Up or Down, Remittances Buy More Trouble For Mexico
Defying predictions, funds sent by U.S.-based immigrants to Mexico set records as COVID-19 began scourging the Americas. Remittances soared to the highest and second highest levels on record in March and May.
April wasn’t too shabby either. Even as U.S. unemployment hit 14.7 percent, southbound remittances still totaled $2.6 billion for the month.
In the midst of the coronavirus pandemic, Mexican President Andres Manuel Lopez Obrador urged his country’s citizens living legally and illegally in the U.S. to keep shipping money home. Calling remittance-sending Mexicans “our living heroes,” he implored them “not [to] stop thinking about their loved ones.”
Figures for last month were not yet available, but Lopez Obrador remains bullish. He expects Mexico-bound remittances – more than 90 percent of which come from the U.S. — to be up 10 percent through June.
This is fool’s gold. With other Central American countries reporting sharp declines in remittance revenue, Mexico can expect that its diaspora will also scale back as the U.S. economy continues to sputter. (The latest unemployment data show that immigrant workers remain jobless at higher rates than native-born Americans.)
Evenin good times, reliance on remittances is unhealthy. Instead of issuing smarmy patriotic pleas for more cash, Mexico’s remittance-hookedgovernment leaders should be working to reverse that country’s brain drain by openingeducational and employment opportunities at home. A nation’s true wealth andhuman capital come from within, not via Western Union wire transfers.
Mexican economist Jonathan Heath attributed at least part of the spring spike in remittances to homeward-bound Mexicans who sent their savings in advance “to avoid traveling with cash and getting robbed.” Indeed.
The importation of more than $30 billion in remittances from the U.S. every year has not cured the twin plagues of organized crime and institutional corruption in Mexico. To the contrary, remittances merely perpetuate the dysfunction south of the border, while siphoning $150 billion annually from America’s economy to countries across the globe.
As FAIR’s Ira Mehlman put it last week: “In a global economy, there will always be legitimate circumstances in which workers from one country fill jobs in another. But exporting workers and importing remittances is not a viable or healthy economic model. It is an unsustainable scheme whose flaws are again being exposed by the current global crisis.”