Mexico's Addiction to U.S. Dollars

Victor Davis Hanson writes today about the problems in the Mexican economy, and how billions of U.S. dollars sent back by illegal aliens are only serving to mask big problems:

Mexico also suffers from this unhealthy oil-exporting syndrome, as the government uses profits from its inefficient state-run industry to spread around subsidies in lieu of enacting long overdue wealth-creating measures. But worse still, Mexico suffers a double whammy by also receiving between $10 billion and $15 billion annually in remittances from its expatriate population in the United States.

Exporting its own poor turns out to be about the cash equivalent each day of selling on the open market about half a million barrels of $70 a barrel oil. The muscles of Mexico's former residents can prove just as deleterious as oil derricks to the long-term health of the country's economy.

[...]

The billions of dollars Mexicans in the U.S. send back to their country pose another economic and ethical dilemma. Many illegal aliens in the U.S. allot nearly half their weekly paychecks to relatives in Mexico. But such deductions come right out of the workers' food, housing and transportation budgets here. So to survive, illegal aliens in the U.S. must endure cheap, substandard and often overcrowded housing. They cannot easily purchase their own health care or invest in safe and reliable cars.

Because the United States is a caring nation, the state often intervenes to offer illegal aliens costly entitlements - emergency-room medicine, legal help and subsidized housing and food - that provide some sort of parity to all its residents.

And when aliens are often paid in cash - that is off the books - the problem of remittances only worsens: The beneficiary Mexico still gets help from workers' pay, while the benefactor United States does not collect taxes.

Read the whole thing.