Tuesday, March 12, 2013

good news for mexico

I am not a big Friedman fan.

Well, that is not exactly true.  If we are talking Milton and Rose, I am enthusiastic.  But if it is Thomas (The New York Times columnist), not so much.

And it is not merely because he tends to be an apologist for dictators -- which he does.  His writing strikes me as being just a bit too glib -- and often designed more to posture than to inform.

But he certainly got it right -- or almost right -- in two recent columns about Mexico's economy.  His conclusion is that Mexico has an economy to be reckoned with.  

Even though it has been handicapped by an American drug policy that drove traffickers from the Caribbean into Mexico and helped create the current drug lord war.  And a political culture nurtured by 400 years of corruption that is a stranger to the rule of law.

My friends are shocked to hear that Mexico has a strong middle class (perhaps as high as 50% of the country) and that Mexico is the 12th or 13th largest economy in the world.

Friedman adds a few facts of his own --

  • Mexico has signed 44 free trade agreements -- more than any country in the world
  • Mexico has also greatly increased the number of engineers and skilled laborers graduating from its schools
  • Mexico is taking manufacturing market share back from Asia and attracting more global investment in autos, aerospace, and household goods
  • Young Mexicans are starting large numbers of technology start ups -- especially in northern Mexico
  • Mexico's economy grew by 3.9% in 2012 -- a growth rate that The States and Canada can only dream of  
  • Mexico’s budget deficit is about 2 percent of its GDP; America's is 7 percent
Friedman concedes that the Mexican government has enacted some policies that have liberalized (and liberated) the Mexican economy while simultaneously reenforcing the sclerotic monopolies of the Revolution in energy and media that stifle economic freedom and growth.

He sees two forces countering the negative weight of Mexico's leftist past.  The first is the grand agreement that Mexico's three parties have entered into to reform historical problems in oil development and education.  I hope he is correct.  PRI has begun the process by authorizing its party members to add the VAT to some food and medication.  But there are plenty of battles to fight.

But he sees Mexico's greatest promise in its young people -- who are ready to invest in Mexico's future, rather than heading north to find their fortunes.  I have seen the same thing in Melaque with young people.

Friedman's optimism is at odds with many northern tourists in our beach community.  They talk a lot about Mexico's weak economy.  But it is not true.

Our dusty little town survives on Mexican tourism.  And tourism is once again robust.  As we shall see on Semana Santa (Holy Week) when Guadalajara decamps to Melaque -- and other Pacific beach towns.

Of course, no matter how Friedman and I talk about the strength of Mexico's economy, the pessimists will see only The Troubles.  Troubles, by the way, that could quickly be resolved if Canada, but especially The States would legalize drugs.

But that s a controversy for another day.

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