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Does Economic Integration with Mexico Raise Mexico or Lower Us?

http://www.huffingtonpost.ca/2016/06/29/obama-joins-trudeau-mexican-president-for-north-american-leaders-summit_n_10733102.html?utm_hp_ref=canada

…Trudeau said it’s one of the key themes of the North American Leaders’ Summit, to highlight how trade and international agreements are good for global economy and for people around the world.

He said countries that export more of their goods to markets around the world are wealthier, and citizens are able to share in that growth.

Obama said it’s too late to try to prevent the integration of national economies into a single global entity, because it has already happened…excerpt from the article.

I am reminded, by this column, of a Mexican auto worker being interviewed on television about the plan to build a new Toyota plant there. He was asked about the disparity between wages paid in Canada and Mexico. He said, “I should be paid the same wage for a job here that a Canadian would be paid there.”

It raised a question for me; does economic ‘integration’ with Mexico raise Mexico or lower us?

I don’t claim to know the answer but I know that trade tariffs were intended to ‘level’ disparate economies, protect trade and labour conditions among trading countries, despite the tendency of tariffs to protect inefficient industries over time. The history of tariffs has been ‘uneven’ but, at one time, they attempted to serve a purpose that, I suspect, ‘free trade’ fails to do or was never intended to do.

Supposedly, opportunities for investment and trade have the potential to help each country in the (so called) free trade arrangement which, one supposes, means more employment. The wealthier countries exploit (don’t hang up on the negative connotations of that word) the economic advantage of the lower wage partners in the trade agreement. Theoretically, all countries share in the benefits, though not necessarily equally.

Perhaps the low wage economy, as years pass, experiences pressure from workers to adopt collective bargaining, like the more advanced economies in the trade partnership and, perhaps, advanced labour laws too.

One supposes, that the lower wage economy would fear losing the economic advantage that lower wages have created and choose to oppress labour that might agitate to have the same wages and benefits offered in the other trade partners or, in anticipation of this development, the advanced, higher paying trade partners may pressure their wages and benefits lower, which will also alter the economic advantage that low wages gave the less developed trade partner.

As I pointed out earlier, I don’t have the answer but I will not be surprised if a ‘middle class’ fails to grow much in any of the nations participating in the trade agreement.

30th June, 2016

Having posted my comment in ipolitics magazine ( ipolitics.com), I was rewarded with a reply, beautifully written, that deserves attention.  It was posted by Duglas, likely an alias, who offered this thoughtful analysis.  Aside from the content, which is noteworthy, it is an excellent example of fine writing.

There is still debate concerning the Smoot Hawley Tariff Act of 1930. The debate is whether it contributed to the great depression, and to what extent. Common wisdom and undergrad economics courses suggest that the tariffs prompted retaliation by other countries and this put a damper on global trade and development. There are counter arguments to this, which are included in the Wikipedia Smoot Hawley page, so I won’t copy the text here.

There are many critics of free trade agreements; they include the full spectrum of society, from academic analysis all the way to the extreme. Conspiracy theorists tend to raise alarms over the NWO, Illuminati, the Foreign Relations Council, and of course the US government and POTUS. While there are some good reasons to ignore the conspiracy crowd, there appears to be some validity to the belief that governments are adhering to tenets of the NWO manifesto, if there even is one. One example is supporting free trade, which aside from improving multi-national companies’ balance sheets, does have the effect of leveling the huge disparities in global incomes, although labor pay rates are still very much skewed to developed countries advantage.

Additionally, one could support Nike paying very low pay rates to workers assembling shoes because at least the money is a function of trade, and not taxpayer funded foreign aid disbursements. It does stretch plausibility to suggest the consumers of Nike shoes and Bangladeshi-made shirts are globalists supporting the NWO, however the people in those countries apparently value their jobs. I lived in the developing world for about a decade, and witnessed that the alternative to working for a pittance is still preferable to starvation.

Finally, the fact remains that labor is cheap and unless you’re a sports icon it’s quite difficult to make any money by providing muscle. Money can be leveraged to make spectacular returns, which seems unfair but there you have it.

ipolitics.ca/2016/06/29/obama-in-12/

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geoffreyjohnbrittan

Professional. Retired. Canadian.
http://www.geoffreybrittan.com

1 reply

  1. Hi Geof,

    Right…but it was a beautiful speech wasn’t it? I just love that man.

    I have to tell you a funny story. One day, Amelia, Zoe, Abby and Avery were getting dressed in the change room after swimming. The girls were about 8, 6, 4 and 2 years of age. They were chanting a long, drawn out incantation of how many boyfriends one should have by twisting hair and waving their hands over the top of a head of hair. Abby asked me if she could see how many boyfriends I have/had and I said “Sure.” She hopped up onto the bench I was sitting on and proceeded to braid and whoosh and smoosh the hair on the top of my head and I felt like a very airy fan was blowing directly on it. She finished her incantation and said, “Granny, you have three thousand boyfriends!” I said, “No I don’t. You know I have only ever had one boyfriend and you know who that is!” Zoe said, “Obama?” That made me realize how much I had talked about him prior to and after taking office. Ah…out of the mouths of babes!

    I know you were analyzing the text, but the spirit of the message is what really matters. Enjoying the speech was the ticket for today…the hard slogging work begins, again, tomorrow.

    Hugs, Dawn:)

    >

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