Biggest Threat to Mexico’s Economic Well-Being Isn’t Trump

This is an interesting article from the Wall Street Journal. As a US citizen now making my home in Mexico I feel that it would be timely to share with others both living in Mexico or  having other ties to Mexico.

Biggest Threat to Mexico’s Economic Well-Being Isn’t Trump, Say Some of the Country’s Economists
David Luhnow
Updated Feb. 10, 2017 5:19 p.m. ET

As a high-school student in northern Mexico in the 1970s, Ildefonso Guajardo marked the start of each new academic year with a ritual. His family would drive three hours to a J.C. Penney store in Texas, and his father would give him $300 to spend on a new wardrobe—clothing that was far cheaper and of better quality than what he could find in Mexico’s closed economy.

“Four shirts, four pants, underwear and socks for the whole school term, all in a day of shopping in Laredo,” recalls Mr. Guajardo, who is now Mexico’s economy minister.

Shopping in Mexico was a lousy experience in those days. The country was emerging from four decades as an economy closed to imports, and most items were still proudly—if poorly—Made in Mexico. A running joke was that Mexican TVs made for great radios—because the image was so terrible.

Partly because of that experience, Mr. Guajardo went on to study economics at the University of Pennsylvania and eventually joined the team of highflying economists who negotiated the North American Free Trade Agreement—the first time in modern history that a poor country and a rich one did away with all trade barriers to compete on even terms.

Nowadays, Mr. Guajardo and the other members of Mexico’s Nafta generation find themselves defending the legacy of the pact at a time when its future is uncertain under the new U.S. administration of Donald Trump. Mr. Trump has assailed the treaty as the “worst trade deal ever” and blames it for enticing some American firms to move factories south of the border. He has vowed to renegotiate it or tear it up.

Despite the threats from the new U.S. president, Mexico’s Nafta team all agree on a somewhat surprising idea: Mr. Trump is not the most serious threat to Mexico’s economic well being. The bigger threat is Mexico itself, with its long history of nationalism and Mexico-first economics.

“What worries many of us is not what Trump will do, but what Mexico will do in response,” says Jaime Serra, who as Mexico’s commerce minister in the early 1990s oversaw the negotiation for Mexico. “We can’t go eye for an eye. We need to stay open and stay committed to our economic path,” he says.

While many Mexicans feel hurt and betrayed by a country they had begun to view as a friend and ally, a trade war is going to take a far bigger toll on Mexico’s export-driven economy than it will on a far larger U.S. economy. “It would be shooting ourselves in the foot,” says Jaime Zabludovsky, a former deputy trade minister on Mexico’s Nafta negotiating team.

Before Nafta, developing countries were told by most economists that they needed to protect their local industry against advanced economies by keeping tariffs higher than in rich countries. Even today, the World Trade Organization allows poorer countries higher tariffs (which is why, if Mr. Trump tears up Nafta, the U.S. is likely to face higher tariffs going into Mexico than vice versa).

After more than two decades under Nafta, it hasn’t all been easy for Mexico. Confronted by efficient American firms, thousands of Mexican companies closed their doors, and millions of farmers abandoned their small plots to head to cities or to migrate to the U.S.

But the pact has helped to transform the Mexican economy, lifting millions into higher-paying factory jobs. It has also forced Mexican firms to raise their quality. Mexico is now the world’s largest exporter of flat-screen TVs. Mr. Guajardo now buys his wardrobe almost entirely in Mexico.

“I buy it not because of a nationalistic pride, but because it’s a good product and it’s price competitive,” he said.

The backlash against globalization in parts of the developed world and Mr. Trump’s rise to the U.S. presidency have stunned the generation of economists who convinced Mexico to become one of the most open economies in the world, with duty-free access for 46 countries around the world.

Even now, the Mexican team that negotiated the Nafta deal stands out for its economic credentials. It included more than a dozen Ph.D.s from top U.S. schools such as the University of Chicago, Yale, the Massachusetts Institute of Technology and Stanford—the cathedrals of free-market thought. Their boss was the country’s Harvard-trained president, Carlos Salinas.

For them, the challenge to the pact from the U.S. has upended the world as they knew it and threatens to undo their life’s work. “It never crossed my mind we’d be arguing with the U.S. government about free trade,” says Mr. Serra, who got his Ph.D. in economics from Yale. Alarmed, many of those in the team who negotiated Nafta now find themselves back in the trenches, advising either President Enrique Peña Nieto or Mexican industry on how to respond.

So far, the Mexican government looks to be sticking with its free-trade principles. The country’s leaders hope to finalize an expanded trade deal with the European Union this year, and they are seeking to lower trade barriers with markets like Argentina to buy grains that are normally sourced in the U.S., in case of a trade war with their northern neighbor.

Mexico is eyeing free trade talks with Australia, New Zealand, Malaysia and Singapore—all countries that were in the now defunct Trans-Pacific Partnership trade deal killed off by the new U.S. administration, a senior Mexican official said. Mexico is also considering asking its fellow members of the Pacific Alliance—a free-trade pact that includes Colombia, Peru and Chile—to expand the group to Asian nations.

If Nafta is scrapped, tariffs would revert to WTO levels, with U.S. industrial products paying higher levies to enter Mexico than vice versa—about 5% versus 2.5%. A far bigger hit would come for pickup trucks assembled in Mexico and for U.S. agricultural products entering Mexico, both of which would face tariffs of about 25%. And those are not small flows of goods: Mexico sent $18.5 billion worth of pickups north last year and bought some $18 billion in U.S. agricultural products (Mexico is the U.S.’s top buyer of corn and pork).

Even without the agreement, the architects of Nafta say that Mexico should consider keeping its tariffs with the U.S. at zero to keep import costs down and remain globally competitive. They argue that Mexico’s export competitiveness is explained less by the decline in U.S. tariffs than by the decrease in Mexican tariffs, which made imports more affordable as key inputs and increased the competition faced by Mexican companies.

“Imagine a world where Mexico—the poor country—is the one staying open and teaching the world a lesson even as the U.S. closes,” says Luis de la Calle, who helped to negotiate the pact and got his Ph.D. from the University of Virginia.

Even if Mr. Trump passes some kind of 25% border tax on Mexican products, much of that has already been offset by a 20% decline in the peso since last May, when Mr. Trump surged in the polls. A new tax would likely cause the peso to fall further, making Mexico’s exports more affordable and making U.S. imports to Mexico more expensive.

Herminio Blanco, who led the negotiating team and got his Ph.D. from the University of Chicago, tells a story about going to an event at Stanford University to celebrate the passage of Nafta in 1993. He got a standing ovation from all the assembled economists except one: the Nobel Laureate and staunch free-market advocate Milton Friedman. Mr. Friedman told Mr. Blanco that he didn’t stand because Mexico should have lowered its tariffs without waiting for a reciprocal deal from the U.S. “His point was that we shouldn’t lower tariffs only because others are doing it. We should do it because it’s the best idea to enhance competitiveness,” says Mr. Blanco.

Politically, however, not engaging in a tit-for-tat with Mr. Trump might be difficult. The rise of the U.S. president—who regularly railed against Mexico during the campaign—is fanning the flames of Mexico’s nationalism, which has long been a feature of domestic politics, first in opposition to Spain in the struggle for independence and then in opposition to the U.S. after it took about half of Mexico’s land during the 1846-48 Mexican-American War.

That nationalistic impulse had waned during the Nafta years, but is staging a comeback. In recent weeks, several consumer groups have launched boycotts of American products. The Twitter hashtag #NoCompresUSA (Don’tBuyUSA) reached more than three million users in the past week. Tens of thousands of Mexicans have heeded a call to put the Mexican flag on their profile pictures on apps like Twitter and WhatsApp.

This Sunday, several hundred thousand demonstrators are expected to take to the streets to “defend Mexico’s honor” against Mr. Trump (and also to call for a crackdown on corruption at home). They are planning to end the march by singing Mexico’s national anthem. Even Corona, owned by AB InBev, is jumping on the bandwagon, running a new ad campaign that criticizes Mr. Trump’s proposed wall.

“If the U.S. raises tariffs on Mexico, I don’t see how Mexico can’t respond. It would be seen as weakness by the U.S. administration,” says Enrique Cardenas, a Mexican economic historian.

The rise of Mr. Trump has lifted the fortunes of Mexico’s own firebrand outsider, the leftist Andres Manuel Lopez Obrador. The former Mexico City mayor, who leads the polls ahead of next year’s presidential election, is seen by supporters as an outsider crusading against a corrupt political establishment and by critics as a dangerous populist. He is most famous for having refused to accept a narrow defeat in the 2006 election and declaring himself president, complete with a mock swearing-in ceremony.

Mr. Lopez Obrador hasn’t attacked Nafta per se, but he has built his career on attacking the “neo-liberal” opening engineered by the Nafta generation. He vows to focus more on domestic projects and was staunchly opposed to Mexico’s opening of its oil industry to foreign investment in 2013.

The rise of Mr. Trump also has emboldened voices in Mexico calling for the country to shift its economic focus from exports to the domestic economy—to promote Made in Mexico again. Just last week, Mr. Peña Nieto relaunched the “Made in Mexico” brand for high-quality Mexican products, complete with an Aztec eagle logo that was first launched in 1978, during the closed economy. “Today we have to consume what is Mexican,” he said. “Not only because we are [Mexican] but because they are quality products,” he said.

A group of Mexican economists recently penned a draft of an action plan called “In the National Interest.” It calls for a greater role for the state in pushing domestic investment, including rules that would force foreign companies to transfer technology and use local suppliers and a bigger role for development banks.

“We forgot about the role of the state and fell into the historical naiveté that growing competition would lead to greater productivity and growth,” says Rolando Cordera, an economist at UNAM, Mexico’s largest public university. “Under the threat of Trump, we must begin a new path of development that emphasizes investment in the domestic market.”

Such arguments worry the trade pact’s architects. “This is perhaps the greatest challenge of a world without Nafta,” says Mr. Zabludovsky, the former deputy trade minister. “All the phantoms of the past will come crawling back: for intervention, deficit spending, protectionism, import substitution and all the things we thought were behind us. Scary, indeed.”

Mexico has done such an economic about-face before. In the late 19th century, dictator Porfirio Díaz opened the country to foreign investment. By the turn of the century, there was more U.S. investment in Mexico than in the rest of the world put together, according to Enrique Krauze, a prominent Mexican historian. But after the Mexican Revolution of 1910-1917, the country began closing its doors, culminating in the nationalization of the oil industry in 1938. The U.S. helped to create the General Agreement on Tariffs and Trade in 1946 to set rules for postwar global trade, but it took Mexico 40 years to join GATT, the precursor to the WTO.

Mexico’s closed economy ushered in a period of remarkable growth called the Mexican Miracle, bringing millions from the farms to the cities. But economists say that Mexico stayed closed for too long, helping to create a bloated state that eventually ran into repeated financial crises, including the 1982 debt default that eventually forced Mexico to open up.

“Nafta was a great step forward. It went against the grain of Mexico’s history and the historic instinct of nationalism, protectionism, jealousy of the outside world and anti-Americanism,” says Mr. Krauze. He also, however, criticizes the Nafta generation—and Mexico’s recent governments more broadly—for relying on manufacturing exports as a cure-all, neglecting the country’s deeper challenges, from a weak judicial system to a backward-looking, largely forgotten rural south.

“A little bit of economic nationalism is fine, without renouncing Nafta or an open economy. Let’s find ways to develop the other Mexico,” he says. “But if we use this to return to an era of economic populism, then it will be a disaster for Mexico.”

—José de Córdoba and Robbie Whelan contributed to this article.

Write to David Luhnow at david.luhnow@wsj.com

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The Mexico Disconnect

I am finding that sometimes living in Mexico has its drawbacks. I moved here in part because it is much cheaper than retiring in the US on a fixed income. Most medical expenses are a fraction of what they would be back home. But there are disadvantages to! When I got to Patzcuaro more than twelve years ago I found it a lovely provincial town a bit backward but because of my laid back lifestyle this was okay. So wiser and older i am having problems with the city’s lack of medical services and facilities for emergency care. There are no 24 hour urgent care clinics other than a poorly maintained state office. To go there would be like going to the stereotypical county hospital in the US where you would be told to take two aspirin and see your doctor in the morning!

Morelia, the Michoacan state capitol, is a little less than an hour away. They have excellent medical facilities and a state of the art hospital in Star Medica. The also have the medical specialists that Patzcuaro lacks. But in a life or death situation it may be too far away. If such should happen overnight it would be too dangerous to drive on the highway! Besides that, it is very costly, not as much as in the US but quickly approaching that.

So as the years go by I am rethinking the advantages and disadvantages of living out here in the boondocks. I still enjoy living here and some things are improving and hopefully this will include medical facilities and full time medical specialists.

Richard Montoya

Animal Farm and Beyond Revisited

“No one believes more firmly than Comrade Napoleon that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be?”
George Orwell, Animal Farm

“Winston Smith: Does Big Brother exist?
O’Brien: Of course he exists.
Winston Smith: Does he exist like you or me?
O’Brien: You do not exist.”
George Orwell, 198
“In philosophy, or religion, or ethics, or politics, two and two might make five, but when one was designing a gun or an aeroplane they had to make four.”
George Orwell, 1984
“The Ministry of Peace concerns itself with war, the Ministry of Truth with lies, the Ministry of Love with torture and the Ministry of Plenty with starvation. These contradictions are not accidental, nor do they result from from ordinary hypocrisy: they are deliberate exercises in doublethink”
George Orwell, 1984

The Bitch America Needs

To be sure I would no sooner say the “N” word that use the term “Bitch” in trying to denigrate anyone! But read this opinion piece in the New York Times seemed to be a good use of the subject line. Don’t blame me as I am just providing a link. Think whatever you will on the opinions express via The Times. -Rich

The Bitch America Needs

By ANDI ZEISLERSEPT. 10, 2016

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Photo

Credit Tracy Ma; photographs by Ruth Fremson/The New York Times and John Rowley/Getty Images

There are so many ways to be a bitch when you’re Hillary Clinton. You can refuse to give up a thriving law career when your husband is elected governor of Arkansas. Later, when he becomes president of the United States, you can infuriate housewives across the nation with a dismissive reference to baking cookies.

You can be too loud, too ambitious, too emotional, not emotional enough. You can say things and do things that are still considered the exclusive realm of white men. You can rally millions of people to vote for you. You can do anything and everything, and it doesn’t matter: The word “bitch,” more than almost any other, will cling to the back of your smart pantsuits forever.

But what if that’s not a bad thing?

The fact that “bitch” has become both an epithet and an honorific for Mrs. Clinton has turned out to be one of the least weird things about this election year. In a race that is indelibly colored by gender and sexism, it’s also potentially transformative. Few of the women who choose to venture into the male-dominated sphere of American politics are hothouse flowers, of course, but Mrs. Clinton’s long journey to the center of presidential contention mirrors a larger impatience with a time-honored tradition of going along to get along. This is not just in politics either: From film stars to athletes to teenage activists, outspoken women from all arenas are increasingly visible, much to the concern of sexists everywhere.

“Bitch” has long been an effective way to silence women because so many of us have been brought up to believe that remaining likable to others — even those we ourselves don’t like — is paramount. For instance, after the candidates’ forum on national security on Wednesday, Reince Priebus, the chairman of the Republican National Committee, included this in his criticism of Mrs. Clinton’s demeanor while she answered questions: “No smile.”

For more than 20 years in American politics, Mrs. Clinton has embodied what we might call Classic Bitch. She’s perceived as an interloper who challenges or threatens masculinity, entitlement and a status-quo worldview; she’s the scandal magnet who can seem as heartless and venal as any old-boy’s-club member. Worst of all, she’s the woman who accepts that she will be disliked and carries on anyway.

As a first lady, a senator and the secretary of state, Mrs. Clinton had bitch bona fides that ran counter to her husband’s public image as a genial, thumbs-up Bubba of the people. As a presidential candidate, they’ve proved cartoonishly polarizing. “How do we beat the bitch?” a woman asked at a John McCain rally in 2007, to an eruption of applause. (Senator McCain himself called it an “excellent question.”)

This time around, the giddiness of bitch-slapping the candidate is at the forefront of her current opponent’s campaign. Donald J. Trump supporters sell T-shirts emblazoned with “Trump That Bitch!” One reporter noted that mentions of Mrs. Clinton at a Trump rally in Greensboro, N.C., were greeted with gleeful shouts of the word; this summer, a “school-age” child yelled, “Take the bitch down!” repeatedly at another rally. When asked where he might have picked up such language, his mother answered, “Democratic schools.”

But there’s a whole other group of people embracing and amplifying Mrs. Clinton’s bitchiness. The person showcased and celebrated in Tumblrs, photo captions and satirical statements from the candidate herself is revolutionary not just for her political stature, but for demonstrating that likability is no longer the heaviest cudgel a woman can wield.

The power of “bitch” to shame is, with a perspective adjustment, also its power to shine. All that’s required to reframe the word is to point out that the things bitches are often guilty of can be both unexceptional and necessary: flexing influence, standing up for their beliefs, not acting according to feminine norms and expectations. Mrs. Clinton’s efforts to address her rigid persona have been cringeworthy, to put it mildly; watching her gamely do the Whip with Ellen DeGeneres or awkwardly spoof herself alongside her “Saturday Night Live” doppelgänger Kate McKinnon is doubly painful because it seems so unnecessary.

She’s not a comedian, definitely not a dancer, not even someone who can — unlike her husband — look authentically excited amid a shower of balloons. The bitch in dark glasses and pursed lips who became an internet sensation, the bitch who sighed and brushed invisible lint from her shoulders while being grilled on Benghazi, the bitch who cares deeply about winning and doesn’t care who knows it — that’s the candidate we need.

Aligning Mrs. Clinton with “bitch,” a term that’s retained its potency through countless reclamations and adoptions across race and gender, turns out to be the one thing people can agree on at the moment. For those who hate her, no other word will do (though the truly dedicated don’t hesitate to throw in other derogatory options for further emphasis). She aggravates their longstanding discomfort with a woman whose power isn’t situated within the private spheres of marriage or family.

For those who want her to be president, which is not synonymous with liking her, she’s the human embodiment of a shrug emoji, dodging flamethrowers from both sides and continuing to take care of business. Her supporters know that worrying about other people’s discomfort with powerful women has never served female politicians — or any woman — very well.

It’s not just that “Bitches get stuff done,” as Tina Fey and Amy Poehler pointed out in a hilarious defense of Mrs. Clinton back in 2008. It’s that they reject the expectations, assumptions and double standards that have always dogged women in the American political system. As one of the memes Mrs. Clinton inspires might put it, we need a bitch who can do both.

Andi Zeisler is the founder of Bitch Media and the author of “We Were Feminists Once: From Riot Grrrl to CoverGirl, the Buying and Selling of a Political Movement.”

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Who’s on first?

From my far removed retirement home in Mexico I am looking at what is happening in US politics and ask my self? That followed by the question, who cares!

The way I see it, nobody really wins. The candidates both Republicans as well as Democrats are scrapping the bottom of the barrel.

Lets start with the Republicans.

Trump: He seems to think that it is a big joke, being the puppet master. Not giving a damn for all the grief that he is causing by stirring up hatred that has been simmering in American hearts. Oh, he is good a using all the fallacious logical arguments to demean the other candidates as well as any minority that he can use to get free publicity.

Then there are Cruz, and Carson, and the evangelical candidates that claim to speak in the name of religion but do not act in a Christ like manner. What would Jesus do?

As for the rest of the Republicans, they are mostly me too candidates.

Makes many think of not voting at all because of the choices. Problem is that if the Republicans win there is the probability that one or more extreme conservatives will be added to the Supreme Court! 

Luana gets some bum info from Dell

Luana gets some bum info from Dell
Reading your info Premium #601, I find that having a Windows 7 computer, I will be able to get a free upgrade to Windows 10. How do I get this upgrade? I purchased my computer from Dell and when talking to a Dell rep I was told there was no free upgrade to a Windows 10. So, I would appreciate your advice on how to get the free upgrade. I am glad to read that it will be closer to the XP which I had for so many years and really liked. During those years, I learned many good tips from you and also used your repair service for it. I still have 2 service keys which I keep on hand just in case I need your help again. Thank you for all you have done to help me and I hope you can give me the info on the free upgrade to Windows10. Blessings and good health to both of you.

Our answer
Hi Luana and thanks so much for your nice comments.

Dell has nothing to do say about whether you can upgrade to Windows 10 or that’s it will be free – it’s a Microsoft decision, but maybe the Dell employee meant that you wouldn’t get it free from Dell. However, in any case, it’s scary that Dell has people on its staff who don’t have a clue what’s going on in the world of technology. It’s been common knowledge for several months now that Windows 10 will be a free upgrade for both Windows 7 and Windows 8x users. And, according to Microsoft, it will be a straight upgrade, that is when you upgrade to Windows 10 from either Windows 7 or Windows 8x you’ll keep all your personal files, settings, programs, etc. The offer of a free upgrade to Windows 10  is good for one year from the official release date, which now is scheduled for sometime in July 2015. Also, according to Microsoft, if a program works on Windows 7 or Windows 8x, it will also work on Windows 10.

You will get Windows 10 automatically (if you choose) via Windows Updates or you can download it directly from Microsoft. We’ll have more details on that when we get closer to the launch of Windows 10 in July of this year. But don’t worry, it won’t be hard to get, by the time it comes out  we’ll all be sick of reading about it and hearing about how to get it free.

China overtakes Mexico as top sender of immigrants to United States

The Chinese are coming. The Chinese are coming! Ops, they are already here! They are not like us. They do not speak our language. They are hard to figure out so they tend to be scary in many ways. The only way that I can relate to them is through old Charlie Chan movies. My wife talks about her mom saying that the Yellow race will rule the world. I may be depending on old stereotype to make assumptions on what this means for the US. I might just be able to cash in on this trend as some may know me as Mr. Miyagi. But that is another story.

By the way grandparents came from Mexico so that should make me Hispanic right? Rich

China overtakes Mexico as top sender of immigrants to United States

  • chinese new year latino.jpg

    NEW YORK, NY – FEBRUARY 22: Revelers shoot confetti in the Chinese New Year parade in Manhattan’s Chinatown on February 22, 2015 in New York City. The parade, now in it’s 16th year, brought out hundreds of participants and viewers to celebrate the Year of the Sheep. (Photo by Bryan Thomas/Getty Images) (2014 Getty Images)

China has overtaken Mexico as the No. 1 one source of immigrants to the United States, according to a new study.

In 2013, 147,000 people came to the United States from China, compared with 125,000 from Mexico. India had 129,000 people come to the United States, but statistical margins of error actually put India at about the same slot as Mexico, the Wall Street Journal reported.

Researchers arrived at the migration statistics by reviewing annual immigration data from the U.S. Census between 2000 and 2013. The study was discussed last week at the Population Association of American conference in California.

“Whether these recent trends signal a new and distinct wave of immigration is yet to be seen,” Census Bureau researchers said, according to China Daily.

The Census does not inquire about legal immigration status; thus, it is not known how many of the immigrants factored into the migration study were here legally. Since most undocumented immigrants are believed to choose not to participate in the Census, their population is likely deeply undercounted.

In 2012, China and Mexico were at a virtual tie for the top countries of origin of people migrating to the United States, the Journal reported.

Other Asian countries also rank high in sending people to the United States. Those include South Korea, the Philippines and Japan.

Some factors believed to account for the rise in foreign born from Asian nations settling in the United States are international study programs, work visas (which then can lead to legal permanent residence) and family reunification.

Meanwhile, Mexicans have had their own factors compelling them to remain in their country – an improved economy in their homeland, lower birthrates, U.S. recession and stricter border enforcement, the Journal said.

All told, Mexicans still account for the bulk of the U.S. immigrant population, which stands at about 1.2 million.

China Daily quoted Wang Ting, an immigrant from China, as saying that the United States is the dream destination for many of her fellow Chinese.

“Choosing the U.S. as the destination is to find a better education for my children,” said Wang.

“The education system in China is too intensely competitive, with the Chinese schools oriented towards one make-or-break college admission exam offered upon high school graduation. It’s too much and not that healthy for the kids.”