immigration crisisThe immigration crisis on the U.S.-Mexico border these days is an odd one. Adherents of the party of free-enterprise, the Republicans, are opposed to the migration of free labor across the border, arguing that agents of the state should stop people and turn them away, if not submit them to government justice. Meanwhile, the party of big government, the Democrats, says live and let live.

Who knows what President Obama is up to in an episode that is perhaps reminiscent of the Mariel boatlift, all this swelling of migrant population into the U.S., in particular in south Texas. It’s probably of a piece with his fake talking up of Republican efforts toward impeachment. At this point in his failed presidency, Mr. Obama must want the opposition to look bad just like him, callous and weird.

The stupefying thing is how Republicans are prone to be led like lambs to the slaughter on this matter. The mass of newcomers to the United States across the Rio Grande and then the land border clear to San Diego gives rise to insistent, if not angry demands to “secure the border.”

If Republicans were true to their nature, they would certainly not be outraged at throngs careening across the border. They would assume that this is the natural course of things. America is the land of opportunity. Any outrage would be trained at forces within this country that did not conduce to a surplus of opportunity, specifically jobs, to meet and greet these people.

Of all the failures of the Obama presidency, the most characteristic, the one the president really owns, is the jobs crisis. Something like eleven million jobs have evaporated against the trend line since early 2009. At least that number of individuals work for pay and hours significantly less than they would like to.

ellistopx-topper-mediumThe proper outrage about the border crisis is that there is not an abundance of useful work waiting for people as they bound into the United States. This has, after all, been the standard circumstance of the great eras of immigration in American history, such as the heyday of the Statue of Liberty a hundred some years ago, when the point of this country was to soak up immigrants on account of all the great work to be done here.

The reason we have a border crisis is that we have a jobs crisis. Were there no jobs crisis (as there would not be had the government been modest with things like monetary, fiscal, and regulatory policy), all the newcomers on the border would slip into positions wordlessly, to the enhancement of the general prosperity, not to mention the culture. The dereliction of duty in this fiasco resides with the government. Not that it failed to secure the border (a phony concept), but that it prevented no less the American economy from achieving its fullness.

You might ask, why then are all these people bounding into Texas? Isn’t there a jobs crisis?

Well, no, not in the regions of this nation’s oil and energy patches. As has been touched upon in this space previously, the distended dollar policy of the United States of late has resulted in a surge in hedges against the dollar, the favorite of which is petroleum. Those regions of the country rich in such hedges have seen a fickle boom in their economies. Texas has therefore attracted the immigrants.

Only the government could have cooked up something this mad. First the United States causes an investment and jobs disaster by failing to care about maintaining the dollar as a criterion of value. This results in inordinate capital allocation into dollar substitutes, namely oil, the prime location of which is next to Mexico. Labor comes in from that country, and TV-watchers north of the border get outraged. The story is a comedy. The butts of the joke are two: the government and those who say it should do more.

In the most important article written on monetary policy since World War II, “A Theory of Optimum Currency Areas” (1961), Robert A. Mundell made the point that the natural area of a single currency is that where labor is generally mobile. If people are crossing point X all the time to work and trade, it would be economically inefficient to have different currencies on either side of X. The example Mundell used in his article (which prompted his Nobel Prize in 1999) was North America.

In an earlier era, Robert Mundell was a Reaganite hero (he did, along with sidekick Arthur B. Laffer, found supply-side economics), and conservative intellectuals like Robert L. Bartley of the Wall Street Journal made clear that a government committed to being limited must ease up on border security.

If the Republicans are the party of free enterprise, they should prefer the minimization of the state and the maximization of opportunity. With respect to the border, this would translate into a lesser federal presence on the Rio Grande and points west and to happy private transactions across the territory.

The funny thing about the U.S.-Mexico border is that its very rise and existence was a chief reason this country decided to have an income tax, that blasted thing. Previously, borders along the United States that were subject to traffic were seaports. The government relied on tariffs for most of its revenue, and these were easy to collect since seaports were few in number and obvious.

With the land border with Mexico (which the U.S. procured by war in 1848), and with the two more of equal length that Canada got busy making with the U.S. (the one against the lower 48 states and the other against Alaska) as it made its bid to go a mari usque ad mare to stave off American expansionism after 1867, it became ludicrous to stop “contraband” coming into the country. What are you going to do, police every merchant hoofing wares into New Mexico, let alone Montana?

In 1913, the United States punted and adopted the income tax, where American citizens would be directly taxed, since the border had gotten too much to handle. Weirdly, in that year we also got the Federal Reserve, which implied (pace Mundell) that the currency could be managed domestically, according to these artificial lines drawn on the map that corresponded to nobody’s way of doing business in real life.

These Republicans, these conservatives today who are up in arms about the new Mexican immigration had better check their bona fides. Proper free-marketeers love the sound of human capital. America is nothing—certainly not the best country in the world or the last best hope of earth or anything like that—without profound economic growth and a big openness to immigration.

Books on the topic of this essay may be found in The Imaginative Conservative Bookstore. Republished with gracious permission of the author. 

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