Weakening Mexico Harms the United States

Weakening Mexico Harms the United States
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On a recent visit to Chicago, a city that looks to the future and not the past, I spoke to some friends about the contradictions and the "alternative reality" that is being spread by the new administration in Washington concerning Mexico.

In the city that is home to the University of Chicago, in which economist Milton Friedman wrote his book "Free to Choose," I thought about the ideas that are especially relevant today. Friedman's work clearly explains why the freedom to choose is indispensable for progress and how government intervention in the economy inevitably leads to lower standards of living and an inefficient distribution of resources.

Paradoxically, many of those who previously spoke in favor of individual freedom, today demand government intervention to "recover the lost jobs." This absurd demand is based to some extent on the fallacy that "Mexico has taken a large part of these jobs."

The truth is that most of the "lost jobs" have little to do with Mexico and will never return. Interventionist policies, far from resolving this problem, will exacerbate it.

Chicago clearly illustrates the causes of job losses in some regions of the United States that have absolutely nothing to do with Mexico. Reasons include technology, globalization and changing consumer preferences, which are beyond the control of any government.

Take for example, Sears, a very respectable company.

For much of the 20th century, Sears was an icon of progress, and very present in the daily lives of American families. It was launched in 1886 as a business centered on catalog sales and evolved to become a successful department store.

However, Sears was unable to resolve the "renew or die" dilemma and faced a formidable rival in another U.S. commercial icon, Amazon.

How can the jobs that Sears lost due to competition in its own country be “recovered”? Or how can Sears become "big again" in the face of the challenges posed by Amazon and other e-commerce giants?

The reality is that this is impossible and undesirable. To recover a few thousand jobs at Sears, millions of consumers would have to pay an unacceptable cost in terms of price and quality of life.

The same can be said of companies in industries such as steel, autos, where many more firms have fallen to technology, global competition, and the endless quest to improve well-being. Silicon Valley has surely brought down more industries than any trade treaty, but it is not politically profitable to attack this worldwide symbol of progress.

I wrote about this phenomenon in a prior post about Matt Ridley and his writings on the Red Queen, where continuous adaptation is necessary for a species to keep in shape with regard to the environment with which it co-evolves.

In other words, continuous improvement allows species, or businesses, to maintain a balance with their environment, which is also evolving. In the end, it’s hard for a single species to obtain a special benefit because they are all in constant transformation. The same applies to companies and industries — and there is no government that can avoid this powerful reality.

Public policies that prevent free choice and international trade have only led to a great decline in living standards, as is clearly occurring today in Venezuela.

The dementia surrounding Mexico

Part of the populist discourse, which ignores forces that are beyond the control of any government, attributes the loss of jobs to trade with Mexico, without taking into account how trade has improved the lives of millions of consumers and created jobs in thousands of industries in the United States.

If Trump's threats against Mexico were to become reality, which is increasingly unlikely, an impoverished and isolated neighbor to the south of the Rio Grande would be a risk to the United States for many reasons:

  1. It would provoke the displacement of millions of Mexicans to the north; immigrant will always find a way to reach the United States, independently of a wall that probably will not be built.
  2. It would put the direct investment of large corporations at risk, companies like Walmart, Hyatt, Marriott, Ford, McDonald's, General Motors and AT&T that have entrusted hundreds of billions of dollars in Mexico.
  3. U.S. exports to Mexico, which in 2016 reached US$ 230 billion in products as diverse as corn, meat, gasoline and many others, would collapse.
  4. A weak country would be incapable of cooperating with the United States to ensure the latter’s security, not to mention the failed War on Drugs
  5. Recessionary pressures and unemployment could bring an overtly anti-Yankee government to power that could end the successful partnership between our two countries.
  6. All of the above-mentioned factors would force Mexico to draw closer to the sphere of other powers that are U.S. rivals.

After my visit to the United States, I read an interesting article in The Atlantic that addresses some of these points and emphasizes how close collaboration with Mexico makes it a key strategic partner. If there is anything we can thank Mr. Trump for, it’s that his Mexico smearing has highlighted the importance of our binational relationship.

In the past few months we have seen that Mexico has countless friends in the United States. None of them have any doubts about the benefits of a close association. But things could change.

As global citizens, we should invite relatives, friends, partners, and allies in the United States to convey the importance of the relationship with Mexico to their elected representatives. I believe that many who voted for Trump today realize the importance of Mexico for their own survival.

For over two decades, Mexico and the United States have benefited from a solid partnership. Far from breaking it, we must strive to make it stronger. The well-being of hundreds of millions of people depends on it.

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