A Marshall Plan for Mexico
Let's stop fooling around.
If we're serious about stopping undocumented immigration from Mexico, if we believe Mexican migrants are stealing our jobs, depressing our wages, sponging up more in services than they pay in taxes, committing too many crimes, making too many babies and transforming entire neighborhoods into Third World ghettos, then there is only one practical solution.
Give Mexicans a reason to stay in Mexico.
And the only way to do that is to close the massive gap between the behemoth U.S. economy and Mexico's economy, which is strong by developing-world standards but diminutive compared with ours. U.S. gross domestic product last year was $9.9 trillion. Mexico's was $557 billion.
I'm talking about the need for a Marshall Plan for Mexico - a government and private-sector plan to ensure that wages paid there will be sufficient for Mexican families to keep their kids adequately clothed and fed.
It's clear that many, if not all, of the objections about Mexican migrants here are more emotional than fact-based.
It doesn't matter.
The perception that we've lost control of our southern border is essentially true, though I differ with many on how much of a domestic problem this really is.
We've tried fences, walls, moats, gizmos, guns, a never-ending deluge of law-enforcement manpower. We've tried herding migrants into inhospitable terrain, where many perish. And still they come.
They will always come until we make the border irrelevant to them. And that won't happen until the two countries are not as out-of-kilter as they are now. How else to describe a relationship that thrives on Mexican labor and goods continuing to be cheap?
"Cheap labor in the long term makes you even poorer," says Juan Enriquez, director of the life science project at the Harvard School of Business, a former researcher at the university's David Rockefeller Center and author of an upcoming book on how the digitized, global and genetically engineered economy will change how the world does business and how we live.
In other words, a nation whose principal value is its cheap labor will always feel the need to be cheap, viewing growth and the need to depress wages as part of the same equation. This retards such countries from joining what Enriquez says is the faster growing and more vital "knowledge economy."
Simply put, it is not in the United States' interest to share a 2,000-mile border with a significantly poorer Mexico. Every point of tension we believe we have with Mexico - from undocumented immigration to the loss of border control to the allure of narco dollars in a struggling Mexican economy with weak government institutions - stems from this single disparity. And baby-step solutions, such as partial amnesty and guest-worker programs, will do nothing to solve Mexico's core economic and institutional problems.
Some may quibble with the Marshall Plan analogy. But, it's the scope and intent that is analogous, not every detail of the effort that resurrected the ravaged economies of Western Europe after World War II. In 1947, Secretary of State George C. Marshall laid out a simple plan. The United States would offer up $20 billion in aid to Europe for post-war reconstruction.
We all know how that story ended. We spent about $13 billion, helped in numerous others ways, and Europe became a strong economic competitor - a great thing for the world.
Our motives weren't entirely altruistic. We wanted to prevent a Soviet takeover of Europe and co-opt any chance that Europe would again war with itself. Separately, we also aided in Japan's post-war reconstruction.
We succeeded magnificently.
We helped solve Europe's problems with a mere $13 billion, and, unlike Mexico, it had suffered a world war in which infrastructure and entire institutions were laid waste. However, the amount of aid we will funnel to Mexico through the U.S. Agency for International Aid this year will amount to only about $20.8 million, though the country receives nominal aid in other forms as well. Still, it's a relative pittance.
The European Union helps its traditionally poorer nations - Spain, Portugual, Greece and Ireland - with a transfer of about $10 billion a year for infrastructure and development aid, much of which is dependent on the recipient countries matching the funds for their own development.
For a like amount of government-to-government aid, coupled with incentives in Mexico and the United States for private sector-investment, we could achieve much the same thing for Mexico.
In the European Union, nations have delegated sovereignty over some economic matters to a union representing all the nations. But the United States and Mexico need not relinquish any sovereignty in a Marshall Plan. Moreover, as a direct model, the EU has other flaws. Heavy governmental roles in the economy and an emphasis on industry subsidies are likely to be politically unpalatable in the United States.
"I like (our) emphasis on private-sector investments. It has had astonishing results so far," says Susan Kaufman Purcell, vice president of the Americas Society and the Council of the Americas.
The U.S./Mexico model is essentially represented by the North American Free Trade Agreement, which Mexico, Canada and the United States signed in 1994. NAFTA removed many trade and investment barriers and has resulted in huge trade gains for Mexico, though, according to the U.S. Agency for International Aid, real wages have dropped an estimated 60 percent in Mexico since NAFTA's inception and nearly half of the nation's 97.3 million people still live below the poverty line.
Nonetheless, Mexico now is the United States' largest trading partner, with Mexico annually exporting $261.7 billion in goods to us.
But even if we disagree with precisely how the richer EU nations helped the poorer nations catch up, as a role model it stands up - the notion being that a rich nation's problems vis-à-vis the poorer ones only diminish if the poor ones become less poor. NAFTA won't get us there quickly enough because it does little to fix what really bedevils Mexico - its own institutions.
Mexico President Vicente Fox has spoken openly about a transfer of wealth across borders.
Juan Hernandez, who directs Mexico's Office of Mexicans Abroad, says, "We need to create a fund that small companies can borrow from. . . . We need to creatively fund infrastructure and small, microcompanies. We need to fund education, health services, and to create opportunities so migrants don't feel they must leave Mexico to find opportunities in the U.S."
Hernandez has been talking up U.S. investment in Mexico.
OK, but invest in what?
Van Whiting, a senior fellow for the Center for U.S. Mexican Studies at the University of California-San Diego, says Mexico is essentially asking investors to invest where the free-market won't go - to poor areas, which, by the way, send us most of our migrants. This type of funding has been a traditional role for non-governmental organizations, such as the World Bank and the Inter-American Development Bank, which together contribute about $1 billion annually to the Mexican economy.
"Their mission is to correct a market failure by directing investments in rural regions, for instance. The free market won't without incentives," Whiting says.
This is likely why Fox has advocated an expanded role for the North American Development Bank, created in 1994 by NAFTA. Mexico and the United States now contribute to the bank. Canada has opted not to participate.
NAFTA, however, limits the bank to water, wastewater and municipal solid-waste projects at or near the border.
Expanding the bank's role clearly has merit. But we must also induce other international lending institutions to join in a Marshall Plan, and increase the level of government-to-government aid for improvements in education, health care and transportation.
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