Lou Dobbs has once again resigned his position at CNN. The first time he left CNN to go into the space exploration business, but that venture never got off the ground. Now Dobbs claims he needs new opportunities to push his advocacy journalism. While his critics both inside and outside CNN have been turning up the critical heat on his broadcasts, the more obvious reason for his departure is the declining importance of his number one issue: illegal immigration.
If reports of an $8 million buyout are true, it would lend credence to the idea that the show was faltering economically, not journalistically, and that it was not simply that Dobbs wanted to move on to other opportunities.
The declining importance of illegal immigration led to a decline in Dobbs’s audience and thus his importance to CNN. Bill O’Reilly of Fox News (a potential employer of Dobbs) interviewed Dobbs and asked the following question: “On CNN, you did quite well in the ratings when the immigration thing was in the forefront. And CNN actually moved you up from a — what they call the early fringe to 7 o’clock, because your ratings were strong,” O’Reilly said. “Then your ratings leveled, as well as all the ratings for CNN, and began to go down. Just correct me if I’m wrong.” Dobbs did not correct O’Reilly, replying instead that it was his attacks on President Obama that had put him in the dog house at CNN.
In March of 2007 — near the peak of illegal immigrant hysteria — I pointed out that illegal immigration is not the most important problem in America and that reporters like Dobbs should pay more attention to the activities of the Federal Reserve and the Military-Industrial Complex. Migration is naturally balancing as long as government provides no incentives like free education and healthcare.
I also pointed out that the underlying cause of the influx of illegal immigrants (and the popularity of his show) was the housing bubble.
Immigrants, particularly illegal Mexican immigrants, have found good jobs in industries associated with the housing bubble. Large numbers of immigrants work at jobs in the construction, landscaping, and road construction industries. Employment in the construction industry alone is currently nearly two million jobs above trend (7.7 vs. 5.9 million). Of course many of the illegal immigrants are not even counted in such statistics, but just take a look at residential, landscaping, and road construction sites and you are likely to find many non-English speaking immigrants.
I then predicted that when the housing bubble bursts, the demand for labor from illegal immigrants would fall and the flows of new immigrants would slow and that many would even return to Mexico when they failed to find work.
Of course all of this will have to be undone because all bubbles eventually burst to one extent or another and all booms are eventually followed by “corrections” that drive whole economies, regions, and industries into economic slumps. A slump in construction will lead to unemployment and bankruptcies. In terms of immigrants we will likely see many return home, or turn up on government welfare rolls another legacy of the Greenspan Fed.
I took more email heat from that article than anything I have ever published. About half of the emails were from irate fans of Lou Dobbs (can you imagine a fan of Lou Dobbs who was not irate?) while the other half questioned my reasoning about illegal immigration and its possible connection to the housing bubble (many also questioned the existence of the bubble).
Since March of 2007 the clock has been ticking on Lou Dobbs and the importance of illegal immigration. I have continued to track this story and such things as the decline in Mexican remittances (money sent back to Mexico from Mexicans living in the US).
When the housing bubble started to unravel the first trend to emerge was the decline in the number of illegal immigrants coming into the US. According to a study by the National Statistics and Geography Institute there was a 42% drop in Mexican emigration in 2007, a trend that continues to this day. Of course you have to take such studies with a grain or two of salt, but you can confirm such trends just by looking out your window.
There has also been a noticeable decline in the amount of money being sent home to Mexico. When legal and illegal immigrants have a tougher time finding work, their take home pay falls and they have less money to send home. I have been tracking statistics on Mexican remittances which clearly showed that a change in trend was coming. Recently, the Mexican Central Bank announced that remittances had fallen for the first time on record.
As jobs disappeared, so did the immigrant workers and eventually such unemployed workers must consider the option of returning to Mexico even though they prefer living in the US. So far the number returning to Mexico has remained under half a million per year, but if current trends hold we could soon be looking at a net emigration of Mexicans from the US back to Mexico.
Of course there are good reasons for immigrants to want to avoid this solution. They like living in America. They love having the opportunity to work and make money. They want to send money back to their families and they realize that it costs more than $1000 to be smuggled back into the US if they leave. They also realize that no matter how desperate their situation, things are probably worse in Mexico. The plight of these families is highlighted by a new report that money is actually being sent from people in Mexico to their relatives living in the US. These are the people who currently represent the bottom rung of the economic ladder.
I would find it very difficult to be a multimillionaire making money by denigrating people who were so desperately poor. Lou Dobbs was dead wrong about the immigration issue. He thought it would kill the country. It can now be seen as a self-inflicted wound made worse by subsidies and the Fed’s housing bubble. Perhaps we are all better off and Lou can return to his earlier venture of traveling into outer space.
Mark Thornton [send him mail] is an economist who lives in Auburn, Alabama. He is author of The Economics of Prohibition, is a senior fellow with the Ludwig von Mises Institute, and is the Book Review Editor for the Quarterly Journal of Austrian Economics. He is co-author of Tariffs, Blockades, and Inflation: The Economics of the Civil War and is the editor of The Quotable Mises.