AMLO outside the Senate, Monday, October 26

Worker's Party Deputy Mario di Costanzo Tears Apart Carstens Economic Plan

Thursday, June 5, 2008

Free for Whom?

As the speculation-fueled global food crisis aggravates Mexico's already-dire economic situation, now is a good time to shake a stick at the free-trade Santa Claus and see if the gifts he has promised to produce from his magic sack have actually made their way into any little boys' or girls' hands.

Santa's promise in the North America Free Trade Agreement of 1993 (the Tratado de Libre Comerico, or TLC, in Spanish - as noted before, in Mexico, it is a treaty whereas in the States it is merely an Agreement) was the same as the one perenially made by free-trade economic theory: by eliminating tarriffs and other hidden costs, free trade lowers prices for consumers while at the same time, by providing greater choice, it stimulates healthy competition between domestic and foreign producers, thus improving quality and efficiency. And like most economic theories out of a textbook, it looks good on paper, but depends on a heavy dose of naivité regarding how the world really works. Anybody who's ever been to a schoolyard knows that artificially leveling the playing field between unequal opponents (or in economic jargon, "trading partners") means essentially throwing the game to the stronger. That distinction is particularly bald in the case of Mexico vs. the United States, where Mexican producers are forced to compete against giant, multinational corporations who not only benefit from the obvious economies of scale, but are also the happy beneficiaries of all kinds of governmental largesse, from tax breaks (the oil companies) to subsidies (agro-business) to fat contracts (defense contractors) that the Mexican government, even if it weren't leaking millions by the minute in corruption, could hardly compete with (and if they did, would be lambasted by the World Bank, IMF and WTO). Not only, then, is the big kid on the schoolyard allowed to beat the puniest into a pulp in a "fair fight", the principal's office is paying for his membership at the gym and talking his teachers into letting him out of class early and getting him out of having to do his homework in order to give him time to go and lift weights, all the while humilliating the puny kid in front of his classmates for his inability to stand up for himself like a man.

No problem, say free trade advocates. Every country has a "comparative advantage" in something, and if each side can only exploit that advantage, both stand to benefit. Unfortunately, the miniscule benefit Mexico has gained in exploiting the comparative advantage of its low-wage labor pool is mostly located along a small strip of maquiladora factories located along the border, where workers slave away at the five-dollar a day wages that have hardly risen since NAFTA's infancy, with the cold comfort that they are making slightly more there than the even-worse pay they might get elsewhere in the country. Meanwhile, the American companies located along the border revel in tax concessions and freedom from pesky safety, health and union regulations - those that are on the books are hardly being enforced by the gang-that-couldn't shoot-straight currently in power. The devastation of the Mexican countryside, caused by farmers' inability to compete ("like a man") with their lavishly-subsidized neighbors to the north, along with NAFTA's recent removal of the last protections against bean and rice imports, means that there will always be a limitless army of unemployed refugees from the countryside willing to work for that little, or if not, to cross the desert in search of work in the US in a hellish odyssey across the desert that makes Dante's Inferno seem like an amusement-park funhouse, and which allows US companies to benefit from the human arbitrage opportunities showing up, hungry and desperate, right on their doorsteps.

At least in the late nineteenth century, when American imperialists like John Cabot Lodge were prying open markets for American overproduction at the butt of a gun, they were more forthright about they were up to. "Gunboat diplomacy" was just that. But the current feeble treacle of free-trade pap is supposed to make the losers not only accept getting reamed in the exact same way as before, but feel thankful for now being the glorified dishwashers of the global village. To be fair, prices for some consumer goods - cars, electronics - have come down for the average Mexican consumer over the last several years. But the questionable benefit of that boost to the consumerist lifestyle pales in comparison to the stagnant wages, dribbly economic growth, crippling monopolies, and massive immigration of family and friends that the average Mexican grapples with daily, not to mention - to return to the beginning of this post - the skyrocketing prices in staple food items. Meanwhile, Walmart has become Mexico's number-one private-sector employer, and was an active campaigner amongst its staff and customers for Felipe Calderón in 2006. Poorer countries, you see, have to accept that free trade means the domination of its economy by foreign multinationals. The policy that the US has the luxury of calling "stimulating domestic production" is scoffed at in the Latin American sphere as the "import substitution," as if the natural state of affair for our Latin amigos is to depend on somebody else making everything for them but letting them, at least, be the ones to sell it to their brothers and sisters.

In the final analysis, as I believe only Noam Chomsky has consistenly pointed out, NAFTA is not really a free-trade agreement at all - it is, in his words, an "investors' rights" agreement allowing multinational companies to shift production and profits in a shell game in and around their international subsidiaries for labor and tax advantages. The lion's share of the much-vaunted post-NAFTA increase in trade between the US and Mexico, in fact, has been just that - internal shifting around of goods within corporations with one foot on both side of the fence, straddling it for that good old comparative advantage. Have the American engineer design it, have the Mexican line worker assemble it, declare the profits in the Cayman Islands or the losses in the States, and each movement of the good from subsidiary to subsidiary counts as trade. Magic. We're all better off. Haven't you noticed?

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