Living Abroad: The Illegal Emigrant Phenomenon

What’s going on in Arizona? The state legislature has passed a law that allows the police to stop anyone on the street and ask him for his papers. If his papers are not in order, the fellow is in trouble.

The idea is to discourage illegal immigrants.

Here at The Daily Reckoning our views on immigration are about as unpopular as our views on everything else. We listen to CNN en Espagnol in the morning. From what we can tell, immigrants from across the border are doing the country a big service. And illegal immigrants are the best kind. They work cheap. They stay out of trouble. They use few public services. And they don’t vote. What’s more, they know how to dance.

If we were all illegal immigrants, the country would have a much healthier economy. Labor rates would fall to levels where we could compete with other exporters. Social costs – food stamps, unemployment compensation, social security, medicare/aid – would drop. And non-voters couldn’t demand more bread and circuses from the legislature (currently, 47% of voters pay no taxes…)

Meanwhile, our old friend Jim Davidson thinks he’s spotted a new trend. For the first time ever, he says, immigration – legal or illegal – is not a problem:

“Note that according to the Center for Immigration Studies, a think tank that agitates for tighter border controls, the number of illegal immigrants living in the United States declined to 11 million in 2008 from 12.5 million in 2007. For the first time since the depths of the Great Depression in the early 1930s, more persons appear to have left the US than moved in.”

This is typical of a nation in decline, says Jim. It’s what happened to Great Britain after it lost its empire.

And now, there’s a new phenomenon: the illegal EMIGRANT.

First this news item from The New York Times:

WASHINGTON – Amid mounting frustration over taxation and banking problems, small but growing numbers of overseas Americans are taking the weighty step of renouncing their citizenship.

The Federal Register, the government publication that records such decisions, shows that 502 expatriates gave up their US citizenship or permanent residency status in the last quarter of 2009. That is a tiny portion of the 5.2 million Americans estimated by the State Department to be living abroad.

Still, 502 was the largest quarterly figure in years, more than twice the total for all of 2008, and it looms larger, given how agonizing the decision can be. There were 235 renunciations in 2008 and 743 last year. Waiting periods to meet with consular officers to formalize renunciations have grown.

It is not easy to renounce your citizenship. If you are wealthy, the costs can be very high, as the feds try to punish you for leaving. Davidson comments:

Just as there are “illegal immigrants” to the United States, so there are also now growing numbers of “illegal emigrants” from the United States. While statistics are necessarily sketchy, evidence suggests that there has been a dramatic upsurge in the number of US persons living abroad. According to the Association of Americans Resident Overseas, (AARO) apart from the military and other US government employees, 5.26 million US citizens reside abroad, a 67 percent increase since 2008. “Among the benefits the study cites of a life abroad are statistics that show expats earn more, pay less tax, have a better work/life balance, have an improved quality of life, enjoy broader cultural opportunities, and enjoy better job prospects.”

In the opinion of the US State Department the AARO estimate is 25% too low. The State Department suggests that about 1.34 million Americans have become “illegal emigrants,” which is to say that they have gone abroad and “fallen off the radar.” As one report stated, “If an American living abroad stops paying their taxes, stops visiting the US, stops using embassy or consulate services they will not be OFFICIALLY counted anymore.”


Bill Bonner
for The Daily Reckoning

The Daily Reckoning