By Earl L. Grinols
Our America Initiative Advisory Council Member of Health Care

Abraham Lincoln said, “No one has a right to do wrong.”  Selfish intentions are stubborn motivators to those who use them to assert their rights, as southern slaveholders once did, but they are also powerful obstructions to just thinking.  In this blog and the next I would like to provide some useful thoughts based on my background as an economist on immigration and national policy toward non-citizen aliens who are illegally in this country.  Part 1 lays out some of the economic issues. 

I find that the real economic issues are rarely discussed.

Start with some historical perspective.  Large numbers of Mexican citizens have periodically tried to enter the United States illegally.  This has happened on and off for decades.  For example, a major upsurge occurred during and after World War II.  Little was done by President Truman or Congress.  Growers in states like California and Texas benefited from cheap illegal workers and politicians like Senator Lyndon Johnson resisted any action being taken.  

President Eisenhower interpreted the obvious failure to take action as due to corruption, both in government and in the private sector.  He ordered General Joseph Swing, one of the liberators of the Philippines, to stop the illegal entries through Operation Wetback.[i]  The operation was successful in apprehending over one million aliens, primarily Mexican males, in just its first year with lesser numbers continuing to be apprehended in succeeding years.  Deportations by ship to Veracruz and other Mexican cities and by other means followed.  Operation Wetback showed that serious intent to apprehend and deport could be successful.  Ongoing attempts at illegal entry were not eliminated, but enforcement of the law had a major effect on reducing the problem. 

In the 1980s another upsurge occurred.  This time President Reagan was persuaded by his advisors to agree to the Simpson-Mazzoli Act (Immigration Reform and Control Act of 1986) that among other provisions provided for amnesty for aliens already illegally in the US in return for measures that Congress would enforce to secure the border against future violations.  Amnesty was implemented, but it is generally accepted that the promise of effective border measures was not. 

Today the problem has returned and is larger.  Illegal crossings include women, children, and pregnant mothers.  An underground network has spring up to help illegal entries and to shelter those in the country.[ii]  Other nationalities are entering illegally in large numbers.  Roughly 60 percent of those coming from the South are from Mexico.  But Hondurans, El Salvadorians, Nicaraguans, Columbians and other Latin American countries are now well represented.  There is concern over Muslim terrorists entering through the southern border as well, and individuals from countries supporting terrorism have been apprehended in illegal crossings.  There is evidence of complicity and planning in the border crossings.  The most recent report is 63,000 unaccompanied children (The term “children” is something of a misnomer because many are really young adults aged 18 and over) who crossed the border in mass.  Most doubt that “children” in such large numbers and with coordinated timing would be possible without planning and complicity.  Finally, there is now a new motivation for doing nothing that has added impetus, which is the political hope that aliens granted amnesty will vote overwhelmingly Democrat in future presidential elections.

Economic context is important.  Mexico is a modern developed country that has enormous natural resources and economic advantages.  It has the potential to be one of the wealthiest nations on earth.  Its economy is the world’s 11th largest, ahead of Canada, Australia, Saudi Arabia, Argentina, and many others.  It has a magnificent climate.  Why are Californians, Texans, Hondurans and El Salvadorans not crossing the border illegally to stay in Mexico?  Individuals do not need to be brought to the United States to be helped or become rich.

Nobel prize-winner Milton Friedman observed that it is economically impossible to operate the United States as a welfare state and simultaneously to allow anyone who wants to come to the US to do so.  In previous times immigrants to the US provided for themselves since there was no welfare system to take advantage of as there is today.  Today, there is illegality in the immigration, but there is also effective economic theft thereafter.  Aliens illegally living in the US steal from legal Americans when they take from the system what was intended for citizens in an amount greater than they pay for in taxes.  There are many examples of Mexican families that illegally live in the US for years, work in lawn service or other low taxpaying jobs, and send three or four children to American public schools.  It costs an average of $12,300 per year to educate a child. [iii]  This total cost of $590,400 is not paid by their taxes.  This cost says nothing of other costs forced onto legal residents such as medical costs for no-pay births at local hospitals because of America’s Emergency Medical Treatment and Active Labor Act designed for citizens and legal residents but appropriated by foreigner mothers,[iv] committing crimes,[v] driving without insurance, bringing diseases into the country and re-establishing old ones such as tuberculosis and malaria.[vi]

If all Americans understood the size of the economic costs and damage, they might be more demanding that the problem be immediately and permanently solved.  As it is, their voices have been opposed successfully by the business and political interests already described that benefit from illegal immigration. 

The ten-year cost to America of aliens illegally living in the US is conservatively estimated at slightly under $600 billion.  Based on 2011 data the top 50 percent of Federal income tax filers (this is those earning $37,900 and up) pay 97.1% of taxes.  Their average share of the cost just cited is $8,437.  The same calculation for those in the top 25 percent (this is those earning $76,800 and up) is $14,876.[vii] 

The problem is that no one really knows how many illegal aliens are in the United States.  Instead of the 11 million regularly cited (based on inferences from self-reporting), there are reasons to believe the true total could be closer to 30 million.  And the corresponding costs would be multiples higher.  In addition, the aggregate costs just reported are almost surely understated because it is not agreed how to include the costs of the next generation of children born in the United States to two parents, each of whom was illegally in the country at the time of birth.

If the first generation of illegal immigrants pays below-average taxes but uses above-average public services, that generation’s net contribution to society is negative.  Figure 1 displays this pattern.  The burden on America of the first generation of illegal residents is the area of the leftmost negative bar.  These are the costs already reported.  In the second generation, taxes paid and services used may move closer to the average.  There is evidence for this improvement.  But there is no evidence for overshooting, the situation that a later generation will on average be above-average net contributors.  The expectation, therefore, is that no future generation will ever pay back to America what was stolen.  The burden diminishes in later generations, but never reverses.  The total cost is therefore the area of the bars added.  The more that such immigration occurs, the more costly it is for legal Americans.

There are remedies that are just and fair, but they can be achieved only after the real economics has been discussed.

Next I will discuss the wage differential model of labor markets and dysfunctional economic incentives of our current immigration system that must be addressed for an immigration remedy to work long term.

                To be continued.




[i] The term “wetback” referred to individuals who swam the Rio Grande River, which forms the border between Mexico and the United States.

[ii] In addition to help offered by earlier arrivals, there are other sources of aid.  Stephen Dinan writes about the sanctuary movement in his September 24, 2014 article in The Washington Times, “Church network offers sanctuary to illegal immigrants to avoid deportation.”  (http://www.washingtontimes.com/news/2014/sep/24/sanctuary-2014-church-network-helping-illegal-immi/?page=all)  This activity has been ongoing.   The UPI reported in 1986, “The prosecution rested its case today in the 18th week of the trial of 11 religious leaders accused of smuggling Central American refugees into the United States.”  (UPI, “Prosecution Rests in Alien-Smuggling Trial,” The New York Times, 8 March 1986.)

[iii] Rector, Robert and Jason Richwine.  The Fiscal Cost of Unlawful Immigrants and Amnesty to the US Taxpayer.  The Heritage Foundation, May 2013, p. v.

[iv]  In one recent year the Dallas hospital delivering the most babies in Texas reported that over 11,000 of the nearly 15,000 total (about 74 percent) were born to women who were noncitizens.  “Most of these women are believed to be in the country illegally.”  Sherry Jacobson.  Dallas Morning News, “Across Texas, 60,000 babies of noncitizens get U.S. birthright.”  26 November 2010.  http://www.dallasnews.com/news/state/headlines/20100807-Across-Texas-60-000-babies-3859.ece

[v] Aliens illegally in the US have migrated to all states, but many remain in southern heavily Hispanic border counties, which show up disproportionately in problem statistics.  Hidalgo County and Starr County, Texas, for example, are among the poorest counties in America.  Crime is another problem statistic.  According to Judicial Watch in an August 2014 story reporting from federal crime statistics, “Crime is so high along the Mexican border that nearly half of all the criminal cases filed by federal prosecutors in the United States last fiscal year were concentrated in a handful of districts located in that region, according to the U.S. government’s figures.”  http://www.judicialwatch.org/blog/2014/08/doj-report-nearly-half-fed-crimes-near-mexican-border/

[vi] Malaria was once present in America but eradicated.  It requires human hosts with the disease to be bitten by mosquitoes that then spread the disease to new hosts.  Mexicans and other nationalities crossing into the US illegally have arrived with malaria, tuberculosis and other dangerous diseases that were once brought under control in the US.

[vii] These are Rector and Richwine costs converted from 2010 to October 2014 dollars and divided by the number of federal income tax returns filed in 2011 for the top 50 percent of filers (68,292,856) and top 25 percent of filers (34,146,428) based on adjusted gross income.

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