Wednesday, April 12, 2006

Excellent comment from David Frum Today

".........And here, finally, a thought about Mexico and the origins of this mass migration. Some readers have wondered why NAFTA did not (as promised) help curb Mexican migration to the US. I have often wondered that myself. Part of the answer may lie in Mexico's bad timing: It opened itself to US investment in 1994, at precisely the moment that China's even lower-wage workforce was joining the world marketplace. Had Mexico started its reform process in 1984, things might have had a different result.

Mexico's refusal to open its energy industry to foreign investment has also hindered the country's growth: One of its most powerful potential engines of transformation has been sputtering wastefully.

Some economists argue that Mexico's inherent weaknesses were always so great that NAFTA's potential for good was bound to be limited from the start.

Others argue that NAFTA itself created the "immigration hump": the point to NAFTA was to push the Mexican economy to greater efficiency through free trade. Free trade prods economies to concentrate where they have a comparative advantage - and to shift labor and other resources away from sectors where they less advantageously deployed. The hope was that these displaced workers would find employment instead in growing sectors of the Mexican economy - but because that economy has performed so poorly overall since 1994, growth has not been sufficient to absorb all the displaced labor, inducing some workers to move northward.

Whatever the cause, it is apparent by now that migration has become a crutch for the Mexican state, allowing it to avoid the politically difficult actions necessary to accelerate Mexican economic growth: open the energy sector, eliminate antique labor restrictions, create financial institutions accessible to all so as to promote small-business creation. All of these steps involve discomfort for powerful local constituencies. Mexico has chosen to export its problems instead.

This background may also illuminate the origins of President Bush's ill-considered migration proposals. Basically he proposes that the US accommodate Mexico indefinitely. This idea overlooks a lot of practical realities, including the practical realities of politics. But it's not too late for at least House Republicans to send a clear message that they remain the party of American nationhood - and by taking a clear even if not immediately successful stand, to remind voters why the GOP continues to deserve majority status in the House of Representatives."


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