Memo To: John McLaughlin
From: Jude Wanniski
Re: Reform the IMF
Congratulations on a wonderful episode of "The McLaughlin Group" on Sunday, September 5. To devote the entire show to the "immigration issue" was a bold stroke -- and you assembled a good group to kick it around. You had opposite poles representing the open-borders crowd and the close-the-borders crowd, as well as Eleanor Clift and Tony Blankley, hemming and hawing somewhere in the middle. Your position is not quite "close-the-borders," but to advocate a temporary moratorium on federal programs to allow more and more educated immigrants is in that direction. Exactly 25 years ago, in a September 1974 op-ed for ,The Wall Street Journal, I laid out the basic prescriptions for our national economy, "It's Time to Cut Taxes," which included the supply-side reforms of the monetary system as well. In the piece, which was essentially an interview with Robert Mundell, the Canadian economist who revived the classical supply-side ideas, I observed that once we fixed our domestic economy, we would have to share this wisdom with the rest of the world. In the reductio ad absurdum, if one country does everything right, and the rest of the world does everything wrong, the rest of the world will migrate to the one country that does it right, and the rest of the world would be empty.
This is why I title this memo "An Alternative to Immigration," which is to "Reform the International Monetary Fund." When you wonder why so many educated people from other countries are clamoring to get into the United States, take a look and you will find their countries have been victimized by the IMF and/or World Bank or U.S. Treasury (which for all intents and purposes is really the puppet-master of the international financial institutions.) It was the Treasury and IMF that engineered the Mexico peso devaluation of December 1994, which sent a million Mexican nationals swarming over the border in search of a better life here. Our Treasury Secretary, Larry Summers, who was one of the ringleaders in that crime against humanity, now has the gall to take credit for "bailing out Mexico," by which he means the transfer of U.S. taxpayer funds to the Mexican government so it could pay its hard-currency debt to our banks.
If you look back throughout American history, John, you will find open-immigration policies always were supported by the commercial establishment. When they could not trump the Jeffersonian policies of opening up the western lands -- which siphoned off their cheap labor, the industrialists backed the Hamiltonian policies of open immigration and a modest protective tariff. The liberal immigration policy we have today is supported by the same commercial establishment that pushed Mexico into a wicked recession that freed up its cheap labor. As you noted on your program, we think nothing of skimming the rest of the world of its most talented people -- except for their lawyers. I totally agreed with Dan Stein of FAIR, who said that if we didn't have access to this cheap labor, we would be forced to upgrade the skills of our native-born minority population. We are not only warehousing almost 2 million blacks and Hispanics in our federal, state and local prisons, we also are doing almost nothing to upgrade their skills while they have nothing better to do all day than make license plates.
When I say "Reform the IMF," I mean turn its programs completely upside-down. Instead of giving it billions of dollars of taxpayer money to be used to destroy the economies of the poorest countries with austerity schemes that always fail, change its personnel and policies to finance supply-side growth policies. If Mexico were growing at 10% a year, which it could easily do if it did not have the IMF on its back -- preventing it from cutting oppressive tax rates and stabilizing the peso -- Mexican nationals who have flooded into the Southwest would be going home to participate in the boom. We would be without their cheap labor, so we would have no choice but to train our native-born population, educate our prison population, and allow financial capital to flow from the top of our economy to the bottom -- not by ordering banks to lend money to bad credit risks, but by eliminating the tax on capital gains, which rewards those investors who invest in successful long shots.
Again, my congratulations to you with this "Memo on the Margin" to a McLaughlin on the Margin. After 25 years of making these arguments with zero resonance in the news media, I was delighted to see you devote an entire show to the matter. The first of many, I hope, as the presidential campaign begins to unfold now that vacations are over, the kids are back in school, and their parents begin to focus on the serious issues facing the nation and the world.