by Victor Davis Hanson<\/p>\n
Tribune Media Services<\/p>\n
E<\/span>conomists have long pointed out that relying on oil as a natural resource can be a long-term disaster for a developing nation. The income from exporting petroleum provides cash infusions that can distort a country’s economy and mask structural problems while impeding reform. Petrodollars act like a lethal narcotic: A formerly impoverished country depends on short-term relief from oil profits at the risk of being reduced to an enfeebled addict.<\/p>\n Easy oil income also often promotes dictatorial government by allowing nationalist thugs to buy pricey weapons to threaten neighbors or to buy off internal dissent with lavish cash subsidies. Take away oil from Venezuela and Hugo Chavez would be just another failed Castro. Evo Morales is able to offer the old bankrupt socialism to poverty-stricken Bolivia largely due to the country’s natural gas reserves.<\/p>\n Mexico also suffers from this unhealthy oil-exporting syndrome, as the government uses profits from its inefficient state-run industry to spread around subsidies in lieu of enacting long overdue wealth-creating measures. But worse still, Mexico suffers a double whammy by also receiving between $10 billion and $15 billion annually in remittances from its expatriate population in the United States.<\/p>\n Exporting its own poor turns out to be about the cash equivalent each day of selling on the open market about half a million barrels of $70 a barrel oil. The muscles of Mexico’s former residents can prove just as deleterious as oil derricks to the long-term health of the country’s economy.<\/p>\n Millions of unemployed Mexicans are now dependent upon money wired from the United States, where low-skill wages are now nine times higher than in Mexico. On the national level, such subsidies, like oil windfall profits, allow just enough money to hide the government’s failure to promote the proper economic conditions \u2014 through the protection of property rights, tax reform, transparent investment laws, modern infrastructure, etc. \u2014 that would eventually lead to decent housing and well-paying jobs.<\/p>\n It may be counterintuitive to think that checks from hard-working expatriates are pernicious. But for a developing nation, remittances can prove as problematic as the proverbial plight of the lottery winner \u2014 sudden winnings that were not earned. In short, remittances, along with oil and tourism \u2014 not agriculture, engineering, education, manufacturing or finance \u2014 prop up an otherwise ailing Mexican economy. This helps explain why half of the country’s 106 million citizens still live in poverty.<\/p>\n T<\/span>he billions of dollars Mexicans in the U.S. send back to their country pose another economic and ethical dilemma. Many illegal aliens in the U.S. allot nearly half their weekly paychecks to relatives in Mexico. But such deductions come right out of the workers’ food, housing and transportation budgets here. So to survive, illegal aliens in the U.S. must endure cheap, substandard and often overcrowded housing. They cannot easily purchase their own health care or invest in safe and reliable cars.<\/p>\n Because the United States is a caring nation, the state often intervenes to offer illegal aliens costly entitlements \u2014 emergency-room medicine, legal help and subsidized housing and food \u2014 that provide some sort of parity to all its residents.<\/p>\n And when aliens are often paid in cash \u2014 that is off the books \u2014 the problem of remittances only worsens: The beneficiary Mexico still gets help from workers’ pay, while the benefactor United States does not collect taxes.<\/p>\n Along with the lack of English, illegal status and insufficient education, remittances explain the poverty of many Mexican aliens in the U.S. In the American Southwest, it is now possible to see apartheid communities of Mexican nationals whose standard of living does not meet national norms.<\/p>\n Americans are often blamed for such disparities, as we saw in the recent immigration protests. But the tragedy is more complicated than the failure to offer workers sufficient compensation \u2014 especially when such communities are often the recipients of millions in federal dollars to improve schools, roads and police forces that cannot be maintained through customary taxation of local residents.<\/p>\n It might be cruel should remittances somehow come to an end. But it may be even crueler in the long run not to deal with a broken system that facilities such massive transfers \u2014 both for millions here in dire need of retaining all their earnings, and millions more in Mexico in more dire need of vast structural reform.<\/p>\n \u00a92006 Tribune Media Services<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" Relying on oil and illegal workers’ wages leads to long-term disaster. by Victor Davis Hanson Tribune Media Services Economists have long pointed out that relying on oil as a natural resource can be a long-term disaster for a developing nation.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[774],"tags":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p466Sb-12o","jetpack_likes_enabled":true,"jetpack-related-posts":[{"id":1424,"url":"https:\/\/victorhanson.com\/wordpress\/obamas-economic-quackery\/","url_meta":{"origin":3992,"position":0},"title":"Obama’s Economic Quackery","author":"victorhanson","date":"November 25, 2011","format":false,"excerpt":"by Victor Davis Hanson National Review Online Sometimes the wrong medicine can make a struggling patient far sicker than he would have been had he been allowed to recover naturally. 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Obama\u2019s Real Legacy Barack Obama\u2019s cries from the heart as a senator about the possibility of a Bush intervention in Iran being a\u00a0de facto\u00a0violation of the War Powers Act have been widely circulated\u2026","rel":"","context":"In "First Term Policies"","block_context":{"text":"First Term Policies","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/obama-administration\/first-term-policies\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":748,"url":"https:\/\/victorhanson.com\/wordpress\/can-california-be-fixed\/","url_meta":{"origin":3992,"position":3},"title":"Can California Be Fixed?","author":"victorhanson","date":"May 29, 2012","format":false,"excerpt":"by Victor Davis Hanson NRO's The Corner Recently, I was driving down pot-holed, two-lane, non-freeway 101 near Monterey (unchanged since the 1960s) when the radio blared that on a recent science test administered to public schools, California scored 47th in the nation. As I looked at the congested traffic on\u2026","rel":"","context":"In "California"","block_context":{"text":"California","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/california\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2723,"url":"https:\/\/victorhanson.com\/wordpress\/the-department-of-food-subsidies\/","url_meta":{"origin":3992,"position":4},"title":"The Department of Food Subsidies","author":"victorhanson","date":"June 28, 2011","format":false,"excerpt":"by Victor Davis Hanson Tribune Media Services The Department of Agriculture no longer serves as a lifeline to millions of struggling homestead farmers. Instead, it is a vast, self-perpetuating postmodern bureaucracy with an amorphous budget of some $130 billion \u2014 a sum far greater than the nation's net farm income\u2026","rel":"","context":"In "Debt and Deficits"","block_context":{"text":"Debt and Deficits","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/politics\/debt-and-deficits\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2408,"url":"https:\/\/victorhanson.com\/wordpress\/the-false-wwii-analogy\/","url_meta":{"origin":3992,"position":5},"title":"The False WWII Analogy","author":"victorhanson","date":"August 28, 2011","format":false,"excerpt":"by Victor Davis Hanson National Review Online Since 2009, the example of the economic boom following World War II has been used by Keynesians to justify their record \u201cpeacetime\u201d levels of borrowing intended to lift the US out of the doldrums. 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