Fences and restrictions

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by Nonso Obikili

My column today is on fences. Maybe not only the physical fences that you build around your house but restrictions in general that attempt to stop or limit the movement of something. My thoughts on this were brought to the fore by something I read with regards to the United States “problem” with migration from Mexico. I put problem in quotes because I still do not understand what the problem is. But lets table that for now.

In the late 1970s the idea of a Mexican illegal immigration problem became a hot political topic in the United States. All these Mexicans were coming to the United States and taking American jobs or changing the culture of America or any of the typical stories that goes with the migration of people. The then president decided to appoint a former military general to take over the department responsible for manning the border and dealing with illegal immigration. This general happened to have been in charge of defending and manning the border between North and South Vietnam during the Vietnam war. He did what most good military generals do and implemented a relatively efficient system of border controls and patrols essentially making it much more difficult from anyone to illegally cross the US-Mexico border. Prior to the general’s appointment crossing the border was close to a casual stroll. So, why was this a problem?

A couple of years prior to this new border protection move a couple of sociologists had started studying the lives of Mexican migrants. They undertook the Mexican migration project which today is still one of the largest and longest running immigration studies in the United States. They found that most Mexican migrants who came to the United States to work, mostly in seasonal jobs, went back home afterwards. According to their research, just as many Mexicans were leaving as were coming in. At least before the increased border control measures.

After the increased border control measures the story changed. People still tried to come. Coming in became more difficult of course but the incentive of higher pay in the United States was still there, and so people took the risks. However, people stopped going home. The difficulty in crossing the border applied to both those who were coming and those who were leaving. Those who wanted to come still came because of the income benefits, but those who would have previously left did not leave because the costs of leaving became significant. In essence, by the time the border control measures were implemented the net migration to the United States actually increased because people no longer returned home. They just stayed put. They fence that they used to try to keep people from coming in also kept people from going home.

This story of fences is relevant to Nigeria not just in the context of our border issues but in other contexts as well. Fences and similar restrictions tend to work both ways. On the current border closure issue, we have made it all about stopping “illegal” imports, but exports also pass through those same borders. The very same exports we are trying to promote have fallen victim to the border restrictions. What will the net impact be? The same can also be said of the “fence” erected by the central bank to limit the outflow of foreign exchange. Over the last six years all sorts of policies from direct bans to onerous documentation processes have been implemented to supposedly limit the outflow of foreign exchange. But do those same restrictions also serve to limit the inflow of foreign exchange too? Probably. Imagine an investor from Kenya who wanted to invest in a yoghurt factory but hears that the yoghurt factory will not be able to import milk concentrate unless they key into some plan crafted by people who have never tendered to or milked a cow in their entire lives? You can guess what that Kenyan investors decision will be. As has been demonstrated time and again, almost every economic activity requires some inputs from the rest of the world. Restricting that access also restricts economic activity.
As we erect all these policy fences that we seem to be fond of erecting let us not forget that fences work both ways. The same fences that keep things in also keeps things out.

NONSO OBIKILI

Dr. Obikili is chief economist at Businessday

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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