Going Global

Give B of A Credit on Immigration

I know immigration is a controversial issue and I don't want it to distract from the other business issues discussed in this blog -- but as I've said before, immigration itself is a business issue.   As discussed in a different context in the last post, the free flow of labor is a key ingredient in the efficient and effective operation of markets, so it would seem only to make sense that we should reform immigration laws so that patterns of immigration can more readily reflect the economic realities of the global market place.  Indeed, I find it somewhat ironic that some of the loudest opponents of rational immigration reform that would permit greater numbers of lower skilled workers to immigrate legally otherwise identify themselves as economic conservatives -- i.e. in favor of free market economies.

Immigration and business have been back in the news together recently thanks to Bank of America's plan to offer credit cards aimed at Hispanic immigrants, including presumably illegal ones.  Not surprisingly, this has raised the hackles of the usual politicians and pundits who have shamelessly pandered to the fear of foreign cultures for their own great political and economic gain.  The fear mongering includes the suggestion that the credit card program could wind up financing terrorist cells.  As noted by Ruben Navarrette in an op ed piece in USA Today, B of A's cards will have $500 credit limits while the terrorist cells that we should be worried about are laundering thousands of dollars.  I also enjoyed Navarrette's take on the tendency of the closed-border proponents to confuse terrorists with immigrants:

Let's not confuse terrorists with immigrants.   Here's a tip on how to keep the two groups straight: One wants to do us harm; the other wants to do our cooking, gardening and child care.

What I find most interesting about the uproar over B of A's program, however, is that the bank may be the one entity actually doing one thing about immigration that I would think even the most ardent proponents of stricter control of immigration would be in favor of and something that the government seems utterly incapable of accomplishing -- i.e. issuing cards with unique numbers tied to the individual's name, address and other personal information.  If you are genuinely worried about what these people might be up to, doesn't this sound like exactly what we should be doing. 

As an added benefit, at 21% interest, the card program means that an American company will make some money on the hard work of these people whom the anti immigration folks like to claim are freeloaders.  In another irony, one of the biggest hurdles the bank is facing in launching its credit card isn't political opposition, but the cultural bias against credit.  As Javier Palomarez, B of A's former VP of marketing who came up with the idea originally, is quoted in the Navarrette op ed piece, "We were raised that, you know what, if you can't buy it with cash, you can't afford it."   Sounds like another tenet of conservative economics that one might think the pundits would hold up as a shining example of good sense.

I guess in the end all this is just another example why no one has ever said that the dogma of true believers needs to be rational.

A Debate about the Not-So-Great Wall

In an earlier post on immigration policy, I called into question the efficacy (or perhaps even sanity) of an effort by Tom Narum to raise private funds in order to build a massive wall along our border with Mexico.  The blog-o-sphere being the remarkable vehicle that it is for circulating information, Mr. Narum himself found and read the post and proceeded to leave several very lengthy comments in his role as executive director of his wall funding project -- Citizens for a Secure Border. Each comment, for reasons that I think will be apparent upon reading them, warranted a reply by me.   

The result I have been told by some of our readers is an entertaining debate which touches on many of the critical issues around immigration policy and reform.   Because of the extent of the comments I am not going to reprint them here in this post, but I thought it worthwhile to call your attention to them and by going to the permalink for the earlier post you can read the entire exchange.

A few useful links to information referred to in the comments but which do not have functioning links in the comments themselves are as follows:

Comments which I think are illustrative of the mindset of at least some of Mr. Narum's supporters as published on his organization's website;

The Cato Institute article profiling the positions of former Colorado governor Dick Lamm whom Mr. Narum quotes at length as providing reasoned support for his own world view (if for some reason this link takes you to the Cato Institute's search page instead of to the article itself, type the title of the article "The World According to Dick Lamm" into the "Find results with all the words" box and the search will take you to the article).;

Rankings of countries by GDP (courtesy of Wikipedia) and rankings by GDP per capita (courtesy of World Facts and Figures).

As you will see by the end of the exchange of ideas, Mr. Narum has done nothing to convince me that his idea makes sense and has said much to heighten my concern about where our country and world is headed if this is the state of fear and loathing we're in.  But that's my opinion -- I encourage you to read the debate and let us know your conclusions.

Will We Lead or Will We Hide – Can the U.S. Seize the Historic Opportunity to Exercise its International Leadership in Addressing Immigration from Mexico?

     I was not planning on doing another post on immigration policy quite so soon – after all this blog is about international business not politics.   But as I pointed out in an earlier post, immigration is a critical issue for companies engaged in global business.   And as I also said in that earlier post, it may well be up to business to “bring a little rationality and sanity to the table before someone starts to wall us off from the rest of the world.”

     The immediate thing that caused me to put aside a post on the paradoxes of the recent spike in international M&A activity that is almost ready for publication and write this post instead was an article in one of Denver’s newspapers this morning entitled “All in All, It's Thrust Another Brick in the Wall”.   Aside from the fact that the headline defiled the classic work by Pink Floyd, the substance of the article got my dander up for the reasons I will explain.   The article profiled the efforts of a Coloradan by the name of Tom Narum, a self described “average guy”, to raise private funds to construct a massive wall along our border with Mexico. Apparently Mr. Narum is not satisfied with the pace at which the government is isolating us from our international neighbors by focusing primarily on unilateral enforcement to solve what is a complex multi-lateral problem.

   

This follows on the heels of an exchange earlier in the week highlighted in a post on the Latin Americanist blog in which the Bush administration chided putative Mexican president-elect Filipe Calderon for denouncing plans by the US government to erect a wall along the U.S. – Mexico border.  More specifically as reported by Reuters, Mr. Calderon stated that “One kilometer of road in Zacatecas or Michoacan is worth more than 10 kilometers of wall in Texas or Arizona to stop immigration.”   Personally I think that this is an extremely articulate manner in which the Harvard educated / pro-U.S. president-elect pointed out the critical connection between economic development in Mexico and a sustainable solution to the immigration imbalance.

     Nonetheless, in an all too predictable response, Mr. Calderon’s insightful and timely remarks were brushed aside by the Bush administration in a glib and backhanded response from White House spokesman Tony Snow.   Mr. Snow told reporters “Last time I checked, Calderon did not have any official authority over the activities of the United States government.”   Somehow a sarcastic dismissal of the soon-to-be president of a key ally does not strike me as effective leadership.

     When Mexico joined with the U.S. and Canada to form NAFTA 12 years ago, it made a strong and compelling statement that it did not want to be a struggling developing country saddled by the politics of corruption that characterized many of its neighbors to the south, but instead wanted to be a fully developed capitalism-based democracy along with its North American neighbors.   Since heading down this road, Mexico has made tremendous strides recovering from the near financial collapse accompanying “The Devaluation”, taming its runaway inflation, normalizing interest rates, opening up industries to foreign investment, and lifting an ever increasing number of its population from poverty.  As suggested elsewhere in this blog, the increasing vibrancy of its growing middle class is reflected in the evolution of its political landscape, moving from the single-party stranglehold of the PRI to the passionately contested multi-party elections of last week.

     Since the advent of NAFTA, Mexico’s economy has grown from $375 billion in 1994 to $693 billion in 2005 (actually passing $ 1 trillion for the first time on a purchasing power parity basis as calculated in the CIA World Factbook).  With exports accounting for nearly 30% of its GDP, and over 85% of that trade dependent on the U.S., Mexico’s economy is inextricably linked to ours.  And of course they have been a steadfast political ally as well – and one which I think is strategically important to the United States’s standing in the remainder of Latin America.

     So perhaps the overriding question in the immigration debate is “how do neighbors and allies help each other when confronted with complex problems with mutual consequences?”  Unfortunately from the tenor of the immigration debate to this point, the answer from our side of the border would appear to be “not so well.”

    

It seems to me that the United States is being presented through the immigration issue an historic opportunity to exercise its leadership role in addressing and solving problems of international scope.   Real leadership would involve working with Mexico to address the economic challenges in our neighboring country that underlie the immigration imbalance between the two countries.  Indeed, any attempted solution which does not begin to address these systemic problems will be a short term and near-sighted solution. 

     If we take the visionary high road, the U.S. could cement our position as a country to be admired and celebrated throughout the western hemisphere.   If instead we forgo this opportunity by shirking our global responsibility, focused only on criminalizing, deporting and walling out our neighbors in the hopes that their problems will simply go away, we may irreparably damage our relationship with the most strategic ally we have in working with the predominantly Spanish speaking world that stretches over half the globe to our south.

     I struggle to understand how so many people in the most powerful and successful nation on earth can be so fearful of people from our friendly neighbor to the south that they feel compelled to build a wall to keep them out.   If we are to resolve the immigration problem, we need to lead, not hide behind the walls of the citadel.

 

What Do You Have to Do to Get a Visa Around Here?

The comment in my last post on the impact of immigration policy on international business apparently hit a responsive chord with quite a few business people -- particularly with respect to the problems posed by the difficulties in getting a travel visa from another country into the US so that foreign employees or customers can come to the US for training and plant visits. 

I was meeting with a representative of the US Department of Commerce this week and I posed the question whether there is anything a US business can do to overcome some of these obstacles.  I can't say that he was brimming with optimism, but he did make a couple of suggestions that I wanted to pass on here given that we're all operating in an "anything would help"  mode at this point.

• The representative (he asked not to be identified) told me that the consulates receive so many forged letters allegedly supporting an invitation to visit the US for business purposes that they simply disregard most of them (his exact words were that "they throw them all in the trash").   The solution that he suggested was to find a contact in a local US government office concerned with these issues (Dept of Commerce / USEAC / Dept of State) and see if that person would be willing to  forward via the US government e-mail system a scanned version of your letter of invitation.  Having received the letter in this fashion with the local official vouching for the bona fides of the sender, my contact's belief was that the letter would be given much more weight -- or at least be spared the trash bin.
• His second point is that the consulates treat every applicant for a visa with the presumption that they will become a permanent immigrant -- and they devote less than 10 minutes to determining whether that presumption is correct or not.   Accordingly, when your customer or employee appears for their "interview", it would behoove them to be ready to present in an organized fashion as much documentary evidence as possible that they have strong ties to their home country and every reason to return.   These documents include evidence of home ownership, a wife and children, bank accounts and business interests.
• Finally, he told me that there has been an internal acknowledgment from cabinet level officials that the pendulum has swung too far toward restrictive visa approval and direction is filtering down to loosen the reins.   Having said that, however, he indicated that while he expected things to improve noticeably for countries such as Turkey or those in eastern Europe, he was under the impression that China particularly would remain a very tough place to obtain travel visas.

Hopefully that information will help somewhat -- although the ultimate solution may still rest heavily upon the voice of the business community, particularly small and medium size businesses, pressuring their government representatives over the negative impact that these policies are having on their business and the US economy as a whole.

Immigration and International Business -- Legality vs Legitimacy

At first blush, the currently raging debate over immigration may seem more a matter of domestic policy and enforcement than international business, but there is a very real connection between  the two.   A few aspects of that interconnectedness are as follows:

• The policies that the US adopts towards people from other countries seeking to live and work in the US can have a direct impact on the policies adopted by other countries towards Americans wanting to live or work abroad;
• The attitude toward alien workers here, both legal and illegal,  spills over into attitudes and enforcement policies regarding work permits and visas in many contexts which directly affects American companies doing business abroad.   I know of several instances in which American companies have been unable to get a work permit for a foreign employee whom they wish to do a stint at US headquarters for training purposes and to further the acculturation of key employees responsible for foreign operations.  I also have several small business clients who are being killed in their export operations in China because of a complete inability to get visas issued so that customers and employees can visit their plant in the US.   This, of course, is exactly the kind of restrictive trade policy that will encourage small US manufacturing businesses to relocate operations overseas in order to support export positions that would otherwise be serviced from the US -- which is the exact opposite of what anti-immigration pundits are trying to accomplish -- a classic example of an unintended consequence.
• The ultimate solution to large scale illegal immigration is economic development in the originating country (in this case, read Mexico).   One of the key drivers to this economic development will necessarily be private foreign investment by US companies, such that international business by American companies is, in a very real sense, one of the keys to resolving the current "crisis" over illegal immigration. 

I had the opportunity recently to hear an address by Hiroshi Motomura who is a Distinguished Professor of Law and Associate Dean of the University of North Carolina School of Law, and who is one of the leading authorities on immigration policy, having  authored the most widely used case book on immigration law.   Professor Motomura is also author of a new book entitled Americans in Waiting: The Lost History of Immigration and Citizenship due out in September.  (To read a currently available article by Professor Motomura on one aspect of immigration policy, see his comments published in the Boston Review).   

Among the many interesting points made in his address, Professor Motomura drew a distinction between legality and legitimacy.   His point was that while many immigrants are here without the requisite documentation and are hence "illegal", there has been a long history of affording "legitimacy" to their presence by selectively enforcing or intentionally not enforcing immigration laws in order to accommodate the reality of the critical contribution that undocumented workers make to parts of the US economy.   He noted that this history of economic accommodation and benign lack of enforcement dates back to the use of undocumented workers to construct much of the transcontinental railroad in the late 1800's -- and of course continues through the present. 

A very current example of the US providing this legitimacy to undocumented workers can be found in an article entitled "Big Cities Reluctant to Target Illegals" published in today's USA Today [Note: The paper's on-line edition will not support a direct link to the article, but search for "local police" and "immigration enforcement" on their site and the article should be the first result returned].  According to the article, many local police chiefs, mayors and city councils from cities such as Chicago, New York and Minneapolis have instructed their police forces not to assist federal agents seeking to "crack down" on illegal immigrants.  Among the rationales for this stand is a belief that participating in the crackdown would undermine some of the positive strides that police have made in combating crime through community relations based policing efforts.   It would be hard to think of something which sends a clearer signal of legitimacy than a refusal by the city government and police to enforce the law because it interferes with sound local policy and police practices.

Immigration policy is obviously a tremendously complicated problem as well as one which generates even more of the usual ideological fervor that characterizes so many "hot button" issues.  My point here is that international business has a very real stake in this debate, and while I know it is too much to hope for in the midst of the heated argument raging over immigration policy, it would be nice if business could bring a little rationality and sanity to the table before someone starts to wall us off from the rest of the world in the vain hope that the rest of the world will take their problems elsewhere.