War on Illegals caused Economic Collapse?

An opinion from the Blue Mass Group:

This is an aging country. Only the illegal immigrants with their young families were consuming enough housing, food, clothing, and transportation resources over the past several years to keep the economy growing. Then the Oppression started. Record numbers of immigrants were deported last year. The number of illegals crossing over the border dropped sharply. Thousands of Brazilians went home. Thousands of Irish left for a more welcoming Australia. All because of harrassment. Then the economy started to sink. A great example is Rhode Island. Their economy was humming until the governor turned up the heat on illegals. Now they have the worst economy in the country. The U.S is out of money and can’t borrow enough to turn this recession around. The whole world depends on U.S. consumption to drive their economies.

While the argument does little to present evidence and treats correlation as causation, it raises some valid points.

Targeting and rounding up undocumented immigrants for deportation has undoubtedly led to the creation of ‘ghost-towns’ like Postville. Resources that could be better spent on social services are nonetheless poured into criminalizing illegal work and presence. For example, Prince William County is suffering budget shortfalls due to foreclosures in additon to a rabidly anti-illegal ‘nab-n-jail’ program. Law Professor Richard Delgado wrote an excellent piece on the direct economic impact of the crackdowns on food prices:

Many farmers are plowing their crops into the ground, realizing that without immigrant workers to pick them, harvesting is simply uneconomical. Still others are shifting to crops that are less labor intensive, even if this means cutting down mature orchards and starting over. The lower supply of food inevitably results in higher prices as consumer dollars chase a dwindling or shifting market.

A new study by the Minority Business Development Agency of the U.S. Department of Commerce and the Office of Advocacy reports that immigrant-owned businesses contribute positively to the economy. While it did not concerntrate particularly on undocumented immigrants, the CPS found:

* Immigrants represent 12.5 of all business owners.

* Immigrants are 30 percent more likely to start a business than non- immigrants are.

* Immigrant business owners are concentrated in certain states, including California, New York, New Jersey, Florida, and Hawaii.

* Mexicans represent the largest number of immigrant business owners, while Greeks, Koreans, and Iranians have the highest ownership rates.

In light of these facts, immigrant crackdowns might not help (and most likely hurts) the economy.

If the United States was to legalize 12 million undocumented immigrants, would they not pay fines, back taxes and acquire property–in other words, increase consumption–which in turn would stimulate the economy? Workers who are not part of an underground (informal) economy and don’t live in the shadows due to fear of deportation could acquire new job skills and move up the career ladder. That translates into higher wages, more money paid in taxes, and more money for consumption.