Trump's Bad Border Idea Gets Worse
Another incendiary proposal.
Amazingly, Donald Trump has taken a bad idea and made it worse. His plan to get Mexico to pay for a wall along the border -- by effectively requisitioning the earnings of Mexicans working in the U.S. -- would undermine not only his goal of reducing illegal immigration, but also a powerful and efficient force for good in the world.
Trump is certainly correct that cutting off U.S. remittances would hurt Mexico. In 2015, the $25 billion that Mexicans working in the U.S. sent across the border accounted for roughly 2 percent of its gross domestic product.
Overall, the roughly half-trillion dollars of remittances that migrants send to poor countries each year far outstrip foreign aid and investment and provide direct assistance to those who need it most. And when people send money back home, they may make their families more willing to stay there.
Just last year, Congress appropriated some $750 million dollars to El Salvador, Guatemala and Honduras precisely to address the violence and poverty that have sent so many of their citizens fleeing northward. But even that generous investment amounted to only one-fifteenth of what those countries received in remittances last year. In Mexico, many of the 6 million households that receive remittances rely on them for half their income.
Never mind the impact of Trump's plan on U.S. relations with its neighbor, or the numerous legal obstacles at home, or the staggering impracticalities of carrying it out. From a purely economic perspective -- surely one that Trump can appreciate -- it makes no sense.
Rather than threatening to block remittances, the U.S. should be advancing efforts to ensure that they provide productive capital for businesses, jobs and infrastructure. Initiatives to encourage remittance recipients to deposit the money in banks, for example, would help, as would spurring competition to reduce transaction fees or encouraging the creation of "diaspora bonds" that channel savings into national development.
That kind of effort would help the U.S. both directly and indirectly, bolstering partners and winning more buyers for U.S. products. For it to be successful requires building more bridges, not walls.
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