Mexico’s US Problem

Mexico’s US Problem

As Mexican president Vicente Fox begins his historic administration, the most difficult and abrasive issue that both he and the United States must confront is the continuing flow of immigration fr


As Mexican president Vicente Fox begins his historic administration, the most difficult and abrasive issue that both he and the United States must confront is the continuing flow of immigration from Mexico. As Presidents Fox’s August 2000 visit to the United States made clear, no other issue poses a greater obstacle to improved relations between the two nations.

The issue is particularly difficult to address because of one rarely questioned assumption held by the vast majority of US voters and policymakers–that the United States itself played no part in creating the conditions that have led to the large flow of Mexican workers across our borders and therefore bears no real responsibility to assist Mexico in seeking solutions. Many Americans, in fact, visualize the flow of migrants to the United States as an entirely internal Mexican problem that has been irresponsibly dumped upon the United States without our participation or approval. As a result, most Americans do not believe that we have any obligation to work collaboratively with Mexico in seeking solutions.

Even if it were true that the United States had played no role in the creation of Mexican migration to the United States, this would not be a valid argument against working harmoniously with Mexico to seek solutions. But, more important, the inescapable reality is that, for the past twenty-five years the United States has had a profound and often decisive influence on social and economic policy in Mexico, so much so that, to a significant extent, the current level of immigration to the United States is the result of policies designed and promoted on this side–not the other side–of the Rio Grande.

Because these events have occurred over a long time, few Americans are able to visualize how this could be the case. But the full extent of the US role can be clearly seen by focusing on the experience of a typical young Mexican man in his mid-20s–an immigrant like so many we see every day mowing lawns or working on construction sites in cities across America.

When this young man was born in the late 1970s, Mexico was in the midst of a profound social and economic transformation. While US economists had routinely dismissed Mexico’s post-war economic system as a state-dominated, protectionist dinosaur that stifled Mexico’s development, in fact, the social and economic policies of governments in the 1950s and 1960s provided Mexico with a significant degree of social stability and above-average economic growth. Social legislation, first enacted in the 1930s, provided a significant measure of job and income security for millions of industrial and public sector workers while land reform measures dating from the same period allowed many young people during the 1950s and 1960s to find work and remain in rural areas. Foreign investment, while highly regulated and directed by the governing PRI, was, for the most part, productively invested in basic infrastructure projects such as the national road network and electric power grid.

As a result, although the US standard of living was vastly higher than Mexico’s during this period, illegal immigration was not as significant a problem. Even those at the bottom of the economic ladder in Mexico often had some formal or informal social safety net–the seemingly indigent street vendors and beggars who sat on the sidewalks near the tourist hotels, for example, were often members of cooperatives that protected their particular spot and thus insured them a minimum living. Such arrangements, while they fell far short of providing an escape from poverty, made life in Mexico still preferable to the unknown dangers of illegal immigration to the United States.

In the late 1970s, when that young man was born, however, this system was beginning to crumble. Skyrocketing oil prices made Mexican reserves vastly more valuable than before and provided collateral for international loans worth hundreds of millions of dollars. US banks and financial institutions often subscribed to these loans based on nothing more than a two- or three-page telex. In private, institutional investors would concede that a disturbing share of the money was being transferred to accounts in Europe or invested in ill-conceived projects that would never show a return or enhance Mexico’s ability to repay its burgeoning loans. But each felt confident that Mexico’s oil reserves and intimate economic relationship with the United States would insure that their particular loans would be repaid.

And, in fact, after Mexico’s massive 1982 default on its outstanding loans and a severe IMF-imposed austerity program, the nation was indeed described as a “model debtor” by the officials in charge of renegotiating the defaulted loans. What was not stated with equal clarity, however, was that the massive drop in living standards and decline in the rate of new job creation after 1982–a result of the severity of the IMF program–created the social conditions that stimulated the first great wave of illegal immigration to the United States.

Even more significant, a deep stagnation in public sector spending produced by the adjustment program came just as that young man, along with millions of others, was entering elementary school. At a time when a massive program of public investment in education was desperately needed to prepare a new generation of Mexicans for the skilled and educated jobs that would increasingly be replacing the unskilled industrial and agricultural jobs of the past, the real level of investment in education fell. At the same time that many US schools were installing their first Apple computers in the classroom, Mexican schools in many rural areas were using textbooks that had not been updated since the 1940s.

Then, in 1988, US involvement in Mexican economic policy became even more direct as, under President Carlos Salinas de Gortari, a new generation of US-trained economists and policymakers began implementing a market-oriented strategy for the Mexican economy–one that the United States had previously endorsed and promoted in Eastern Europe and the Soviet Union. While the centerpiece of this effort was the free trade agreement with the United States and Canada, it also included a variety of policies to reduce the role of the public sector on the economy and eliminate a range of social legislation. Many of these policies had clear and predictable consequences for job creation and job stability in Mexico.

In Mexican industry, the privatization of many public sector companies and the opening of the domestic market to foreign competition resulted in massive layoffs and the elimination of blue-collar jobs in thousands of companies, particularly after 1994. Reforms in agriculture encouraged large mechanized farms and discouraged individual cultivation. Continued restraint of public spending limited the growth of jobs in health, education and other human services.

For educated workers, on the other hand, jobs were plentiful, and a consumer spending boom created substantial unskilled work in importing, retail and service occupations–principally in the burgeoning “informal” economy. But, everywhere one looked a profound loss of security and stability was evident in comparison with the past. Job security and fringe benefits in the new maquiladora industries were generally inferior to those in traditional auto, steel, beverage or cement manufacturing. A range of government support programs for small farmers had been reduced or eliminated. In the 1950s and 1960s Mexico City’s street vendors had informal arrangements with the local police that had allowed them to ply their trade; in the 1990s, there were violent clashes between police and mobile vendors and constant demonstrations.

The result was that, when the young man, now in his early 20s and looking for work, considered his options, he found himself not only “pulled” by the lure of high wages in the United States but “pushed” by the deterioration in the conditions in the Mexican labor market. Without an education he faced not only a lower standard of living if he stayed in Mexico but a level of job and economic instability that was, in many key respects, worse then that which had been faced by his parents’ generation.

In fact, by its very nature, the economic strategy that Carlos Salinas’s US-trained advisors employed inevitably created powerful economic incentives for migration to the United States. The fundamental goal of positioning Mexico as a low-cost production center, competitive with Asia, necessarily required that Mexico maintain substantially lower wages and labor costs than the United States. This, in turn, inescapably entailed creating a huge economic incentive for migration. Increasing Mexican migration to the United States may not have been an explicit goal of the pro-market economic strategy, but it was a predictable and necessary consequence.

US economists have argued that, on balance, the pro-market strategy they designed was more beneficial to Mexico than any alternative, and that it will increase job creation in Mexico in the long run. But, in one extremely important respect, this is beside the point. There is something profoundly wrong with a US foreign policy that allows us to energetically recommend and endorse an economic strategy for Mexico that clearly creates powerful economic incentives for migration to the United States and then turn around and refuse to accept any responsibility for the immigration that results. The Mexican economy has been powerfully shaped by the actions of US financial institutions and the economic policies of the US government over the last quarter of a century. It is morally and socially wrong for the United States to now assert that it has no responsibility for the consequences.

It is also politically shortsighted. Many of Mexico’s emerging political leaders, from every position on the Mexican political spectrum, are keenly aware of the United States refusal to recognize its role and responsibility in generating the Mexican immigration of the last two decades, and they will be directly raising the issue with increasing frequency in future bilateral negotiations. The United States’ best hope for developing workable solutions for the complex set of issues involved with immigration will be through greatly increased collaboration and coordination of our policies and initiatives with Mexico, and this will be made profoundly more difficult if we refuse to accept the fact that our own policies and actions have played a critical role in generating the Mexican migration of recent years.

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