Finally. Headlines about Mexico that do not include "drugs."
Unfortunately, the economic news between the United States and Mexico is not good. The United States has declared the opening shots of a protectionist trade war with Mexico. And the results may be as tragic as anything happening in Baghdad.
As I read the headlines this week, I thought back on two historical scenarios.
In the first, I imagined an enterprising fellow wandering into fourteenth century London, full of innovative ideas on how to improve the wool trade. He would have been well served to just keep on moving.
The reason: London was a guild town. If you wanted to work in wool, you had to be a member of the guild. And the guilds would prevent you from setting up shop on your own because they had patents from the king. Political authority prohibited competition -- putting a centuries-long damper on improved production.
In the second, the year was 1929. Republican Congressman Willis C. Hawley, of my home state Oregon, was a co-sponsor of a major tariff bill designed to protect American farmers. The Act that would come out of this endeavor was the infamous Smoot-Hawley Tariff Act -- a single act that was responsible, in large part, for the stock market crash of 1929, a world-wide trade war, and a worsening of the depression.
The scenarios are related in a very odd way in last week's announcement that Congress cut off funding for a program to allow Mexican trucks to transport goods in the United States under the provisions of NAFTA.
That congressional and presidential act was the result of brute political pressure from an economic special interest: the Teamsters. Even though the Teamsters tarted up their arguments as safety concerns, the outcome has all of the subtly of a horse's head in an opponent's bed. Without the program, Mexican trucks can cross the border, but must then transfer all goods to American trucks for delivery.
Some of us had sincerely hoped that the Democrats would return to their historical position as the party of free trade. Democrats have been opponents of tariffs since the Age of Jackson. Bill Clinton and Al Gore were the principal advocates of NAFTA's passage.
For whatever reason, the Democrats have decided to turn their backs on their own history and to dress up as Reed Smoot and Willis Hawley. I can easily imagine Harry Reid in a wing collar.
The results were predictable. Mexico has imposed tariffs on 90 American products. The details will be released today.
The impact is going to be far-reaching. Most of the products that will incur tariffs are agricultural. That means that food prices in Mexico will increase -- along with the social unrest that has recently accompanied every food price increase. The Mexican administration is facing a tough election cycle. It just got worse.
That same administration has been bravely fighting a drug war caused by what Americans stuff up their noses and into their veins. This spat is not going to make coordinating a policy around the border any easier.
And then there is the more personal concern of border crossings. Mexican customs officer have been rather lax about enforcing all of the restrictions they could enforce at the border. As an example, visitors to Mexico are allowed to bring no more than 20 CDs and 5 DVDs across the border without paying duty. Every car with families on vacations has now become a potential revenue source for the Mexican treasury.
Maybe none of this will happen. Maybe Smoot and Hawley had the correct approach to protectionism. Maybe I will wake up and discover all of this has been a dream on "Dallas."
I'm not counting on it.
Unfortunately, the economic news between the United States and Mexico is not good. The United States has declared the opening shots of a protectionist trade war with Mexico. And the results may be as tragic as anything happening in Baghdad.
As I read the headlines this week, I thought back on two historical scenarios.
In the first, I imagined an enterprising fellow wandering into fourteenth century London, full of innovative ideas on how to improve the wool trade. He would have been well served to just keep on moving.
The reason: London was a guild town. If you wanted to work in wool, you had to be a member of the guild. And the guilds would prevent you from setting up shop on your own because they had patents from the king. Political authority prohibited competition -- putting a centuries-long damper on improved production.
In the second, the year was 1929. Republican Congressman Willis C. Hawley, of my home state Oregon, was a co-sponsor of a major tariff bill designed to protect American farmers. The Act that would come out of this endeavor was the infamous Smoot-Hawley Tariff Act -- a single act that was responsible, in large part, for the stock market crash of 1929, a world-wide trade war, and a worsening of the depression.
The scenarios are related in a very odd way in last week's announcement that Congress cut off funding for a program to allow Mexican trucks to transport goods in the United States under the provisions of NAFTA.
That congressional and presidential act was the result of brute political pressure from an economic special interest: the Teamsters. Even though the Teamsters tarted up their arguments as safety concerns, the outcome has all of the subtly of a horse's head in an opponent's bed. Without the program, Mexican trucks can cross the border, but must then transfer all goods to American trucks for delivery.
Some of us had sincerely hoped that the Democrats would return to their historical position as the party of free trade. Democrats have been opponents of tariffs since the Age of Jackson. Bill Clinton and Al Gore were the principal advocates of NAFTA's passage.
For whatever reason, the Democrats have decided to turn their backs on their own history and to dress up as Reed Smoot and Willis Hawley. I can easily imagine Harry Reid in a wing collar.
The results were predictable. Mexico has imposed tariffs on 90 American products. The details will be released today.
The impact is going to be far-reaching. Most of the products that will incur tariffs are agricultural. That means that food prices in Mexico will increase -- along with the social unrest that has recently accompanied every food price increase. The Mexican administration is facing a tough election cycle. It just got worse.
That same administration has been bravely fighting a drug war caused by what Americans stuff up their noses and into their veins. This spat is not going to make coordinating a policy around the border any easier.
And then there is the more personal concern of border crossings. Mexican customs officer have been rather lax about enforcing all of the restrictions they could enforce at the border. As an example, visitors to Mexico are allowed to bring no more than 20 CDs and 5 DVDs across the border without paying duty. Every car with families on vacations has now become a potential revenue source for the Mexican treasury.
Maybe none of this will happen. Maybe Smoot and Hawley had the correct approach to protectionism. Maybe I will wake up and discover all of this has been a dream on "Dallas."
I'm not counting on it.
