Thread: How immigration and inflation are linked

How immigration and inflation are linked
Submitted by SHNS on Wed, 02/20/2008 - 13:32. By BONNIE ERBE, Scripps Howard News Service editorials and opinion

The two "i" words are back in the news, one more prominently than the other. The more prominent is "inflation." The less prominent at the moment is "immigration" (of the illegal variety). The two issues are more closely tied than one would think. None of the three remaining major-party candidates for president has a realistic plan to resolve immigration's contribution to the problem.

Inflation moved from minor concern to major concern this week for the Federal Reserve Board. Chairman Ben Bernanke has aggressively cut interest rates by 2.25 percent since September to try to prevent an economic implosion. But he has to balance recession concerns against the possibility that deep interest-rate cuts might also pump up inflation, as the January report on consumer prices showed a surprisingly steep rate of 0.4 percent. Wall Street fears deep cuts in interest rates might serve to trigger inflation while simultaneously failing to spur growth. Then Americans could end up hearing a revival of a word we haven't heard in a few decades: stagflation.

How are illegal immigration and inflation tied together? In 2005, Bear, Stearns Senior Managing Director Robert Justich and a team of his economists issued a study on the impact of illegal immigration on U.S. economic indicators. They found that undocumented immigrants account for some 8 percent of American workers, a much higher figure than the government reports. Justich's report explained that the number of people counted in productivity calculations is artificially boosted when there are more people working than are reported to the government. American productivity is based on the amount our economy produces divided by the number of people working. If there are a lot more people working than the government takes into account, this makes productivity look artificially high. It can also help to conceal underlying inflation.

My personal belief is that inflation is and has been a lot higher than the government has been reporting, and undocumented workers play a large part in concealing the true inflation rate.

How would presidential candidates Barack Obama, Hillary Rodham Clinton and John McCain deal with illegal immigration? In remarkably similar fashion and, at the same time, ineptly. All three want some form of increased border control and a "path to citizenship" (to wit, amnesty) for everyone already here illegally. Their plans sound alarmingly close to the 1986 Immigration Reform and Control Act, which failed miserably in preventing two decades of increased illegal immigration. And so will amnesty in this decade.

The Associated Press reported on Tuesday that Obama was in San Antonio saying immigration should not be used as a "political football" and that he supports "border security ... combined with a pathway to citizenship for people who are already in the U.S."

Isn't that a political football in and of itself, designed to appeal to open-borders voters? Of course it is.

Just as Obama has succeeded in taking race out of the equation in his presidential campaign, whoever becomes president will need to take race out of the immigration equation in order to resolve this festering issue. As the proud granddaughter of a Cuban immigrant, I support a serious crackdown on illegal immigration coupled with a U.S. effort to spur economic growth in countries whence immigrants flee, so they can find decent jobs in their homelands. That is what they truly want and need. If we don't stop purposefully luring illegal immigrants into the United States (by offering them wages they can't make at home and benefits they'd never receive from their own governments) the quality of life for today's immigrants, their children and grandchildren will continue to deteriorate.

Any realist recognizes the "political football" crowd will win, our borders will not be secured anytime soon and the United States will not make a serious effort to help undeveloped nations bolster their own economies. But without finding a workable solution to the "immigration" issue, we must also assume the "inflation" issue will dog us for some time to come.

(Bonnie Erbe is a TV host and writes this column for Scripps Howard News Service. E-mail bonnieerbe(at)CompuServe.com.)
http://www.scrippsnews.com/node/30874

Another great post, Thanks zeezil.

GO RON PAUL!

My personal belief is that inflation is and has been a lot higher than the government has been reporting, and undocumented workers play a large part in concealing the true inflation rate.

True. Look at the cost of, for example, food & items in grocery stores.

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NO AMNESTY in any way, shape or form !