For those not following the news closely, Arizona recently decided to tighten their immigration laws. Of course, most of the laws have been in place in one form or fashion at the federal level for a long time but Arizona has signaled in a very political fashion that it will get serious about enforcing them. After all, politicians are being told to “do something” about jobs and those immigrants are taking up all the American jobs, right?
I hate to keep quoting Prechter but he again called this type of behavior as one symptom of deflation. Basically, when the credit was expanding the money supply thus making the economy boom artificially, Americans (including Arizona residents) turned a blind eye to rampant immigration violations because, let’s face it, we enjoyed the low paid slave labor that illegals represented. illegals worked for low wages, paid sales tax on their consumption in the US and did not get unemployment or social security. Yes they took advantage of walk in emergency room services but it’s pretty clear that they traded their labor, their lives very cheaply to us. Fast forward to today and Americans suddenly have decided that a lot of work that used to be done mainly by illegals is no longer beneath us and so the illegals must be run off in order to open up jobs for Americans who will at least get minimum wage (and now health care benefits too). Prechter wrote years ago that there would be a rise in nationalistic mood and that it would negatively affect immigrants. Here is one example of the nationalistic writings that are floating around out there today: http://www.renewamerica.com/columns/weaver/100519
With all that in mind we are starting to see some very interesting inter-state dynamics. California, not content to be perhaps the most bankrupt state in the union, has become outraged at Arizona’s “new” laws to the degree that some of the cities, including Los Angeles, have voted to boycott Arizona commerce where possible.
At first glance I thought to myself that it is completely ridiculous that states boycott each other as we continue down the road toward a potential depression. What are these people thinking? Do they not care about their own economies? But then I read this part of the article:
“Among the contracts with Arizona companies that conceivably could be terminated include those for helicopter services, Taser guns, waste management, engineering and surveillance equipment. Hahn said "the best scenario" would be to turn around and give those contracts to California suppliers.
Ah ha. Perhaps this boycott business has little to do with morality and a lot to do with economic protectionism like the kind that many people believe underpinned the Great Depression. It seems to me that CA is trying to do to AZ what AZ is doing to immigrants: kick them out to make more jobs at home. Of course the whole thing is stupid and the consequences to CA will be very negative if they persist in playing the game. Perhaps AZ will just cut off the electricity to CA and tell them they didn’t want to accept IOUs in 2011 anyway…
