www.JoeCobb.com

Here in Arizona, it is no surprise that many illegal immigrants are young workers, and some of those seek agricultural employment. Back in 1982-83, when NAFTA was first being talked about, I was working in the State Department. We talked about the comparative advantage of more open trade to each country, and one of Mexico’s advantages is agriculture - climate and low cost labor.

Yet, in the past 20 years, the U.S. Senate (in particular) and the House have continued to increase subsidies for agriculture. Look at the votes of the Senators from Southeastern and North Central agricultural states, which are losing population due to increased productivity in agriculture. Less labor is needed; fewer jobs; Americans are moving to cities and low cost labor is no longer plentiful on large farms when seasonal demands arise.

Subsidized changes in the United States have also affected Mexico’s economy.

Rural Mexican farmers have been particularly hurt by the removal of import duties and quotas. Mexican city dwellers are benefitting from lower food prices, but rural farmers are suffering a drop in their monetary income, although in their villages they are still self-sufficient but at a poverty level.

Part of the “transition costs” in any opening of trade is the adjustment that formerly protected domestic industries must face. In Mexico, the adjustment for rural Mexico has often been that U.S.-subsidized corn, beans, and rice are cheaper in the cash/city market than home grown staples. Transportation and storage costs are also a factor, since efficient systems from the U.S. displace more primitive delivery from rural Mexico.

Labor productivity in rural regions of Mexico is often low, as Nobel-laureate Theodore Schultz demonstrated by his research into “penny agriculture.” There is not sufficient marginal incentive for those workers at home. They look north for job opportunities, in American subsidized agriculture and more advanced work, like construction - subsidized by our residential housing angels, Fannie Mae/Freddie Mac?

Why are these Latino workers “illegal”? It is because for the next 20 years the racial/national visa quota from Mexico has been filled up by the elderly relatives of their green-carded children and grandchildren already here, under the “family unification” prime directive of U.S. immigration law. There are no available visas for young workers - the kind who might legally save Social Security’s solvency. There are no legal work visas.

So, thank you, agricultural (corporate?) welfare queens, and U.S. Senator Join Kyle. You have given us not only more expensive food, but also an illegal immigration problem. [see my further comment below, about Kyle]

This entry was posted on Sunday, December 17th, 2006 at 10:10 pm and is filed under Economics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.