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Post Immigration Reform: Revive the Bracero Program?
Created by John Eipper on 10/24/15 7:26 AM

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Immigration Reform: Revive the Bracero Program? (Richard Hancock, USA, 10/24/15 7:26 am)

I was impressed by Timothy Brown's post (17 October) about a new immigration model. I can't understand how our government can continue to stall on a workable immigration program. We had the Bracero program, which was in operation from 1942-1965, which worked much as Timothy described, but the sensationalist media and various groups in our country who are against sensible solutions managed to kill this good program. The result is that we now have 11 million undocumented people in the US. I have always felt that the only way to keep undocumenteds out of this country is to have a legal alternative. No one will risk dying in the deserts of our southern border if there is a legal means of entry.

The Bracero program, on which I did my dissertation under Mr. Hilton at Stanford, was the type of program that Timothy recommends. It provided a means for contracting farm workers from Mexico under a contract enforced by the US Department of Labor. If a worker felt that he didn't get fair treatment at the hands of the Labor Dept., he could also complain to the Mexican Consul, in our case, in El Paso, Texas. No families were involved. Male farm workers were contracted for an initial 3-month period that could be extended to a total of 18 months. Under this program, illegal entries fell to less than 40,000 annually.

The key to the success of this program was that this program was successful in contracting only legitimate farm workers. I ran this labor program for the Doña Ana County Farm Bureau in Las Cruces, New Mexico for a total of 8 years, 1951-54 and, again in 1959-61 after I graduated from Stanford. The University of Texas at El Paso did a study which consisted of interviews of all participants of this program. They found that all the participants interviewed--workers, farmers, Immigration and Labor Dept. personnel, as well as Mexican government managers--had a positive view of the Bracero program. That is not to say that the program was perfect, but it certainly was workable.

I don't wish to summarize all the criticisms of this program, but the main view of opponents was that farmers could find US employees easily if they were simply willing to pay them a living wage. This is simply untrue. No US citizen is willing to perform heavy manual labor if there is any other alternative. You can pay Americans $20 per hour for farm work, but they will do a poor job and will leave you as soon as they receive their first paycheck. I experienced this in New Mexico, where we were required to hire any worker that sought employment through the local employment office. We did this and the results were an absolute catastrophe.

I experienced the same thing in Oklahoma, where we pastured our horses with an elderly man who owned and operated a thousand-head cattle operation. We discussed this problem with him many times. He said that he employed good tractor drivers that would do anything that could be done aboard a tractor, but they absolutely refused to get off their tractor to do any manual labor. He stated that whatever hand labor was done on his ranch was done by himself and his foreman.

I know what it means to perform manual labor. I did plenty of it growing up on a ranch in New Mexico. In 1943, I worked as a sixteen-year-old section hand, swinging a pick for 10 hours per day. I would not recommend this work to my worst enemy. Manual labor is not unskilled labor. If you want to succeed as a manual laborer, you need to start this career as a child. Your cannot be a successful manual laborer if you start as an adult expecting to learn on the job.

As a university student in 1946, a group of us students decided we would try picking cotton, which was paid on a piece-work basis of $2.05 per 100 pounds picked. We lasted one day at this, working 10 hours and earning $1.50 for this day of back-breaking work. Experienced hands working in the same field were making $8.00 per day. I remember asking a bracero from the Torreón, Coahuila region if he could pick cotton. He replied, "Sir, I am from the Laguna (cotton-growing region)."

What we need to do is restart the old Bracero program with modern improvements. In order to get an opinion other than my own, based solely on New Mexico, I contacted one of my Peace Corps friends of the El Salvador I group, in 2013. Stephen Cockerham was our host at at a Palm Springs reunion and is the director emeritus of Agricultural Operations for the University of California at Riverside. I asked him about his work crews. He answered as follows:

"The nationality is overwhelmingly Mexican. Mostly Mexican citizens and the legality is an issue. I used ‘casual labor' on the Experiment Station and had to have proof of legality (e.g. SS number, I -9, or something), which was a hassle, but not a problem for the workers. The documentation was easy to get and still is, I understand. I would not be surprised if the majority were illegals. At the laborer level I never saw an H-visa. However, for truck drivers, office workers, etc., we did occasionally see the H-visa, which had to be scrutinized by UCR administration before hiring.

"Right now there is a major labor shortage, which we are also feeling in the citrus harvest operations. The labor is arranged via labor contractors. Where there are abuses, such as skimming pay, the Feds have begun to go after the contracting company as well as the labor contractor. Our citrus packinghouse just settled a case on this, where the contractor didn't pay the pickers what he was supposed to pay so we were fined for his abuse."

Steve's statement reinforces my opinion that we need to reinstate the old Bracero program. It was simple and was easily managed. If we continue down our present path we will end up importing many of our fruits and vegetables from other nations, principally Mexico. I like to make "chile con carne" with chile grown in Hatch, New Mexico. I now use "New Mexico Chile," which, in small inconspicuous wording is labeled "grown in Mexico." We will see more of this if we don't come to our senses in regard to immigration.

JE comments:  The term "bracero" would require euphemistic updating.  How about an "Opportunity Visa"?  Something with the word "empowerment" would also fit the bill.

Richard Hancock's ideas dovetail nicely with Tim Brown's earlier post.  Both deserve serious consideration.

Ten hours a day with a pick?  Richard:  I admire your fortitude.  I've never swung a pick for more than an hour or two, and it's dreadful work.

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  • Hard Physical Labor: My Worst Jobs (Randy Black, USA 10/25/15 6:08 AM)

    I truly enjoyed Richard Hancock's (24 Oct) stories of his experiences with the Bracero program and his observations about the work ethic of the various parties, himself included. Richard truly has a gift for telling stories that convey the color of the era along with the social aspects of the time. He can truly draw a memorable picture with his words. I'll think about his family name and history when I travel through Alpine, Texas and past Hancock Hill next weekend on my way to the World Chili Championship at Terlingua.

    Richard's pick ax and cotton picking experience brought back memories of the worst jobs I ever had in my developmental years.

    Which brings me to my first couple of summers after my early years in college.

    In the summers between college semesters, my stepfather took a rather unusual tactic aimed at raising my otherwise terribly low grades at the University of Oklahoma and later at Texas Tech. Because I was a slow learner, it took him a couple of summers to get his message across.

    Dad was a senior executive in Chicago with the George A. Fuller Co., at the time the largest commercial construction firm in the USA, it was said.

    The firm's history included NY's Flatiron Building, the NY Times Building, the Washington National Cathedral, Marshall Field's, the Lincoln Memorial, the Bahá'í Temple in Wilmette, Illinois and nearly 1,000 other major projects over many decades in the United States.

    As such, he commanded responsibility for a number of construction jobs across the nation.

    After my abysmal freshman year academic showing at OU, during the summer of 1967 he assigned me to a construction site in Los Angeles as a laborer on the Century Plaza Hotel in Century City. On a rotating daily basis, I shoveled concrete, hauled lumber and other goods around a 30-acre construction site in the California sun about ten hours a day for about ten weeks. On the weekends, I had to serve as gardener's assistant plus vacuum the halls of four 8-story apartment towers at the intersection of Sunset Blvd and the Pacific Coast Highway, a property that the Fuller company owned. The 7-day work schedule did not get my attention and my sophomore year grades were not much better.

    Thus, for the summer of 1968, I was sent to Dayton, Ohio to work on a demolition job that prepared a site in downtown Dayton for what was to be Dayton's tallest structure, the 22-story Grant Deneau Tower.

    As a newly minted member of the Laborers & Hod Carriers Local, five days a week, I ran a 120-pound jackhammer.

    I should qualify that to admit that I was one part of a 2-man team that in turn was part of four or five other demolition teams. On a daily basis, these teams set about to demolish the two-level deep foundations of an ancient movie and vaudeville theater. We worked below ground level in the dusty, humid conditions that typified Dayton in summer and the site in particular.

    The other fellows were African-American, I was the only white guy of dozens on the site. I was 21 years old and about 125 pounds. Prior to the previous summer in LA, the hardest work I'd ever done was throw a daily newspaper, deliver pizza, or mow laws in Dallas growing up. I'd always worked, just never this hard.

    The work and the Dayton climate throughout that summer were brutal and somewhat dangerous. Each team would split time pick-axing and shoveling the rubble the other had demolished with the jackhammer or holding the rope up at ground level that suspended the jack hammer so that the operator could hold the machine at chest level and hammer horizontally into the old foundation. My partner was so strong, he didn't need the rope to support the tool. He could lift up the iron tool, all 120 pounds of it, put the business end against the concrete wall, support the weight with his hands, arms and shoulders, and push the pressure trigger with his chest and off it went into the cement. I was left to shovel the debris. When he needed a break, we'd switch places but he'd help me support the weight by tying a rope to the jackhammer and supporting part of the weight from overhead at the top of the wall.

    The others in these crews were old men in their 30s and 40s. They had been doing this work all of their lives. They knew nothing else. They were black, muscular, not a hint of fat on their bones, they all smoked, brought their lunches to work, took few breaks, were not afraid of hitting on a bottle of rot-gut during lunch, and played hard on the weekends. After the first couple of days, my partner confided that the construction boss whispered that I was the son of a company exec in Chicago, but to work me as hard as possible. "Don't cut him any slack and let me know if he's not able to keep up."

    Eventually, this group seemed to take a liking to me, sometimes taking me with them on Saturday nights to "after hours" joints in Dayton's ghettos. Everyone seemed to be carrying pistols under their shirts on these nights out. The joints smelled of sweat, urine and stale beer, were packed with ladies of the night, laughter, music and did not close until 4 a.m. if then. But my friends from the jackhammer crews took care to keep others from giving me trouble. Still...

    One Saturday morning, my partner took me to a local pawn shop and had me purchase my first pistol for $14. It was a used .22 cal revolver. "You may need it next month," he advised. "When Dayton burned earlier this year after Dr. King was murdered, we burned our own neighborhoods. The word is that in August, we're going to burn whitey's neighborhoods."

    I was living in a boarding house near the old NCR plant in Dayton, a predominantly white, blue-collar area. Later that day, he took me to the river bottom where he showed me how to shoot my old pistol. We killed a six-pack first and then killed the cans. Fortunately, the predicted riots that summer did not materialize. By the way, the plaque on the outside of that pawn shop indicated that it had been the site of the Wright Brothers Bicycle Shop in the 1890s.

    The good news: I got the message and my grades picked up and I was able to graduate from Texas Tech. I'll share this final thought: Whenever I pass a construction site, I am nearly always reminded of my summers in Ohio and California. Whenever I hear the sounds of a jackhammer, I marvel that I survived that summer in Dayton and I'm grateful to my father, RIP.

    JE comments:  Randy Black has a gift for narration, too.  I hope this post will start a thread on "my hardest (or worst) job."  "Worst" here is relative, as strenuous work teaches you a lot more than sitting in a cushy office.  When time permits, I'll write about my summer at a Missouri grain elevator.

    I wasn't sure how to classify this post--Culture?  Sports?  Education, as in work ethic?  I settled on "Economics."

    Best of luck next week in Terlingua, Randy!  Remember that your chili recipe will also be representing the honor and reputation of WAIS.

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    • Wright Brothers' Bicycle Shop (Patrick Mears, -Germany 10/25/15 10:34 AM)
      I enjoyed reading very much Randy Black's post of 25 October.

      I just wanted to pass along to Randy that the old Wright Brothers Cycle Shop in Dayton was purchased by Henry Ford when he was assembling historical structures in Dearborn's Greenfield Village. It was dismantled and then reassembled on the Greenfield Village grounds. If Randy is ever in the neighborhood, he might enjoy seeing and walking through it.

      JE comments: Randy and I almost made it to Greenfield Village after WAIS '13, but we had time only to visit the adjacent Henry Ford museum. Among the historical icons of American technology at Greenfield, one can also see Thomas Edison's workshop. (The HF museum houses a glass orb which allegedly contains Edison's last breath. This is one of the more bizarre items in the collection.)

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  • Immigration Reform: Revive the Bracero Program? (Hall Gardner, -France 10/26/15 5:43 AM)
    I am writing in strong support of John E's proposal "opportunity visa" following the excellent discussion of the Bracero program and on immigrant spending by Richard Hankock and Timothy Brown.

    Another factor to consider is how much of the hundreds of billions of dollars that have been put into the IRS "earnings suspense file" by undocumented immigrants can be put into such an "opportunity visa" program and into the US Social Security system in general.


    The other side of the coin is the billions of dollars of remittances that undocumented immigrants in the US send back to their countries and that help float the economies of Central America and even Mexico to a certain extent. What would happen to these countries if the flow of these funds were significantly reduced?

    I discussed these issues, and those of the drug war presently ravaging the region, in Chapter 9 of my book Averting Global War (Palgrave Macmillan 2010) which is available in paperback. In many ways, the situation with the drug wars and the immigration crisis is much worse five years after I wrote that book. In my view, the failure to soon implement sound immigration and drug policies will lead to increased American xenophobia on the domestic side and will augment dangerous steps toward American isolationism on the international side---as the US will increasingly find itself drawn into hemispheric affairs and crises in Central America and Mexico, if not in Latin America in general.

    And I thank Roman Zhovtulya for putting up my WAIS conference talk on the web; the sound is excellent, even if I was too close to the screen! And I thank John for posting the academic version of my speech, "From World War I to Today: Comparative Hegemonic Rivalries and the Disintegration of Global Order."


    JE comments:  My pleasure, Hall!  And you will go down in WAIS history as the first person to present at one of our conferences from a different continent.  It was almost as good as having you with us, except you missed out on the Sunday-afternoon finger sandwiches. 

    Here's the link to the entire video program of WAIS '15:


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    • How Big is the Labor Black Market? (Timothy Brown, USA 10/27/15 3:50 PM)
      In response to Hall Gardner (26 October), based on rough calculations, the Black Market in labor runs about $400 billion a year and the Black Market in narcotics about $450 b. per year. But those are just two money flows. One of the oddest, at least to me, is that the US taxpayer also spends at least another $400 b. or so a year to fight the so-called "Drug War," even though we have about 67,000 "pharmacies" legally licensed to market "drugs" that can be as addictive and injurious as the illegal ones. One big difference being that they have to collect sales taxes, while the drug cartels do not.

      As regards flows of remittances, per the IMF, the worldwide value of remittances in 2011 was US$483 billion, with some $350 billion going to developing countries, 10% or so from the US. (http://www.imf.org/external/pubs/ft/fandd/basics/remitt.htm then remittance statistics.) Per the OECD, global foreign development assistance in 2012 in current USDs totaled $126.7 billion, of which 32% was from the US. Planned US foreign aid in FY 2016 is $33.7 billion.

      http://www.globalissues.org/article/35/foreign-aid-development-assistance#2013aidrebounds . And http://beta.foreignassistance.gov/

      Big numbers, yes. But one key question is how much bang per buck reaches those most in need, the poor. In my personal experience running two AID programs (admittedly as dated as I am), only about 10-15% of US foreign aid reaches the poor in developing countries. The rest is spent on overhead. Whereas, 85-90% of remittances sent home by persons working here reaches their families. What does this mean?

      We of the rich world have been preaching that we have a moral obligation to help poorer countries develop and been putting billions of dollars where our mouths are via foreign assistance programs run by us--and wasting 90% of it, as my AID colleagues repeatedly said in private, but never in public. Foreign aid is a process by which "the poor in rich countries send money to the rich in poor countries." So, using the stats above, my conclusion is that foreign aid is a bust that makes us feel good about ourselves but has never developed a single country, while 90% of remittances reach the poor abroad and anger us because "foreigners" are stealing our money so we need to seal our borders.

      My own suggestion is that we stop standing reality on its head and harness remittances by foreign labor to bottom-up development while abolish almost all of our top-down foreign aid programs. It's a solution that, were it not for partisan politics, should make conservatives happy because we could get rid of foreign aid, one of their favorite "bete noirs," while simultaneously making liberals happy by "helping poor countries develop," one of their favorite mantras. But I suppose that would require their working together for the common good. So all I can do is dream.

      JE comments: Tim Brown talks a lot of sense. Policymakers--why aren't more of you reading WAIS?

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      • War on Drugs; Foreign Aid (Tor Guimaraes, USA 10/30/15 6:46 PM)
        Wow! Timothy Brown (27 October) is right on the money regarding some issues dead serious to American survival as a great nation: Our "war on drugs" and welfare to foreign nations. Also I love the expression "Foreign aid is a process by which the poor in rich countries send money to the rich in poor countries." It is clever and absolutely true. Congratulations to Tim on a great post.

        To me these problems are specific illustrations of how over the last few decades our government has managed to waste trillions of dollars through our "foreign relations" by legally stealing the money from US taxpayers and giving it to the "right people." Rest assured behind every apparently stupid government replacement, nation-building, wars for whatever false excuses, some private interests (oil companies, weapons manufacturers, big farmers, beneficiaries from NAFTA, TPP, etc.) have been or will be making a lot of profits and financing many elections.

        JE comments: Today's historic bombshell: US ground troops in Syria. We need to discuss this.

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      • Remittances and "Bottom-Up" Development; from Gary Moore (John Eipper, USA 11/05/15 4:54 AM)

        Gary Moore writes:

        How does Timothy Brown (27 October) propose to harness remittances by foreign labor
        to bottom-up development? Doesn't he say that the remitters themselves
        are already doing that--contributing concretely to their hometown economies?

        Would he have us take some of their remittance money away from them so
        we can channel it more wisely? Aside from individually, a large number of
        Clubes de Oriundos (HTAs, or Hometown Associations) in Mexican immigrant
        communities inside the United States are already pooling portions of their
        remittances to fund joint development projects in their hometowns in Mexico,
        such as road-building. There have been some impressive results. And yes, the
        spoilsport experts nonetheless point out that, while productive and inspiring,
        these efforts form only a drop in the bucket as to changing Mexico's basic dilemmas.



        I've probably missed something in Timothy's argument. He recommends using
        immigrant remittances to replace foreign aid. Maybe I'll grasp this once he explains
        how he will do this without taking the remittances away from the remitters, and
        how the new procedures would spur development that the remittances aren't already
        spurring anyway.

        JE comments:  If I may summarize Tim Brown's proposal, it is to set up mandatory savings accounts for guest workers.  The money would be returned upon the worker's return to his or her home country.  By bringing up the HTAs, Gary Moore reminds us that a significant amount of "bottom-up" development is already taking place.

        Tim explained his plan back in May.  One concern popped into my head:  how would you keep the cartels from victimizing the newly returned guest workers?



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        • Mandated Savings Account for Guest Workers? From Ric Mauricio (John Eipper, USA 11/08/15 4:38 PM)
          Ric Mauricio writes:

          I found Timothy Brown's proposal for mandatory savings accounts for guest workers in the US to be quite an intriguing concept. (See, most recently, Gary Moore, 5 November.)

          In retail, it is not just enough to sell product at an acceptable margin, but to turn over that product as quickly as possible, to generate volume to accelerate profit growth. The concept is not unlike the Eighth Wonder of the world: compounding. Compounding at a daily rate produces astoundingly superior results than compounding annually.

          The only beneficiaries of the mandatory savings accounts would be the banks, since they would pay the guest worker an annual .1% interest, while lending it out at a 3.5% to 12% interest rate, many times over (compounding). To me, this is akin to transferring the "cartel" from foreign soil to American soil.

          There seems to be a prevailing attitude that the government will take care of you. Should we ask the Native American Indian how that worked out? Should we ask our current Social Security recipients, who will receive no COLA increase this year (due to no inflation as calculated by the heavily manipulated chained CPI calculation), and in some cases, will experience an increase in Medicare premiums, how that worked out?

          Recently, the government unveiled the MyRA, a low cost IRA alternative that will invest in US Savings Bonds. Let's see, it pays around 2%, while real inflation (caused by the creation of new money; note that I did not say "printing," new money is mostly digital, oh, like bitcoin) is between 2% to 10%, depending upon what expenses one is looking at. It helps the US government, who has just issued you a digital IOU in exchange for your digital dollars, but it certainly does not help the MyRA investor. Oh, yes, the government is certainly looking out for your best interest.

          My guess that with HTAs at work, that guest worker remittances are a healthy adjunct to foreign aid. It is truly teaching guest workers how to fish, rather than just giving them the fish.

          JE comments:  The "empowerment accounts" would face some PR challenges certainly, especially with immigrants inclined to distrust government programs.  I hope Tim Brown will fine tune his proposal in a future post.  What kind of interest should be paid on these accounts?  I would say at least the rate of a Treasury note.


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          • Mandated Savings Account for US Guest Workers? (Timothy Brown, USA 11/09/15 4:20 PM)
            I very much appreciate the thoughtful and constructive comments of my colleagues on my immigration proposal. (See, most recently, Ric Mauricio, 8 November.)

            Perhaps some further clarifications of my admittedly rather terse explanation of some of its parts will help move the discussion along. Just to address Ric's concern that private banks, not workers, would benefit from the 10% of income savings aspect. Having, over the decades, done a bit of financial analyses of banking systems of Mexico, El Salvador and Honduras, he may find it reassuring that three key parts of my proposal are specifically designed to favor the workers by maximizing both the short-term security and long-term value of the worker's savings into USG-controlled dollar accounts.

            One more immediate benefits for the workers would be to reduce the cost of remitting funds to their countries from today's average of 7.8% (per the World Bank) to zero by adding a system of guest worker remittances to our already existing decades-long systems of sending US dollar checks to Social Security, veteran and other overseas beneficiaries of USG programs via our consular offices abroad. This would extend to guest workers an immediate monetary benefit. It would also greatly improve the security of their transfers by assuring that they go directly to their families. As for the management of their 10% savings, these would be deposited in US government-controlled dollar accounts, not simply in local banks to be used as the banks see fit and, over time, their end dollar value would be compounded. Today, each country has its own currency that floats against the US dollar. While nominal interest rates in local currencies may seem high, real rates rarely exceed dollar rates. Even at low US Treasury rates, the compound interest that worker accounts would earn could be expected to increase the value of their savings by a compounded rate far above what they would earn by any other licit means.

            (More later. The dinner bell just rang!)

            JE comments: My dinner bell has rung, too! This post from Tim Brown actually came in last night, but I'm behind on my WAIS editing.  Más vale tarde que nunca, Tim!

            I hope Tim can clarify his claim about interest rates.  I've always thought that "real" interest rates in most of the developing world far exceed US levels.  I just found a dollar-based mortgage offer for Mexican properties, which requires a 35% down payment and charges 8% on a 20-year mortgage.  This would be considered usurious in the United States.

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            • Interest Rates in Latin America (Timothy Brown, USA 11/10/15 4:52 AM)
              To answer John E's questions of 9 November, I have bought property in Costa Rica, but not in Mexico. But 8%/20 years seems fairly reasonable if the borrower has a USD income. But, if like most Mexicans their income is in Mexican pesos (MXN), then, since in just the last six months the peso to USD has devalued from around 15 to 17 to the dollar (about 13%), the borrower's real versus nominal cost of the mortgage would have been about 34%. (8% + 26%)

              If, on the other hand, the buyer had been a beneficiary of the mandatory 10% savings system I've suggested and also sent, let's say, 30% of his $1,000 per month salary ($300 USD per month) to his family in Mexico, his family's peso income from his remittance would have gone from 4,500 MXD to 5,100 MXD per month.

              Had the worker been in the US for 11 months per year, their mandatory "saving" would have been $1,000 USD per year (think IRAs or other pension systems) that would be earning an average of 3% per year for 20 years and the MXD continued to decline at historical levels, their dollar savings would have grown to $30,000+ and their MXN value would easily have doubled.

              Incidentally, I hate math.

              JE comments: As Barbie used to say prior to her Liberation, "Math class is tough!"


              The more Tim Brown explains his savings plan, the more I'm impressed.  It would, however, require the oversight of an enormous new bureaucracy.  Wouldn't these administrative costs have to come from the workers themselves?

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              • Mandated Savings Account for Guest Workers? Administrative Costs (Timothy Brown, USA 11/11/15 3:56 AM)
                John Eipper asked a question about the costs of administering the guest worker savings account system I've suggested. Interestingly, I understand that a proposal already before the Congress would increase the H visa (temporary workers and their families) including, H agricultural worker visas, a measure that would address one major piece of the proposal.

                On the costs of the proposed program, we already have in place a visa processing system that handled almost ten million non-immigrant visas in 2014, including H2s and 4s (agricultural workers and accompanying non-working family members) and Border crossing cards. Of these, perhaps 200,000+ were H2s or H4s. We already have well over 150 US Foreign Service consuls in place in Mexico and northern Central America to handle today's visa load. So adding another 200,000 or so to their load might require (and here I'm making a vaguely informed guess) assigning another 100 or so to manage the visa application flow. Additional immigration personnel would also have to be put in place, as would the number of officials that manage petitions in the US. But, at the same time, it should reduce the flow of undocumenteds and the burden they generate elsewhere in the system.

                A related additional expense would be incurred to manage the flow of remittances to families and the 10% going to "pension" savings. And this would require additional personnel and other costs, mostly at Treasury. But, again, this should not put much of a strain on a system that already manages such programs as Social Security, Veterans' pensions, Internal Revenue, foreign commerce and other programs.

                An aside story. During my years as a Border Research Fellow in New Mexico, there was a great deal of pressure from regional businesses to open an additional INS border crossing. But the cost estimates for doing so, on which their campaign was based, were extremely low because they had not taken into account the real costs of such a crossing. When I explained that it requires 7-10 employees to man one position 24/7/365, they were shocked. But, it would be manned by just one INS agent at a time! Yes, if you don't mind it being open only a maximum of 8 hours a day, 5 days a week, and being closed whenever the agent needs to take a break to clean the building, clean the toilet (they will need one, you know), brew a cup of coffee or just get off their feet for a few minutes. Oh, and that doesn't take into account annual vacations, training stints, sick days, the time needed for someone to processing attendance records, pay checks, and the like, and on and on. When you take all this into account and add in long-term costs (sooner or later they will retire, for example, and get pensions), you're looking at several million dollars a year, not just one person's salary.

                JE comments:  Rodolfo Neirotti (next) is impressed with Tim's proposal, but raises the question:  how can we draw policymakers' attention to the rarefied atmosphere of WAIS discussion?

                A hearty Veterans/Armistice Day congratulations to Tim Brown and WAISer veterans around the world.  Thank you, on behalf of all, for your service.

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                • Mandated Savings Accounts for Guest Workers? Administrative Costs; from Ric Mauricio (John Eipper, USA 11/12/15 6:17 AM)
                  Ric Mauricio writes:

                  Tim Brown (11 November) correctly hit the nail on the head, as did John E's question on who will pay for the administration of the "GuestIA" (Guest Worker Investment Account). It will cost money; whether that is a little or a lot is anyone's guess. And my guess is that the American people will foot the bill.

                  My take on the GuestIA comes from another angle and one must understand, I come from the investment side of the discussion spectrum. Tim proposes that the account not be administered by the banks, who will benefit from paying low interest rates while compounding the return on their liabilities (deposits are carried on the books as liabilities) by lending at 3% to 12% many times over. Rather, if I read interpret correctly, it will be administered by the US Government and invested in US Government paper (like savings bonds). This is akin to the new myRA. Currently this account pays 1.47%. But unlike the banks, these funds will be spent by the US Government, not invested in income-producing assets, thus eliminating any compounding possible with those funds. At least, with the banks administering the funds, the banks will benefit and those who borrow, investors and homeowners, will benefit. With the government-administered investments, the only ones benefiting are government workers, who produce no profits whatsoever.

                  Now Tim's comparison of what would happen to these funds should they be transferred to families in Mexico, shows that because of the depreciation of the Mexican peso to the US dollar, the Mexicans would be less better off then they would be is true, but only if the Mexican guest worker continues to hold the currency. Mind you, the guest worker would be more likely use the funds to feed his family, thus ensuring that her/his wife/husband and children would enjoy a quality of life greater than if he/she could not transfer most of their earnings to their family. The purchase of goods and services in Mexico further accelerates the growth of the Mexican economy, thus raising the quality of life for most Mexicans. Again, a compounding effect of every dollar sent back to Mexico. This to me is a much more fruitful way of handling money.

                  I propose that instead of having the US Government attempt to take care of our guest workers, that we instead encourage them to take their earnings and spend it or invest it in their local economies. Let us not try to micromanage the world, but let the world manage itself. Vietnam is asserting itself as a economic (and very capitalistic, though still centrally managed) nation, and hopefully soon, with its latest democratic elections, Myanmar will join the list of developing nations.

                  I quote the 2007 Formula One World Champion, Kimi Raikkonen, "Leave me alone, I know what I'm doing." Let our guest workers decide what to do with their earnings. They may make errors in judgment, but hopefully, they will learn; but they need to be encouraged, like your children, to do things on their own. This will encourage dynamic economic growth rather than having the US Government waste their money on non-productive spending.

                  And yes, to all Marines all over the world, "Semper fi!"

                  JE comments: A convincing vote for Laissez-Faire, "Invisible Hand," or what have you, from Ric Mauricio.  Tim Brown's bottom-up proposal with government oversight is a hybrid approach.  Perhaps the ultimate "unknown" is philosophical:  can you force people to help themselves?

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                  • More on Mandated Savings Accounts, and Medicare, for Guest Workers (Timothy Brown, USA 11/14/15 6:46 AM)
                    I very much appreciate Ric Mauricio's thoughtful comments of 12 November. And I agree with him about what would happen to guest worker savings were they, in effect, simply confiscated by the US Government, thrown into the general budgetary pool, and spent rather than saved, as we have long been doing with Social Security tax income. That's exactly why I suggest they be deposited in individualized dollar-denominated escrowed accounts in local banks abroad, not in a USG depositary. That way, much like mortgage escrow, they would then be on the overseas bank's books, increasing its reserves. This would both make the savings accounts safe and increase USD reserves countable both by the holding bank and host government, strengthening both.

                    As for the benefits to the worker. Today, per the World Bank, it costs 7.8% of the face value of a remittance to send money home. The cost to the USG today of sending the remittance for them, since we already do the same for Social Security, VA or other government pensions to beneficiaries abroad, would be minimal. Once entered into a USG system, the cost of cutting a check electronically is negligible. The additional cost of then pouching the checks to the nearest consulate and tracking their delivery, is also minimal. The cost of confirming that they reach the intended beneficiary abroad is a task American consuls or personnel already stationed abroad do for other recipients.

                    So what will have happened? One, the worker will have deposited 10% of their income in a personal long-term USD savings account they own that cannot be raided by either the bank or the USG and established a long-term pension fund to the benefit both of themselves in the long run and the local economy. The worker will have saved 7.8% or so on today's transaction costs of sending money home to family, while simultaneously reducing to near zero the risk of its being intercepted by anyone else. And, three, because the worker would only recuperate the 10% plus compound interest if and when they return to their country of origin to live permanently, they will have a very strong interest in doing just that rather than agitating for legal permanent residence in the US. In the interim, their families will have been better served and they will have maintained strong ties to their country of origin. And, the deposits of workers that chose not to return home would be forfeited to the USG.

                    I also suggest having the worker's Social Security retirement payments--and Medicare account--be payable only in their country of origin if and when they return permanently, or these, too, would be lost. This would do two things (at least!): increase greatly the incentives for their returning home and establish a new source of funding for their country of origin's health system. (We all are, after all, committed to helping less developed countries develop. Right?)

                    Incidentally, while I'm nattering on, today Medicare does not pay benefits abroad. I think we should seriously consider changing this. Today, US Veteran's medical benefits for disabilities are already covered in third countries, and more and more private health insurers are doing the same. When they do, both the beneficiary and the insurer benefit because of lower costs, and the local population benefits because their medical providers and health system earn more. That's why the volume of medical tourism is growing exponentially. Why not take advantage of reality?

                    PS: Remittances are a global reality that totaled more than $400 billion in 2013. And more were sent from Europe than the US. India ($70 b.), China ($60 b.) and the Philippines ($25.4 b.) were the three highest recipients. Mexico ($22.2 b.) was fourth. So I suspect most developed countries would be very interested in establishing a similar system.

                    JE comments:  I never would have thought of China as second in remittance receipts.  We think of that dynamic economy as a next exporter of wealth (loans and capital investment).

                    Tim Brown brings up the important subject of medical tourism.  We've never placed this topic under the WAIS microscope.  Has anybody gone on a medical "tour" abroad?  Cuba, I predict, will be a leading medical destination for (US) Americans within a few years.

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              • Mandated Savings Account for Guest Workers? (Rodolfo Neirotti, USA 11/11/15 4:06 AM)
                Timothy Brown has interesting ideas about temporary workers in this country, and he is not the only one. In the past, I asked about finding a way of getting these ideas out of the WAIS microclimate. I am sure that some members may have connections with lawmakers than can explore the implementation.

                JE comments: Rodolfo Neirotti raises a (perhaps the) key question: how do you turn jaw, jaw into law, law? Tim Brown has many contacts in the Washington establishment--with lawmakers, diplomats, and NGOs. I hope he'll respond to Rodolfo.

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  • Immigration Reform; from Gary Moore (John Eipper, USA 10/27/15 1:35 PM)

    Gary Moore writes:

    As John Eipper said, the insights on immigration from Timothy Brown, Richard Hancock, et al. are
    really getting interesting. The savings account idea, the Bracero program--I wonder which political
    candidates might be likeliest to use such thinking.  And as the vein of concrete insights gets
    deeper, getting behind some myths, it brings the hope of illuminating some often heard claims:

    I've tried to investigate the claim that illegal immigrants are swamping county hospitals
    and emergency rooms with system-busting free visits. I know a big-city mayor, very liberal,
    who made such a claim. Yet when I tried to find out I met...the privacy regulations.

    Could it be that nobody can ever get real statistics on this because of privacy laws? Does anybody know this issue?

    And ditto the same claim about illegals swamping Arizona schools--even Georgia schools.  Try to find out, you meet the privacy wall. Or do you? Has anybody got the goods?

    But maybe the bonanza is Richard's statement that no American will do manual labor
    for $20 an hour. Here's one that really needs chasing down, yea or nay. His own experience
    from multiple angles is very persuasive, but for this argument to have political weight--in a realm laced with so much unconscious prejudice--a whole series of such compelling
    personal insights would be required even to begin moving the battleship of polemic,
    let alone policy. Any parallel insights? Has anybody ever found that supposed Black ex-construction worker in the South who says: "No, I prefer sitting at home on welfare
    while the Mexicans do it"?

    Here's an example of how complicated it gets: Thirty years ago
    in northern Mexico, if you talked to Mexicans doing just the sort of farm employment Richard
    is talking about, you would get no end of startling statements like: "Forget it. Mexican labor
    just won't work. They're too lazy." How did we get from there to here? Did somebody drop
    a bomb on the lazy Mexican? What a fascinating frontier of the unknown. Will another
    can-do Clinton be able to broach it? Or will we just get another feel-good anti-Bracero wave,
    like the 1986 amnesty/open-the-gates sham?

    Both Timothy's and Richard's posts had so many vital concretes that one hardly knows
    where to begin asking about them.

    JE comments:  Work ethic is another facet of that nebulous construct, "national character."  Is there any meaningful way to measure it?  "Productivity" is not exactly the same thing.

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