The United States’ Neighbors … Always Winning

It was my chance traveling companion during a 1 1/2-hour flight who best summarized where we’re heading economically.

His first initial is G. He is a good-natured 30-something guy who immigrated to Texas when his brother tricked him into believing that he would get a job in a mechanic’s shop. He ended up on the other side of the river.

He mentioned that he sometimes worked construction, until he met a retired English businessman, who saw in him the necessary qualities for starting a business; they became partners. The construction company grew to the point that the European pleaded for tranquility. It was a lot of work for a retired person.

Today G has his own company in Austin, but he wants to return to Mexico. Over there, it is a stressed-out life, to the tune of 16-hour days, he says. Here, it doesn’t pay as well, he knows. Building a small swimming pool in Mérida costs around 100,000 pesos (approximately $5,245), and the work lasts some four months.

Surprisingly, he notes that that can be good business. With his equipment, he can do the work in two weeks and at a lower cost.

This is the difference between Mexico and the United States, G explains. Here, everything is done by hand, by people who charge very little instead of training and equipping them to use machines that increase production.

In Mexico, the government calls on the people to plant trees, giving them poorly paid work. The big investments will come from foreigners: the engineering and equipment for the Dos Bocas refinery, or the infrastructure of the Mayan Train will be the work of people who are trained better from other countries.

Soon, the differences between the United States and Mexico will become more pronounced. The biggest global economic and political struggle that confronts the U.S. is about the establishment of the 5G network, which will permit, for example, conducting surgery remotely, as well as carrying out military operations with no humans present. Their strongest rival is China, which still has a per capita income that is lower than that of Mexico.

The National Project 2018-2024 of Morena* discusses increasing the coverage of the 3G and 4G networks. It does not mention the 5G network, nor what it entails: digitized supply networks and the generalized use of “artificial intelligence,” a term not mentioned in the document.

It has become clearer in recent weeks that our relationship with our neighbor to the north will remain strong. But we aspire to be a manufacturing country, with labor as our basic input. In return, the government hopes for better wages for people through the social struggle, by labor reform that encourages the unions.

The problem? There are no plans for increasing productivity so that Mexicans can learn how to invent and use new machines. Of this, there is nothing to say about an educational system under the control of the CNTE and the SNTE.**

Many companies will stay, but those that get tired of a new “class struggle” will leave. And they won’t have to go very far.

“USMCA would reduce the scope of the investor-state dispute settlement mechanism, a change that, based on modeling results, would reduce U.S. investment in Mexico and would lead to a small increase in U.S. domestic investment and output in the manufacturing and mining sectors,” the U.S. International Trade Commission concluded in the report delivered this month at the request of the Trump administration.*** It is getting close to the time for ratification of the treaty that is replacing NAFTA; but for the Mexicans, these don’t stand out as triumphs. Here, it is constructing swimming pools by hand, painting striping with a brush, and assembling cars by bolting them together. Not much more than that.

*Translator’s note: “Morena” is the Spanish acronym for the National Regeneration Movement, a Mexican political party founded and originally led by Andrés Manuel López Obrador, the current president of Mexico.

**Translator’s note: The SNTE and CNTE are Mexican teachers’ unions.

***Translator’s note: USMCA is the United States-Mexico-Canada Agreement, the replacement for NAFTA; it has been signed but not yet ratified.