It’s the remittances not poverty

We hear that President Biden and President Lopez-Obrador spoke by phone.  According to news reports, the Mexican president said that the U.S. is offering US$ 4 billion to Central America.  

I guess that President Biden is hoping that money going south will keep caravans from going north, or something like that.  It sounds good but it won’t really work.

The biggest problem with Mexico and Central America is that the leaders have grown accustomed to remesas or remittances.  They flow south every week, from one guy in Texas sending mom a $100 a month to even bigger numbers.  These remittances are the social net for many of these countries, as we see in this WSJ report:    

Mexicans working in the U.S. sent record amounts of money to relatives back home last year, illustrating the resilience of the U.S. economy despite the shutdowns imposed to fight the pandemic.

The surge in remittances, which surprised analysts and migrants alike, provided a lifeline for many poorer Mexicans in the midst of the country’s biggest economic slump in decades.

Remittances rose 11% to $36.9 billion in the first 11 months of the year, more than the record $36.4 billion sent in all of 2019, according to figures released this week by Mexico’s central bank. The average remittance was 4.3% higher at $340, the bank said.

In Guatemala, El Salvador and Honduras—the Central American countries that make up the Northern Triangle — remittances slumped in April but later rebounded, and were up 3.4% from January through October.

So the money goes south and keeps going south.  

In theory, dealing with the root cause of poverty is a noble idea.  In this case, they are not coming here because they are poor.  They are coming here because they can make more money and send dollars to mom.

Can it be stopped?  Not really.   Unfortunately, the politicians are used to having their folks outside taking care of the people inside.

P.S.  You can listen to my show (Canto Talk).