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Two weeks ago, Eric Cantor turned the world of politics upside down with a crushing loss; it was the first time, ever, that a sitting majority leader lost a reelection attempt. While there were several factors (including a perceived aloofness with constitutions, and cozy relationships with big business headlines) that focused on Cantor's moves toward so-called immigration reform.
Last week, President Obama's handling of immigration was also a shocker ion- when 65% of Americans disapprove, there is something horribly wrong. This is a hot-button issue and will be influential in upcoming elections. The politics of it all may involve some xenophobia, but for the most part, it comes down to economics and the rule of law.
Americans have been horrified by Russia's boldface moves into Ukraine, which have defied the rule of law, while erasing established borders. With many, it seems indifferent to the US border being porous and violated.
The Economics of Immigration
"Keep, ancient lands, your storied pomp!" cries she
With silent lips. "Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"
There is no debating the benefits of America's melting pot. Millions of immigrants have come to this country to make it their own, assimilated, and have added unique touches and skills. Yes, America has taken in the huddled masses, but those huddled masses have taken their yearning to be free and to leave indelible marks that have enriched and have even helped make America unique and special. Let's face it; this debate is not about legal immigration.
Within the United States, three in four immigrants are legally in this country, and like those that came before them, they are doing remarkable things.
An immigrant or the children of immigrants have founded 40% of fortune 500 companies. These companies employ 10 million workers and are worth $4.2 trillion.
From 1995 to 2005, start-ups by immigrants in Silicon Valley employed 450,000 people, while generating $52 billion in sales.
Many immigrants begin 50% of all start-ups in Silicon Valley.
"For God so loved the world that He gave His only begotten Son, that whoever believes in Him shall not perish, but have eternal life.
The biblical scripture on bags used by retailer Forever 21 underscores the secret to success in America. People who come to this country (legally and illegally) have faith that they will be taken cared of one way or the other. For Do Won Chang and his wife, Jin Sook, it was faith, hard work and a vision. Chang arrived in America at age 18. During his first three years, he worked as a janitor, gas station attendant, and a coffee shop worker.
Longing for the styles back in Korea, he decided to open a small hole-in-the wall store called Fashion 21.
Before long, it was renamed Forever 21, which boast sales of $3.0 billion a year with 500 stores throughout America and other parts of the world. Chang and his wife are said to have a combined net worth of $4.5 billion. Bearing the original name, Fashion 21 is still in business in Highland Park, California, generating $700,000 in revenue.
As Chang's story shows, it is not just technology where immigrant businesses are having an impact. Look at how rapidly immigrants are changing the face of business ownership throughout the country. Since 2010, ownership has surpassed their population in the nation's largest metropolitan areas. I do not have any official stats, but even small towns in states like Alabama have witnessed a huge surge in immigrant-owned businesses.
Burden of Illegal Immigration
Head honchos in Silicon Valley and other business leaders are putting a lot of money and resources into allowing more immigrants with tech skills into the nation. However, there is a crisis of unskilled workers pouring into the system that cannot hold down the job. This crisis has taken a turn for the worse with children pouring into the nation without parents.
According to a report from the Heritage Foundation, the illegal immigrates put a tremendous strain on the system (not counting legal issues) via the 80 means test benefit programs that come under welfare, food assistance, and Medicaid. It adds up to a giant annual deficit.
The average illegal immigrant household in 2010:
The one amnesty program discussed would take away these benefits for 13 years, as taxes are paid would lower the deficit, but only slightly before retirement benefits would kick in and kick the annual deficit to the moon:
- Current annual deficit $54.4 billion
- Annual deficit during 13 years of amnesty $43.4 billion
- Annual deficit during retirement period $160.0 billion
There are a lot of emotions and lots of dollars and cents to consider as well, as the need to make sure this issue does not become any bigger. A wall could be built for $22 billion, which opponents say is a waste of money and mean-spirited. In a country where government debt is $17 trillion, the annual cost already pose a daunting challenge and the wall might not even be worth what taxpayers will have to dole out over a long period in the future.
The economics alone should pressure a solution from Washington, but it is too good of a political hot- potato to solve.
It's not worrisome, but there is a kind of 'all-quiet-on-the-western front' feeling to the market this morning. You get the sense that investors are awaiting news, and maybe even for someone else to make the first move.
o WEC paying $9.1 billion to acquire TEG
o ORCL paying $5.3 billion to acquire MCRS
o AVGO paying $309 million to acquire PXLT
These deals aren't moving the needle, but we like Merger Monday's as part of the overall 2014 theme of bulking up for more rapid growth.