August 23, 2007

Christian outrage over cartoon of prophet - demand resignation of editor

Just in case anyone thought it was a muslim thing, cue the christian faithful getting all hopped up over a cartoon of Jesus holding a cigarette and a beer. The editor of the offending paper immediately apologized for what he claims was an honest mistake, i.e. he wasn't trying to prove a point or trying to goad Christians. Yet the bishop doesn't seem inclined to forgive. WTFWJD?

August 19, 2007

Things that annoy me - part 2

"Kid Nation". Un-be-lie-va-ble. Take 40 kids, ages 8 to 15, plunk them in a ghost town in the middle of the desert for 40 days to build a city. Working from dawn to dusk, doing anything that needed to be doing, without being shown how, or being supervised. Film it all, reality-TV style and bam, you have a "show". There are some drawbacks, though. Such as:

Several children required medical attention after drinking bleach that had been left in an unmarked soda bottle, according to both the parent and CBS. One 11-year-old girl burned her face with splattered grease while cooking.

Ok. I am not really surprised that CBS tried to do the show. I'm sure they get pitched even more despicable and illegal schemes all the time. But I can't imagine that their legal department let it through. It is simply inconceivable that they didn't know that accidents were very likely. As it is, they got lucky. Well, relatively speaking. And the fact that the parents allowed this is no excuse. Digging up 40 families with more greed than common sense isn't hard.

Oh, yeah, here's the best part: they filmed this thing over 40 days in April and May, i.e. IN THE MIDDLE OF THE SCHOOL YEAR! And no one noticed. Oh, and for legal purposes they declared it a summer camp. Early summer, this year, isn't it?

I understand there are bad parents everywhere, and corporations are by definition immoral. But I don't understand why a nation would allow its children to be exploited and abused. The least they can do is forbid the broadcast, fine CBS and have DCFS review each one of the families that participated. The charges? Child endangerment, child neglect, child abuse and violation of child labor laws.

And get a load of this pearl of wisdom, courtesy of a CBS representative:

Mr. Anschell also said that state labor laws did not apply. “The children were not employed under the legal definition,” he said. “They were not receiving set wages for performing specific tasks or working specific hours.”

Isn' that slavery, then? Well, not really, because Mr. Anschell is lying. The kids received a stipend of 5,000 USD for their participation, and could earn a gold star for each episode, worth 20,000 USD each. The excuse that the kids weren't doing a specific task, just surviving and acting, or that they were not working specific hours, just from dawn to dusk, seems a little thin.

Disagree? Hey, sign up your kids for Kid Nation 2.

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Faking your own death for what?

After reading on a blog that wireless companies would cancel the contracts of deceased customers, "I thought, 'What have I got to lose, besides a cellphone I despise?' " Taylor said. The Chicago consultant fashioned a fake death certificate and had a friend fax it to Verizon Wireless, his carrier. He thought he was in the clear -- until the company caught on.

Ugh. What the heck? How stupid can you be? I do hope he's being sued for fraud as well. Breaking a legally binding contract is a serious offense.

It's rather simple: you pay less for your phone, if you sign a relatively long contract. In some countries, this practice is illegal, but in the US it is common, and I can't imagine that there is anyone that doesn't know why they get a discount. You get a BlackBerry curve from AT&T for 300 if you get a 2 year contract. If you don't want that contract, you pay 450 for the same phone. How hard is this to understand? Of course you pay at least 150 when you break your contract.


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August 14, 2007

What's NOT wrong with Detroit

From Kaus's redux of GM's predicament:

"apparently the total labor cost for a GM hourly worker ( including health, pensions etc.) is about $146,000 per year. They're competing against Toyota and Honda who pay $96,000 per year--on equally American workers in American factories. Much of this disparity is in health care costs, something that would be fixed if the government took over that burden. But, according to CNN (citing Harbour-Felex data) $630 per vehicle is for union-negotiated "issues like work rules, line relief and holiday pay," while "paying UAW members for not working when plants are shut costs another $350 per vehicle."

Various calculations put the difference in profit per car on average at 2900 USD.

I agree with Kaus that American cars aren't made of more expensive materials. As Kaus says, if American cars could spend another 1,000 USD per car on better materials, some of their cars might be a bit more attractive. But I don't think that that means that the final cost of the car is due to employee salaries. After all, GM's total expense on wages and healthcare is around 20 billion USD per year, which is only around 10% of its total costs. Since it takes about 30 hours to manufacture a car, an hourly worker making 73 USD an hour (blue collar average pay AND BENEFITS for US carmakers) contributes 2190 USD per car for an American car. At 44 USD an hour (blue collar average pay for Japanese carmakers), it contributes 1320 USD an hour. That's a difference of 870 USD per car that comes from blue collar pay and benefits. So there must be other reasons why GMs cars are so much more expensive to make.

One of the ways to lose money is by operating many brands. Toyota has three brands, worldwide: Toyota, Lexus and Scion. Honda has two: Honda and Acura. GM has 11 brands! Buick, Cadillac, Chevrolet, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn and Vauxhall. With 284,000 core employees worldwide, producing about 9 million cars per year, GM is spreading its engineering talent very thin. Toyota has slightly more core employees (299,000), turning out about the same number of vehicles, but they are centered in only three brands, all of which have relatively small product line-ups.

I believe that the limited number of platforms lies at the root of many other differences between the American and Japanese cars. Less platforms means more time spent engineering them. So the quality can be higher and more thought can go to making production more efficient and cheaper. Newer products come faster, perpetually putting competitors at a disadvantage. Fewer products means less attention to niche markets, which are always expensive to cater to, and more attention to what most people appreciate: quality, longevity, fuel efficiency and price. GM's shotgun approach to marketing simply isn't as efficient as Toyota's sniper attacks.

A direct consequence of spending more time engineering fewer platforms, and of building fewer different platforms, is that it takes less time to build a car. The hard numbers for that are telling. In North-American plants, it takes Toyota 29.93 hours to build a car, whereas GM takes 32.36 hours, 2.43 hours longer. This 8% to edge in productivity goes a long way in explaining the 10% edge in total profit that Toyota has. Oh, and Ford takes 35.10 hours - 17% longer than Toyota. Of course, it could be that Toyota is spending more money on non-labor improvements of its factories. Better automation increases productivity. If the cost of the increased automation is less than the cost of the hours of work saved, it helps profitability. Unfortunately I didn't find capital equipment expense data yet, but I don't think it will matter. Simply looking at capacity utilization points out another place where American manufacturers lose money hand over fist. Toyota runs its plants at 103% utilization, i.e. they work overtime to keep up with demand. The best of the American manufacturers (GM), runs its plants at 93% of capacity. That's 7% of GM's invested capital that is sitting idle, while Toyota's dime is working overtime. Ford sidelines an impressive 23% of its manufacturing capacity. This is a huge cost factor. So while it could be that Toyota buys more automation equipment, or at least uses what it has much better (by, for example, engineering the cars better), all of their equipment is used to more than its capacity.

Note that there are many ways to measure productivity, some of which are susceptible to outsourcing of body parts, which is something American producers are more prone to doing. Some of those productivity measures have GM running neck-to-neck with Toyota. But that ignores the outsourced parts. The drawback of outsourcing core components shows itself here. In principle GM could play one parts provider against another in order to force them to become leaner and meaner. But there aren't that many parts providers, and having more than one source for the same part is risky (higher variability), and changes in the components are more difficult to manage.

Comparing the salaries is not that simple. First of all, Toyota manufactures in places like Huntsville, Alabama and Blue Springs, Mississippi. Those are cheaper places to live than Detroit, MI, as you can tell from cost of living calculators. Toyota also still imports a larger fraction of its content, which helps as long as the yen remains relatively weak. And GM having many retirees to support is only the tip of the iceberg: being fairly recent, the Japanese plants have a younger workforce, which is obviously cheaper (less seniority, less illness). At least that advantage will become smaller with time.

According to the CNN article that Kaus refers to, the difference in PROFIT is on average about 2900 USD per car between Japanese and American carmakers. With the average price of a new car being 28,400 USD (FTC data), that's about 10% of the price. The article blames healthcare for most of the difference between US and Japanese companies - 1635 USD per car for GM compared to 215 for Toyota. But that pretends that Toyota-US is a fully independent company, which it is not. Toyota pays for healthcare of its workers in Japan through corporate taxes, which run a healthy 40.9%. This year, Toyota is paying 7.6 billion dollars in taxes, whereas GM will pay only 2.8 billion dollars in taxes. That is 533 USD in taxes per car that Toyota pays more.

A closer look to the income statements shows another crucial difference in the way the two corporations operate. GM operates under a vast debt load, run up through chronic mismanagement. This interest alone translates to a whopping 12 billion dollar expense each year. Toyota, frugal all along, only pays less than half a billion in interests. This means that the debt load of GM is adding 1278 USD to the cost of each car.

Toyota has a younger workforce than GM, located in cheap, rural areas, which explains why its workers are cheaper. It only manages three brands, offering a very limited number of vehicles in each class, allowing it the advantage of scale and focus. It utilizes its capital equipment better than GM, and vastly superior to Ford or Chrysler. Most importantly, it carries no debt. All these things help explain why its costs on each car are lower than GM's.

However, this is only half the story. Bigger scale for each model, better management of resources and a better fiscal position explain why Toyota is currently in a difficult to assail position now. But how did it get there? The focus on fewer brands and models, in short. It forced them to focus on the big middle market. And they realized that most consumers don't want choice. At least not choice just for the sake of choice. They want a car that is first of all reliable and cheap to run, not excessive in any aspect. Something that feels solid and quiet, and looks expensive but isn't. With sensible packages of options. Everything else is gravy.

But we're still not at the end of this issue. We're trying to explain a difference in profitability, and we've only discussed costs. If costs were really the only problem, then we could expect costs for a GM car to be higher than for an equivalent Toyota car. But we would expect the GM car to fetch the same price. And it does not, not by a very long shot. For example, the Chevy Malibu is a midsize family sedan, in principle competing against the Honda Accord and the Toyota Camry. I say in principle, since in reality, you can have any Malibu for two to three thousand dollar less than a similar Accord and Camry, and even then they don't sell in nearly the same quantities.

That is the cost of decades of brand neglect. Made in Japan used to be a joke. Right now, it carries a price premium of thousands. And that, unfortunately is the other reason that Japanese car makers are so much more profitable. To reverse that, GM, Ford and the DamnedChrysler need to pull off what Toyota and Honda did in the Eighties: turn their brand name from a joke into a badge of honour. That won't be accomplished by squeezing American workers further, but by producing better products.

August 06, 2007

Turkey into Iraq

It was long predicted, and frankly, I have been extremely surprised by the reticence of the Turkish army. They have given the US plenty of time to start tackling the terrorist safe havens in Iraqi Kurdistan. Because, despite all the talk about Kurdistan being the one part of Iraq where things are going well, the Kurdish areas are full of terrorists.

Some background. The Kurdish areas of Iraq have long been staging areas for the PKK, a Kurdish "rebel" organization that mainly fights in Turkey. I am sympathetic to their basic cause, as Kurds have been horribly mistreated by Turkey (and Iraq, and Iran), but they have simply committed too many terrorist acts. They are widely regarded as a terrorist organization, including by the US.

Within Iraq, the Kurdish areas have been ruled by the PUK and the KDP. Those are authoritarian, self-serving parties that have fought each other (and any other comers) for decades to gain control over areas of Iraqi Kurdistan. While their armed forces (peshmerga) generally fought as disciplined guerilla forces, they did resort to kidnapping and other dubious tactics at some points. The KDP worked close enough with the PKK to have its bases in Iraq attacked by Turkey.

In the Iran-Iraq war, both Kurdish forces resorted to complicated and shifting alliances with either side in order to survive, while trying to attack each other at the same time. Towards the end they formed a unified front against Saddam, and it wasn't until the Iran-Iraq war ended that Iraqi forces were able to defeat them. Using the full force of the army, and using chemical weapons honed in the war with Iran, Saddam nearly destroyed the peshmerga as a regular fighting force. The peshmerga reorganised in response, adopting insurgent tactics still being used in Iraq: smaller, independently operating forces targeting infrastructure and ambushing convoys. They further rebuilt under an agreement struck with Saddam during the Gulf war, and were particularly strengthened by defectors from the Iraqi army. They attacked Kirkuk with a force of 100,000 during the uprising following the Gulf War and took it in two days. Unfortunately most of the elite units of Saddam's army escaped the massacre in Kuwait, and when they turned their focus to Kurdistan (after subduing the Shi'a rebellion), they quickly retook the big cities in the plains, and drove the peshmerga into the mountains again. About 1.5 million Kurds fled to refugee camps in Turkey and Iran to escape Saddam's wrath. Again the peshmerga barely survived. The PUK and KDP forces tried to form a unified army, but that wasn't very successful. They actually cooperated in an attack on the PKK, with the help of the Turkish army, in 1992. But they quickly fell out and several rogue commanders (commanding forces as large as 20,000) starting acting as more or less independent warlords. This culminated in the Kurdish civil war (1995-1998). In this civil war, the PUK allied with Syria and Iran, while the KDP was supported by the Iraqi government. Strange bedfellows. The situation got even more complex when an Al-Qaeda inspired terrorist group (Ansar-al-Islam) started operating in PUK-held area. This group was mainly made up by fighters escaping Afghanistan after the US attack there, and it succeeded in unifying the KDP and PUK again. The US attack on Iraq brought the peshmerga the assistance it needed to defeat Ansar-al-Islam.

The peshmerga played an strong role in the defeat of Saddam in 2003. Having essentially liberated themselves, American forces have trodden very lightly in the Kurdish areas. In return, the Kurdish areas have continued to self-police and to cooperate in the fight against Sunni and Shiite insurgents. With the local economy booming (and the result of civil war all too clearly on display in the rest of Iraq, just in case the Kurds should forget their recent past), the iron hold that the PUK and KDP have on the region is not causing much discontent. Indeed, peace and prosperity is giving the Kurds hope that their rotten luck is about to change.

More info here. The crucial point is that the peshmerga forces are extremely nationalistic, very experienced guerilla fighters with no qualms about changing alliances in order to achieve the goal of an independent Kurdistan. The peshmerga captured a large amount of military hardware in the aftermath of the war, leaving them better equipped than at any time in recent history. They continue to embody Kurdish nationalism, newly invigorated by the clear progress they are making, and the idea that they would be disbanded or fully absorbed into an Iraqi army is absurd.

However, the problem for Turkey is that Iraqi Kurdistan is rife with thousands of PKK fighters, and that the PUK and KDP forces have not gone after them. American forces haven't either, because the last thing they need is another large, battle-hardened terrorist organisation to join the insurgency, let alone run the risk that significant fractions of the KDP and PUK would join the fight. The US forces don't even want to take the risk that the peshmerga would stop cooperating with them: they are essential to the US military throughout Iraq, not just as reliable and very capable allies, but also as translators. So instead, the US has tried to pressure the PUK and KDP to attack the PKK. There are estimated to be around 100,000 peshmerga right now, split between PUK and KDP forces. This would seem to be no match to the 3,000 estimated PKK fighters in the Kurdish area. But I believe it is highly unlikely that this fight would ever happen. After all, the three organisations share a common view of a unified Kurdistan that would (far) exceed its current borders. I also think it would be naive to think that the peshmerga forces didn't have a significant number of PKK fighters amongst them.

So where does that leave the situation? Iraqi Kurdistan is a poisoned oyster. It is peaceful and prosperous, but it has strong territorial aspirations, both within Iraq and outside it. It is unlikely to turn on the PKK forces within it, as it shares their ideology and many of their methods (note that many in Iraqi Kurdistan do not see the PKK as terrorists, but freedom fighters). Festering, I guess is what I would call the situation. Not all that unlike the situation Afghanistan was in before the US attack. Turkey may not have a choice but to go after terrorists in Iraq, since the US is unable to. But it will be a bloody mess.

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August 04, 2007

Illegal immigration

I've been reading up on illegal and legal immigration, on account of some stories I read on Carpentersville, IL. Now I'm just thinking out loud, trying to put some things together.

First of all, clearly illegal immigrants break the law. So does everyone that drives over the speed limit or jaywalks. Some laws are more important to enforce than others, and we don't jail or deport people for jaywalking. So illegality is not the end of the story.

What is the alternative to illegal immigration? Legal immigration, of course. But this process takes years and is expensive. It is also not likely to be successful for poor, uneducated people. Immigration reforms underway are going to make this even worse, by biasing the immigration process towards the rich and educated.

While on the subject of legal immigration, I should say I think that legal immigration, especially when biased towards educated professionals, does a huge disservice to the rest of the world. Importing foreign talent and education reduces those elsewhere. Good for US, not good for them...

Legal immigration of educated professionals also irons over the huge deficiencies in the American education system. The excessive reliance of the US economy on foreign-educated doctors, engineers and professors is a warning sign. Importing education is a stop-gap measure, but unfortunately it masks the urgency of the problem.

Now, back to illegal immigration. How many illegal immigrants are there anyway? The Pew study on the size and characteristics of the "undocumented" population estimated that in march 2004 there were 10.3 million undocumented migrants in the US. At the same time, there are 25.4 million documented migrants (which includes refugees and people on temporary papers). One thing bedevilling a rational debate on the issue is that 57% of the undocumented are Mexican, and 81% are Latin-American. This adds race, religion and language to the mix. It seems unlikely to me that the debate would be quite as visceral if the illegal immigrants were Caucasian, English-speaking and (to a lesser degree) protestant.

Compounding that part of the problem is that illegal immigration is largely a problem in states that have long been culturally ambivalent. California, Texas and Florida receive almost 50% of all illegal immigrants. California was settled by the Spanish, and was a part of Mexico until it was annexed by the US in the Mexican-American war of 1848. Texas was part of Mexico before it gained independence in 1836. Its eventual annexation by the US in 1845 was the root cause of the Mexican-American war. Florida was settled by Spanish and French, and has maintained a strong latin flavour. Both legal and illegal Latin-American immigration has targeted these historically Spanish or Mexican states, reinforcing their dual identities. This provides ample reason for fear amongst the dominant Anglo-Saxon culture, because it is unclear where this process will end. It could end with equality between Spanish and English, or that could just be a milestone along the way. There are many countries where citizens need to be fluent in at least two languages or accept that their employment (and social, and cultural) possibilities will be limited. The US has not had to deal with this for several generations (except, perhaps, in some areas of Florida).

I've read several arguments to the extent that Spanish-speaking immigrants will learn English and assimilate, just as all previous immigration waves have. And indeed, while previous immigration waves have also started out very localised, later generations have tended to spread out and integrate, leaving only small communities that still maintain their ancestral language and culture. But that argument is flawed, for four reasons. First off, technological progress. While it used to be hard to keep in touch with your ancestral culture, this is no longer the case. Personal mobility and communication technology mean that you can maintain links across continents with relative ease. Second, proximity. Latin-American culture is not a continent away. While Swedes, Germans, Italians and Irish had to look across the ocean to find their roots, Latin-American immigrants in the US only have to look across a river. Third, size of the culture. Previous waves of immigrants came from fairly small cultures of less than, say 80 million native speakers. Spanish is different in that there are over 400 million native speakers of it, more than there are native speakers of English. Four, persistence. Because of the proximity of most of the world's 400 million Spanish speakers to the US, the influx of Spanish-speaking immigrants is unlikely to slow unless the underlying causes for the migration are addressed. Whereas previous immigration waves were limited in size and time, there are no such limits foreseeable on Latin-American immigration.

Of course, in stead of addressing the driving forces of migration (poverty, violence, crime, civil wars, drug wars, ...) one could try to stop immigrants and send them back. The Pew center estimates that the population of undocumented immigrants rises by about 700,000 each year (since 2000). Since the ICE (Immigration and Customs Enforcement agency) returns about 220,000 people a year (mainly undocumented immigrants, with the occasional US citizen by mistake), that comes close to the ballpark figure of 1 million immigrants arriving each year, which is bandied about quite a bit. So the ICE spends about 8 billion a year, catching less than one quarter of the illegal immigrants, presumably the ones that are easiest to catch. So a ballpark estimate of the cost to catch enough illegal immigrants to offset new arrivals would be anywhere from 40 to 100 billion a year. Clearly, a lot of money, actually much more than illegal immigrants are estimated to cost the tax payer (about 16 billion). As discussed below, this "cost to the tax payer" is due to the fact that the illegals are low-income, not that they are illegal.

One can argue that undocumented immigrants committed a crime, and they should be caught and punished, just on principle. But do they need any more punishment than what they have chosen for themselves? In the end, undocumented workers have to leave the US before they reach retirement age, since they don't qualify for Social Security and cannot survive without working. The statistics bear this out: there are virtually no undocumented immigrants aged 60 and over. While they are in the US, they work very hard without protection from the law (actually, to some degree continuously persecuted by the law), and about 75% of them pay social security taxes and medicare taxes, of which they are not likely to benefit. Other taxes can be evaded as they are not directly deducted by the employer, but those would be very small indeed.

It is important to stress that last point. The Social Security administration tracks the money paid to workers with fake documentation, and puts the total at about 50 to 60 billion a year. There are estimated to be about 3.8 million undocumented households that contribute to payroll taxes, which means that household income is, on average about 15,000 USD per year. No doubt these households also have unreported income, but that is not a problem specific to the undocumented. At the income levels of the undocumented population, social security and medicaid taxes - being regressive taxes - run a healthy 7.65%. Federal tax rates in this bracket are 10%, but with normal deductions, the effective tax rate in this bracket is more like 5%. Of course undocumented immigrants pay sales taxes as well. All in all, even if the undocumented can evade the federal tax, gaining 5%, they still pay the 7.65% flat rate for social programs they cannot use. So they still overpay. As the Center for Immigration Studies puts it:
"If illegal aliens were given amnesty and began to pay taxes and use services like households headed by legal immigrants with the same education levels, the estimated annual net fiscal deficit would increase from $2,700 per household to nearly $7,700, for a total net cost of $29 billion."

The strange conclusion is that if every undocumented worker were suddenly to become documented, the increase in the federal taxes would be more than offset by the increase in federal liabilities in the social security programs. Keeping the undocumented workers undocumented is cheaper for the federal government.

So what about state taxes? Well, depends on the state. States that don't levy an income tax, such as Texas and Florida, would not be affected at all. In California, the state tax rate varies between 1, 2 and 4% for the incomes that undocumented households have. With standard deductions, it is unlikely that these households would pay more than 1% in income, on average about 150$ per year. That would have to pay for all the services they would get if they were fully documented.

So in terms of governmental budgets, the effect of undocumented immigrants is actually positive - they pay more in taxes than they can claim as services - compared to documented workers with the same incomes.

So why all the complaints about undocumented immigrants taking up resources?

Well, they have no health insurance, so medical costs are difficult to recuperate. Some of these costs end up being paid by Medicaid, but that is a program that the undocumented pay into, so they should be entitled to it. More importantly, the vast majority of the uninsured are citizens and residents. Turning the undocumented into documented workers might mean that some would be able to get healthcare insurance, but - at their income levels - this is not a likely outcome (less than 50% of households with incomes under 20,000$ are insured).

Uninsured drivers are a problem, and many of the undocumented would not normally be insured. That is a problem that can be tackled by reengineering driver's insurance and healthcare insurance. But crucially, uninsured drivers are not usually undocumented immigrants. The highest percentages of uninsured drivers are in Mississippi, Alabama, California, New Mexico and Arizona. Not only are 4 out of 5 of those states not noted for their undocumented immigrant population, but most importantly, the rate of uninsured drivers is between 22% and 26%. Clearly, the vast majority of the uninsured drivers are citizens and legal residents.

The highest impact of the illegal population on the resources is through their American-born children:
"Many of the costs associated with illegals are due to their American-born children, who are awarded U.S. citizenship at birth. Thus, greater efforts at barring illegals from federal programs will not reduce costs because their citizen children can continue to access them."
This points out why it is hard to reduce the public resources that illegal immigrants do use. A typical undocumented household uses less than half the resources than a similar documented one does.

The complaints about illegal immigrants have many causes, from simple racism and xenophobia to linguistic and cultural concerns. Those can be argued back and forth forever. But when it comes to the economic arguments, the situation is fairly simple. Most undocumented hold jobs and use few government resources. Most pay taxes, and the net fiscal effect of the undocumented is positive, considering their socio-economic situation. The perceived fiscal deficit is caused by the relatively low educational attainment of the undocumented immigrants which confines them to the lowest levels of US society. This is, however, a first-generation only problem - and not all that different from other mass migration waves that the US have seen before. With a decent educational system, the next generation ought to do better economically. So I don't see this as a problem that will continue to get worse.

Fiscally, the problem is the existence of so many low-paying jobs without benefits, which means that hardworking households that use much less public resources than most (about half), still cost the US government tax dollars. Simply removing a subset of the people that hold those jobs leads to a reduction in the quality of the services and/or a raise in salary costs to attract new workers. To keep the quality of services AND the prices stable, one can replace the currently undocumented workforce with a fully documented one. But that will cost the government even more, as the additional taxes will not cover the additional services.

Culturally, the US needs to become less insular, and the addition of a second cultural language should be welcomed, certainly in those states that have strong historical ties to it. In particular the states that used to be part of Mexico, such as California and Texas, it seems only fair that this history is recognized and even honoured.

Legally, I believe that punishing illegal immigrants is useless. The life they have chosen is full of back-breaking work done in fear. It is punishment enough. We would not punish people to become slaves voluntarily, even though slavery is illegal. One could punish those that promise them work, give them work and keep them in their current condition.

So I guess I would be for a kind of amnesty for anyone that has been in the country for a certain amount of time. After all, they have gone through hell. But while it is the right thing to do, it would not solve anything. As long as the jobs are there, and are not paid enough to attract legal residents to them, they will be filled with illegal immigrants. And legalizing the existing workforce would actually cost the government more. To reduce the illegal immigration, here are some simple steps that I think could help:
1. Increase minimum wages and encourage unionization of the jobs that attract the most illegal immigrants. This will make it more attractive for legal residents to fill the jobs.
2. Increase fines on employers that hire undocumented workers. For recidivist corporations, jailtime for white collar top executives should be an option.
3. Introduce national ID cards and link them to social security accounts. No card, no job. This is essential is one wants to crack down on employers. As long as identity is kept vague in the US, employers can argue that they were victims.
4. Deduct all taxes from the salary by default. This won't achieve much more than kill the argument that they're not paying taxes, but that is something.
5. Change citizenship rules. Born in the USA should only confer citizenship if one of the parents is a citizen. It should only confer legal residency if the parents are legal residents. Children born in the US to illegal immigrants should be sent back to their home country with their parents.

I actually think that the last one is too harsh. It would never fly, as it would lead to families being torn apart and women chosing to have their children without any medical assistance. But the other four could be a start.

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