Immigration reform, an alternative to foreign aid? small steps toward a balanced budget

Posted on March 30, 2010 by

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Immigration reform, an alternative to foreign aid? – Part 3
By Orphe P. Divounguy

From my previous articles, it is easy to understand why the migration of high skilled workers would clearly improve the standard of living of many abroad. Remittances as a result of skilled workers migration are simply more effective in eradicating poverty than official aid. Official aid rarely reaches the poor, and it also promotes the wrong incentives. African governments have come to rely on these flows rather than to enact policies that encourage private sector development and productivity. Remittances on the other hand, cut the “middle man” government, and reach households directly affecting regions where these flows are needed the most. Remittances enter the household budget constraint in such a way that they are able to invest more resources in human capital accumulation (education). Remittances give poor households access to financial services, spur investment/savings and help to develop the domestic private sector. According to the World Bank, remittances accounted for 305 billion US dollars in private flows to developing countries in 2008, and immigration reform that favors skilled worker immigration would increase these remittance flows.

From reading the responses to my article, I feel that I have not made a strong case to demonstrate why Americans would benefit from the immigration of skilled workers from abroad. When I mention immigration reform, I can sense that people get very tense; it seems to be a very delicate issue. Is it a fear of the unknown? Is it truly like inviting a stranger into your home? Some people think that allowing foreigners to come into the US implies either having to support them, or that they’ll take away our means of subsistence (jobs). The US government has attempted for more than 2 decades to stop illegal immigration from Mexico and most of the current measures have simply resulted in undocumented aliens driving wages down. If these immigrants had come into the US as legal workers, they would have not started this downward trend in wages, they would have taken up jobs at the same wage that American workers enjoyed. According to a report by the Center for American Progress published in January 2010, immigration reform would raise the “wage floor” for the entire US economy, to benefit both immigrant and native-born workers. I believe that it’s time to enlighten the American people on the benefits of Immigration reform. Although I am a strong believer that we benefit from all immigration, high skilled and low skilled, the scope of this article is to demonstrate how high skilled worker migration can not only contribute to the global effort to eradicate poverty and drive development in the world’s least developed countries but also improve the standard of living here in the US.

According to the recent report by the Center for American Progress, comprehensive immigration reform would yield at least 1.5 trillion in cumulative US gross domestic product over 10 years. This is a compelling economic reason to move away from our current policy that is costly, ineffective and so restrictive that we end up with millions of illegal workers driving down our standard of living. Our national debt currently amounts to approximately 12.6 trillion US dollars and additional revenues in the form of tax receipts would help reduce our yearly deficits. In addition to the tax receipts benefits of such policy, eliminating our ineffective foreign aid policy would cut spending by approximately 17 billion US dollars every year, almost 10% of the 2010 projected deficit. Cutting foreign aid while allowing for skilled worker immigration would lend a hand to the efforts to balance the administration’s yearly budget and cut down the US national debt.

The Center for American Progress, Immigration policy center report entitled Raising the Floor for American Workers can be viewed online at: http://www.americanprogress.org/issues/2010/01/raising_the_floor.html

The World Bank reports and statistics on remittances can be viewed online at:
http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:22115303~pagePK:64257043~piPK:437376~theSitePK:4607,00.html

To be continued …

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