Don Goyo speaks…
CENEPRED regigistered 191 explosions within the lava dome of Popocatépetl within a five hour period. He’s smokin’ …
Fascinating! From, “TRADE: The Nafta Paradox,”, Berkeley Review of Latin American Studies, Spring 2014.
Two interesting points. First, that the Mexican left was correct in 2006, when they (meaning AMLO) identified expanding the internal market as essential to improving economic conditions within Mexico, and second, that U.S. workers are right in “blaming Mexico” for stagnant wages… but only because Mexican wages have been stagnant, “thanks” to anti-union provisions within the NAFTA agreement.
..sharply expanded trade has brought benefits to Mexico, although it has hardly been the “undeniable success story” that some herald. Mexico has gained much-needed jobs, access to advanced production technology, and new ways of organizing work. However, only 3 percent of border plant exports are sourced domestically, and a mere 0.4 percent of gross domestic product (GDP) is invested in research and development. Moreover, low wages diminish purchasing power, limit the domestic market, and slow Mexico’s potential growth. Carol Wise points out that Mexico’s per capita income remains mired at “about one-third that of the wealthier countries in the OECD [Organization for Economic Cooperation and Development].”
The United Nations Development Program concluded in a 2007 report that, “Nafta has produced disappointing results in terms of growth and development.” Economists Gerardo Fujii Gambero and Rosario Cervantes Martínez writing in the April 2013 issue of the UN Economic Commission for Latin America and the Caribbean Review found that “the gap between exports and GDP [in Mexico] has been widening, which indicates that the export sector is underperforming as a driver of economic growth.” They argued that “the ability of exports to galvanize the economy will be heightened if export activity leads to an expansion of the domestic market.”
Rising Productivity and Declining Wages
While very different economies, the United States and Mexico share similar problems: sharp income inequality, slow growth, high unemployment, and persistent underemployment. These problems are exacerbated by a troubling paradox: rising productivity combined with falling real wages. As a result, much of the economic gain has flowed to the top as workers and communities have faced downward pressure on wages and working conditions. While this productivity/wage disconnect emerged as a key issue during the Nafta debate, it now feeds into a growing concern in many countries throughout the world, including the United States, about the corrosive effects of economic inequality, which President Obama has called the defining issue of our time.
Mexican Productivity and Compensation, 1994-2011
Consider the dimensions of this disconnect in Mexico. Mexican manufacturing productivity rose by almost 80 percent under Nafta between 1994 and 2010, while real hourly compensation — wages and benefits — slid by nearly 20 percent. In fact, this data understates the productivity/wage disconnect. Wages in 1994, the base year, were already 30 percent below their 1980 level despite significant increases in productivity during this period. Although they are producing more, millions of Mexican workers are earning less than they did three decades ago.
Economists often maintain that if wages are low, their level simply reflects low productivity. In the Mexican case, however, low wages exist in spite of strong gains in manufacturing productivity. These low wages reflect a number of factors, from government policy to globalization, but a central issue is the lack of labor rights in the export sector. As a result, it is difficult to form independent unions that can exert pressure to restore a more robust link between productivity and wages. If workers are unable to share in the gains, high-productivity poverty becomes a danger. The damage affects more than Mexican workers. The gap between productivity and wages results in low purchasing power, which depresses consumer demand and slows economic growth.
This gap in Mexico also puts downward pressure on wages in the United States, contributing to a U.S. wage/productivity gap that began opening up in the mid-1970s. Between 1947 and the early 1970s, strong unions forged a link between rising productivity and higher wages, and the entire economy benefitted. As union strength waned, the U.S. wage/productivity gap opened and wages stagnated. What does this have to do with Nafta? A key question during the Nafta debates in 1993 was whether Mexican and U.S. wages would harmonize upwards or be pulled downwards by the agreement. Proponents argued that expanding trade alone would lift all boats, while critics maintained that effective labor standards were essential to insure that everyone would benefit.
From an interview by Greg Granden, published in The Nation (31 October 2014):
GG: Immigration from Mexico and Central America is an issue that, in the United States, reveals the close connection between domestic and foreign policy. Do you see this as one potential source of hope and resistance?
NC: To this moment, Mayans are fleeing from the consequences of the virtual genocide of the 1980s, primarily at the hands of José Efraín Ríos Montt, whom the historian Stephen Rabe describes accurately as “the Guatemalan butcher who supervised the eradication of 100,000 mainly Mayan people”—or, if we prefer, a man “of great personal integrity” who was getting a “bum rap” from human rights groups, according to the boss in Washington, whose spirit now hovers over us like “a warm and friendly ghost” in the Kim Il-sung–style renditions of Hoover Institution scholars. The flight of Mexicans was anticipated: Clinton initiated the militarization of the border when NAFTA was passed. It was quite predictable that NAFTA would destroy much of the campesino class, unable to compete with highly subsidized US agribusiness, along with other effects by now well-documented. Immigration follows as night follows day. Much the same is true throughout the region. The consequences of these policies engender conflicts within the United States. Super-cheap and highly vulnerable labor is a boon to business. But it is perceived by the white working class as a threat to its subsistence and cultural values, which are already felt to be under threat for many reasons, even more so as whites will become a minority in the not too distant future. These tendencies are being exploited in ugly ways by political leaders who are dedicated to service to the “1 percent” but need a voting constituency. That’s been the natural decision of strategists for the Republicans, who put aside any pretense of being a traditional parliamentary party long ago, also shedding their moderates. Now centrist Democrats are following not too far behind.
There is indeed resistance, a reason for hope, but the prospects will be grim if the US socioeconomic and political system persists in the vicious cycle that became established in the 1970s and escalated since, with a sharp concentration of wealth (increasingly in the financial sector) leading reflexively to concentration of political power and legislation to carry the cycle forward. It’s not inevitable by any means. There are encouraging signs at last of popular opposition, notably in the Occupy movements. But there is sure to be hard struggle ahead.
(Sombero tip: Bill Wilson, San Miguel Allende)
Photo: Getty Images, via Hello (GB)
The British heir to the throne is on a state visit to Mexico… not that anyone particularly cares about it.
The Institutional Revolutionary Party (PRI) says it will support all public and social action that counters the attacks on freedom, human dignity and social harmony, because “violence breaks up the political system”.
“Our party reaffirms its support for the efforts made by the Government of the Republic in strenghtening the culture of legality in consolidating democracy, and is redoubling efforts to assist in promoting the prosperity of all, to bolster social development, and work for security, justice and peace,” the statement read.
(from a report by Suzette Alcántara in El Universal)
Oh, really? PRI and PAN … who between them have been synonomous with “impunity” for political criminals, find themselves on the Road to Damascus now that the third major party, PRD, is having its own difficulties with being embarrased by its own office holders… especially the former governor of Guerrero, who — just incidentally — was a PRI stalwart, but ran on the PRD ticket. And, of course, the dreaded AMLO, having, as a PRD leader, naturally spoken in favor of his party’s candidates, is always a tempting target for his long-time foes in the two neo-liberal parties and his frenimeis in the supposedly Social Democratic PRD.
If the PRI had come out with this statement back about… oh… 1968… we might have avoided a few of those “embarrasing” political scandals along the way… you know… the ones littered with unsighly corpses (Tlatelolco, 1968; Jueves Corpus, 1972; the “dirty war” 1970-90, Acteal 1997, and on and on and on). PAN, having less time in governance, made up for it in the body count, with the “drug war” … and with nothing but scandals during their 12 years in Los Pinos.
Not that PRD … or any party … has clean hands and everyone involved in politics here has only the purest of motives and best of intentions, but really… when has the PRI… or PAN… or PRD ever been so much abut “promoting the prosperty of all” rather than protecting themselves?
A short film by Ashley Graham, Kate Reynolds and Lindsey St. Pierre.