Michael Swickard
Note: what should we call people who are in our country without legal status? Undocumented immigrants? How do we know they intend to immigrate? I use the term: Without Legal Status.
The informal economy in our country thrives without our government having any control of it. It hovers at the edge of our society. This informal economy trades in services and products person to person. Often based in barter, when it is financial the transactions are not reported to our government, nor are taxes paid.
Most of us are more familiar with the formal economy of our country, which includes transaction and income taxes, work rules, business regulations and control of the operation of the economy by the government. Many people participate in the informal economy, but one group uses it the most: people in our country without legal status. If our country did not have a vibrant informal economy, many without legal status would not stay.
In debates about immigration “reform” there is scant acknowledgment of this perspective by those who, for political reasons, do not want our immigration laws applied equally. They contend that to apply immigration laws equally is a racist act. That argument is just politics.
Many people over the years have come to our country without securing legal status and did not take citizenship the last time it was offered. They informally harvest the bounty available in our country. It is important to distinguish that while some people want American citizenship, there are others who do not.
Being without legal status does open these people to the possibility of financial or physical abuse, but that risk seems worthwhile to some who are intent on making money to send back home. These people use the informal economy because they get to keep all of the money they make; they do not pay income taxes.
They prosper in our country because they get lots of “free” stuff such as medical care and education for their children. They are pawns in the political battle between Republicans and Democrats. The government in their own country does not give these things to people in their country without legal status. Especially those from Mexico juke our system in hundreds of ways while Mexico itself allows none of this.
Why not live in an informal economy?
Amnesty will not result in all becoming citizens because some do not want to divide their income with our government. They may continue with their informal economy and ignore the citizenship offer. They may say they do not trust the government but, in reality, our government is just not offering them what they want.
Many are here to make money and send it home. When they have made enough money, they will return to their home countries and live better lives because of their time in our country.
I do not blame these people; I blame the politicians who have created an environment that functions so perfectly for people without legal status. Example: If every time they tried to enter our country outside of our legal channels they were caught, most would stop trying.
Still, I wonder if there is something in this debate about people without legal status that could transfer to our larger national debate about the legitimate role of government in our lives. Why not live in an informal economy as they do since our government does not seem to care?
Note that in the informal economy there is a premium on the concept that both parties must prosper in every transaction. Economists call this a positive sum gain. Example: If a grocer sells someone food the grocer has lots of food and no money while the person has money and no food. Both walk away from the transaction made better. Know this: Neither will continue to trade very long unless both are able to prosper.
Win/win situations are what made our country great. The value of win/win is well understood by our visitors. However, in the formal economy the government takes a significant portion of every transaction, which affects or can even cancel some transactions because the huge tax bite may not leave enough in the deal to be enticing for either party. The informal economy is so vibrant because it is almost always win/win.
Trying to make enough money
For many of us citizenship is a concept of higher-order thinking where we talk about liberty. Other people have little interest in theoretical concepts and are just trying to make enough money to live comfortably. What is comfortable? Depends on where you came from and where you want to be.
Early in life I did manual labor. At the time I set my sights on jobs I would enjoy better, but I needed the money right then. I was not focused on economics; I was focused entirely on my needs. I understand people who keep their eye on the prize, and it is economic freedom back in their own country.
There is a lesson to be learned. These people walk across scorching deserts to be part of our informal economy. They take jobs many of us do not want. They mostly do without so they can send the bulk of their money home. Most importantly, they rely on our informal economy to make their lives work.
Rather than be troubled by those without legal status, maybe we should step back from the debate and learn from their use of our informal American economy.
Swickard is a weekly columnist for this site. You can reach him at michael@swickard.com.
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