Immigration and Jobs

A couple of thoughts about immigration. It seems that there is a widespread belief in the US that immigrants take jobs from Americans. It makes superficial sense if you also assume that the number of jobs to be filled is fixed and that just about anyone can do any kind of work.

Both assumptions are mostly false. Here is an example that illustrates why.

I keep hearing native-born Americans trained in various high-tech fields who claim that they are unemployed because of competition from low-cost H1B visa holders. H1B visas go to foreigners with skills deemed to be needed by the American economy. A large number of H1B visa holders are from India and many are from China; they also come from a wide variety of other countries, including Russia, France, Bulgaria, etc. The implicit affirmation is that were such visas stopped completely, those who complain would step right into the vacant jobs.

Two things. First the claim that foreign H1B visa holders work for less is largely unsubstantiated although it should be easy to investigate such abuse. Second, I think it’s illegal to pay H1B holders less than Americans. Why would many employers risk a distracting lawsuit? Of course, a few might because there are irrational people everywhere.

Next and last: Hundreds of thousands of high-tech jobs are going begging as I write. Are employers so vicious that they would rather have the work not done at all than to give it to a credentialed American? Or is it more likely that the unemployed native-born high-tech workers have skills that do not match demand? If the second supposition is correct, ending the H1B visa program would cause even more high-tech positions to remain empty. Of course, this would have a negative effect on everyone, on every American’s prosperity.

Missing from this narrative: the possibility that high power, accelerated re-training programs would bring unemployed Americans the skills the high-tech sector requires.

I have to begin a confession that’s going to make me even more unpopular locally than I already am. I mean unpopular among my conservative friends. I taught in an MBA program in the middle of Silicon Valley for 24 years, two quarters each year. It was an evening program squarely directed at the ambitious hard-working. During that span of time, I must have had 150 students from India. I remember only one who was a bad student. I was intrigued, so I made inquiries. Sure enough, he had an Indian first name and last name, and the corresponding appearance but he was born in the US.* I cannot report so glowingly about other, non-Indian students that sat in my classroom through the years.

This little narrative proves nothing, of course. Consider it food for thought. Do it especially if you voted for Pres. Trump – as I did.

Reminder: H1B visas are awarded to individuals with an occupational qualification deemed to be in short supply in the US. Right now, it’s likely that most of those who get an H1B are trained in some IT area but that’s not all. For a long time, farriers from everywhere could easily get one. (If you don’t know what a farrier is, shame on you and look it up.)

There are other – presumably non-specialized – categories of immigrants who are widely suspected of taking jobs from Americans. The truth is not always easy to discern, not even conceptually. Five or six miles from where I live in Santa Cruz, there are growers who are tearing off their hair. Their problem is that they can’t figure out who is going to pick the crops they are now putting into the ground. As I have said repeatedly, the Mexicans they counted on in years past have largely stopped coming.

A quarter of a mile from where I live, and in the same direction, there are dozens of perfectly healthy US-born Americans who are working as “sales associates.” The apparent conceptual issue is this: sales associates earn $10/hr while a moderately experienced crop picker earns $15. The question arises of why we don’t see a full exodus from the sales positions to jobs that pay 50% more?

I think it’s lazy to call the US-born sales associates “lazy.” The reality is that the Mexicans who came, and are still coming, to pick vegetables and fruits in California overwhelmingly came from a rural population. They were reared under conditions where almost everyone around them labored in the fields. When they arrive in the US – legally through family reunion – or illegally, they are ready to take picking jobs. They then just do here more or less the same work they would do at home but for five times the pay or more.

In American society that kind of population disappeared several generations ago through mechanization and, of course, through the importation of foreign labor, precisely. Native-born Americans won’t do the work because it’s alien to their background. I think US-born people of Mexican ascendancy whose parents labored in the field won’t do the work either. Their parents do what they can to make their own work experience alien to their children. I am not surprised, that’s another expression of the American dream. It’s  what many would do back in Mexico but then, why emigrate?

I am pretty sure that any immigration reform should include a temporary agricultural program, a sort of H1A ( “A” for “Agriculture”) visa. It would allow foreigners to come to the US legally, just to work in the fields and for a set period only. It would not lead to permanent residency, nor, of course, to citizenship. Such a program existed between the forties and the early sixties, if memory serves. It was called the “Bracero program.” I don’t know why it was terminated. (Perhaps a reader can tell us.)

Mexicans would be the first to take advantage of such a program. As Mexico’s economy develops, they may be replaced by Central Americans and, eventually, by Africans. Such a program would sidestep the kind of assimilation problem France, for example, is facing right now with its North African population.

PS Personally, I think Mexicans make good immigrants to the US. I would bet than in ten years we will be begging them to come.


* Disclosure: I am married to an Indian woman. She is not in high-tech unfortunately.

US Immigration: a Primer

President Trump was elected for a variety of reasons but any observant person knows that the general topic of immigration played a significant role. Mr Trump appears unfamiliar with the current American immigration system and he is ignorant of the economic benefits of immigration, or he downplays them. Below I address modest parts of both topics. I aim for sensationalism rather than for completeness.

First a little bit about the American immigration system such as it is in January 2017. There are two main bizarre ideas among Trump supporters about the real system: One regards who is allowed to come into this country (legally, I mean); the other strange misconception has to do with how aliens become US citizens.

The system by which the US admits immigrants is a little complicated and its description relies on a specialized legal jargon. In my considerable experience, few people have the patience to sit through a lecture on American immigration policy. So, let me cut to the chase:

THE NON-EXISTENT ORDERLY QUEUE

There is no way, zero way, the average married Mexican can legally immigrate into this country.

This is worth mentioning because many are under the impression that illegal immigrants are cheats who cut through the line instead of patiently waiting their turn.

The “average Mexican” does not have American-born children, children who are US citizens by birth. Mexicans who do have such children and the children are minors go to the head of the line. There is no (zero) line for those who don’t have close relatives who are Americans or legal immigrants. This example illustrates the US immigration policy that accounts for most legal immigrants in most years: Family re-unification.  

Sophisticated people noticed long ago that there is an instantaneous way to acquire an American relative. It’s to marry an American. Doing so for the purpose of gaining admission to the US is illegal for both parties involved. I don’t know if anyone ever goes to jail for it but it’s ground for immediate deportation. Nevertheless, I am told by some of my immigrant friends that there is a thriving little cottage industry of visa brides and grooms for a fee in some parts of the country. I cannot verify this rumor but I believe it.

Similarly, there is only one way the average married Irish man or woman may immigrate into this country: Winning a lottery. (You read this right: a lottery which one may play as often as one wishes; it has not entry fee.) In 2015, only about 49,000 people, all from Europe and Africa, gained admission on the basis of winning that lottery.

Some legal immigrants gain admission under the broad category of “employment related reasons.”  This category includes high-level programmers as well as farriers. (Look it up.) It’s a small number. In 2015 they made up about 15% of all one million-plus legal admissions. Our average Mexican and our average Irishman does not qualify here either.

You may have heard of an “investor’s visa” accorded to foreigners who will create employment in the US. That’s always a tiny number, about 10,000 in 2015.  It’s not always open. Congress decides about if every so often.

There is a third main, amorphous way by which foreigners are admitted, “asylum” broadly defined. I call it “amorphous” because the definition of who is a refugee or an asylum seeker can be changed by Congress in a very short time. The President decides how many can be admitted in either category. The number admitted under this category is accordingly highly variable. It was about 150,000 in 2015. It could have become 500,000 in 2016 because of a new crisis anywhere in the world. (It didn’t.) The current, Trump figure of  50,000 seems just about normal historically. Yet, there is wide variation about the average.

There is thus no orderly queue that Felipe or Ahmed could join on their own if they wanted to avoid becoming illegal aliens.

That’s it, folks. If you want to know more about the raw numbers, study the relevant pages in the Statistical Abstract of the US.

So, contrary to what I suspect is a widespread idea among conservatives, it is not the case that there is an orderly, wide-open legal way to immigrate into this country that illegal immigrants perversely ignore. Illegal immigrants are not rudely jumping to the head of the line; they come in through a side-door the US does not seem able to close.

One more thing, a programmatic idea: Instead of the present admission policies (plural)  based on viciously absurd selection we have, we could take a page from the Australian and from the Canadian playbooks. That is, we could coolly decide what kind of immigrants we want and try and tailor a door to those precise dimensions. Presently, we are doing very little of this, however unbelievable it may sound. Such a rational procedure would not not need to eliminate refugee and asylum seekers admissions.

I am personally in favor of such a reform . I also think special policies  should apply  to our proximate neighbors to the north and to the south. I developed this idea with Sergey Nikiforov in an article [pdf] published in the Independent Review several years ago.

Incidentally, I am a product of a rational immigration policy myself. I was admitted on merit alone. I rest my case! Thank you for asking. OK, truth be told, I tried to come in as a spouse of an American citizen but she dumped me.

GAINING CITIZENSHIP

On to the next misconstrued idea. I keep hearing (on talk radio, I confess) irate citizens affirming that foreigners who don’t want to take American citizenship should not be admitted. The case hardly arises.

In fact, in reality, to be allowed to become a US citizen, to take American citizenship, requires several years of residence in this country after being legally admitted. (See above.)

Hence, personal preference plays little role in determining which immigrant does not become a US citizen. I don’t have the numbers but I am sure that, as a rule, the vast majority of legal immigrants adopt American citizenship shortly after they are legally empowered to do so. It is true that, in theory, some hesitation or some problems may arise in connection with some countries of origin who do not wish to recognize dual citizenship. In practice, depriving anyone of his passport is low on the list of priorities of most countries from which new US citizens originate. (India may be an exception – a curious exception – as if the country were facing an unbearable burden of immigrants of all sorts.)

The consequence of this scenario is that, contrary to what I think is a widespread notion, there is no horde of legal immigrants living in this country and peevishly and disloyally refusing to take American citizenship. It also follows that there is no mass of illegal immigrants who obstinately refuse American citizenship. It’s not available to them, period.

I think it’s legitimate to be opposed to illegal immigration and even to legal immigration but it’s best to do on the basis of correct information.

What’s the difference between open borders and Open Borders?

There are two meanings here. I’ll define them below:

  • There are open borders, where borders are open and anyone can move between them
  • There are Open Borders, where borders to rich states are open to people from poor states, but the borders to poor states are closed to immigration

Open borders are fairer than closed borders. If people can move from poor states to rich ones, that’s good. But what about people who want to move from rich states to poor ones? Open Borders addresses the first issue but not the second one. Libertarians are enamored with the second type of open borders these days, for a couple of reasons. The main reason, and the only one I’m going to name here, is that most of us are pragmatic and therefore support any kind of liberalization in labor markets we can get. If we can get our respective polities to open up their borders to poor migrants, so be it. Let’s do this in any way we can.

But what we are advocating for is not open borders. It’s labor market liberalization. I understand the need for sloganeering these days. I get it. Y’all are thinking on the margin. I’m all for Open Borders.

How, though, do we get actual open borders?

How can senior citizens from the US have the freedom to choose retirement in not only Florida or Oregon, but Tamaulipas or Veracruz, too?

How can middle class Californians have the freedom to choose between not only Texas or Colorado for relocation, but Chihuahua or Neuvo Leon?

My answer is, of course, federation, but I also realize my argument is politically unfeasible for the time being (even though it’s an old argument). Any other ideas, or is Open Borders the best we can do for now?

New issues of Econ Journal Watch, Reason Papers out

Many of you already know that two of NOL‘s Senior Editors are associated with Econ Journal Watch, thus making its publication a family affair. Fred is on the editorial board and Warren is its math reader. Here are some of the highlights I found worth noting in the latest issue:

Eli Heckscher’s Ideological Migration Toward Market Liberalism: Benny Carlson explores the intellectual evolution of a great Swedish economist.

Symposium:
Classical Liberalism in Econ, by Country: Authors from around the world tell us about their country’s culture of political economy, in particular the vitality of liberalism in the original political sense, historically and currently, with special attention to professional economics as practiced in academia, think tanks, and intellectual networks.

New contributions:

Young Back Choi and Yong Yoon: Liberalism in Korea

Pavel Kuchař: Liberalism in Mexican Economic Thought, Past and Present

(All of the papers from this symposium, which has carried across multiple issues of EJW, are collected at this page.)

You can download the whole issue here (pdf).

Dr Khawaja, an Editor-at-Large for Reason Papersreports (2/2/16) on the latest issue over at Policy of Truth:

The latest issue of Reason Papers, vol. 37, number 2 is now out; officially, it’s the Fall 2015 issue, but we only just managed to put it up on the website last night. This link will take you to a monster-size PDF to the whole issue (almost 250 pages). This link will take you to the journal’s Archive page, where you can access individual articles for this or any past issue (you have to scroll down a bit). Finally, this link will take you to three (time sensitive) Calls for Papers issued by the journal’s editors: one on “the philosophy of play” (March 1, 2016); one a fifteen-year retrospective on 9/11 (July 1, 2016); and one an Authors-Meet-Critics symposium on Douglas Den Uyl and Douglas Rasmussen’s forthcoming book The Perfectionist Turn: From Meta-Norms to Meta-Ethics (February 1, 2017).

My own small contribution to Reason Papers can be found here (pdf).

From the Comments: Do Mexicans make good immigrants (to the US)?

Jacques (re-read his updated bioresponds to a thought by longtime reader John:

John: If I did not know better, I would think you are patronizing me. God will make you fall off your bikes if you do. Don’t say you were not warned.

The policies in existence for the past thirty years have gotten this country the worst of several immigration worlds: A large population that sinks into illegality because it or its parents committed a small misdemeanor. (A population that is illegal will quickly start competing with others in ways that cannot be resisted, among other things.) And it’s growing and it’s forbidden to have a stake in this country’s future, or in any country’s future. The current conservative alternative is to “close the border.” That’s a useless blowhard dream. Most illegals now just get a tourist visa, come by plane and stay. (It’s not a legend, I know some.) Do you really want a police state with no tourism at all? There used to be one. It was called the Soviet Union.

I am arguing that few Mexicans want to live in the US, first. Second, the few who do make good immigrant as compared to almost (almost) everyone else. Look into your heart: Is it the case that you really want to stop all immigration? That’s another discussion we could have, just not today and not until you declare yourself.

I repeat that the European Union has been operating for at least twenty years on the model I propose for Mexicans and for Americans only: Free movement, no path to citizenship. The EU suffers from many ills but , remarkably, that is not one of them. The strong anti-immigrant sentiment there that you read about is directed almost entirely at illegal immigrants and at refugees who are not natural neighbors of the EU, and against people who have no intention of going home ever.

No one in France is bitter about the English couple who came to open a pub. No one is disturbed by the so-called Polish plumbers in England who stay long enough to save for a down payment on a house in Poland.

I really hate to use the word (OMG, I do!) but many native-born Americans who are afraid of immigration seem to lack a basic form of sensitivity: Pulling up roots, leaving many relatives behind, learning a new language, being routinely patronized, is both very difficult and emotionally costly. Very few people want to endure this if they can avoid it. (The privilege of living say, in Detroit, does not always make up for it.) If you let them go back and forth, Mexicans will mostly not stay and will return to Mexico where, for one thing, they already know the language.

Fences don’t always make good neighbors. Fences are often so bad they make you lose control of what you wish to control. Bad fences are worth than no fences.

OK, John I have now chastised you much beyond what your own sins required. It’s just that you gave me an opportunity and I took it. Almost everything I hear in the US today about immigration is error-ridden, uninformed and downright childish.

This comes from Jacques’ post on Mexican immigration from a few months back, and is worth highlighting given all of the demagoguery to be found in the US presidential election (on both sides of the aisle).

PS: Michelangelo also provided this link in the thread. It’s well worth the read.

Mexican immigration and the Open Border: Mexicans Go Home and Mexican Kindness

I just returned from a two-plus weeks stay in Mexico for the second time in less than five months. A couple of comments to add to my previous essay on Mexican underdevelopment. Plus, some unrelated political sociology comments.

In 2009, my friend and I published a long piece on Mexican emigration to the US in the libertarian periodical The Independent Review. (Nikiforov and I are both immigrants to the United States.) The article is entitled, “If Mexicans and Americans Could Cross the Border Freely (pdf),” and the full text is available through a link on this blog. In that article, we argued that we would all be better off if the southern American border were open to crossing by citizens of both countries with no expectation of a change in citizenship for either.

Well, the politicians did not listen to us then and their inattention led to the recent Republican fiasco whereas, President Obama used an executive order to more or less legalize five million illegal aliens, most of them Mexicans whereas, the Republican Senate called him out and ended up caving piteously. (Do you remember or have you already forgotten? Stupidly, Republicans tried to use the threat to de-fund Homeland Security at a time when aggravated terrorism news fill the airwaves.) As often happens, the Republican leadership confused the issue of constitutional principle with the substantive issue of limiting immigration. Myself, I would chose total firmness on the first and flexibility on the second, for fear of ending up the A.H., no matter what the outcome. The Republican leadership lost the constitutional arm wrestling and still ended up the A. H. Congratulations, guys!

Our article was long and intricate as is normal for a scholarly piece. Here are two highlights from that piece on which I wish to comment after my two recent stays in Mexico:

A We argued that Mexicans – who constitute the largest immigrant group to the US – should be given special treatment over other aliens. Several reasons for this: They are our close neighbors; they have been joined to us through NAFTA for now 23 years, insuring that our lives are tightly enmeshed economically. Then, because of a long series of past interactions some may find deplorable, Mexicans tend to make very good immigrants. Two reasons for this superiority, in turn. First, nearly everyone agree that Mexicans (in the US) tend to be very hard workers. Even their direct competitors in the work place tend to assent to this judgment. Second, sociologically, Mexicans make good immigrants because they are astonishingly familiar with our society, including with our institutions, before they set foot on American soil. In particular, Mexicans don’t find perplexing our fundamental constitutional principle of separation of religion and government. (That’s, as opposed to immigrants from other areas I could name.)

Nikiforov and I argued that Mexican citizens should enjoy unimpeded passage into the US, and the freedom to take any job for which they qualify, all without any path to American citizenship because, Mexicans already have a citizenship, that of Mexico. We point out that the European Union has used this model for more than twenty years and experienced few downsides. (The current ferment in Europe about and opposition to immigration does not involve neighbors from the EU, with one single exception I will discuss if someone asks me.)

B We proposed that many Americans would find it comfortable to spend their last years in Mexico because of a specific aspect of Mexican culture, to wit, contemporary Mexicans tend to be sweet in general and considerate to older people in particular.

This is what I found in twice two and half weeks in Puerto Vallarta in the pas five months that is relevant to these issues.

First, on the matter of Mexicans wanting to work in the US but not necessarily wishing to live there, we were much more right than we thought when we wrote about this. The anecdotal evidence is overwhelming that this would work. Everywhere I went in Puerto Vallarta , I bumped into people who knew some English that they had learned in the US, mostly as illegal immigrants here working at undesirable jobs. None of those people had been expelled, deported. All had returned to Mexico under their own power after saving some money. Thus, they had chosen to go home because it’s home, just as we predicted in the article.

One middle-aged man sticks to my mind, a taxi driver. He had stayed in the US (illegally) for several years. He had refrained from visiting with his family in Mexico for stretches of two or three years at a time to avoid being unable to return to the US. You might say that he was trapped in the US for longer periods than he wished because of our immigration laws. He finally decided to go back to Mexico and to his family for good after he had saved enough money to build a house for each of his three daughters. He specified that only one of the daughters was of marriageable age by the time he had the three houses standing. To my mind, this is an exemplary story of emigration/immigration. On my query, the man declared himself satisfied with his choice and with his life since his return from the US.

He was earning, driving a taxi, about 1/5 or less of what he earned in the US doing unpleasant work. He liked his job; he enjoyed returning to his family every evening; he liked the schools; paradoxically, he liked Mexican schools. (This is paradoxical because daily life in Puerto Vallarta, including in the schools is much more relaxed, much more genteel than what prevails in the US except in the most elite neighborhoods. In that part of Mexico, the bloody drug traffic-based blood-thirsty banditry is found strictly in the newspapers. It is not at all apparent in daily life. The quality of this daily life is at the antipodes of the impression of Mexico reaching us through the US media. Gangs are not in the school unlike in Salinas, California, for example.)

On point B, the attractiveness of Mexico to older Americans, I find that I tend to censor myself anytime I write about the topic because I fear appearing to be gushing like a teenage girl. During my last stay, of two and half weeks, I did not meet a single Mexican man, woman or child who was not completely pleasant except two. One was a taxi driver and he was morose but, that’s because he was drunk. (Nobody is perfect.) The second was a female merchant who acted displeased because I tried to bargain down an item in which I was interested. Another merchant – from whom I actually bought and whom I befriended – told me later that my bargaining had been reasonable and that the woman was undergoing a painful divorce. Mexico is not perfect and I may have looked like the woman’s soon-to-be ex-husband. You never know; these things happen.

Absolutely everywhere, my gray beard drew the kind of respectful behavior I don’t expect in the US. (And that I don’t deserve, to be honest!)

I can hear the snickering from here: “Of course, he stays in a tourist ghetto were everyone is occupationally obligated to appear nice.” No, I did not spend all my time there; I was forced to go out and I liked to go out. I found that everyone smiles a lot, including at each other, even among perfect strangers, that everybody ceded passage, that waiting lines are always orderly. Being a formerly great social scientist, I yielded, of course, to the temptation to conduct verbal experiment. Unfailingly, I made everyone I wanted to laugh at the drop of a hat. I mean small children, old ladies and adults of all sexes. (Yes, my Spanish is that good. Eat your heart out or learn to conjugate irregular verbs! Those are your choices. There are no others.)

Issue A and B are joined in the strangest way within my latest short stay in Mexico. Puerto Vallarta in the winter is swarming with Canadians. Their flight from the cold may have a great deal to do with this fact but it has a virtuous side-effect. I suspect many flew in to warm up and ended up warmly loving Mexicans for the reasons I depicted above. They beat Americans at it, in that city, at least. Oh, and the only sullen faces around Puerto Vallarta all belong to them. It became a game of pop-sociology for me: guessing from afar who was American and who was Canadian. It soon become embarrassingly easy: The Americans are the loud ones who say hello and who laugh easily. (Besides, I think the presence of Canadians explains much of the bad food there.)

After this last experience, I am very tempted to start a new racist fad: Speaking ill of and persecuting Canadians. It could be fun and they are not (yet) a federally protected minority.

Mexican Underdevelopment: Pop-Sociology

It’s six a.m., I am sipping my first cup of coffee on the small balcony near the tall coconut tree. It’s still dark but I can see a short stocky woman sweeping the ground of the open space in front of the hotel next door. Right away, I detect that something is wrong in the picture although I am not fully awake. The broom the woman is using is too short, its straw end is frayed. She is bending over more than should be necessary; some of her energy is being misspent because she pushes harder than she would have to with a newer broom. No big deal! Except…

Mexico is the kind of country where the dentist kisses you when you leave. (This particular dentist is a pretty willowy blonde.) Perhaps, Mexico is the only country of its kind. I don’t know; I have not been everywhere. No American dentist has ever attempted this maneuver on me, or on my attractive wife either. I have avoided French dentists since 1960. A dentist in Morocco once gave me a root canal with no anesthesia whatsoever. I forgave him long ago but I wouldn’t let him kiss me if you paid me. The universal amiability of Mexicans might color everything I say below. You are warned.

I just spent three weeks in Mexico, in the pleasant resort city of Puerto Vallarta. With a population of 250,000, it does not feel much larger than Santa Cruz, California with its population 4/5 smaller. Still it’s large enough to be considered a real place, not a boutique resort. I was staying in a small hotel on the beach, of course, which limits observation. But my wife and I did most of our own cooking and therefore, we had to shop often in an ordinary supermarket located in an ordinary commercial center. This is important as a kind of regular and forced immersion into normal local life. We did not have a car so, we took taxis several times a day. This is important too because cab drivers everywhere are a rich fount of information if you manage to steer them from small talk. Yes, I know Spanish, and not only in my imagination as described in my masterful “Foreign Languages and Self-Delusion in America” (if I say so myself) but for real. I understand everything that is said to me in that language; I am able to eavesdrop on conversations between strangers; I can read the newspaper; I listen to television news without effort.* In brief, I was in a reasonable good position to observe, interpret and ask questions.

This stay in Mexico was like a refresher course on a topic that occupied me professionally for about twenty-five years: Why some countries are poorer than others. (When you begin thinking seriously about this simple question, you quickly discover that the plausible answers are numerous and complex.) I used to do it in a rigorous, quantitatively based manner, estimating statistical models and the like. This time, I am indulging myself frankly in pop-sociology. It does not imply any rejection of my past endeavors.

Comparisons between the way things are done in Mexico and in the US come naturally because the surface similarities between there and here are obvious. Mexicans want what we want and they work openly for it and, in time, they get it. Material progress usually takes a familiar American form, from shopping malls to cineplexes, to the Discovery Channel…, you name it.

Mexico’s GDP per capita is less than one third of the American equivalent (about USD 16,500 vs 52,000, Purchasing Power Parity, a formulation which makes the two figures comparable) Mexico is a poor country but not one of the poorest by a long shot. Why would it be poor?

Mexicans are not a short on entrepreneurial spirit. Every nook and cranny shelters a business of sorts. I enter a tiny corner shop in a non-touristy part of town selling I don’t know what. A toddler sleeps on a blanket on the cold floor. (It’s hot.) Against one wall, three cramped stalls offer Internet access. The owner, the toddler’s father, tells me he is opened from 7 am to 10 pm. He charges me forty cents to recharge my cellphone battery, not an especially low price considering his cost and the little labor involved. There are restaurants everywhere, also far from the tourist tracks. Some have only four tables. Most are still empty at 8 pm. Two social mechanisms seem at work. One is simple mimicry: The guy across the street has one. What does he know about birria that I don’t know? The other is a version of the Chinese eating place economic rationale: If people don’t come to dine here, my family can always eat the food; I have many children anyway. Nothing is going to go to waste. The economic risk is small. It can’t hurt. Perhaps, rents are low because there is not much  alternative use for the relevant spaces.

Food is everywhere anyway. If someone goes hungry in Mexico, it’s somewhere else. Yet, food prices are low but not very low. Rice is cheap, avocados are cheap; apples are the same price as in California perhaps because they come from afar. This is an undeveloped capitalism, with poor infrastructures; moving foodstuff is still expensive. A cup of reasonable good coffee costs USD 1,40; that’s probably more than in an Arkansas diner. That’s what it means to be poor: Your money does not reach very far.

Three facts of possible economic relevance strike you quickly; two are concrete and easy to verify; the third is intangible, or kind of unsubstantial, but that does not make it irrelevant. First, nearly every shop is overstaffed by a significant factor. That’s easy to see when people perform identical jobs with identical technologies as in the US. There are twice or more salesladies in the clothing area of a department store as there would be in KMart, the perennially failing chain. In the butcher section of the supermarket, employees are waiting for you. That’s nice but it’s probably superfluous. I could wait two minutes instead, so could Mexican housewives. In the restaurants that actually have some business, the waitpersons (waiters and waitresses ) seem to be spending most of their time standing still.

The second observation concerns low individual productivity. It’s not that Mexicans don’t work hard. In Mexico as in the US, Mexicans are remarkable for working hard for long hours. They seem to know no coffee breaks and little even by way of lunch breaks. The problem is that you see everywhere people doing work for which they have received little or no training. I watched with increasing fascination, several times a day, a laborer failing to finish a simple brick path. He did not manage to complete in three days what I am ready to bet an American bricklayer would have done in less than a day. (Yes, I know something about bricklaying too.) That’s a big productivity differential. Even the pharmacists filling my prescriptions seemed hesitant. They did not exude the authority of American pharmacists with an advanced education. Since Mexicans in general rarely lack in personal authority and, by elimination, I am forced to hypothesize that my pharmacists where just sort of learning their job as they went along.

Incidentally, I have reasons to believe that this shortage of training does not extend to superior occupations: Mexican doctors and Mexican engineers are not inferior to their American counterparts, I am guessing. (The fast development of medical tourism into Mexico from both the US and Canada testifies to the quality of the former, I think.)

The third observation, which I called intangible is difficult to render, of course. It’s almost only an impression but one that is redundantly encountered. The information dispensed by the conventional Mexican media seems very thin. The nightly news program on major channel serves poor fare as compared to the Spanish language but American Univision. If there are new or substantive programs on radio, I have not discovered them. (I may very well have missed such.) I mean that I almost missed National Public Radio there ( a difficult admission for me, obviously). Whether you read the daily newspaper or not does not make much difference in your level of information. Here is a test case.

On a weekend day, there is a massive protest march in Mexico City. The demonstration is to protest the disappearance of 43 young people from the same teachers school. Everyone except their parents knows they have been murdered. The demonstration is both very large and quite orderly as compared to anything of the same kind in the US. The police uses tear gas but only sixty people are arrested. There is no mention of anyone seriously hurt.

I buy the Sunday version of what has been designated to me as the best national daily newspaper in the country (“El Excelsior“). A description of the demonstrations and photographs cover the front page, as you would expect. The two innermost pages are devoted to the same events. In addition to eyewitness accounts are included serious interviews of government officials, of protest march organizers and of several pundits. I make myself read every word. At the end, I have learned close to nothing and I have no new perspective on the crime, sociologically, politically or otherwise. I just get confirmation of the fact that the mayor of the town where the young men disappeared and his wife have been arrested. I turn to the “global” page and get a reading of events in Iraq and Syria that I would probably not understand absent my previous familiarity based on American media. In three weeks, I see and hear not a single reference to President Obama’s executive order concerning illegal immigrants about half of whom are of Mexican origin.

I think that Mexicans, including well-educated Mexicans, are not well informed unless the Internet makes up for the obvious deficiencies of the conventional press, which is hard to believe. I would be hard put to explain how this affects Mexican economic development except that it may result in a blindness to new economic opportunities. Mexican entrepreneurs dedicate themselves to old pursuits or they imitate the gringo model late and imperfectly, perhaps (perhaps). Even where a Mexican industry has experienced notable global success such as the brewery industry, it did not innovate much, if at all. No innovation, no temporary super-profits, no generous wages (as we see in Silicon Valley, for example). This is all speculation. Others may have written on the relationship between the general level of information of a population and its overall productivity and it may have escaped my attention or, I may have forgotten it. Maybe readers will come to my rescue on this.

So, here you have it: skimpy training of ordinary workers, inferior tools, a poor physical infrastructure, an under-informed populace, together make for much lower gross productivity than what we are used to in the US. But, overall, in a sort of rough way, wages follow productivity. Mexican workers produce little and they get paid accordingly little. Note that the same factors of poverty interact with one another: Low pay encourages the hiring of a surfeit of workers; modestly paid workers may not be perceived as deserving good tools; an underdeveloped infrastructure buffers business decision-makers from all kinds of competition, including competition for workers, thereby keeping wages lower than they need be. Workers may not be well informed enough to struggle for higher wages. And, of course, workers with low pay make poor consumers. Among other things, they fail to fill the restaurants their entrepreneurially inclined neighbors open for them.

By now, you may wonder why something is missing from this story. I mean corruption, small corruption and especially, big corruption. Two reasons for this absence. The first is that, naturally, corrupt behavior is not readily amenable to casual observation. The second reason is that I am not convinced that corruption of any kind goes much way toward explaining Mexican underdevelopment.

Low level corruption first. In Mexico, it’s common to deal with an ordinary traffic transgression by asking the policeman who stopped you to pay the fine on your behalf because “I am too busy, sorry.” I am told that any amount of cash close to half of the amount of the official fine will do the trick. This sort of practice pervades Mexican life, I am still told. (I have not had a personal experience of it for twenty years myself.) It’s not clear to me that it has any relation to underdevelopment. In the above example, what is basically a tax gets diverted from the government to private pockets. Likewise, when building permits are sold by building inspectors rather than earned and deserved, a relaxation of anti-growth regulations takes place, doesn’t it ?

I don’t know, incidentally, that there is much private corruption in Mexico. I must have taken more than sixty taxis while I was in Puerto Vallarta. They have no meters but rates are fixed by zone. Only one tried to take me, for about USD 3. That’s an extremely low hit rate as compared to say, New York City.

Now, on to big-time corruption. By its nature, it’s hard to observe except if you read the paper carefully and with great, diligent constancy. (See above.) Here is one possible case that came to my attention while I was in Mexico. A big house on a golf course comes up for sale for USD 1.5 million. The seller is a police official described to me as not very high on the totem pole. Someone I know makes an offer. The asking price shrinks to USD 750,000 if he will pay cash. How did a police official get his hands on that house? Did he inherit a pile of money from his father, from a rich aunt? By insisting on cash, is he simply trying to avoid taxes or does he have a more sinister reason? I don’t know and here again, I am not sure it matters. Perhaps, it does in relation to the accumulation of capital; I wouldn’t know which way though.

People of libertarian inclination have to choose: If government is inimical to happiness in general and to economic prosperity in particular then, the suspension of government efficacy, as with corrupt government practices, must be for the better. Or, another, more benign theory of government must be developed.

* If you wonder at my linguistic prowess, don’t. First, Spanish is a dialect of Latin, like French, my native language. Second, I have been studying Spanish for a straight sixty years. It stands to reason that I have made some progress.