Thursday, January 24, 2008

“Illegal immigration Akin to Enron Fraud”

This essay appeared in The Aspen Times “Soapbox” last Sunday. The author, Doug Mytty, has framed his argument regarding illegal immigration by comparing it to the nefarious activities of Enron. His analogy works quite well:

Illegal Immigration: Republicans want cheap workers, Democrats want poor voters.

America once faced a problem with systematic fraud in the financial markets which lead to scandals such as Enron. The premise is simple, by misreporting their performance, these companies gained an illegal and unfair advantage over competitors. By misreporting their numbers, their cost of borrowing money was far lower, and they didn’t have to work to actually make a “profit.” Ultimately, society - that’s you - paid $50 billion when this fraud was uncovered.

Illegal immigrant employment is fraud by another name - and costs far more. Both the illegal immigrant, and the individuals employing them, attempt to gain an unfair advantage by creating an illegal advantage over competitors. Ultimately you pay, as more wealth is unfairly transferred to the illegal employer and more bills are given to you by the illegal immigrant. An extrapolation of the Rice University Huddle Study of 1996 to 2006 yields a net economic impact of minus $70 billion, nearly all of that borne by low-income households. Mexico alone receives nearly $20 Billion per year in remittances - that’s cash leaving the U.S. economy. For those who question the net impact of illegal’s work - after all they are working - one might also ask whether Enron was a net positive, for was it not also working? The reality is that white collar fraud and illegal employment are not victimless crimes, and also further affect business and employment by creating illegal competition.

In the case of the illegal immigrant, he/she is here in America, working and enjoying the relatively good life, while a would-be legal immigrant is spending years in their home country filing paperwork, educating themselves, learning English, and earning money to show Uncle Sam that they can and will take care of themselves in America. Is it easy for someone in a third world country to raise the funds? No. However, adapting to America won’t be easy either, so this hard work in the home country effectively becomes part of the selection process.

- - - - - - - - -
Illegal immigration also unfairly competes against another part of the selection process: sponsoring. If the legal immigrant is sponsored (and many are), a relative in America with at least two years of full residency is working hard to show that they have approximately $12,000 for short term support costs, and the stability to cover any and all welfare given to the immigrant for a period of 10 years. Ten years? That’s right, Uncle Sam bills the sponsor for any unpaid hospital bills, welfare, public defender costs, and any “public aid” given to the immigrant for 10 years. Sponsoring offers a far more effective screening and assimilation process than government could ever provide. Think of immigration sponsoring as having a co-signer on a loan, and you are the bank.

The employer of illegal immigrants has a similar illegal advantage over his/her competitors in that the illegal immigrant has none of the above immigration costs and therefore can work for lower wages - no sponsor, no co-signer. The employer of illegal immigrants has not had to work for his/her money by finding good workers to manage, being innovative on products or services, or worked hard to find good customers. Rather he/she has only had to violate the law to ensure personal profits, just like Enron. The employer of illegal immigrants is no different than a factory that fires all American workers and sends it work overseas. However, as construction and mowing a lawn can’t really be “offshored,” the only “solution” is to bring the low wage of a third world country here. At least the offshoring T-shirt factory doesn’t stick you with the inflated hospital bills of the workers.

So is there a solution that’s immediate and relatively painless? Sure. In the wake of Enron, the Sarbanes-Oxley act required all financial reports to be signed by the CEO or CFO of the company. If there was a fraud, the person signing the report was criminally liable. As white collar guys don’t like to be lead away in handcuffs, the companies cleaned themselves up.

It would be simple to make similar change in illegal immigrant employment. Currently, there exists a Federal Pilot system for checking social security numbers. We need only enforce the provision that if social security numbers aren’t cleared by an employer using the Federal Pilot system, the ICE team arrests the owner of the company. While an illegal immigrant might not be too put out by spending a few days in the clink and appearing before a judge, I’m willing to bet that more than a few owners might not like the social stigma and discomfort of shuffling around in chains. Of course, any owners that wouldn’t mind the stigma are probably unscrupulous in other ways, so people would soon rightly identify the employer of illegal immigrants as an unsound business partner.

Currently, this is unlikely to happen. In the last 12 months, ICE reports only 91 arrests in the “employer supervisor chain.”

Illegal immigration is not a human rights issue. It’s not victimless. It is simply fraud. The debate only exists because both parties really want class warfare: Republicans want cheap workers that will work for them, while Democrats want poor workers that will vote for them. While politicians exploit this, the workers of America pay the bill.

[Editor’s note: Soapbox runs weekly on the Sunday opinion page. This spot is a forum for valley residents to comment on local topics. If you’d like to contribute, contact Naomi Havlen at The Aspen Times at 925-3414, ext. 17624, or e-mail nhavlen@aspentimes.com]


Hat tip: The Opinionator

21 comments:

ZZMike said...

I found the link:

Immigration and Usurpation

It's from the Center for Immigration Studies. The writer, Fredo Arias-King, is "A Harvard-trained businessman and Sovietologist, his academic work focuses on the post-communist transitions ... was an aide to presidential candidate Vicente Fox Quesada of Mexico,..."

The case he makes is that

"A sociological study conducted throughout the region found that Latin Americans are indeed highly susceptible to clientelismo, or partaking in patron-client relations, and that Mexico was high even by regional standards...

"Do the U.S. legislators have an overt and well thought-out "plan," as Echeverría did? That is unlikely.

"Those that have come out supporting amnesty are also associated with other attempts to undermine the Jeffersonian and Madisonian model of democracy...
...
If an organizeable mass of Americans comes to suspect that mass immigration from Latin America is being used by the political class to undermine their democracy and as a tool to liberate the political elites from the Jeffersonian and Madisonian constraints, then indeed we may witness a reaction—but hopefully not against the immigrants themselves, as they are also objects of elite manipulations in more than one country."

Both parties would benefit from the cahnges Arias-King sees; whether they're consciously planning it is anothr question.

Zenster said...

Illegal immigration is not a human rights issue. It’s not victimless. It is simply fraud. The debate only exists because both parties really want class warfare: Republicans want cheap workers that will work for them, while Democrats want poor workers that will vote for them. While politicians exploit this, the workers of America pay the bill.

Only in his very last paragraph does this author finally expose the real culprits. When an issue like illegal immigration carries with it such deleterious side effects for the average American yet nonetheless manages to offer appealing benefits to both political parties, the stage is set for a monstrous conflict of interest.

Such is the case with this problem. When neither democrats nor republicans can bring themselves to forego the political advantages offered up by illegal immigration, they become party to outright treason. The top-tier leadership within every single protective organ of our government, be it executive, legislative or judicial, all enjoy sufficient personal wealth to be well-insulated from the corrosive effects of their own actions. Thus they have all become the traitor elite. It is long past tea for them to answer in open court for this ongoing felony against the American people.

Conservative Swede said...

Republicans want cheap workers that will work for them, while Democrats want poor workers that will vote for them.

Also the cheap workers is more of a gain for Democrats than Republicans. Democrats are overrepresented among the rich people; the ones having a Pepe mowing the lawn for them, or working on their plantation. Or working for the many "international" restaurant owners, also Democrats. Possibly for construction workers there is more Republicans gaining. But all in all there must be more Democrats gaining from this.

So the Democrats win the poor voters AND the cheap workers. Why does the Republicans support this? Because they are too duped to even see their own interest; too scared and bullied into complacently agreeing; too timid to have a strong opinion against it since it would be "impolite". Such are Republicans. Big time losers, and they don't even know it. It's the same in Europe of course.

Laine said...

Democrat incomes are shown to be on average higher than Republican. Since Hispanics and blacks, who are among the least educated and poorest (not unrelated) groups vote overwhelmingly Democrat, dragging the average income down, then one can see that there are more big money men in the Democrat party to pull the average back up higher than the Republicans.

Therefore conservative swede is correct. Republicans as a group are foolish to follow the Democrat bandwagon as RHINOS or as "bipartisan, let's try to get along" wusses. Illegal immigration is made legal by batches every few years by Democrat governments and every single last one of those new votes is going to Democrats so Republicans are co-operating in their own demise with nothing to show for it other than cheap labor for a very very small number of Repubs over all!

Is Republican leadership truly all moneyed and in politics for cheap lawn care? willing to sell their hard-working constituents down the river? Wake up Republican leaders! Your constituents already know about the damage illegal immigration is doing to their wallets. Learn to educate the Democrat voting working and middle class that they share these losses.

Even those on Welfare need to be educated that the way to a better quality of life is through work for decent wages and illegal immigration depresses both opportunity and wages.

Of course, the minute this is attempted, there will be a leftist accusatory cacophony of "racist, class war" but for once, bull through it. Stay on message e.g. how is it racist to welcome legal immigrants of the same race that is illegally immigrating? How is it racist to prefer a black African who is jumping through the hoops to immigrate here legally over someone who breaks our laws to enter?

Conservative Swede said...

Good comment Laine.

The Republican base wants to imagine that their leaders, while screwing them, are at least doing it in their own egoistic interests. In our culture being bad and smart, looks better than being bad and stupid. But the Republican leaders are just that: bad and stupid wusses. The only smart ones are the Democrats. And the Muslims.

Charlemagne said...

The City Journal has a really good article about the rising anger of blacks over illegal immigration. The party of special interests is cracking up.

Ypp said...

Bottomline - Left or Right, all powerful want some miserables to rule them. By means of money (right) or statist and information control (left), does not matter. Self-sufficient people don't satisfy their need for power.

Kafir_Kelbeh said...

In land of the sightless, the one-eyed man is king.

He is nervous about the man with two eyes, or even the man with one eye...for they are a threat to his rule.

Why do you think our "education" system has been so successful at developing such stupid sheep? They're not failing, by any stretch of the imagination - this has been their intent all along.

Now those in power, whether in education, government, or politics - for they all branch from the same poisonous yet boorish tree - may remain in power, without any pesky questions from thoughtful people.

Welcome to our future, folks.

ln said...

From Sarkoland it is reported:

Friday, January 25, 2008
[T]he number of immigrants arriving [in France] from countries outside of the European Union has already gone from 153,000in 1999 to 251,000 in 2005. The illegals estimated at about 100,000can be added to these official figures. One can therefore assume that about 350,000 entered French territory in 2005, which in six years is the equivalent of the population of Paris. As far as the contribution of this migratory influx is concerned, let us just quote from our Economic Report on Immigration: “Six out of ten persons from foreign countries of working age are idle. The deficit in public funds attributable to this population reaches 48 billion euros, or 80% of the total deficit recorded in 2004.”
http://islamdom.blogspot.com/2008/01/immigration-to-europe-out-of-control.html

ln said...

Continuation

Re: the Attali Commission's report on *jump-starting* the French economy.
- - - - -
...80% of the total deficit recorded in 2004." Regarding their effect on the GNP, they represent 93 billion in added value and they consume 126 billion." Finally, since the Commission considers that "immigration, a factor in the development of the population, is, as such, a source of growth," let's remember that if development went hand in hand with population growth, Yemen and Niger would be great economical powers and Switzerland a poor country.

In truth it is useless to criticize such inept notions. Rather we should search for those who "profit from the crime". In this regard, it is fitting to emphasize that the Attali Commission contains 22 leaders from big business. Now, in business the choices are based more on calculations than on ideology. For example, the increase in population from immigration increases consumption and favors major outlets of mass distribution.

The fact that this consumption is paid for through allocations financed by the taxpayers, and that its excessiveness results in a massive deficit in our trade balance (40 billion euros in 2007) is never taken into account in the calculations of these businesses. Likewise, to advocate immigration, which is 80% Islamic in the case of France, can serve as an argument in favor of selling nuclear reactors to dictatorships of the Maghreb and the Gulf.

In a more general way, these large companies want to rely on an abundant proletariat, not well unionized, and poorly paid, in order to increase their profits. With globalization, they can move their capital to countries with cheap labor, but many enterprises do not want to relocate, or cannot. So they establish an internal relocation consisting of the importing of cheap labor to replace the nationals, and they leave the attendant costs (education, housing, security) to the taxpayers. Concretely, this phenomenon results in the concentration of the gains from growth in the hands of a global elite, relegating the national working class into the pit of welfare and ultimately pauperizing, relatively speaking, the middles classes (including the United States). I should add that this recourse to immigration does not correspond to the orthodox liberal theory based on comparative advantage. It is therefore a heresy that may become fatal to liberalism in the minds of our populations.

To these economic interests can be added passions. To claim that the immigrants will pay for our pensions gives credibility to the idea that our generation is the last one and that we will soon all be replaced. Such remarks express the pathological hatred that our unfortunate people inspire in certain milieux. In other eras, the National Assembly would have overturned the government and our grandparents would have marched in legions to the office of the Commission.

Alas! This authentic French people no longer exists except on the monuments to the dead. Therefore, let us not be more royalist than the King and let us deliver to Africans the politically correct speech forced upon us: Your continent contains 750 million people who live in uncertainty. Come en masse to France. You will have the right to housing in Paris, your medical needs will be covered, you will receive free education and a multitude of allocations as soon as you are legalized.

Life is beautiful, isn't it? Beat the tom-toms in all the villages. Come one, come all. Come as quickly as you can! The Attali Commission awaits you.

http://galliawatch.blogspot.com/2008/01/profits-and-passions.html

Zenster said...

ln: Rather we should search for those who "profit from the crime". In this regard, it is fitting to emphasize that the Attali Commission contains 22 leaders from big business.

Good catch, ln, follow the money. As in solving any regular crime, who stands to profit from this the most?

The fact that this consumption is paid for through allocations financed by the taxpayers, and that its excessiveness results in a massive deficit in our trade balance (40 billion euros in 2007) is never taken into account in the calculations of these businesses.

This is the dark side of globalism. Large multinational corporations have ZERO allegiance to anything but the BOTTOM LINE. There is no loyalty to the countries that helped launch their profitability nor any feeling of responsibility for the workers who dedicated themselves to making them a success.

This is a form of hardcore capitalism that emerges when ethics and morals have been stripped out of the equation. These are predatory entities whose main goal is immunizing themselves from any fallout that arises from their rapacious conduct.

As a devout capitalist, it galls the living crap out of me to see companies operate this way. They give free market economics a black eye and fuel socialist propaganda that encourages state control of what was once free enterprise. This sort of malicious business strategy has become so pervasive that—much like Chinese manufactured goods—it is almost impossible to boycott on a comprehensive basis.

As usual, because these large corporations make massive campaign contributions they innoculate themselves against the one source of possible intervention. Namely, that of government mandates that companies whose profits derive largely from a given population demonstrate good faith in how they operate within their borders. Instead, collusion between politicians and corporations constitutes one massive conflict of interest whose central victim is the average tax paying consumer.

The Poster Formerly Known as Gordon said...

This article is WRONG is so many ways.

The basic WRONG premise is that economics is a zero-sum game. Any money made by an employer hiring illegal workers, or the workers themselves, is stolen from "legitimate" businesses and workers.

However, businesses that hire illegal workers benefit the overall economy. By hiring cheaper workers, they provide cheaper products to consumers. Those consumers, having spent less money on these products, have more discretionary income to buy additional products, or save, or whatever. This additional money goes back into the economy, creating more jobs, or creating more capital for enterpreneurs to borrow and create more jobs.

If businesses must pay workers more, then they will raise prices. This will reduce demand for their product. They will sell less of the product, and therefore they will hire fewer workers. Consumers will have less of a product that they want, and fewer people will be employed.

This can be exemplified by the "$50 per hour to pick lettuce" example going around last year. It would take $50 per hour to get a "lazy" native American to do the backbreaking labor involved in picking lettuce. The price of the picked lettuce would go up significantly. Much less lettuce would be sold. And many, or most of those $50 per hour jobs picking lettuce would disappear.

So illegal employees don't hurt economic growth - they actually help it!

The Poster Formerly Known as Gordon said...

Next wrong premise: illegal aliens are robbing those who would follow the legal process to get into this country.

The wrong premise is that all the waiting periods and economic sponsorship requirements are necessary. Many of them aren't - perhaps the only one really necessary is screening to make sure we aren't allowing workers into this country who are hardened criminals or potential or actual terrorists.

The answer to this problem is to lessen the incredible burdens we put on people who want to move to the U.S. to better themselves. We certainly didn't put these kinds of restrictions on 19th and early 20th century immigrants - and somehow, I don't think their entry hurt this country - perhaps they even helped us!

The Poster Formerly Known as Gordon said...

Next wrong premise - illegal immigrant remittances to Mexico are robbing this country.

What happens to the $20 billion sent back to Mexico? Yes, it isn't spent directly in the U.S. But much of that money spent in Mexico is spent on products made or improved in the U.S. and exported to Mexico. So some of the money comes back here after all.

Further, much of the money is invested in economic enterprises in Mexico. This fuels economic growth in Mexico, which has two benefits for the U.S. First, it results in more purchase of products or services imported from the U.S., benefitting the U.S. economy. Second, if Mexico's economy starts growing at rates closer to those of China and India than of the U.S. the average Mexican will become wealthier, and will be less likely to have economic incentives to come to the U.S.

Repeat after me: Free Market economics is not a zero-sum game!

RexMundi said...

Heyas Zenster...good to see you on GoV. As for once known as el gordo's last comment..let's set the record straight. There is no economic growth in Mexico and never will be as long as the current ruling elite is in power and prohibits foreign investment / ownership. Of that $20 billion that leaves the U.S., how much actually is spent on goods/services from US? You don't say...so your argument doesn't fly. Repeat after me: "Mexico will never, ever see anything like China's economic growth!"

RexMundi said...

Oh... and an apology to "Formerly known as Gordon"...I was going along the whole Mexico thing when playing with your old moniker. I just remembered "el gordo" could be interpreted as a derogative which was not the intent.

The Poster Formerly Known as Gordon said...

rexmundi: No offense taken.

However, you are wrong when you say there is "no economic growth i Mexico." According to this website: http://www.economist.com/countries/Mexico/, by the reputable British magazine The Economist, GDP growth rate in Mexico has been almost 3% per year for the last five years, and is projected to go up to 3.5% in the next five years. And, if the Mexican government makes further economic reforms (a big if), that growth rate could go higher, perhaps approaching the rates of India and China.

And, before you ask, the growth rate far outstrips population growth of 1.2% per year.

People in Mexico are still far poorer than those in the U.S. But they are far richer than they were at any point in the 20th century.

Charlemagne said...

I read a story a couple of days ago, wish I could remember where, that said there was the beginning of a housing boom happening in Mexico because of all the illegals returning home from the US. Proves the point, IMO, that the best reform for Mexico is for the US to force Mexicans to return and/or stay home.

Lugundum said...

But much of that money spent in Mexico is spent on products made or improved in the U.S. and exported to Mexico. So some of the money comes back here after all.

Majority of that money simply evades US economy.They are being used for buying of Chinese products not American ones. The only noted exception could be food products because NAFTA impoverished small Mexican farmers by massive imports of US corn and meat subsidized by US. taxpayers and processed by cheap immigrant and often illegal labor force because salaries offered in agriculture are so small that an American with a family is unable to make a living from them.

Further, much of the money is invested in economic enterprises in Mexico. This fuels economic growth in Mexico, which has two benefits for the U.S. First, it results in more purchase of products or services imported from the U.S., benefitting the U.S. economy. Second, if Mexico's economy starts growing at rates closer to those of China and India than of the U.S. the average Mexican will become wealthier, and will be less likely to have economic incentives to come to the U.S.

Wrong. Almost total majority of that money is siply spent and not invested into economy. 3 - 3.5% percent growth rate of Mexico means that the abyss between GDP of the USA and Mexico deepens as the base for growth in Mexico is significantly lower than that of the USA. This development makes illegal immigration to the USA even more interesting for Mexicans in the future. Remittances from the USA are for Mexicans the same curse as the oil for Arab countries. They undermine local economical activity, fuell corruption and criminal activity (people smuggling) and creates dependency. No surprise Mexico is meddling into US internal affairs and supports its illegals there.

Lugundum said...

Next wrong premise: illegal aliens are robbing those who would follow the legal process to get into this country.

The wrong premise is that all the waiting periods and economic sponsorship requirements are necessary. Many of them aren't - perhaps the only one really necessary is screening to make sure we aren't allowing workers into this country who are hardened criminals or potential or actual terrorists.

The answer to this problem is to lessen the incredible burdens we put on people who want to move to the U.S. to better themselves. We certainly didn't put these kinds of restrictions on 19th and early 20th century immigrants - and somehow, I don't think their entry hurt this country - perhaps they even helped us!


Wrong. Both legal and illegal immigration depresses wages and creates social, cultural and political instability. A perfect example is California. With a record budget deficit of more than 14 bilions dollars, abyssmal criminality, racial warfare led by latino gangs against remaining black population in LA, Aztlan separatist movement and Latino culture cleansing out what has been left from American.

Lugundum said...

However, businesses that hire illegal workers benefit the overall economy.

That is not only wrong but also very offensive. Please refrain from advocating of criminal activity.

By hiring cheaper workers, they provide cheaper products to consumers. Those consumers, having spent less money on these products, have more discretionary income to buy additional products, or save, or whatever. This additional money goes back into the economy, creating more jobs, or creating more capital for enterpreneurs to borrow and create more jobs.

Wrong. This is a usual "explanation" of immigration logic peddled by elites which should sway people to accept and support their own demise. In reality it works very differently. At the beginning when immigration affected only blue collar people middle class might be happy with slightly cheaper products. But it destroyed livelihood of local manual workers and ran them into poverty or even criminality. Later by various immigration programs even middle class like IT people started to suffer from various H1B scams. The results is the growth of poverty in the USA. Together with devaluation of US dollar because of trade deficit it destroys American society.

If businesses must pay workers more, then they will raise prices. This will reduce demand for their product. They will sell less of the product, and therefore they will hire fewer workers. Consumers will have less of a product that they want, and fewer people will be employed.

Wrong. If bussines are compelled to value labor force they would invest to science and research. The remaining highly skilled workers are enjoying higher salaries and are ready to buy more goods or services. Your approach of cheap labour instead of that creates servant underclass from free people because of immigration oversuply and kills ingenuity of bussines. It leads to the third world.