The Real State of the Union

The Real State of the Union

President Obama gave his 7th State of the Union speech  last night, January 21st 2015. After hearing these speeches year after year, president after president I have come to see them not as projections of what the actual state of the nation is, but rather an advertisement for things the president thinks he did well,

“ ...more of our people are insured than ever before...”

Well yeah, they kind of have to be, remember you made them criminals if they didn’t buy insurance.

Not mentioned in last nights remarks is the reality of the real state of the union.

What about the National Debt?

The Outstanding Public Debt as of 21 Jan 2015 at 06:03:20 PM GMT is:

The estimated population of the United States is 319,850,520

so each citizen's share of this debt is $56,565.23.

The National Debt has continued to increase an average of

$2.40 billion per day since September 30, 2012!

Or maybe the amount of new regulations?

A little over 75,000 pages of new burdensome and restrictive regulations were imposed on US businesses. Each one a hinderance to the growth and expansion of businesses.

No mention of the prison population.

More than 1.57 million inmates sat behind bars in federal, state, and county prisons and jails around the country as of December 31, 2013. Many from victimless crimes.

We could go on with the rising tax rates, poverty levels, inflation, wasteful spending, the drug war, real wars and their destructive nature, the rate of returning soldiers committing suicide, the rate of bankruptcy and homelessness, the NSA…. And so on and so on.

The State of the Union has become nothing more than promises of future action and commercialization of past actions, not to give a statistical breakdown of how the nation is functioning.

How the Drug War Drives Child Migrants to the US Border - Mark Thornton

How the Drug War Drives Child Migrants to the US Border - Mark Thornton

Most attentive parents today rarely allow their children to go unsupervised, particularly in public. It starts with the wireless baby monitor for the crib and ends with the ever-present cell phone at college graduation.

This is what makes reports from the US-Mexican border so perplexing to most Americans. It is hard to believe that parents would send their children, even young children, to travel many hundreds of miles, up to 1,600 miles without guardianship, or under the control of “mules” who guide the children with the hope of a safe voyage to the United States.

The journey is both harsh and dangerous. The northern regions of Central America (i.e., Guatemala, Honduras, and El Salvador) and Mexico are some of the most dangerous areas of the world. The climate can be harsh, roads and travel conditions are mostly poor, and the children are subjected to robbers, kidnappers, rapists, government police and soldiers, drug cartel members, and bandits of all sorts.

As unbelievable as it seems, Central American parents are sending their children, or more often asking their children to join with them in the United States, in large numbers. In many cases the children flee on their own accord without any guardian.

A decade ago US Border Patrol agents apprehended only several hundred unaccompanied children per year. Over the last nine months they have caught nearly 50,000. Official estimates project the capture rate to reach 10,000 per month by this fall. Those numbers actually hide the enormity of the problem because historically the problem was largely restricted to Mexican children who could be immediately returned to Mexico. During the last couple of years, the majority of growth has come from children from Central American countries and these must be processed and turned over to the Office of Refugee Resettlement (part of HHS).

One suggested reason for the explosion of child immigrants from Central America is the perception and rumors that children from Central America who cross the border will receive a “proviso” which might suggest a permit to stay in the US legally. However, it seems that the proviso is really just a notice to appear in immigration court for deportation proceedings. Whether this gives the children more time in the US, or whether it increases the probability of them being allowed to stay in the US for humanitarian reasons is unclear. In one report, only 1 of 404 children specifically mentioned the possibility of benefiting from US immigration reform.[1]

Even if the proviso rumor was having an impact, it does not explain why the children and their parents would risk such a dangerous journey in the first place.

The Role of the Drug War

The underlying cause for this mass dangerous migration is the US’s war on drugs. Central American countries have become the conduit by which illegal drugs move from South America across the US border. Unlike conventional media sources, who will sometimes vaguely mention violence and instability in Central America as a cause, The Economist[2] quite correctly found the source of the problem in America’s war on drugs:

Demand for cocaine in the United States (which, unlike that in Europe, is fed through Central America), combined with the ultimately futile war on drugs, has led to the upsurge in violence. It is American consumers who are financing the drug gangs and, to a large extent, American gun merchants who are arming them. So failing American policies help beget failed states in the neighbourhood.

The result has been that the drug cartels have a great deal of control over much of northern Central America. The cartels control the governments, judges, police forces, and even some prisons and some of the military through a combination of bribery, threats, and outright force.

As a consequence of this control drug gangs and cartels can operate in the open or they can operate deep within the jungle beyond the reach of the law. In turn, the drug cartels can act above the law and as a result they have created a culture of violence, building on the civil wars of previous decades.

The countries in the northern Central American region, Guatemala, Honduras, and El Salvador, have the highest murder rate of any region in the world. The region’s murder rate is 7.5 times the murder rate of the North American region.

Globally, the top murder rate in any given year since the 1990s has been Honduras or El Salvador. In 2012, nearly 1 out of every 1,000 citizens in Honduras was murdered. In addition to murder, there are high rates of other types of violence, crime, and intimidation. A very large percentage of the entire Salvadoran-born population has migrated, mostly to the United States.

In addition to violence, the war on drugs has been a disruptive force for the Central American economies. After reading about the region, is anyone likely to make travel plans to go there, or to consider opening a business there? Obviously, the war on drugs has been highly disruptive for job creation, commerce, and international investment outside the drug cartels themselves. Therefore it would be more correct to say that it is not so much the attraction of opportunities in the US, but the lack of and reduction in opportunities in Central America that are spurring emigration, and that this is directly linked to the war on drugs.

When you try to make sense of parents sending their children on such a dangerous undertaking, just remember it is just another despicable result of the war on drugs with few solutions.

The Economist recommends the repeal of the war on drugs and the legalization of drugs globally as the solution. Its second best solution is for the United States to finance an effort to rebuild the institutions (i.e., police, courts, prisons, etc.) and infrastructure (i.e., military, transportation, and education systems) in the countries of Central America:

Such schemes will not, however, solve the fundamental problem: that as long as drugs that people want to consume are prohibited, and therefore provided by criminals, driving the trade out of one bloodstained area will only push it into some other godforsaken place. But unless and until drugs are legalised, that is the best Central America can hope to do.

In other words, ending the war on drugs is the only solution.

Note: The views expressed in Daily Articles on Mises.org are not necessarily those of the Mises Institute.

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Image source: Wikimedia Commons.

Mark Thornton is a senior resident fellow at the Ludwig von Mises Institute in Auburn, Alabama, and is the book review editor for the Quarterly Journal of Austrian Economics. He is the author of The Economics of Prohibition, coauthor of Tariffs, Blockades, and Inflation: The Economics of the Civil War, and the editor of The Quotable Mises, The Bastiat Collection, and An Essay on Economic Theory. Send him mail. See Mark Thornton's article archives.

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Notes

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[1] http://www.unhcrwashington.org/children/reports, p. 31.

[2] “The drug war hits Central America: Organised crime is moving south from Mexico into a bunch of small countries far too weak to deal with it,” The Economist, April 14, 2011.

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On Immigration: Legal and Illegal

Immigration seems to be the brightest blip on the map right now, and it seems it is the most popular topic among people. Immigration by itself doesn't seem to be the real issue, at the heart of it is the economics of Immigration. That is what needs to be addressed. Together and separately, the economics aspect, at least for some, can resolve these issues in a mutually beneficial way. This is not to say that other aspects of the issue are not important, the supposed health risks for example cannot be simply eradicated by economics, but addressing the issue at the root helps us to get past the emotional reactions and allows us to clearly define and resolve the issue completely.

Immigration is nothing new. The moving of people from one place to another for various reasons has been a mainstay of human life since the beginning. A chance to increase the quality of life or to advance knowledge or social rank have been the previous reasons for migration of people from homelands. For centuries this was the way cities and towns, and eventually states and countries grew. From the dust of the immigrant workers, nations grew to their current levels. But now it seems, this belief has been replaced with fear, misunderstanding, ignorance, nationalism and hate. Could the solutions to what some call a crisis be found in economics?

While the media portray a rising tide in illegal immigration, statistics shows another story.

According to statistics from Pew Hispanic Research and the Department of Homeland Security the estimates of Unauthorized or "Illegal" immigrants has remained roughly unchanged from the past year but has seen a relative decline since the recession began in 2008. Looking over the graphs provided on that page we can also see that the rise in Immigration happened between 2002 and 2007, adding almost 4 million more immigrants between those years. Fig 1.

While the current fuss is being made during the Obama Presidential administration the real blame should go to the prior administration. Under President George W. Bush an average of 4 million immigrants found their way to the US. But where was the outrage then?

There wasn't one. Why? The economy seemed stronger under Bush due in part due to the Housing Market Bubble that eventually, in late 2007, burst. This false prosperity brought in a higher demand and a need for more workers. Immigrants filled the void of low-skilled workers as native born citizens took over higher skilled positions. In 2007 unauthorized immigrants made up a total of 5.5% of the labor force in the US. And very few minded having these immigrants come here at the time, because a financial strain was not being put onto American workers, and jobs were plentiful and expanding. These points will not be made in the current discussion on Immigration.

The additional production gave way for American and Legal immigrants to take up higher skilled jobs while "illegals" took in the lower skilled jobs. Immigrants play a large part in the unskilled and low skilled workforce, in part to the barrier in language and education or experience. These "illegals" will take lower paying jobs due to these shortcomings, where citizens and legal immigrants will tend to be drawn to higher skilled jobs with higher pay ranges.

After the "They Took Our Jobs" line the next line will be "They took our Government Handouts"

Another issue in the immigration debate is that "illegal" immigrants use government programs more than they put into them through taxation, since most believe illegals are not taxed this would make sense. Next we can look at the claim that illegal immigrants do not pay taxes. This claim has been around for years, I even at one time believed it. First the point should be noted that ALL Federal, State, and Local "Welfare Programs" are funded by taxation, it is a redistribution of wealth.

Are they really costing more than they put in?

According to Shikha Dalmia in her 2006 article at Reason Foundation more than 8 million of the then 11 million immigrants actually paid into social security, medicaid and other taxes. But how is that you say...


In 1996 a welfare reform bill was passed. In this bill were "restrictions on benefits for noncitizens accounted for 44% of this total, and food stamp revisions for 43%. The 105th Congress rescinded and modified some 1996 budget cuts, restoring SSI, Medicaid and food stamp benefits to many aliens at an estimated 5-year cost of $12.3 billion. Further, Congress in 1997 created Welfare-to-Work (WtW) grants ($2.7 billion in estimated outlays for 2 years) to help states move severely disadvantaged TANF recipients into jobs, and it boosted funding for food stamp employment and training."

Another thing that happened is a bill that allowed the IRS to issue identification numbers for those illegal aliens that did not have social security numbers. This reform does two things, it allows those aliens to pay into the system to be in accordance to what citizens do in a hope it is seen as favorable if and when they file for legal statuses. Number two, it adds those tax monies into a system that because they do not have an official Social Security number, they cannot benefit from. This adds millions of dollars into the federal coffers. Damlia writing, "Last year, the revenues from these fake numbers — that the Social Security administration stashes in the "earnings suspense file" — added up to 10 percent of the Social Security surplus. The file is growing, on average, by more than $50 billion a year.

Her statement is pointing to the 2005 numbers. 

This data points to the fact that overall immigrants are not a drain on any programs but actually contribute. Add to this that even illegal immigrants pay sales taxes, adding millions more to their local community coffers. Roads, Schools and other services in and around their homes are partially contributed to through this tax. More info on taxes paid by illegal immigrants click here.

So how can we solve the Issue through Economics?

Can we simply abolish the Welfare State?

In order to tackle this we have to look at the statistics of those receiving this assistance and address it properly. Many have been saying for decades that the welfare state needs to be completely dissolved and regulations restricting voluntary aid programs given their chance to return. Prior to the 1930's the welfare state did not exist, it was before this that private organizations were the main source for any form of welfare or aid. Donations given by Individuals and Businesses alike kept Americans fed and housed on a larger scale than today. So where did this go? After government aid programs began the amount of funds used in voluntary donations were extracted by taxation and those who gave some were able to give less. This caused the great plethora of charities, to be replaced by bureaus and departments, each getting larger and larger, taking more and more to run their offices, less and less aid actually made it to those that needed it.

Where does that lead us to today?

Spending on largest Welfare Programs Federal Spending 2003-2013*[33]
Federal Programs	Spending 2003*	Spending 2013*
Medicaid Grants to States	$201,389	$266,565
Food Stamps (SNAP)	61,717	82,603
Earned Income Tax Credit (EITC)	40,027	55,123
Supplemental Security Income (SSI)	38,315	50,544
Housing assistance	37,205	49,739
Child Nutrition Program (CHIP)	13,558	20,842
Support Payments to States, TANF	28,980	20,842
Feeding Programs (WIC & CSFP)	5,695	6,671
Low Income Home Energy Assistance	2,542	3,704
Notes: * Spending in millions of dollars

Would abolishing the Welfare State actually have any effect on the economic issue of Immigration? It could, in a way, rid the system of an incentive to the minority that use the system without contributing. Taking away that incentive could cause many to rethink the opportunity costs of coming in illegally.

Benjamin W. Powell writes "Before, immigrants assimilated into a culture of hard work and self-reliance. Those who failed here often had to go home. Few go home today because of failure today. Instead, they are taught to assimilate into a system of government reliance where failure and laziness are not punished. The post-1965 immigration wave is the first that has come once we had a welfare state in place. Unfortunately, that welfare state not only makes them less productive, it also teaches them to undermine our old culture that made America successful."

Since there would be no guaranteed way for them to live off of the state, many may just decide to go the legal route or choose another place to move to.

Getting the Government out of businesses and allowing the markets to work properly could be the greatest and most needed change in policies. Deregulation, Getting rid of barriers to work, Abolishing minimum wage laws, stop with the corporate welfare programs, price controls, sending false signals and creating bubbles and busts in markets would easily give everyone, Immigrant or Natural Citizen, a better chance at building wealth and prosperity. Add along with this the ability for all people to keep 100% of their earned wages and abolish taxation, all taxation. Leading us into a voluntary state, a way for the preferences, wants and needs of everyone to be met by competitive businesses and entrepreneurs.

Speaking of legal immigration, one way to reduce the amount of illegal migrations is to make the legalization process easier to navigate and less costly. Those persons not willing to wait months on end and pay in thousands of dollars usually opt for the illegal route knowing the risk of deportation is lower than shelling out money and time. Reducing the time it takes to get through the legalization system and the amount of money put into legalization could drastically reduce the amount of people who enter illegally. 

The real issue of the Illegal Immigration debate isn't at all about the moving of people into a certain geographical area, but rather the implications and effects those people have in current models of operation. Looking at the issue form a reasonable economic standpoint can lead to real sustainable answer rather than the tug of war political party lines being offered now. Turning America into a thriving economy can give incentive to those wishing to better themselves, their families and their new homes as well.

Here is another post I wrote dealing with Borders and US Marine Tahmoorsi being held in a Mexican Jail.

More reading on this issue.
http://www.cato.org/policy-report/septemberoctober-2013/tear-down-wall-immigration-versus-welfare

http://www.fee.org/the_freeman/detail/immigration-friend-or-foe

http://www.fee.org/files/docLib/547_24.pdf


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Tahmooressi and the Border Issue

The latest battle between political parties and their followers and pundits is the issue of Borders, Securing those borders, Immigration and Amnesty. It has in the past few months become the most visible topic by candidates, commentators and political junkies alike. The story of ex-US Marine Sgt. Andrew Tahmooressi has reignited this issue and has left myself with more than enough questions to the idea of borders and the sincerity of either political party and their adherents to the motives of their stances. The idea of borders, definable lines arbitrarily drawn on maps and fought over, has consumed the airwaves.

As always, the issue is made to be seen as only two options. Pro Immigration and Anti Immigration or Pro-Amnesty and Anti-Amnesty. The first option is to allow amnesty to persons already in the country "illegally" and the second is to continue deportation and criminal charges against those living in the United States borders without having gone through the immigration process, the "legal" way as they call it. The line these two beliefs draws is apparent and approachable by yet other paths. The history of immigration into the United States is riddled with laws, regulation, restrictions, hate, fear, death and hypocrisy. Beginning the Idea of America on the act of Immigration, Genocide and Conquest doesn't lend well to the history of immigration into this country and the resulting years and decades since the first Illegal Alien stepped foot on American soil. If we were to respect borders of any countries our military armaments would rust and its soldiers be taken back to private employment. If one reduces this issue down to its base it is a belief that one person may have say over the movement of another, this is to say that one person holds rule over another, or that any government have the right to restrict travel in any way.

We have seen wars fought over land, deaths in foreign countries in the name of this land and a new breed of bigots and hypocrites arise from the simple act of movement and travel around the globe. The mainstream accepted idea on immigration is to subject other human beings to tests and health restrictions, to perform up to certain levels, to curtail freedom and to allow themselves to be robbed of wealth in the process. Every year hundreds of people die in an effort to reach "The Most Free and Most Prosperous Country in the World". They die in their attempt to reach a land that promises freedom and prosperity, they die for a lack of freedom to enjoy a better life, they die for a lack of freedom to move about the earth unhindered and uninhibited. The act of Legalized Immigration is an act of barbarity and exclusivity.


To say you believe in the closing of borders, demarcations of land used in exclusion by one government entity, You have not only barred any entering of outside persons but have also confined oneself to the same rule. You have created your own prison.

The economic theory behind the want of closed borders is this. As more and more immigrants come into this country they will, without fail, turn and send these American dollars outside of our borders. In a proper understanding of Economics this isn't seen as a negative as any country that bars it's currency from foreign circulation fails to have that currency to buy products from the foreign markets. If this theory were to hold water, countries would have difficulty acquiring goods from foreign markets for lack of foreign funds. Now one might say to convert these currencies would be the answer and to reduce trade to currency exchanges and money manipulation. There is also the prohibition of allowing workers into trades within a country. Lower skilled workers who enter into a foreign marker make much lower wages, while this is seen on its surface as a negative, is actually a positive. Lower wages equal out to lower costs and in effect lead to lower prices. "Let's look at the problem of immigration from another angle. There exists a market demand for low-skilled cheap labor. Part of this demand is being met by outsourcing of jobs overseas. The rest is met by vast numbers of immigrants coming to this country. Illegal immigration is the market supplying a demand. A demand is being met and satisfied. When viewed this way, how is this a problem? This triumph of the market is not in itself a problem." says Wade A. Mitchell

Now to the Hypocrisy Part.

Ex-US Marine Sgt. Andrew Tahmooressi sits in a jail cell in Mexico for this very act, and the hypocrites on every side of the political aisle are in fervor for his release and an escape from the very laws they seek to impose on their own borders. The Marine, who had been visiting friends had supposedly come upon a border crossing station and checkpoint run by the Mexican Federal Government. Tahmooressi alledges to have informed the guards that he had registered weapons in the vehicle and had just made a wrong turn. Enforcing their own laws the border agents arrested Tahmooressi and the ensuing battle over his release has brought a new wave of nationalistic border builders and wall wishers. Whether Tahmooressi had or had not meant to cross into Mexico and whether or not he informed them of his weaponry, the Mexican Border Agents did the job of upholding their national law. This law may not be agreeable to me but it is to those that wish to "secure" the US's borders in the same fashion. It is hypocritical to say that a man from America should be released from custody yet scream and push for the same actions from your own border agents and administration.  This is the real gap in reasoning I see in the issue.

The gap in this is the face of the issue, subjective value and nationalism. Nationalism, to believe that the nation of your residence is befitting a higher status and therefore more rule over any other. The Subjective Value to reduce a mans worth and the worth of all others to the geographical location of their birth. The happenstance of birth in any place of the world  does not predispose one to a higher place in the world or a higher rule over others. It should not be seen as a benefit or hindrance where one is placed on the earth and it should not be restricted or inhibited in any way to any place he wishes to travel.

The issue of borders can best be seen from afar. Space. In the pictures of earth from above there are no borders, there is only earth, all of us together, all of us combined in this experience.