Are remittances as bad as oil?

Are remittances as bad as oil?
By Victor Davis Hanson

http://www.JewishWorldReview.com Economists have long pointed out that relying on oil as a natural resource can be a long-term disaster for a developing nation. The income from exporting petroleum provides cash infusions that can distort a country's economy and mask structural problems while impeding reform. Petrodollars act like a lethal narcotic: A formerly impoverished country depends on short-term relief from oil profits at the risk of being reduced to an enfeebled addict.

Easy oil income also often promotes dictatorial government by allowing nationalist thugs to buy pricey weapons to threaten neighbors or to buy off internal dissent with lavish cash subsidies. Take away oil from Venezuela and Hugo Chavez would be just another failed Castro. Evo Morales is able to offer the old bankrupt socialism to poverty-stricken Bolivia largely due to the country's natural gas reserves.

Mexico also suffers from this unhealthy oil-exporting syndrome, as the government uses profits from its inefficient state-run industry to spread around subsidies in lieu of enacting long overdue wealth-creating measures. But worse still, Mexico suffers a double whammy by also receiving between $10 billion and $15 billion annually in remittances from its expatriate population in the United States.

Exporting its own poor turns out to be about the cash equivalent each day of selling on the open market about half a million barrels of $70 a barrel oil. The muscles of Mexico's former residents can prove just as deleterious as oil derricks to the long-term health of the country's economy.

Millions of unemployed Mexicans are now dependent upon money wired from the United States, where low-skill wages are now nine times higher than in Mexico. On the national level, such subsidies, like oil windfall profits, allow just enough money to hide the government's failure to promote the proper economic conditions — through the protection of property rights, tax reform, transparent investment laws, modern infrastructure, etc. — that would eventually lead to decent housing and well-paying jobs.

More @ http://tinyurl.com/ghybd jewishworldreview

The last effective government Mexico had left when the Spanish were kicked out by the natives. Since then Mexico has suffered through one two bit dictator or just plain corrupt politician after another. What Mexico has now is just another corrupt politician who is living high on the hog while his people starve or illegally invade the US.

It's insightful to note that in most of the former Spanish/Portuguese colonies real republics that look after their citizens welfare is a rare thing as most of these former colonies either fell into the clutches of left-wing-nuts or right-wing-nuts.