The creation of a new border between the United States and Mexico created a new reality in which the populations on both sides are able to move freely back and forth, migrating with economic opportunities and engaging in smuggling whatever is illegal on the other side. These turbulent borderlands exist throughout the world, between any countries whose political boundaries and cultural boundaries don’t match up, usually because, as in this case, the border has moved. Sometimes, as in the case of Germany and France, the issue of the borderland generates war. At other times, as between the United States and Canada, the border is a matter of little importance. The situation of Mexico and the United States in the next decade will be somewhere between the two extremes.
Mexico is a country of 100 million people, most of whom live hundreds of miles away from the United States. It is now the world’s fourteenth largest economy—counting only legal commerce—with a GDP of over $1 trillion. It annually exports about $130 billion worth of goods to the United States and imports about $180 billion worth, making it the second largest trading partner with the U.S., after Canada. The United States obviously can’t afford to disengage from Mexico, certainly not in less than a generation. Nor does it want to.
But the United States faces two problems: Mexico’s illegal export of immigrant workers and Mexico’s illegal export of drugs. In both cases the underlying issue is the appetite of the American economic system for the commodities in question. Without the appetite, the exports would be pointless. Because of the appetite—and particularly in the case of drugs, because of their illegality—the export is advantageous to individual Mexicans and to Mexico as a whole.
It is important to understand that Mexican immigration is fundamentally different from immigration from distant countries such as China and Poland. In those cases, people are breaking their tie with a homeland that is thousands of miles away. Some degree of assimilation is inevitable, because the alternatives are isolation or a life within a culturally segregated community. Although immigrants have frightened Americans ever since the Scots-Irish arrived to unsettle the merchants and gentry of eighteenth-century America, there is a fundamentally geopolitical reason not to compare Mexican immigration with those precedents.
Not only is Mexico adjacent to the United States, but in many cases the land the migrants are moving into is land that once belonged to Mexico. When Mexicans move northward, they are not necessarily breaking ties with their homeland. Indeed, within the borderland, which can extend hundreds of miles into both countries, the movement north can require minimal cultural adjustment. When Mexicans move to distant cities, they react as traditional immigrants have done and assimilate. Within the borderland, they have the option of retaining their language and their national identity, distinct from whatever legal identity they adopt. This state of affairs can create serious tension between the legal border and the cultural border.
This is the root of the profound anxiety within the United States today about Mexican illegal immigration. Critics say that American concern is really an aversion to all Mexican immigration, and they are not altogether wrong, but this analysis does not fully appreciate the roots of the fear. Non-Mexicans within the borderland and even beyond are afraid of being overwhelmed by the migrants and finding themselves living culturally in Mexico. They are also afraid that the movement north is the precursor to Mexicans reclaiming formerly Mexican territories. The fears may be overwrought, but they are not irrational; nor can they be avoided.
The irony, of course, is that the American economy requires these migrants as low-wage workers. The only reason that individuals take the risk of coming to the United States illegally is the certainty that they will be able to get jobs. If migrants were not required in order to fill these jobs, the jobs would be filled already and the migrants would not come.
The counterargument—that migrants take jobs from others, or that their claims on social services outweigh whatever economic advantages they provide—is not entirely frivolous, but it has some weaknesses. First, 10 percent unemployment in the United States translates into about 15 million people out of work. The Pew Hispanic Center estimates that there are about 12 million illegal immigrants in the United States. If the replacement theory were correct, then getting rid of illegal immigrants would create 12 million job openings, leaving only 3 million unemployed and an unemployment rate of only about 2 percent. That such a replacement scenario seems intuitively illogical argues to the point that most of the low-cost, unskilled labor that is imported does not compete with the existing workforce. The American economy requires additional workers but doesn’t want to increase the pool of citizens dramatically. The Mexican economy has surplus labor it needs to export. The result is predictable.
And this problem will only intensify, because the fertility of nonimmigrant women has fallen below the rate of replacement, and this at a time when life expectancy has expanded. This means that we will have an aging population with a shrinking workforce—a condition overtaking the advanced industrial world in general. That means that countries will be importing labor both to care for the aged and to expand the workforce. Rather than subsiding, the pressure to import workers will increase, and even while Mexico improves its domestic economy, it will continue to have an abundance of exportable labor.
Compounding the turbulence along the border are the law of supply and demand and the cost of goods applied to the American appetite for narcotics. Heroin, cocaine, and marijuana, the drugs of choice, originate as extremely low-cost agricultural products—weeds, essentially, that require almost no cultivation. Because the drugs are illegal in the United States, normal market forces don’t apply. The legal risk of selling drugs drives efficient competitors out of the market, enabling criminal organizations to create regional monopolies through violence that further suppresses competition, which further inflates the cost of the drugs.
Illegality means that merely moving a product a few hundred miles from Mexico to Los Angeles will increase the price to the user by extremely high multiples. Official estimates of the amount of money flowing into Mexico from the sales of narcotics run from $25 billion to $40 billion a year. Unofficial estimates place the amount much higher, but even assuming that the $40 billion figure is correct, the effective amount is staggeringly high. When you look at the revenue from a product, it is not the amount you sell it for that matters—it’s the profit margin. For a manufactured product, such as the electronic components that Mexico exports to the United States legally, a profit margin of 10 percent would be quite high. Let’s assume that this is the profit margin for all legal imports from Mexico into the United States. Mexico’s exports of $130 billion would then generate about $13 billion in profit.
The profit margin on drug sales is enormously higher than 10 percent, because the inherent cost of the commodity is extremely low. Marijuana needs no processing, and processing costs on heroin and cocaine are insignificant. A reasonable and even conservative estimate for the profit margin on narcotics is 90 percent, which means that the $40 billion from the illegal trade generates a profit of about $36 billion. Drugs generate free cash, then, at a level almost three times greater than all of Mexico’s $13 billion in legal exports.
Even if Mexico makes only $25 billion a year at an 80 percent margin, that still means a profit of $20 billion a year, which is still $7 billion more than the profit being made from all legal exports. Play with the numbers as much as you like—even demonstrate that drugs generate only half the profit of legal exports—and the fact still remains that drug money helps the liquidity of the Mexican financial system tremendously. Mexico is one of the few countries, for example, that continued to make loans for commercial real estate construction after the financial crisis of 2008.
It follows, therefore, that the Mexican government would be foolish to try to stop the trade. Certainly there is violence from the cartel wars, but it is generally concentrated along the border, not in the populated heartland of Mexico. On balance, the enormous amount of money pour
ing into the country—all of which finds its way into the banking system and the general economy in some way—benefits the country more than the violence and lawlessness harm it. As a consequence, the rational approach ought to be for the Mexican government to give the appearance of trying to stop the drug trade while making certain that all significant efforts fail. This would keep the United States mollified while making certain that the money continues to pour in.
AMERICA’S MEXICO STRATEGY
The American economy is too integrated with Mexico’s ever to allow a disruption of legal commerce, which means that large numbers of trucks will be moving between the United States and Mexico indefinitely. The volume of traffic is too high for agents at the border to inspect all cargoes, and therefore even if the border is walled off, both illegal aliens and drugs will continue to slip through at international crossings and elsewhere. Given the low cost of the narcotics before they reach the United States, the interception of cargoes has very little effect on trade. Cargoes are readily replaced with little impact on aggregate revenue.
It should be much easier to stop illegal immigrants than drugs, because it is easy to detect immigrants once they are in the country. The simplest means of doing this is to institute a national identity card with special paper and embedded codes that make it extremely difficult to forge. No one could be employed until his or her employer first cleared the card via the sort of system currently used for credit card transactions. Any alien without a card would be deported. Any employer who hired him or her would be arrested and charged with a felony.
But this simple method is highly unlikely to be employed, in part because many of the people most opposed to illegal immigration also have a deep mistrust of the federal government. The national identity card could be used to track the movement of money and people—to detect tax fraud and deadbeat dads as well as to monitor political organizations—which could easily lead to government abuse. Dissension within the anti-immigrant coalition on these issues will preclude support for such a system.
But there is a deeper reason this relatively easy step won’t be taken: the segment of society that benefits from large numbers of low-cost workers is greater and more influential than the segment harmed by it. Therefore, as with the Mexican government and drugs, the best U.S. strategy is to appear to be doing everything possible to stop the movement of immigrants while making certain that these efforts fail. This has been the American strategy on illegal immigrants for many years, creating a tension between short- and mid-term economic interests and long-term political interests. The long-term problem is the shift in demographics—and in potential loyalties—in the borderland. The president must choose between these options, and his only rational course is to allow the future to tend to itself. Given the forces interested in maintaining the status quo, any president who took the steps needed to stop illegal immigration would rapidly lose power. Therefore the best strategy for the president is to continue the current one: hypocrisy.
Similarly, the drug issue has a relatively simple solution that will not be implemented: legalization. If drugs were legalized and steps were taken to flood the country with narcotics, the street price would plunge, the economics of smuggling would collapse, and the violence along the border driven by all the money to be made would decline precipitously. Along with that there would be a decline in street violence among drug addicts seeking to steal enough money for a fix.
The downside of this strategy is that there would be an unknown increase in the amount of drug use and in the number of users. Existing users, no longer restricted by price, would increase their indulgence, and it is almost certain that some individuals who are unwilling to use drugs illegally would begin to use drugs once they were decriminalized.
The president—and in this case it is up to Congress as well, so it is not really a foreign policy decision—would have to calculate the benefits of stopping the flow of money to Mexico and limiting violence in the borderland against increased drug use and worse, and would have to appear to favor or at least be indifferent to that increase. No significant political coalition in the United States is prepared to embrace the principle of crushing the illegal drug trade by legalization. So, like national identity cards, legalization simply won’t fly, for internal ideological reasons.
Assuming that no magical solution will emerge to quell the national appetite for narcotics, the president must accept three realities: drugs will continue to flow into the United States, vast amounts of money will continue to flow into Mexico, and violence in Mexico will continue until the cartels achieve a stable peace, as has happened with organized crime in other countries, or until a single group wipes out all the others.
The only other strategy the United States could use to deal with the struggle is intervention. Whether a small incursion by the FBI or a large military occupation of northern Mexico, this is an extraordinarily bad idea. First, it is unlikely to succeed. The United States is unable to police narcotics at home, so the idea that it could police narcotics in a foreign country is far-fetched. As for a large military occupation, the United States has learned that its armed forces are superbly positioned to destroy enemy armies but far less adept at crushing guerrillas resisting occupation on their own terrain.
An American intervention would conflate the drug cartels with Mexican nationalism, an idea that is already present in some quarters in Mexico, and thus would pose a threat on both sides of the border. Suddenly attacks on U.S. forces, even in the United States, would be not mere banditry but patriotic acts. Given the complexities the United States faces in the rest of the world, the last thing it needs is an out-and-out war on the Mexican border.
The top priority of the president must be to make certain that the violence in northern Mexico and the corruption of law enforcement officials do not move into the United States. He must therefore commit substantial forces to the northern borderland in an effort to suppress violence, even though this is a defective strategy. Its flaws include fighting a war that allows the enemy sanctuary on the other side of a border, which, as we learned in Vietnam, is a very bad idea. It is also a purely defensive strategy that does not give the United States control over events in Mexico. But given that gaining control of events in Mexico is extremely unlikely, a defensive posture may be the best available.
The American strategy will continue to be inherently dishonest. It does not intend to stop immigration and it doesn’t expect to stop drugs, but it must pretend to be committed to both. To many Americans, these appear to be critical issues that affect their personal lives. They must not be told that in the greater scheme of things, their sense of what is important doesn’t matter, or that the United States is incapable of achieving goals they see as important.
It is far better for the president to appear to be absolutely committed to these goals, and when they aren’t met, to fall back on the failure of some underlings to act forcefully. On occasion, members of his staff or of the FBI, DEA, CIA, or military should be fired in disgrace, and major investigations should be held to identify the failures in the system that have permitted drugs and illegal aliens to continue crossing the border. Over the next ten years, the president will be engaged in constant investigations to provide the illusion of activity in a project that cannot succeed.
Stopping the violence from spreading north of the border is alone important enough to topple any president who fails to do so. Fortunately, not allowing violence to spread is in the interests of the cartels as well. They understand that significant violence in the United States would trigger a response that, while ineffective, would still hamper their business interests. In recognizing that the United States would neither move south nor effectively interfere with their trade otherwise, the drug cartels would be irrational to spread violence northward, and smugglers dealing in vast amounts of money are not irrational.
A final word must be included here about Canada, which of course shares the longest border with the United States and is America’s largest tr
ading partner. Canada has been an afterthought to the United States since British interest in continental North America declined. It is not that Canada is not important to the United States; it is simply that Canada is locked into place by geography and American power.
Looking at a map, Canada appears to be a vast country, though in terms of populated territory it is actually quite small, with its population distributed in a band along the U.S. border. Many parts of Canada have a north-south orientation rather than an east-west one. In other words, their economic and social life is oriented toward the United States in contrast to Canada, which operates on an east-west basis.
The issue for Canada is that the United States is a giant market as well as source of goods. There is also a deep cultural affinity. This creates problems for Canadians, who see themselves as and want to be a distinct culture as well as country. But as with the rest of the world, Canada is under heavy pressure from American culture, and resistance is difficult.
For the Canadians, there are multiple fault lines in their confederation, the most important being the split between French-speaking Quebec and the rest of Canada, which is predominantly English-speaking. There was a serious separatist movement in the 1960s and 1970s, which won major concessions on the use of language, but it never achieved independence. Today that movement has moderated and independence is not on the table, although expanded autonomy might be.
The Next Decade Page 22