Free-market solution to America's immigration dilemma

More than 1.7 million Salvadorans live in the U.S. and about 240,000 reside in the Washington, D.C. area. El Salvador which is the size of Massachusetts remains one of the most violent countries in the world with 2,492 of its 6.1 million citizens murdered in 2013. Today violence in El Salvador is mostly attributed to gangs that vie for territory and drug trafficking routes. 

According to many Salvadorans I have spoken with there is still a lack of opportunity in their country due to instability, a poor education system and lingering institutional weakness. Many Salvadorans who wait for a day job at Home Depots around the Washington, D.C. area would like to return to their country and be part of its rebuilding. Indeed, Cynthia J. Arnson, a scholar at the Woodrow Wilson Center, argues that Salvadoran expatriates play a critical role by sending remittances home but that is not enough. El Salvador needs people to rebuild the economy and provide education and job opportunities to keep people from joining gangs.  According to the Central Bank of El Salvador it received $3.6 billion in remittances last year.

“As important as the remittances are to subsidize consumption it is not the same as creating productive capacity," Anson said.

Yet this productive capacity can be created if President Obama and members of Congress work together to implement four simultaneous initiatives. First, the establishment of micro-loans to assist Salvadorans with start-up capital to rebuild their home country. This one time capital raise of $5.1 billion would allow the 1.7 million hard-working Salvadorans to each get a loan of $3000 to use as start-up money to build a business back in El Salvador. The experience Salvadoran expatriates have gained in the U.S. could be put to good use in rebuilding their country. For example, a group of 100 expatriates could pool their resources from these micro-loans and invest $300,000 in starting their own Chipotle franchise in El Salvador. 

Second, to sustain this desire to rebuild their country, the U.S. can decouple a percentage of its trade with China and reorient it to El Salvador. Each year the U.S. imports $8 billion in low quality toys from China. Imagine if through a public-private partnership rich countries from the Persian Gulf  invested in plant and equipment to manufacture toys in El Salvador. Simultaneously American toy companies would sign long-term contracts with these manufacturers based in El Salvador to buy their products. Last year foreign direct investment in El Salvador was a mere $78 million. A recurring annual $8 billion injection into El Salvador's economy would create a sustainable job creating boom. 

Third, Congress must immediately pass the Dream Act so as to allow Salvadoran students who are illegally in the U.S. to take advantage of in-state tuition and obtain degrees in public health, medicine, engineering, accounting, hotel management or biology. Armed with these degrees, young Salvadorans can fan out to the farthest corners of their homeland and help rebuild their local communities. If one of the Achilles Heals of El Salvador is its poor education system, then graduates of American universities would be ideal candidates to infuse a new culture of learning into the fabric of El Salvador’s national psyche. 

Finally, as a means to addressing gang violence and provide stability so as to allow investments to take hold and create wealth, the U.S. can deploy an OAS sanctioned force to El Salvador but only for a three year period. The age-old axiom that capital gravitates towards stability holds true in this case as well. 

For too long, Washington has ignored its southern neighbors and it is time to reorient our attention to stability and wealth creation in countries like El Salvador.

Sobhani, Ph.D. is CEO of Caspian Group Holdings.