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“Free Cities” - An Economic Alternative to Illegal Immigration?

At least in this political climate, legislative solutions to the problem of illegal immigration do not appear to be working. At its root, illegal immigration represents a complex problem, including an economic dilemma of multiple dimensions.

The Mexicans crossing border seek jobs and then often send a portion of their incomes back home. One estimate is that illegal aliens sent $24 billion back to Mexico in 2006 (an increase from the estimated $20 billion in 2005). To put that in perspective, Mexico’s revenues from tourism in 2005 were estimate at $12 billion, while revenues from their oil production reached $35 billion. Thus, the importance of inflows from Mexican immigrants (legal and illegal) sending money from Estados Unidos de América to Estados Unidos Mexicanos cannot be understated.

While it remains a difficult task to stop U.S. employers from hiring illegal immigrants, when you look at the economic contribution of all immigrants to the U.S. economy, a recent study by the Council of Economic Advisors estimated the current contribution to the U.S. economy was roughly $37 billion per year. To get an idea of the impact of Mexican immigration as a whole, a March 2006 study by the University of California, San Diego and the National Bureau of Economic Research, Illegal Migration from Mexico to the United States concluded that 56% of Mexican immigrants appear to lack permission to be in the country, compared to 17% of all other immigrants. This is also discussed in the Council on Foreign Relations paper, The Economic Logic of Illegal Immigration

The Pew Hispanic Center estimates that in 2005 80 to 85 percent of Mexican immigrants who had been in the United States less than ten years were unauthorized. Illegal immigration thus accomplishes what legal immigration does not: It moves large numbers of lowskilled workers from a low-productivity to a high-productivity environment.

Additional discussions of the economic impact of illegal immigration from Mexico can be found here .

Regardless of the actual numbers, it could be concluded that there aren’t sufficient economic disincentives on or from either side of the Mexico-U.S. border to stem the tide of illegal aliens. Late last week, an associate alerted me to a recent article in the Weekly Standard that raised an interesting concept. Even if it is a “thinking out of the box,” the alternative suggested was to create a series of Hong Kong-like “Free Cities” that would create freedom and opportunity for illegal immigrants in their own countries. The premise?

The desperation that drives millions of illegal immigrants into this country will never subside as long as there are no jobs and no opportunities in their stagnant homeland economies. Fortunately, there is a way the United States could jump-start vibrant, non-corrupt, globalized economies inside otherwise destitute third world countries. We could do it soon, and we could do it for a lot less than we'd have to pay to assimilate millions more illegal aliens. The solution is to adapt and propagate the free market model of post-colonial Hong Kong.

The concept is to establish free market cities in which taxes can be kept low, import/export restrictions limited or non-existent, and where the society would be “democratic” and “free of corruption.” Essentially the recommendation is to “create treaty-based cities that would be joint ventures between the United States, an international financial institution like the World Bank, and the host governments, and would become safe havens for investors and entrepreneurs. They'd allow citizens to raise capital, attract the skills they need from abroad, and create thousands of new jobs where there are none today.”

As idealistic as the concept of “Free Cities” sounds, at a time when the political will appears lacking in the United States to solve the illegal immigration problem, and when opposition to building the border wall continues, it might not be all that “hair-brained” after all. However, among my very serious questions are identifying where to locate these free cities and the willingness of the host countries (like Mexico, Guatemala, Costa Rica – pick another) to participate. Additionally, how would “we” (the partners of the joint venture) induce immigrants to go to the free city instead of continuing to flow across the Rio Grande River to reach the “promised land?”

Notes

5 Comments

Free cities is an interesting concept. But what countries would be willing to give up their sovereinty in order to allow the creation of such an entity?

And what is the root of poverty Latin America? Failed states, states that are not truly democratic, are corrupt, ignore the rule of law etc. Are these states, and the powers that control them going to allow any competing influence within their country? Or allow anyone but their elites to profit by it? Dream on.

But what is really interesting about this article is the estimate that illegals only contribute $37 billion per year to the USA economy.

Net, CA alone pays out $10.5 billion in benefits to illegals each year. Illegas must be costing the US taxpayer at least a hundred billion dollars each year.

And if the illegals are moving up the job ladder, which is what Americans contend is happening, then is true that Americans are being displaced by cheaper illegal labor.

Finally, if the USA economy through the illegals are providing such a large percentage of Mexico's income, maybe we Americans should be demanding a citizenship in Mexico, and the extension the USA into that country! Aztan in reverse!

It might not be all that “hair-brained” after all.

Oh yes it is! What advantage is it to Mexico and who is going to bear the upfront costs?

I suspect that you will agree that policy is not a science, its an art. So, first of all Barry, this was meant as a "think piece," with the intent of spurring thinking and discussion on the topic with "out of the box" ideas to deal with the border issues. FWIW, I am so hawkish about the border issues it makes some of my friends cringe. To me "amnesty" of any form is a travesty.

Secondly, "hair-brained" was followed by a big "However", as well as my own concerns about the proposal. Perhaps I should have bracketed the words with the appropriate HTML, <sarcasm> "hair-brained"</sarcasm>.

Realistically, the U.S. politicians can't agree on a solution. Portions of the "wall" are being built, but it is being resisted by many of the border farmers (at least here in Texas). The Mexican government does not seem to be motivated to solve the problem. And "amnesty" (or guest worker programs) of any form is a sham in my opinion.

"Out of the box thinking" is needed. As for who would pay, the article suggested that it would be the World Bank. Politics isn't solving the problem, maybe economics can.

I doubt if we will see my solution, "shutting down the borders entirely" and cleansing the country of all illegals before opening it back up; re-securing the borders and backing that up with truly fraud proof identity cards, will happen anytime soon.

And finally, if you have a problem with the concept of "Free cities," I am certain that you, as I do, should have a problem with the formation of a North American Union (that contrary to the "conspiracy-minded" among our population, I don't think will happen either).

The solution to Illegals is to stop the Security and Prosperity Partnernership that aims to destroy the sovereignty and borders of the USA and making us one country with Mexico and Canada. Meeting in Quebec on August 20, 21, Bush and Mexico's Calderon and Canada's Harper will pave the way for the North American Union which is modeled after the disasterous European Union. Because of the media blackout, most people have never heard of what is happening and we MUST get the word out before it is too late

stopnorthamericanunion.com
stopspp.com
stopthe northamercianunion.com, numbersusa.com.

Congressmen Virgil Goode of VA has sponsored legislation aimed at banning NAFTA and the NAU and he has 25 Congressional co-sponsors. Please read up on this and please get the word out to as many people as you can. Thanks. R. Dell

In yet another stunning demonstration of the fact that Mexico is inhabited and governed by third-world banditos incapable of reasoned thought, Mexican officials threatened to take the United States to the United Nations. In other words, this corrupt bunch of third-world idiots is under the misguided notion that America has no sovereign rights or borders, and that our great nation should be open to every Mexican peasant that decides unilaterally to squat in America.
* Did the United States violate the sovereignty and borders of Mexico by encouraging 20 million illiterate American peasants to cross the border illegally?
* Did American illegal aliens feed at the public trough for health care, education, food, housing and other vital services to which they were not entitled, and which cost Mexican taxpayers hundreds of billions of pesos each year?
* Did American illegal aliens overwhelm Mexican hospitals, medical clinics, and emergency rooms and refuse to pay for medical services received?
* Did the impact of serving American illegal aliens force scores of medical facilities into bankruptcy, resulting in the loss of vital medical services for Mexican citizens?
* Did American illegal aliens who refused to pay for medical services manage to send $30 billion a year back to the United States?
* Did American illegal aliens refuse to learn Spanish, and demand that Mexico provide services in English at considerable cost to Mexican citizens?
* Did the children of American illegal aliens slow down and otherwise impede the education of Mexican children because of language and cultural issues?
* Did American illegal aliens demand driver's licenses despite being in Mexico illegally? Did they demand that driver instruction and testing materials be in English?
* Did American illegal aliens demand the same reduced tuition rates offered to Mexican students there legally?
* Did American illegal aliens vote in Mexican elections and alter election results?
* Did American illegal aliens overwhelm Mexico's penal system, making it impossible to deal with the citizen inmate population?
* Did the largest state in Mexico contract with another Mexican state for the housing and care of 15,000 inmates because of the impact of American illegal aliens?
* Did American illegal aliens engage in wholesale forgery of vital public documents and commit identity theft in order to secure employment, education, credit, and access to public services?
* Did American illegal aliens in Mexico in 1986 receive amnesty in an attempt by the Mexican government to end illegal migrations once and for all?
* Did the Mexican government refuse to enforce the provisions of the amnesty, thereby causing the American illegal alien problem to grow seven times greater in the span of 20 years?
* Did millions of American illegal aliens take to the streets to protest pending legislation in the Mexican congress that would tighten border security and enforce the nation's immigration laws?
* Did American illegal aliens wave Old Glory and scream "Yes we can!" and "We are Mexico!" in English as they marched to protest the rule of law in Mexico?
* Did American illegal aliens cry "Racism" every time they were criticized for being in Mexico illegally or challenged to learn Spanish and assimilate into Mexican society?
None of the above is correct, although each and every one would provide more than adequate justification for diplomatic, and perhaps military, action by the offended nation against the offender nation.
In fact, however, Mexican officials threatened to take the United States to the UN over the border fence legislation that was signed into law by President Bush this week.