Mexico's Immigrants

http://web.lexis-nexis.com/universe/document?_m=cbf543bbee9e6ebd0ca939797e2b0b79&_docnum=1&wchp=dGLzVzz-zSkVb&_md5=774df2d1c79b20843943b710e39801d2

After the last post, someone told me a procedure for making smaller links. I paid attention, but now, when I blog again, the button, which I remember seeing before and was told to use, is no longer there. Ah well.

This is a link to an article in the New York Times on Lexis-Nexis. The author argues that because Mexicans have the option of illegally entering the US for relatively well-paid physical labor, they have a reduced incentive to acquire education. Because they're illegal and employed short term, employers have no incentive to train illegal immigrants. We should tighten the border and increase allowed legal immigration, but require more education, incentivizing education in Mexico and increasing the economic benefit to the US of immigration.

This article argues from two standpoints. One is for the benefit of the US. From that standpoint, the argument is valid--we would derive greater benefit from legal, well-educated immigrants than from illegal immigrants who can only get jobs doing manual labor. Economically, the reduced number of immigrants (since the thousands of immigrants who enter the country illegally each year would certainly not meet our standards) might reduce this benefit or even bring the net economic impact of this policy into the negatives. But politically, we would have immigrants who would demand less of our welfare system and compete less with our poorest (unionised) workers.

The second standpoint is for the benefit of Mexican laborers. This appeals to me less; poor Mexican farmers can't always afford to send children to school. Their labor might be needed on the farm, which is just scraping by. People care about their children, and when they can afford to educate them, they do. The best way of making that education affordable, for the government as well as for the family, is to maximize economic growth and benefits from trade, not trying to change education in Mexico through policy in the United States.

Thoughts on Nafta

http://web.lexis-nexis.com/universe/document?_m=fa48042a8f0d2f56594a3de460822a5c&_docnum=5&wchp=dGLbVlb-zSkVb&_md5=cfa1c33303ad064180ae18742e96e4b8

I really wish I could figure out how to get smaller links.
Anyway, this is an article from Business Outlook about a recent Senate panel discussion on the pros and cons of NAFTA. In short, trade has increased, as might be expected from a free trade agreement. American agricultural exports in particular have grown by 160%. However, as manufacturing jobs have been created in Mexico, a nearly as large number of Mexican farmers have been driven from the market by American competition. Nancy Peloski (sic) believed that Mexican farmers had lost more than they gained from NAFTA.

So farmers left the land, and a similar number (greater in fact) took up manufacturing jobs. Historically, it was the increased productivity of farms that led to the large supply of labor that fueled the Industrial Revolution. So Mexico's poverty and large-scale unemployment, which existed before NAFTA, have been reduced somewhat as industrialization takes place. NAFTA has not solved all problems instantly, but that's not what it was for. It was to create wealth through increased trade and help the economic development of Mexico, which it has done to a significant (though not enormous) degree. NAFTA is awesome.

Mexico's Corn Tariff

http://find.galegroup.com/itx/tab.do?subjectParam=Locale%2528en%252C%252C%2529%253AFQE%253D%2528su%252CNone%252C6%2529Mexico%253AAnd%253ALQE%253D%2528JN%252CNone%252C9%2529Economist%2524&qrySerId=Locale%28en%2C%2C%29%3AFQE%3D%28ke%2CNone%2C6%29Mexico%3AAnd%3ALQE%3D%28JN%2CNone%2C9%29Economist%24&sgHitCountType=None&inPS=true&sort=DateDescend&tabID=T003&sgCurrentPosition=0&subjectAction=DISPLAY_SUBJECTS&prodId=EAIM&searchId=R1&displaySubject=&userGroupName=beloit_main&prevSubject=&searchType=AdvancedSearchForm

Behind this (admittedly unseemly) link, there is the full text of a recent article in the Economist about a price spike in corn (which the British news magazine calls "maize,") which has led to a similar spike in the price of the tortillas everyone in Mexico eats. The cause? Mexican corn tariffs.
Under NAFTA, tariffs are being reduced, and the Mexican corn tariff is set to be eliminated next year. However, when the American ethanol craze began, the price of American yellow corn went up 50% (in Chicago, specifically). Mexican users of yellow corn (for things like cattle feed) started buying up white corn instead, which Mexicans use to make tortillas. Prices rose fast. Without the tariff, Mexican companies would be able to import corn at subsidised American prices, increasing supply. With the tariff, it's cheaper to buy up other sources of corn, so of course that's what they did.
Mexico's trade-freindly President, Felipe Calderon, responded quickly, increasing the allowed amount of tariff-free imported corn. But Lopez Obrador, the second-place finisher in a recent presidential election (and self-declared "legitimate president of Mexico") has accused him of allowing monopolistic importers to fix prices.

It Begins

This is the first post of a blog I'm starting as part of International Economics. Happy Zeroth Birthday, Blog! I'm actually posting this in class at the behest of the professor, so I'll get down to the interesting things later.