Time for a Tex-Mex Marshall Plan

By Steven Hill, Washington Post, April 23, 2006

Immigration issues are always ripe for demagoguery, particularly in an election year. But the solution to the very real problems along the U.S.-Mexican border can be found, ironically, in that other part of the world that American demagogues love to ridicule: old Europe.

Two years ago, the European Union admitted 10 new members. Like Mexico, all of these nations were poor, some of them fairly backward and most recently ravaged by war and communist dictatorship.

To deal with the situation, the leaders of the European Union wisely created policies for fostering regional economic and political integration that make efforts such as the North American Free Trade Agreement “look timid and halfhearted by comparison,” according to Bernd Westphal, consul general of Germany.

Europe realized it had to prevent a “giant sucking sound” of businesses and jobs relocating from the 15 wealthier nations to the 10 poorer ones. It also had to foster prosperity and the spread of a middle class in these emerging economies and prevent an influx of poor workers to the richer nations.

So for starters it gave the new states massive subsidies — billions of dollars’ worth — to help construct schools, roads, telecommunications and housing, thus making these nations more attractive for business investment. The idea was to raise up the emerging economies rather than let the advanced economies be dragged down. It was expensive, but the result has been a larger economic union in which a rising tide floats all boats.

In return the 10 poorer nations had to agree to raise their standards on the environment, labor law, health and safety — and more. The incentive of admission to the European club was used as a carrot to pull the poorer nations toward acceptance of human rights and political democracy. There won’t be any border maquiladoras in the European Union.

Worker migration still is regulated. Immigrants will be carefully integrated so as to cause the least amount of disruption to the developed economies, with the goal of having open borders within a decade or two.

This bold yet carefully planned E.U. approach suggests the direction that policy between the United States and Mexico should take. Increasingly the demands of the global economy will push North American regional integration out of the realm of a shadow economy and flawed free trade agreement. But what might such an American-Mexican union look like?

It would start with massive subsidies from the United States to Mexico, a Tex-Mex Marshall Plan, with the goal of decreasing disparities on the Mexican side of the border and fostering a climate riper for investment. This would create more jobs in Mexico and foster a middle class, homeownership and better schools, roads and health care. Fewer Mexicans would then want to emigrate north. Instead, they’d stay home, becoming consumers of U.S. products.

But Europe’s union is not just an economic one. It also includes continent-wide political institutions for all 25 nations. As American-Mexican economic integration unfolds, regional political structures also make sense to allow better coordination and supervision of the regulatory regime and common goals. Canada, not wishing to be left out, would ask for inclusion.

And here’s an even more intriguing possibility. We always assume that opening the border means hordes of Mexicans streaming north, but under this scenario, more Americans also would begin emigrating to Mexico. With the cost of living spiraling along the U.S. coasts and in U.S. cities, many Americans would find not only the cheaper prices but also the warm climate and palm trees of Mexico a more attractive alternative than relocating to South Dakota or Kansas.

Call it the Mexican safety valve, with American workers migrating to Mexico in search of jobs, homeownership, even to start businesses. In other words, they would chase the American dream in Mexico. Already we see the beginnings of this, with American expatriate communities springing up around cities such as Guadalajara.

The Census Bureau predicts that by 2050 the number of Latinos and Asians will triple in the United States and non-Hispanic whites will make up only 50 percent of the nation’s population. For many people, these changes are alarming, but economic disparities guarantee that poor Mexicans will continue seeking entry into El Norte, legally or illegally.

Given these demographic realities, gradual integration of the American and Mexican economies is the only sensible solution. Of course, U.S. politicians are reluctant to talk about this levelheaded approach, preferring to stick to bumper-sticker slogans and avoid the reality of border issues.

In the meantime, the United States is missing out on huge economic opportunities while the European Union has grown to the largest trading bloc in the world, poised for the 21st century. Old Europe is looking spry on its feet, while the United States is looking clumsy and stuck to the flypaper of old ideas.

The writer is director of the political reform program of the New America Foundation and author of the recently published “10 Steps to Repair American Democracy.”