendous issue of concern for the country. All right nobody gets at the question of the call and we have someone else. Better the next line to follow. Yeah I was wondering if you happen to know anything about. I've heard

two two or three. Social Security Administration people refer to billions and hundreds of billions of dollars accumulated over the last two decades to three decades I guess it is that due to illegal immigrants paying Social Security under false Social Security numbers and then of course not claiming any kind of benefit at the end of their or their time here. I was wondering if because you talked earlier about how there's a net negative financial effect to the illegal immigrants coming to this country because of the low wages as far as the scare is concerned but did you include that. So those social security contributions is a very interesting story. So what happens is since changes in U.S. immigration law in the 1980s

U.S. employers are required to ask to see valid identification from all workers who apply for jobs. So what illegal immigrants will do is present a counterfeit Social Security card and maybe an a counterfeit green card to show that they're eligible to work. And U.S. employers often times may know that these things are are counted. Just accept them at face value the law doesn't require them to do anything more than to know the information on these on these documents. Now what the employers then do is to withhold Social Security taxes from these workers paychecks and send that money to the Social Security Administration. Now since the Social Security cards are counterfeit the numbers are are fictitious. They don't belong to any real account. And that money goes into something called the earnings. The suspence file in the Social Security Administration. Now right now that account has somewhere over 400 billion dollar Senate. We don't know how much of that is due to

contributions of illegal immigrants. Undoubtedly a large amount of it does have to do with contributions from illegal immigrants. So and in the statement I made earlier about about immigrants both legal and illegal from Mexico having a net drain on U.S. Siskel resources. I was taking into account our best estimates of what those contributions look like. It's absolutely correct that that many illegal immigrants do make contributions to the US social security system on which they will never collect. I should also add that many illegal immigrants pay income taxes. Now you might ask why would you why would you do that. Well by virtue of getting attacked identification number from the United States it makes it easier to get loans from banks. It makes it easier to participate in the economy and in the end a variety of different areas. And it also kind of builds builds your taste for ultimately becoming an illegal immigrant. So it's not true as many folks say that illegal

immigrants don't pay taxes. They do and make. But even so the drain that comes from the usage of public education and the uses of health care makes a lot of that kind of damage. Hello. Yeah not quite exactly sure what happened there to the caller. You're still there right. Mr. Hanson OK go ahead. So we have those tax revenue coming in Social Security and income taxes as well as you know sales taxes and property taxes from illegal immigrants. But we also have expenditure going out of them from uses of public education from emergency medical services and other areas and to the best guess is that on net illegal immigrants are a net drain on the fiscal resources of the U.S. economy. Now you've got to balance that against the economic contributions they make by bringing their labor here. And when you put all of that together what you come up with is a net

contribution to the U.S. economy which could be positive could be negative in either case. It's not a large share of U.S. GDP it's going to be less than a twentieth of a percent of U.S. GDP. Well one of the things that you talk a bit more about is getting back to this idea of the kind of. Immigration reforms that the president has talked about and there may be some support among some members of Congress for that is making it possible for people who either are now here illegally to be here legally in work or for people who would want to come here to the United States for a period of time to come here legally and work. Who exactly who benefits from that. Well two groups in particular employers benefit because they get access to more labor at the same wage or or more labor at lower wages. Now that's not all employers it's employers and industries that use low

wage labor. So that's going to be an apparel industry and meat packing and poultry processing and food processing and manufacturing industries. It's going to include a service industries and restaurants and hotels construction as well as the provision of you know janitors and and security personnel and house cleaning services and so forth. The other group the benefits are consumers that buy those goods now that again that's not everybody and it's not everybody in all parts of all parts of the country but they benefit by getting access to those goods and services at lower prices than they would otherwise. And when you talk a bit earlier about the fact that that immigration reform is one of those issues that for a lot of members of Congress nobody wants to. Another one of those third rail issues that nobody wants to go near. What is it that makes it so difficult and makes members of Congress so hesitant to even want to talk

about it. Well I think because immigration policy divides the natural coalitions on which either the Republican Party is faced or the Democratic Party is faced. So within the Republican Party when you talk about immigration reform what you do is you create conflict between business interests which would like to see access to more labor you create conflict between them and fiscal conservatives who are concerned about the public finance consequences of immigration. And then your sort of social conservative law and order types who are concerned about what wide scale widespread illegal immigration means for U.S. Civil Society for Law and Order in the country. And then every tragic side. You have a division between. Groups representing who are concerned about civil rights groups who are representing Latinos in the United States were concerned that that immigrants here are treated fairly

with union workers who are concerned about immigration putting downward pressure on their wages. So even within the environmental community you have folks that are concerned about immigration contributing to population growth and harming the environment versus those who want to maintain their alliance with civil rights groups that tend to support immigration. So you make you create enemies out of your friends when you bring up immigration policy. So again just to round out you think probably not this year maybe even. Well there's a possibility in the coming year for a very modest type of immigration reform which would be targeted on workers in the agricultural sector where there would be some sort of partial amnesty. That's an explosive term in immigration policy but providing legal resident visas to workers who work in agriculture and expanding the number of temporary work visas for

individuals in agriculture. There are several bills that are being debated in Congress right now that would that would achieve both those objectives. However that is a very small piece of the larger immigration policy puzzle and even if those bills go through it's going to only make a small dent and that stock of 11 million illegal immigrants that are in the country and it's not going to do anything to change meaningfully the nature of enforcement policies in the country. Well there are we will have to stop because we've come to the end of the time our guest Gordon Hansen professor of economics in The Graduate School of International Relations and Pacific Studies at University of California San Diego Professor Hanson thanks very much. It's been my pleasure.