A Trump administration could erect a lot of legal, regulatory, and logistical obstacles to transferring money from the U.S. to Mexico. But those moves would enrage the banks and financial institutions that make money off the transfers, and probably spur interest in transfer methods that escape the attention and grasp of law enforcement.But you don't have to make the banks, and the check cashing services, and the poverty industry generally, angry, cathartic though that might be.
To some Americans, Mexican workers’ remittance payments represent a fundamentally unjust financial transfer. While $22 billion to $30 billion is a drop in the bucket for the $17 trillion U.S. economy, it’s a matter of principle for these folks. In their eyes, illegal immigrants from Mexico effectively steal from the United States by entering the country, offering unethical employers a labor force that isn’t covered by wage, workplace safety, and other laws, getting paid under the table, and then sending the money out of the country.Like any other constraint on behavior, though, it will produce incentives to avoid the constraint. The generalization to Mr Sanders's proposed transaction tax on the big financiers is left as an exercise.
But mitigating this perceived injustice might not require grandiose promises to “impound” the money. A simple tax on wire transfers might offer the path of least resistance.
Furthermore, as Reason's Nick Gillespie notes, there can be imports of goods from Mexico, or migration of people from Mexico, but not simultaneously.
Build a wall now and you're only trapping folks here who are moving en masse back to a country that's offering them a better life than the sluggish U.S. economy.There's still room for research on the political economy of remittances. Start here.
Of course, start a trade war with Mexico and help kill its economy, increase joblessness, and...Mexicans will start heading north again....That sounds about right for government, doesn't it, whether it's directed by conservatives or liberals? Address a problem that is declining, implement policy that reverse that decline, and then declare your stupid, pointless intervention is exactly what was needed!
United States policy is consistent with the behavior of a rich country facing a somewhat elastic supply of potential providers of cheap labor subsidies to its underground economy. The relatively ineffective border enforcement and the periodic debates about "guest workers" are consistent with a policy of probabilistic amnesty that's sufficiently tempting to keep the cheap labor coming without turning illegal immigration into a net sink of public benefits.Your challenge, dear researcher? Disentangle the wage-raising effects of out-migration from the wage-raising effects of investment chasing supposedly cheaper labor. No shortage of interesting research projects, if you're ambitious enough.
A tougher question that I haven't tackled yet is the role of emigration in fixing the economic conditions in the source countries. Perhaps remittances are a source of funds for such countries, but the onus is on their governments to provide the transparent institutions that might turn the remittances into a source of local income. Perhaps sufficient out-migration of people will induce local employers to offer workers more.