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Originally published September 20, 2006 at 12:00 AM | Page modified May 14, 2010 at 12:08 PM

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America's Dilemma: Understanding Immigration

Building wealth, not walls

The price of living next to a country with a fraction of your wealth is a lot of immigration, wanted or not. The price of immigration is...

Milwaukee Journal Sentinel

The price of living next to a country with a fraction of your wealth is a lot of immigration, wanted or not.

The price of immigration is under debate. Many economists say immigrants add more than they take, although there is prominent dissent — The New York Times, for instance, recently profiled George Borjas, who contends campesinos displace American dropouts. Public hospitals also complain of the cost of caring for destitute newcomers.

The price of just saying no is unpayable, say critics of tougher enforcement: Fences must be maintained and guards paid, and catching illegal immigrants who overstayed a visa likely would involve national-identification systems that would make some Americans' skin crawl.

Besides, critics say, as long as the United States is rich and Mexico is not, people will come, fence or no. It's worth asking, then: What's the price of an alternative?

Being Europe, some say.

"I think you need to get at root causes," said Christine Neumann-Ortiz, executive director of Voces de la Frontera, a Wisconsin immigrant-rights group.

Neumann-Ortiz, who generally favors much more open immigration from Mexico, says the United States can best stem the flow of poor Mexicans by investing in Mexico in the way northern Europe subsidized Spain or Greece.

"That European Union model is the one that makes sense," she said.

She isn't alone: Academics and eminent journals suggest Europe, which took billions from taxpayers in well-to-do countries and spent it on infrastructure and farm subsidies in poorer ones, had the right approach. For U.S. taxpayers not eager to subsidize emergency-room visits by uninsured, undocumented Mexican farmworkers, the price would be to build a hospital in Oaxaca and a paved road to reach it.

The costs are jarring. Besides the obvious, such as $5.5 billion bridges to Sicily, Europe's system includes higher taxes, slower growth and poorer economic results than in the United States. It's unclear whether it was so much a matter of Germans paving Spain that made a difference as opening up inefficient markets to competition.

Freer markets seem to have provided what progress Mexico has seen. Northern states, where the bulk of U.S. investment under free trade has been, have boomed, while southern states remain poorer. Since 1992, Americans' direct investment in Mexico has increased fivefold, to about $67 billion in 2004.

The way Fernando Fabre sees it, walls, law-enforcement roundups and a military presence on the border are the dalliances of politicians, not pragmatists. In the long run, the Mexico- and U.S.-trained economist says, there is one way to stem the flow of illegal immigration to the U.S.: Create taxable wealth in Mexico, diminishing the incentive for Mexicans to leave home.

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"The long-term problem is only solved through opportunity," said Fabre, whose New York-based nonprofit Endeavor is launching a U.S.-style venture-capital fund that would invest as much as $100 million in Mexican entrepreneurs and midsize businesses and, it is hoped, combat illegal immigration in the process.

Mexico isn't necessarily poor. It is well-stocked with oil, entirely under government control for more than 50 years. That this hasn't translated into better schools suggests that sending U.S. taxpayers' money to Mexico's public sector might not be the proper path.

Perhaps Mexico should imitate the United States. The World Bank says it takes an average of 58 days to obtain permits to open a business in Mexico; it takes five days in the United States. Powerful unions exercise more control than they do here, there's little local control over schools and Mexico's legacy of communally owned rural land makes it difficult for farmers to own a parcel.

The price of stopping a massive migration, then, might be that Mexico surrender some of its political habits. This may be a lot to ask. Mexican officials have bristled at the suggestion that we may watch the border more closely. Our advice on educational reform may not go over even that well.

But compared to the U.S., Mexico's political system is a failure at accommodating a growing economy, which is why it relies on the $20 billion sent home a year by people who cross the U.S. border to work. Fixing that system may cost Mexico's elites some pride and power, but it would be worth it in the human misery it would alleviate.

And while telling Mexico this, officially and repeatedly, would make Americans look pushy, it would be a lot less expensive than it has been for a French taxpayer subsidizing other parts of Europe.

Fernando Fabre's comments were reported by the Los Angeles Times.

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