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US / Mexican underground economic relationship

H

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Interesting article about the US / Mexican underground economic relationship:

http://www.miami.com/mld/miamiherald/7119237.htm

Is this bad for our dollar? Ecuador already takes our dollar and uses it as their unofficial currency (but they like to give change in theirs). Now our dollar (a lot of them) is being sent south of the border, so much that it is the country’s second source of foreign income.

How does this affect the Mexican community in America? The investment is obviously back home and not here. This is just a temporary stage to make a few bucks, send it back to the family and then what? Retire back in Mexico?

How are your areas dealing with these transient communities? Or are they?
 

Duke Of Dystopia

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H said:
Is this bad for our dollar? ....How does this affect the Mexican community in America? The investment is obviously back home and not here. This is just a temporary stage to make a few bucks, send it back to the family and then what? Retire back in Mexico? ...
this is nothing new. There are many times in US history when we have been in need of Mexican labor. We do need to create an enforcable guest worker status WITH the Mexican government so it is effective and not paperwork shuffling on our part.

The money paid to them is NOT an investment in the US economy. It is the wages the company OWES him for his efforts. It should be thier business what they do with it.

Latinos are unlike other groups of immigrants to the US. They cycle through and change less because of the cycling. The US changes more because the traditions we interact with are stronger and more resilient than traditions and customs from other immigrants that are now isolated.

If they send money to Mexico, that is a reason for US companies to expand into mexico attempting to capture that market.
 

The Irish One

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Suro said .............. new security measures along the U.S. border have not significantly slowed the growth of remittances.
And what security measures would he be talking about?
As for the over all point of the article, I think it's really bad for Mexico that they're so dependent on our dependance for cheap labor. In the long run we'll both be hurt by this akward relationship..
 

jresta

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The dollarization of other regional economies only increases the value of our money by increasing the demand and spreading the supply over a larger population simultaneously.

I think the US winds up the winner in this equation anyway - otherwise our federal reps wouldn't be allowing it. Here's my point:

If you would have to pay a native born american $8 dollar an hour to mop the floor at the Olive Garden but you can pay a legal mexican $6 an hour and an illegal $5 an hour then you're getting the same or more work done and you're saving $2 to $3 per hour per employee. For workers in the bracero program or other similar programs it's even more dramatic. US labor protections simply do not apply to these workers.

Now - multiply this $2 to $3 an hour savings by the number of hours worked every month by mexican laborers (or all temporary workers from latin america for that matter) My hunch is that the savings incurred by US businesses is much greater per year than $17 billion.

The other issue is that, when developing countries borrow money from the IADB, the World Bank, or the IMF they have to repay the loan in a pre-determined foreign currency. Most likely it's US dollars although it could be pounds sterling or euros. The only way they can get US dollars into their economy is by trading with the US or by trading with other countries and being paid in dollars. In the case of Mexico this means cars, textiles, fruits and vegetables, and electronics/appliances. But in order to sell these things in the US they have to be sold for cheaper than comparable products on the shelves. That means ignoring the environment and suppressing wages.

It's little wonder that mexican workers look north for better paying jobs and it's little wonder that their government encourages them to go and send home huge amounts of American cash.

I highly recommend watching the documentary "Life and Debt"
http://www.lifeanddebt.org/about.html
 

jresta

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jresta said:

Now - multiply this $2 to $3 an hour savings by the number of hours worked every month by mexican laborers (or all temporary workers from latin america for that matter) My hunch is that the savings incurred by US businesses is much greater per year than $17 billion.

Yeah, this is obviously bad for american workers because it lowers the wage floor - lower wages mean people like us spending less money - and since this is a service economy it takes a lot of people spending most of their money to keep it humming.

It's obviously good for the corporate bottom line in the short-run.

If you take the estimated number of undocumented workers (not saying that big companies knowingly hire undocumented workers) which is 3 million and assume that they only work 20 hours a week and only make $2 less than the prevailing wage they're still saving their bosses $12 billion a month in labor costs. In reality i think all of those numbers are a lot higher.

This also isn't counting the much greater number of immigrant workers who are here legally.

great article here.
http://www.villagevoice.com/issues/0130/kamber.php
 
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The Irish One

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It's little wonder that mexican workers look north for better paying jobs and it's little wonder that their government encourages them to go and send home huge amounts of American cash.

Not to mention the Mexican government doesn't have to deal with a shamefully poor and neglected segment of their society, rural mestizos, who will never have political representation or support of any from their government. But that's why we're here in the USA, us uncultured gringos will lay down the sweet bennies package for the lowest of Mexican society. Mexico's government is happy to let these people leave as soon as possible. You see we are the welfare state for Latin America, especially Distrito Federal.
 

Rem

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The same accusation is levelled at soem nationalities working in Australia (no JNL NZ no longer is looke at in this way) but in pure economic terms the money sent home should not be overstated.

Bearing in mind that most of these folks are working in lower paid sectors, they probably spend (rather than save) a much higher proportion of their wage than employees in other busines sectors. The critical thing for maximising general economic benefit from wages is the speed at which the money they earn circulates in the economy. If that is a high proportion of their wage - you are all better off. Also the US is obtaining benefits from the globalisation of world markets so why not let someone else benefit from globalisation of labour markets?
 

The Irish One

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The same accusation is levelled at soem nationalities working in Australia
Just so we're clear I'm not placing any blame on Mexicans Central Americans, Sout Americans for wanting to make it in The Promised Land, no way, I come from stock that did the exact same and I wish the same fortune for many generations to come. But Mexico City is nothing but a ruthless political machine that will gladly pawn its home spun problems on the US for as long as we are passive and greedy about it.

so why not let someone else benefit from globalisation of labour markets?
Isn't this happening already? I think this describes "capital flight" and it brings up a great question. How in the world can US workers demand $25 an hour for a manufacturing job, when I can get Juan in Tijuana to make the same product just as good for $4 and hour w/ no union to deal with, no enviromental restrictions, no health coverage, pensions, anything? I'm amazed there are still to this day manufacturing jobs in the "developed" countries. Service economy, I think that's what we are now??
 
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And then there is the fact that American high school and college students used to work in construction during the summer but that is pretty rare these days. Who do you think would build all these 3000 square foot homes that so many Americans live in if it weren't for immigrant labor, both legal and illegal?

And who would clean them? "Maid service" is often immigrant labor -- my immigrant mother has made a career of it and, when my sister hired a maid following surgery, the young woman was Latino and didn't speak English too well. The woman who runs the maid service that my sister used was a doctor in her country but couldn't master English well enough to pass whatever test she needed to pass to get her license to practice medicine here in the U.S.

Or to quote one comedian: "Yeah, all those illegal immigrants coming over and stealing our jobs and ruining the economy. I wanted to be a migrant farm worker but couldn't because of them. Instead, I had to become a banker."
 

The Irish One

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And then there is the fact that American high school and college students used to work in construction during the summer but that is pretty rare these days.
I think I've got one up on you Michelle. American High School kids and kids in general used to work on farms during Summers! But no, now its hang out at the mall, watch reruns, goto Europe, Summer movie passes, let's go into debt for the newest fashions, look at me I've got self esteem and the world is so clean! fun fun fun for everyone and our culture never suffers, weeeeeee!!! Ok, sorry about the rant. I generally agree with you.
 

Chet

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MOD HAT OFF

Stop talking Macro Economics. I hate it. I will smite you all ;)
 

Duke Of Dystopia

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Chet said:
MOD HAT OFF

Stop talking Macro Economics. I hate it. I will smite you all ;)
Does somebody in the MOD camp have to stay up and watch this whole damn thing all night long? You were on all day too. When the HELL do you sleep?

Iv'e been SMITTEN before, its not so bad when your a glutton for punishment! :)
 
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The Irish One said:
I think I've got one up on you Michelle. American High School kids and kids in general used to work on farms during Summers!
Oh, duh! What was I thinking! You are exactly right -- that is, in fact, WHY school kids do not go to school during the summer: they were needed on the farm and couldn't be spared for luxury items like 'education'. Silly me. I tip my hat to you.

Chet, go get Smitten yourself. Or at least get LAID. Like DOD says: don't you ever sleep? (Preferably WITH someone.):)
 

H

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I will start by saying that if I was poor and in Mexico (or any country) I would risk it all to get here and I as an American citizen welcome anyone from anywhere.

A few years back I worked for a branch of a company that specialized in helping Mexican immigrants buy houses. (Note: this was a private industry for heavy profit but it was a win-win situation in the long run). Well, many Mexican families would straight up tell me that they hated the US. They wanted to make some money and then go home as fast as they can. But usually (just like everyone else) they would get stuck in the capitalism and debt cycle. However, they never really called the US “home” and this would often spawn lack of investment in the community. I see this as a potential serious long-term problem.

This phenomenon seems to be different from past immigrant groups that were coming to “stay”. Did the Irish or Polish or etc. send this type of money “home” to their countries? I don’t think they did. This has never happened before to my knowledge. Where are we headed here?
 

The Irish One

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H, I think you bring up a great point. If I was a poor Mexican you bet I'd be crossing the border.

Did the Irish or Polish or etc. send this type of money “home” to their countries? I don’t think they did. This has never happened before to my knowledge. Where are we headed here?
The obvious factor is geography, Mexicans live close to home and it does hurt them in the short and long run in many ways. If you do comparisons of immigrant populations in California you will find that the Mexican immmigrant community is lagging way behind other immigrants in education, income, health care, mortgages. In my opinion this has a lot to do with being so close to the motherland. The neccesity to assimilate is not so urgent, there is a delayed cultural crossing, if you will. But let's not forget we hire these people at dirt cheap wages to work hours a day doing jobs that aren't good enough for us natural born citizens. Never in the history of this country has there been a more liberal immigration policy towards one country. The myth that this country has always been an open borders for all is very misleading and contrary to the practices of the past immigration. I think it's time for some sort of rational policy of restrictive legal immigration. I would love to see this country's Citizens do they're own farming and construction, especially in California!
 

jresta

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H said:
I will start by saying that if I was poor and in Mexico (or any country) I would risk it all to get here and I as an American citizen welcome anyone from anywhere.

A few years back I worked for a branch of a company that specialized in helping Mexican immigrants buy houses. (Note: this was a private industry for heavy profit but it was a win-win situation in the long run). Well, many Mexican families would straight up tell me that they hated the US. They wanted to make some money and then go home as fast as they can. But usually (just like everyone else) they would get stuck in the capitalism and debt cycle. However, they never really called the US “home” and this would often spawn lack of investment in the community. I see this as a potential serious long-term problem.

This phenomenon seems to be different from past immigrant groups that were coming to “stay”. Did the Irish or Polish or etc. send this type of money “home” to their countries? I don’t think they did. This has never happened before to my knowledge. Where are we headed here?
A lot of immigrants, be they polish, russian, mexican, nigerian - don't like it here. They're here because they couldn't get into germany, spain, england and they can find a job relatively easily here and because they can work as many hours as they can stay awake.

Comparing modern immigrants with many of our own ancestors is different in some ways. My dad's grandfather came here by himself because that's all the family could afford. He saved money and sent it back to italy to ship the rest of the family over. The intent was to bring the family here - not to bankroll them there.

At the same time those european countries were quite eager to get rid of their proletariat. In mid 19th century Germany Marx was getting published and syndicalism was on the rise. This scared the crap out of the bourgeoisie and what better way to eliminate the threat then to ship all the unemployed off to a distant continent and let them "cause trouble" in Chicago.
50 years later Malatesta was riling up the anarchists in Italy and not long after they arrive in waves on our shores - the most famous of those immigrants, of course, being Sacco and Vanzetti.

This is all interesting and pertinent as the push is on to ratify the FTAA - expanding NAFTA to the entire hemisphere. There's a bright idea. The spigot of Mexicanos will look like nothing compared to the firehose of Brazilians, Chileans, Argentinos, and our neighbors from the Carribean.

I'm a firm believer that people should be just as free to cross borders as capital is. The FTAA furthers the already existing imbalance and is setting us up for a serious disaster. If you look at the Department of Labors own statistics - American males wages, adjusted for inflation, are and have been exactly the same now as they were in 1972. Women's wages have have seen 5% growth or better every year. As if that bargain weren't enough, and as if being forced to compete with Canadians and Mexicans for the same jobs didn't make things worse you can throw another 500 million workers into the labor pool.
 

BKM

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I could support this if we require the salary of all multinational CEOs to not exceed the 100 times the average wage of their workforce. :) I bet the incentive to relocate to cheaper labor markets would suddenly disappear.
 

The Irish One

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Losing purchasing power....must ...move....to ..Canada-scratch that..... Europe, I DON'T WANT TO LIVE LIKE ANY LATIN AMERICAN COUNTRY. It seems each political party in the US has a real vested interest in the free flow of capital and people. Let's face it we're 300 million in a hemisphere of ......I'm not sure but at least 700 million people, and the overwhelming economic trends (shitty wages for any job) for the south will hit the US sooner or later and much harsher. It has been a while since I've paid any attention but, I thought the Souther Cone was not interested in these broad hemispheric economic & trade policies? anyone keep up with that stuff?
 

Zoning Goddess

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H, take a look at the series the Orlando Sentinel is doing this week on the construction industry, partly about how shoddy the work is, but also how it relies so strongly on Mexican immigrants.
 

jresta

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The Irish One said:
It has been a while since I've paid any attention but, I thought the Souther Cone was not interested in these broad hemispheric economic & trade policies? anyone keep up with that stuff?
Well, we're about to find out. The FTAA summit is in Miami in two weeks (Nov. 19-21) Countries like Brazil, Mexico, Chile, Costa Rica, and Peru are probably very interested. Countries like Argentina, Venezuela, Ecuador, and Bolivia are prob. very much opposed or at least have a public that is largely opposed.
The stuff will hit the fan in Argentina and Bolivia if it goes through.

But it's going to hit the fan in Miami well before that . . . I can't wait.
 

H

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jresta said:
Well, we're about to find out. The FTAA summit is in Miami in two weeks (Nov. 19-21) Countries like Brazil, Mexico, Chile, Costa Rica, and Peru are probably very interested. Countries like Argentina, Venezuela, Ecuador, and Bolivia are prob. very much opposed or at least have a public that is largely opposed.
The stuff will hit the fan in Argentina and Bolivia if it goes through.

But it's going to hit the fan in Miami well before that . . . I can't wait.

jresta, the following site gives good updates on this:

www.americas.org
 

jresta

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That's a nice resource.

What's interesting about Bolivia is that they're going on a month long general strike that centers around oil (and other mineral) exports and not even 3 years ago there were riots and a general strike over water as a Bechtel subsidiary tried to privatize all the water in the country.

Argentina . . . wow, well at least now we know what it will take to get the middle class into the street. Close the banks, don't stock the ATM's, and shutter the malls. All hell will break loose.
 
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Originally posted by The Irish One
It has been a while since I've paid any attention but, I thought the
Souther Cone was not interested in these broad hemispheric economic &
trade policies? anyone keep up with that stuff?

A couple of thoughts from Los Angeles in a older section of the city with a large ethnic base (mexican, croatian, serbian, swedish, greek, italian).

First of all pick up a copy of Joseph E. Stieglitz's (shared nobel prize in economic science in 2001)Globalization and Its Discontents. Its a very hard read. Its an eye openner. It concerns the policies and effects of IMF and World Bank on other countries that the US manipulates as trade partners. Bottom line is the US would not qualify under these policies for loans from the institutions that we use to control other countries.

Just to let you know, I am not racist when I mention the reality of the local situation that I observe on a daily basis. In LA at least, and as far as I can tell in California, there is a twin or mirror cash economy of immigrant labor. The government policies support it actively by ignoring existing statutes on a wholesale level. This is a program to use the taxpaying base to subsidize business interests. There is no border other than on paper or in historic memory. The policies hurt everyone and contribute to larger problems of urban decay both in housing stock and support infrastructure / services. We are bankrupt.

Consider that in the 1960's and into the early 1970's the United States lit the US Mexico border with stadium flood lighting. You could read a newspaper at night within a mile of the border near Mexicali - Calexico. The US govt. was interested in stopping illegal immigration at the time. That is no longer the case. Based on behaviors, not rhetoric, the interests of govt. at a variety of levels is to allow a flood of cheap semi-skilled and skilled labor to service corporations for short term profits.

Case in point, in LA, the LAPD if you are hispanic looking the police are instructed not to ask for any ID, insurance info, registration, etc. when involved in a car accident. If you are hit and have been here for generations, you are grilled as the victim. It is pretty ludricious. I have seen it and the person hit is generally very shocked that the police are not 'doing their job, infact refusing to do it. The police here assume that if you are hispanic you are illegal. Because the legal system is about getting money into the general fund, they will not expend the effort for something that they have determined has no income producing effect. Unless you come under scrutiny of Homeland Security for some reason, as an undocumented or illegal immigrant or worker, one is home free when they arrive on California soil. If you end up in INS custody, you have more rights than any person who brings it to their attention - visit the Federal Building at 300 N. Los Angeles Street in downtown LA. You can go to a public hospital and let the established legal taxpayers foot the bill. I can not imagine that this would be the case in the heartlands of rural America. The entitlement aspect of public services would be non-existent. In hospitals the scenario is similar. There is a new company that voluntarily sends illegals in private Southern California hospitals back to Mexico - hot story from the LA Times over the weekend picked up in yesterdays Seattle Times. The problem is exacerbated in the city of San Diego along the Mexican border which has no public hospitals. The problem falls on private facilities. http://seattletimes.nwsource.com/html/nationworld/2001788103_mexpatients11.html.

The greed for cheap labor of all sorts has led to what I consider a defacto welfare program for business. Immigration, hospitals, schools, non-compliance with laws that cross all strata of urban life here benefit business and consumers only on the short term. The costs are paid for by everyone, and go directly against what normal people consider the laws on the books as written....... particularly federal immigration statutes.

If cities are bankrupted by services to the 'poor', what can be done to alter the situation. A statistical analysis of the 'poor' in LA would most probably reveal that 'undocumented workers'- the new euphumism giving them some status..... are consumers of public services in medical aid as uninsured. These create a large deficit that is a contributory factor to our local and state deficit.

Now consider in the total recall scenario, the decriminalization of undocumented workers by providing them with California driver's licenses. The assumption is that they will go out and buy insurance, etc. and be good californians. But the reality is that virtually anyone from any country - in addition Mexico or central America could get off a plane at LAX and disappear into the woodwork. Terrorists would not have to work very hard at all. The soon to be former gov. Gray Davis refused to inform the mainstream media on repeated telephone calls as to when and where he would sign the new legistlation. However, it was announced in the Spanish language media with great hoopla - bring your friends for the party. The Mayor of Los Angeles, James Hahn and the Gov. were in attendence to celebrate. I can not imagine that worthless California ID's will benefit the average Californian in the long term. Carrying a US passport might become necessary when you travel and want to rent a car or go thru screening on a commerical airliner.

The tripling of the car tax locally was the basis of the gubenatorial recall initiative. Ironically, it was money specifically slated for local municipalities only for fire and police services. With the whole ridge of the mountains from Ventura to San Diego ablaze, no one would at this point fault the car tax. We have to pay for things of value. The new guy is going to sound like a fool as he tries to get rid of it. Hindsight is so accurate.

Another thing to realize on the economics of trade. The Chinese operate and manage the Panama Canal. A good percentage of goods imported through the port of Los Angeles and Long Beach are actually transhipped across the US via rail (Alameda Corridor project) to ports in Texas. They then go back onto cargo ships and are sent on to Europe and the middle east. We use increasingly automated ports and rail to compete directly with the Panama Canal. Some California senators husband is a multimillionaire on this trans-ship business (either Mr. Boxer or Mr. Feinstein working closely with Zim). I look directly at the mouth of the Los Angeles harbor, and have watched the expansion of the combined ports accelerate dramatically over the last 6 years. The number of shipping containers (TEU's) increase about 25% every year. These are not dollars, these are number of containers. The dollar value is about 6% a year. That equates to more and more cheap goods consumed by WalMarts and Targets and everyone else. This is obvious and palpable where I live.

A similar effect on the economics of labor. The WTO and NAFTA are in fact a dismantling of what would be considered traditional American values developed in the 1st half of the 20th century. At the heart of it is child labor laws, educational standards and what might be considered by as 'human rights'. We do not use cheap child labor on US soil, instead having our children in schools. NAFTA and other trade agreements do nothing to regulate working conditions, instead focussing on free trade and competition. This is facilitated to a great degree by the lack of mandates for worker ages. Do the math. If a pair of Rockport loafers costs as much made in China and imported as it did when made on US soil, what is the purpose or benefit to the average consumer here? ......Or an "American" car made of components produced offshore. None that I can gleen.

What happens is that if it is not a cost to be considered in unregulated labor off of US soil, eventually it will be the status quo matching condition on US soil. The strikes of the MTA mechanics and grocery workers are over benefits - health benefits, not wages. Corporations will refuse to pay, it is not a matter of if they are able.

What can cities do to be a more liveable place, when we are bankrupting ourselves and a sustainable tax base by a sucession of short term policies? Is cheap labor the end all be all? Sure seems like it around here.

A note: if I were a Mexican, I would have been the first one under the border fence. We have more - presently, but for how long? The comment about US engineers exporting themselves to Asia has long term merit.

Any thoughts from other major metropolitan areas??

e-)
 

The Irish One

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Art, we are on the same page! I'll check out the book. By the way is the Serb and Croation population new in your parts? I've noticed a lot of Serbs, some Croats in my part of northern San Diego county and they're recent first generation immigrants.

The California economy is a bad joke waiting to get worse. We're in deep for this whorish uncriticized greedy expansion and this "irrational exuberence" to borrow from Alan Greenspan, is going to kick our collective ass. I didn't know that San Diego doesn't have a publicly owned hospital, for some reason I thought UCSD med center was public?, I don't know. Preying on the immigrant is fair game in the business climate these days and we will pay for it even more than we are. Why wouldn't voters decide to cut social services in the future? When average people don't have a say in federal immigration policies coupled with not needing the state and local gov. services, they will have a say with their votes to support referenda that take direct aim at cutting funding to abused institutions for general welfare purpose, be it education, medical, social service, preventative srvice. The federal government presently will NOT pay for illegal immigrant bills, be it any of the aforementioned.

Today Colin Powell met with Mexican delegates to discuss these immigration issues and clearly the Mexican delegates were pissed about the lack of accomadation to their desires. But don't fret the Mecican government has its agenda and as long as the people want to leave Mexico it's fine with DF, because we all know if your poor in Mexico tough shit -says the federalis. And the US can't get enough of cheap willing voiceless labor.
 
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