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November 2, 2014

Zambrano Was Cement Process Innovator



(p. A22) Beginning in 1992, Mr. Zambrano bought up far-flung producers to create the third-largest cement company in the world. He remade each new acquisition, introducing high technology and logistical efficiencies that made Cemex the subject of business school case studies at Harvard and the Massachusetts Institute of Technology.

From his own computer Mr. Zambrano could monitor any Cemex operation in more than 50 countries, said Rossana Fuentes-Berain, a Mexican journalist who wrote a 2007 book about Mr. Zambrano, "Grey Gold."

What distinguished him was "the technology, the management and the hunger to prove that you can be as good as anybody in the market," Ms. Fuentes-Berain said.



For the full obituary, see:

ELISABETH MALKIN. "Lorenzo Zambrano, 70, Leader of Cemex, Dies." The New York Times (Thurs., May 15, 2014): A22.

(Note: the online version of the obituary has the date MAY 13, 2014, and has the title "Lorenzo H. Zambrano, Head of Cement Giant Cemex, Dies at 70.")


The biography mentioned above, as of this posting, is only available in Spanish:

Fuentes-Berain, Rossana. Oro Gris: Zambrano, La Gesta de Cemex y la Globalizacion en Mexico. Aguilar, 2007.






October 13, 2014

Mexicans Abandon Government Subsidized Housing Developments



(p. A5) ZUMPANGO, Mexico -- In an enormous housing development on the edge of this scrappy commuter town, Lorena Serrano's 11-foot-wide shoe box of a home is flanked by abandoned houses. The neighborhood has two schools, a few bodegas and a small community center that offers zumba classes.

There is very little else.

"There are no jobs, no cinema, no cantina," said Ms. Serrano of the 8,000-home development, called La Trinidad. Her husband's commute to the capital, Mexico City, about 35 miles south, takes two hours each way by bus and consumes a quarter of his salary, she said. "We're in the middle of nowhere."

Ms. Serrano, 39, is among more than five million Mexicans who, over the past decade, bought houses through a government program that made mortgages available to low-income buyers.

The program, initially hailed by some experts as the answer to Mexico's chronic housing deficit, fueled a frenzy of construction and helped inspire similar efforts in Latin America and beyond, including Brazil's "My House, My Life," which aims to build at least 3 million homes by this year.

But the concrete sprawl around Mexico City and other big towns grew faster than demand. Commutes proved unbearable, and residents abandoned their homes.



For the full story, see:

VICTORIA BURNETT. "ZUMPANGO JOURNAL; They Built It. People Came. Now They Go." The New York Times (Tues., SEPT. 9, 2014): A5.

(Note: the online version of the story has the date SEPT. 8, 2014.)






May 10, 2011

Mexican Universal Health Care: "There Are No Doctors, No Medicine, No Hospital Beds"



(p. 6) A decade ago, half of all Mexicans had no health insurance at all. Then the country's Congress passed a bill to ensure health care for every Mexican without access to it. The goal was explicit: universal coverage.

By September, the government expects to have enrolled about 51 million people in the insurance plan it created six years ago -- effectively reaching the target, at least on paper.

The big question, critics contend, is whether all those people actually get the health care the government has promised.


. . .


The money goes from the federal government to state governments, depending on how many people each state enrolls. From there, it is up to state governments to spend the money properly so that patients get the promised care.

That, critics say, is the plan's biggest weakness. State governments have every incentive to register large numbers, but they do not face any accountability for how they spend the money.

"You have people signed up on paper, but there are no doctors, no medicine, no hospital beds," said Miguel Pulido, the executive director of Fundar, a Mexican watchdog group that has studied the poor southern states of Guerrero and Chiapas.

Mr. Chertorivski acknowledges that getting some states to do their work properly is a problem. "You can't do a hostile takeover," he said.

The result is that how Mexicans are treated is very much a function of where they live. Lucila Rivera Díaz, 36, comes from one of the poorest regions in Guerrero. She said doctors there told her to take her mother, who they suspected had liver cancer, for tests in the neighboring state of Morelos.



For the full story, see:

ELISABETH MALKIN. "Mexico Struggles to Realize the Promise of Universal Health Care." The New York Times, First Section (Sun., January 30, 2011): 6.

(Note: the online version of the story is dated January 29, 2011 and has the title "Mexico's Universal Health Care Is Work in Progress.")

(Note: ellipsis added.)





February 26, 2011

How Bacardi Fought Predatory Taxation in Pre-Castro Cuba



BacardiAndTheLongFightForCubaBK2011-02-05.jpg











Source of book image: http://www.nytimes.com/2008/09/21/business/21shelf.html?_r=1





(p. W6) When it comes to chronicling the Bacardi rum dynasty, the best model may be "Buddenbrooks" or some other novelistic attempt to capture the experience of a family business trying to survive across generations. Tom Gjelten's "Bacardi and the Long Fight for Cuba" -- though fact-driven history and far more upbeat that Thomas Mann's tale of dynastic decline -- feels very much in this literary tradition.


. . .


Perhaps the most fascinating figure in the Bacardi tale is José Bosch, called Pepín, a young businessman who also married into the Bacardi family and was an early opponent of Gerardo Machado's corrupt rule in the 1920s. Machado made Bacardi, one of Cuba's most successful companies, a target of predatory taxation, but a proposed rum tax was more than the distiller could stand. Bacardi opened new facilities in Mexico and threatened to move its operations there if the tax was enacted. The Cuban legislature dropped the idea -- and Bacardi soon found itself with a Mexican distillery it didn't need, trying to sell a liquor to tequila- quaffing public that didn't want it.

Bosch was dispatched in 1933 to shut down the Mexican facility, but instead he saved it. "Noticing that Mexicans drank a lot of Coca-Cola," Mr. Gjelten writes, Bosch urged the company to promote Bacardi-and-Coke cocktails. Observing the rich tradition of Mexican handicrafts, he also suggested that the locals would be more inclined to drink rum if it was sold in the sort of wicker-covered jugs often used for it in Cuba. Sales in 1934 doubled.



For the full review, see:

ALVARO VARGAS LLOSA. "The Family Spirit." The Wall Street Journal (Fri., September 12, 2008): W6.

(Note: ellipsis added.)


The book being reviewed, is:

Gjelten, Tom. Bacardi and the Long Fight for Cuba: The Biography of a Cause. New York: Viking Penguin, 2008.





November 18, 2010

Some Hispanics Support Arizona Immigration Law



StoletoSpousesDisagreeArizonaLaw2010-11-14.jpg"Shayne Sotelo opposes Arizona's new immigration law, while her husband, Efrain, supports it." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. 28) PHOENIX -- Arizona's immigration law, which politicians have debated in the Legislature, lawyers have sparred over in the courtroom and advocates have shouted about on the street, has found its way up a driveway in central Phoenix, through the front door and right onto the Sotelo family's kitchen table.


. . .


That such a divisive social issue would divide some families is not surprising. But what makes the Sotelos stand out is that they are both Latinos, he a Mexican immigrant who was born in the northern state of Chihuahua and she a descendant of Spanish immigrants who grew up in Colorado.

While polls show that a vast majority of Latinos nationwide side with Mrs. Sotelo in opposing Arizona's law, that opposition is not uniform. "All Latinos are not opposed to this law -- that's too simplistic," said Cecilia Menjivar, an Arizona State University sociologist. There are other Mr. Sotelos out there, including an Arizona state legislator, Representative Steve B. Montenegro, a Republican who immigrated from El Salvador and became the only Latino lawmaker to vote in favor of the bill.


. . .


[Mr. Sotelo] thinks his adopted state has been unfairly maligned since the law passed. "I'm a Hispanic, and I don't have any issues walking the streets," he said. "They make it seem like the police or sheriff are out there checking everyone's papers, and that's not so."



For the full story, see:

MARC LACEY. "One Family's Debate Shows Arizona Law Divides Latinos, Too." The New York Times, First Section (Sun., October 31, 2010): 28.

(Note: ellipses added; bracketed name added to replace "He.")

(Note: the online version of the article is dated October 30, 2010 and has the title "Arizona Immigration Law Divides Latinos, Too.")





August 31, 2010

Legalizing Drugs in U.S. Would Reduce Mexican Crime Wave



FoxVicente2010-08-29.jpg

Vicente Fox. Source of photo: online version of the NYT article quoted and cited below.


(p. 14) Is there anything to be done about the drug wars that are terrorizing Mexicans today and that have reportedly caused 25,000 deaths in the past three years?
That has to be dealt with together by the United States and Mexico. It's a joint problem and a joint challenge. The U.S. provides the markets and guns that come back to Mexico and allow the cartels to be active.

You think the United States is causing Mexico's crime wave?
Absolutely, yes. The cartel gangs are nourished through the drug consumption in the United States. That's why my position is that we should move as fast as possible into legalizing drug consumption.




For the full interview, see:

DEBORAH SOLOMON. "QUESTIONS FOR VICENTE FOX; Border Rap." The New York Times, Magazine Section (Sun., July 25, 2010): 14.

(Note: bold in original, to indicate questions by Deborah Solomon.)

(Note: the online version of the interview is dated July 23, 2010.)


.




June 24, 2010

U.S. Jobs Lost Due to Law Restricting Mexican Truck Drivers



CarbonlessPaperMachine2010-05-20.jpg"Carbonless paper comes off a coating machine at Appleton Papers in March. Mexican tariffs have hit sales." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. A5) APPLETON, Wis.--Congress's vote last year to keep Mexican truck drivers south of the border was good news for DuWayne Marshall.

Mr. Marshall, 49 years old, owns a truck and hauls loads all over the U.S. from his home in Wisconsin. "Why should I have to compete against Third World drivers within my own borders?" Mr. Marshall asked during a break on a run to San Diego. "By closing down the borders, we are saving American jobs."

Elizabeth Villagomez, 38, isn't so sure. A single mother of two teens, she has worked at a paper plant in this community near Green Bay for 15 years. After the Mexican government retaliated against the trucking ban by slapping $2 billion in tariffs on U.S. paper, produce and other goods, orders plunged and managers began slashing shifts and overtime for the unionized work force.

"The company has done all it can to cut costs," Ms. Villagomez said. "I'm at the bottom of the list if they have layoffs. It's kind of scary, not knowing if you're going to have a job."


. . .


At Appleton Papers Inc., the fight over who can drive a truck across a border 1,600 miles away has translated into falling wages and rising anxiety.

Rick Bahr, head of the United Steelworkers union local that represents more than 500 employees at the Appleton plant, said six shifts have already been cut, cutting down on overtime.

"The battle ends up union versus union, truckers versus the paper workers," Mr. Bahr said. The national steelworkers' union has been supporting the Teamsters on the issue of Mexican trucks in the U.S.

Nearly half the company's revenue, about $420 million last year, comes from carbonless paper sales. Its largest foreign customer is Mexico. After Mexico put a 10% tariff on carbonless paper, revenue from Mexico fell to $37 million in 2009 from $46 million in 2008.

Now, more Mexican customers say they will look for alternative suppliers to avoid having to bear part of the tariff costs. Just last month a major customer told Appleton it was going to get its carbonless paper from a European producer.

Even before the tariffs were imposed, the company had seen business hit by the economic slowdown and had cut its work force in 2008 and stopped other benefits, such as reimbursing tuition and matching workers' contributions to their 401K retirement plans. Company officials said it was hard to quantify what part of the business downturn could be blamed directly on the tariffs, but they noted that Appleton sold 18% fewer tons of carbonless paper in the U.S. last year, compared with 2008. The number of tons sold to Mexican customers was down 24%.

Inside the plant, the machine that coats 4,000-pound rolls of paper to make it carbonless was idle one recent afternoon. Once run 24 hours a day, it is now used only half that time.

Kevin Bunnow, 50, a 33-year veteran of the plant, said the reduction in shifts had meant a wage cut of several thousand dollars last year.

"When elephants fight, the grass loses," he said. "It didn't take me long to realize, we're the grass."




For the full story, see:

GARY FIELDS. "Trade Dispute Divides Workers; It's 'Union vs. Union' as Ban on Mexican Trucks Cheers Drivers, Triggers Cut in Hours at Paper Plant." The Wall Street Journal (Tues., April 6, 2010): A5.

(Note: ellipsis added.)





December 4, 2009

Calderón's Decision Is Bigger than Reagan's Firing of Air Traffic Controllers



ElectriciansProtestMexico2009-10-29.jpg"The Mexican Union of Electricians protests the government's decision to liquidate the state-owned electricity company in Mexico City." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. A19) Eight days ago, just after midnight on a Sunday morning, Mexican President Felipe Calderón instructed federal police to take over the operations of the state-owned electricity monopoly, Luz y Fuerza del Centro (LyFC), which serves Mexico City and parts of surrounding states. The company's assets will stay in the hands of the government but will now be run by the Federal Electricity Commission (CFE), a national state-owned utility and the major supplier of LyFC's energy.

The net effect of the move is to dethrone 42,000 members of the Mexican Union of Electricians, which had won benefits over the decades to make Big Three auto workers in Detroit blush. When the liquidation is complete, it is expected that the company will employ about 8,000. To appreciate the magnitude of Mr. Calderón's decision, think of Ronald Reagan's firing of the air traffic controllers--only bigger. As one internationally renowned Mexican economist remarked on Sunday, it is "the most important act of government in 20 years."



For the full commentary, see:

MARY ANASTASIA O'GRADY. "Mexico's Calderón Takes on Big Labor; Its state-owned electricity company was bleeding the national treasury dry." The Wall Street Journal (Mon., October 19, 2009): A19.





July 18, 2009

"Build a Wall Around the Welfare State"



For a long time, I've been meaning to post a pithy comment on immigration policy from the Cato Institutes's Bill Niskanen.

The comment was related to the proposal to erect a wall between the United States and Mexico, in order to reduce illegal immigration. Some libertarians favor open immigration. Others believe that so long as we have a large welfare state, open immigration would impose high costs on the taxpayer, and thereby reduce economic growth. (I believe that I read Milton Friedman supporting this latter position, in the year or two before he died in 2006.)

In this context, Niskanen's pithy comment has appeal:


"Build a wall around the welfare state, not around the country."


Source:

William A. Niskanen on 11/19/07 at the meetings of the Southern Economic Association in New Orleans.





December 13, 2008

Regular Citizens Perform Vast Majority of Disaster Rescues


UnthinkableBK.jpg







Source of book image: http://www.cleveland.com/arts/index.ssf/2008/06/the_book_the_unthinkable_expla.html


The most important message of this book is a very important message indeed. That message is that overwhelmingly, disaster survival and rescue depends on the actions of regular people, not the actions of professional lifesavers. (Very often, the professionals cannot get there quickly enough, or in sufficient numbers, to get the job done.)

This message, is itself worth the price of the book---if it were sufficiently understood, it would have enormous implications for individual preparedness, and government policy. (Think about the implications, for instance, for whether individual regular people should be allowed to carry guns.)

(p. xiii) These days, we tend to think of disasters as acts of God and government. Regular people only feature into the equation as victims, which is a shame. Because regular people are the most important people at a disaster scene, every time.

In 1992, a series of sewer explosions caused by a gas leak ripped through Guadalajara, Mexico's second largest city. The violence came from below, rupturing neighborhoods block by block. Starting at 10:30 A.M., at least nine separate explosions ripped open a jagged trench more than a mile long. About three hundred people died. Some five thousand houses were razed. The Mexican Army was called in. Rescuers from California raced to help. Search-and-rescue dogs were ordered up.

But first, before anyone else, regular people were on the scene saving one another. They did incredible things, these regular people. They lifted rubble off survivors with car jacks. They used garden hoses to force air into voids where people were trapped. In fact, as in most disasters, the vast majority of rescues were done by ordinary folks. After the first two hours, very few people came out of the debris alive. The search and rescue dogs did not arrive until twenty-six hours after the explosion.



Source:

Ripley, Amanda. The Unthinkable: Who Survives When Disaster Strikes - and Why. New York: Crown Publishers, 2008.




September 23, 2008

Montezuma Tried Appeasement with Cortes


ConquistadorBK.jpg










Source of book image: http://images.barnesandnoble.com/images/26910000/26912572.jpg

(p. A 13) Cortés was a man of deep contradictions. A devout Catholic, he was horrified by the sights and sounds of Aztec worship: its human sacrifices and cannibalism, its skull racks, its idols draped with human body parts, its priests with their blood-clotted hair. But he was not above massacring his enemies or burning them at the stake. He was genuinely dazzled by his first sight of the Aztec capital, Tenochtitlán, with its tidy fields and gleaming stone causeways, a city of nearly a quarter-million people that was, he wrote in a letter to the Spanish king, more beautiful than any in Europe. Even so, he was ready to destroy it all to feed his desire for gold and to bend the Aztecs to his will.

If Cortés was a man of contradictions, Montezuma was not. Studious and conscientious, he had been trained for Aztec priesthood before becoming emperor in 1503 -- the same year that Cortes set out from Spain for America. Montezuma believed in the rightness of his own convictions but also, it appears, in the importance of an open mind. As Mr. Levy shows, he always looked for ways to dispel a crisis by placating the feelings of all concerned. He would have made a fine college president. From his first meeting with Cortés in November 1519, though, he was desperately overmatched.

Montezuma hoped that, by giving Cortés magnificent gifts of gold and silver, he could make him go away. He made him want to stay instead. The Aztec ruler never quite shook off the suspicion that Cortés might be the Aztec god Quetzelcoatl returning home according to ancient prophesy -- a suspicion that led Montezuma to want to treat the intrusive Spaniards as guests rather than a threat.

Cortés exploited Montezuma's weakness without scruple, squeezing one concession after another out of him until, though outnumbered by more than 1,000-to-1, Cortés made him a hostage. When Montezuma had lost all credibility with his people and was no longer useful, Cortés cast him aside. Montezuma died a broken man -- although probably not, Mr. Levy argues, at Cortes's order. It is more likely that Montezuma died from wounds inflicted by his own subjects. When they saw him appear in chains and appeal for calm, they had bombarded him with stones and arrows. His weakness, they understood, had betrayed them to the Spanish.



For the full review, see:

ARTHUR HERMAN. "Bookshelf; Spain Says Hello." The Wall Street Journal (Thurs., July 10, 2008): A13.

The reference for the book, is:

Levy, Buddy. Conquistador. New York: Bantam Books, 2008.




March 20, 2008

Mexico Supplies United States Aerospace Industry


MexicoAerospaceMap.gif Source of map: online version of the WSJ article quoted and cited below.


(p. A2) Mexico has felt the downside of globalization in recent years as cheaper Asian manufacturers of everything from electronics to auto parts have undercut the advantages provided by looser North American trade barriers.

Now, Mexican officials are turning to another sector they hope will put down deeper roots: The booming North American aerospace industry.

Mexico has moved to make it even easier for foreign companies to do business south of the border. Already, big names in aerospace such as Goodrich Corp. of the U.S. and Bombardier Inc. of Canada have set up facilities there.

The nation offers proximity and easy reach at a time when aerospace giants are under pressure to hit deadlines and deliver new aircraft to customers. Aerospace officials also say they are impressed by Mexico's deep talent pool. And if Mexico successfully bolsters its aerospace industry, it will demonstrate that skills burnished servicing the automotive sector can be transferred to higher-end industries.

. . .

Mexico's biggest advantage may be its location. For years, major aerospace manufacturers such as Boeing Co. have farmed out a growing share of their work to suppliers in Japan, China and elsewhere. But these arrangements can make it a challenge to get finished components back to the companies' main factories for final assembly. The choice often boils down to waiting weeks for delivery by ship or paying for costly space on a cargo jet.

With demand for new jetliners and other aircraft at record levels, however, companies are under greater pressure to cut shipping time and increase production. Many U.S. aerospace companies already have built up considerable capacity in Mexico to feed the industry's production hub in Southern California.


For the full commentary, see:

JOEL MILLMAN and J. LYNN LUNSFORD. "THE OUTLOOK; Mexico Seeks a Lasting Share Of Aerospace Boom." The Wall Street Journal (Mon., November 26, 2007): A2.

(Note: ellipsis added.)




December 2, 2007

Effective Foreign Aid

 

   "HOMELAND SECURITY.  Many women in Mexico, like Estela Palacio Calzada, with her granddaughter, rely on money sent back from the U.S. "  Source of caption and photo:  online version of the NYT article quoted and cited below.

 

Adam Smith argued in The Theory of Moral Sentiments, that altruism is more effective when it is directed toward those we know best--mainly our family, and immediate neighbors.

A policy implication may be that the most effective foreign aid is to have more open immigration policies, that then permit the migrants to send back funds to those in their home country who they know best.

 

THE money flows in dribs and drabs, crossing borders $200 or $300 at a time. It buys cornmeal and rice and plaid private school skirts and keeps the landlord at bay. Globally, the tally is huge: migrants from poor countries send home about $300 billion a year. That is more than three times the global total in foreign aid, making “remittances” the main source of outside money flowing to the developing world.

Surveys show that 80 percent of the money or more is immediately spent, on food, clothing, housing, education or the occasional beer party or television set. Still, there are tens of billions available for savings or investment, in places where capital is scarce. While remittances have been shown to reduce household poverty, policymakers are looking to increase the effect on economic growth.

Some migrants, for instance, send home money to savings accounts at small bank-like microfinance institutions, which use the resulting capital pool to lend to local entrepreneurs.

 

For the full story, see:

JASON DePARLE. "Migrant Money Flow: A $300 Billion Current."  The New York Times, Week in Review Section  (Sun., November 18, 2007):  3.

 

   Source of map graphic:  online version of the NYT article quoted and cited above.

 




November 16, 2007

"India is Outsourcing Outsourcing"

 

   "Infosys employs workers in Brno, Czech Republic."   Source of caption and photo:  online version of the NYT article quoted, and cited, below.

 

(p. A1)  MYSORE, India — Thousands of Indians report to Infosys Technologies’ campus here to learn the finer points of programming. Lately, though, packs of foreigners have been roaming the manicured lawns, too.

Many of them are recent American college graduates, and some have even turned down job offers from coveted employers like Google. Instead, they accepted a novel assignment from Infosys, the Indian technology giant: fly here for six months of training, then return home to work in the company’s American back offices.

India is outsourcing outsourcing.

One of the constants of the global economy has been companies moving their tasks — and jobs — to India. But rising wages and a stronger currency here, demands for workers who speak languages other than English, and competition from countries looking to emulate India’s success as a back office — including China, Morocco and Mexico — are challenging that model.

Many executives here acknowledge that outsourcing, having rained most heavily on India, will increasingly sprinkle tasks around the globe. Or, as Ashok Vemuri, an Infosys senior vice president, put it, the future of outsourcing is “to take the work from any part of the world and do it in any part of the world.”

. . .

(p. A14)  Such is the new outsourcing: A company in the United States pays an Indian vendor 7,000 miles away to supply it with Mexican engineers working 150 miles south of the United States border.

In Europe, too, companies now hire Infosys to manage back offices in their own backyards. When an American manufacturer, for instance, needed a system to handle bills from multiple vendors supplying its factories in different European countries, it turned to the Indian company. The manufacturer’s different locations scan the invoices and send them to an office of Infosys, where each bill is passed to the right language team. The teams verify the orders and send the payment to the suppliers while logged in to the client’s computer system.

More than a dozen languages are spoken at the Infosys office, which is in Brno, Czech Republic.

 

For the full story, see: 

ANAND GIRIDHARADAS.  "Outsourcing Comes Full Circle As India Starts to Export Jobs."  The New York Times   (Tues., September 25, 2007):  A1 & A14.

(Note:  the somewhat different title of the online version was:  "Outsourcing Works So Well, India Is Sending Jobs Abroad.")

 




November 12, 2007

Strong Global Support for Free Markets

 

FreeMarketsPositiveViewTable.gif   Source of table:  "World Publics Welcome Global Trade -- But Not Immigration." Pew Global Attitudes Project, a project of the PewResearchCenter. Released: 10.04.07 dowloaded from: http://pewglobal.org/reports/display.php?ReportID=258

 

(p. A10) WASHINGTON, Oct. 4 — Buoyed and battered by globalization, people around the world strongly view international trade as a good thing but harbor growing concerns about its side effects: threats to their cultures, damage to the environment and the challenges posed by immigration, a new survey indicates.

In the Pew Global Attitudes Project survey of people in 46 countries and the Palestinian territories, large majorities everywhere said that trade was a good thing. In countries like Argentina, which recently experienced trade-based growth, the attitude toward trade has become more positive.

But support for trade has decreased in recent years in advanced Western countries, including Germany, Britain, France and Italy — and most sharply in the United States. The number of Americans saying trade is good for the country has dropped by 19 percentage points since 2002, to 59 percent.

“G.D.P. growth hasn’t been as dramatic in these places as in Latin America or Eastern Europe,” said Andrew Kohut, president of the Pew Research Center, referring to gross domestic product, the total value of the goods and services produced in a country. “But worldwide, even though some people are rich and some are poor, support for the basic tenet of capitalism is pretty strong.”

 

For the full story, see: 

BRIAN KNOWLTON. "Globalization, According to the World, Is a Good Thing. Sort Of."  The New York Times   (Fri., October 5, 2007):  A10. 

 




June 24, 2007

The Mexicans Are Not What Is Wrong with Mexico

Gerardo on the left; me in the middle; and Jenny in the right lower corner.  Photo by Jeanette (who you can just barely see in the mirror over Gerardo's shoulder).

 

In downtown Cancun we dined at a wonderful restaurant called Labná.  The food was authentic, varied, and delicious.  The service, from Gerardo (above) was attentive and replete with gracious good-will. 

The restaurant itself was an oasis of order in a milieu of disorder and decay.

As one tours Mexico, one has the sense of an enormous waste of human time and talent.  The incentive to act and the ability to get things done, is sucked away by an enormous cadre of parasitical rent-seeking hangers-on, who are either part of the government or who are privileged by government rules and regulations.

When the roof of our home in Nebraska was damaged by hail several years ago, it was replaced by a crew of Mexican workers. 

Our retired neighbor Howard had the habit of carefully monitoring all of our outdoor contractors.  Old, reliable, helpful, curmudgeony Howard (may he rest in peace) was much more likely to offer complaint than praise.  But Howard told me, with genuine respect and admiration in his voice, how impressed he was with how hard the Mexican crew had worked, especially through the oppressive heat of the summer days. 

The Mexicans are not what is wrong with Mexico.  What is wrong with Mexico is the Mexican government. 

In most areas of government activity, the Mexicans would benefit from a lot more of what Edmund Burke called "salutary neglect."

 

(Note:  Leonard Liggio reminded me of the wonderful phrase "salutary neglect" at the April 2007 meetings of the Association of Private Enterprise Education in Cancun.)

(Another note: The address of the Labná restaurant is Margaritas 29.  It is near a run-down park, where I purchased an OK cup of flan from a vendor for 10 pesos--the best flan I ever had for less than a dollar!)





June 20, 2007

Chichen Itza May Have Lasted Longer than Other Mayan City-States Because of Its Free Trade

 

  The guide told us that this area of pillars at Chichen Itza, in the Yucatan of Mexico, is thought to have been a market area.  (Photo taken by me on April 8, 2007, at the excursion to Chichen Itza arranged for the Association of Private Enterprise Education.)

 

Usually we think of the Catholic Church's great damage to knowledge being its persecution of Galileo and attempted suppression of heliocentricism.  But the suppression quickly failed and nothing permanent was lost.

A greater harm to knowledge may have been done when, in the name of the inquisition, countless Mayan manuscripts were burned by the Spanish conquistadors.

Evidence was destroyed that likely would have helped us understand how the Mayan society worked.

For example, we were told on our visit to Chichen Itza that one hypothesis has it that Chichen Itza lasted 300 years longer than all other Mayan city-states because it was the only city-state dominated by cosmopolitan merchant and entrepreneur culture--an hypothesis that I find highly congenial.

Unfortunately, much of the evidence that might have confirmed, elaborated, or refuted this hypothesis, was destroyed forever.

 




June 18, 2007

Mexican Federal Taxi "Charters" Increase Taxi Prices

 

     A non-federally-chartered taxi leaves the Cancun Hilton, headed for the Cancun airport, charging $23.  An identical, but federally-chartered cab, making the reverse trip, charges $40.  (Photo by Art Diamond.)

 

When we arrived at the Cancun airport we faced a chaotic environment where many Mexicans were yelling at us to buy taxi tickets.  After buying a ticket for $40, someone escorted us to a crowded, chaotic place to wait for a cab.  We waited and waited in the noise and the heat.  At some point, my daughter Jenny commented, "These people need to get organized."

Yes, Jenny they sure do!  And you might think that what they need in order to get organized, is for the government to come in to organize them.

But it turns out that the government has already come in.  Only federally charged taxis are allowed to take passengers from the airport to the hotel zone.  The price is fixed at $40.  On the other hand, any taxi may take passengers back to the airport, from the hotel zone.  The base price for a return trip was $23 .  (I added a $2 tip out of sympathy for the cabbie not driving a federally anointed cab.)

So, yes, these people need to get organized, and the best way to do that is to get their government out of their way, so that they can organize themselves through the free market.

 

Note:  relevant guide book passage:  "[Returning to the airport] the rate will be much less for the trip from the airport.  (Only federally chartered taxis may take fared from the airport, but any taxi may bring passengers to the airport.)"  (p. 78)

Note:  italics in original; bracketed phrase added.

 

Source:   

Baird, David, and Lynne Bairstow.  Frommer's Cancun, Cozumel  &  the Yucatan 2007.  Hoboken, NJ:  Wiley Publishing, Inc., 2006.

 




April 13, 2007

Wal-Mart Improves Life in Mexico

   Source of graphic:  online version of the WSJ article cited below.

 

(p. A1)  JUCHITÁN, Mexico -- For as long as anyone can remember, shopping for many items in this Zapotec Indian town meant lousy selection and high prices. Most families live on less than $4,000 a year. Little wonder that this provincial corner of Oaxaca, historically famous for keeping outsiders at bay, welcomed the arrival of Wal-Mart.

Back home in the U.S., Wal-Mart Stores Inc. is known not only for its relentless focus on low prices but also for its many critics, who assail it for everything from the wages it pays to its role in homogenizing American culture. But while its growth in the U.S. is slowing, Wal-Mart is striking gold south of the border, largely free from all the criticism. Like Wal-Mart fans in less affluent parts of America, most shoppers in developing countries are much more concerned about the cost of medicine and microwaves than the cultural incursions of a multinational corporation.

That fact is making Wal-Mart a dominant force in Latin America. Wal-Mart de México SAB, a publicly traded subsidiary, is not only the biggest private employer in Mexico -- it's the biggest single retailer in Latin America. Sales at Wal-Mex, as the Mexican unit is called, are forecast to rise 16% to $21 billion this year, representing a quarter of Wal-Mart's foreign revenue. International revenue soared 30% to $77.1 billion, accounting for 22% of Wal-Mart's sales, in the fiscal year ended Jan. 31. Wal-Mex profits are forecast to grow 20% to $1.3 billion this year.

. . .

(p. A14)  In Mexico, Wal-Mart has been a counterweight to the powers that control commerce. One of the most closed economies in the world until the late 1980s, Mexico was dominated for decades by a handful of big grocers and retailers. All were members of a national retailing association called ANTAD, and cutthroat competition was taboo. At the local level, towns are still hostage to local bosses, known here as caciques, the Indian word for local strongmen who control politics and commerce.

. . .

In recent months, as rising prices for U.S. corn pushed up the price of Mexico's corn tortilla, a staple for millions of poor, Wal-Mart could keep tortilla prices largely steady because of its long-term contracts with corn-flour suppliers. The crisis turned into free advertising for Wal-Mart, as new shoppers lined up for the cheaper tortillas.

Wal-Mart also overcame a Juchitán cacique, or local boss: Héctor Matus, a trained doctor who goes by La Garnacha, the name for a fried tortilla snack popular in town. Dr. Matus, 55, owns six pharmacies, stationery stores and general stores. He has also held an array of political posts, including Juchitán mayor and state health minister. As town mayor from 2002 to 2004, he says he blocked a national medical-testing chain from opening in town because it meant low-price competition to local businessmen doing blood work.

But Dr. Matus couldn't persuade local and state officials to block Wal-Mart, and he is feeling the pinch. Sales are off 15% at his stores since Wal-Mart arrived, and he is now lowering prices in response. Even so, he's still more expensive. A box of Losec stomach medicine costs 80 pesos ($7.30) at one of Dr. Matus's stores, marked down from 86 pesos. The price at Wal-Mart is 77 pesos ($7.20).

Dr. Matus isn't happy about the competition. "I could still kick them out of town, because I know how to mobilize people," he said, sitting in his living room surrounded by pictures of him with leading Mexican politicians dating back to the 1970s. Despite his bravado, town officials say Wal-Mart is staying. "The ones who have benefited the most [from Wal-Mart] are the poorest," says Feliciano Santiago, the deputy mayor. "I hope another one comes."

. . .

Gisela López, the 31-year-old head of billing at the Juchitán store, benefited from the retailer's system of promoting from within. Raised by her uneducated, Zapotec-speaking grandparents, Ms. López earned a computer degree at Juchitán's small technical college and then left for the booming northern city of Monterrey in search of opportunity.

Lacking connections, she couldn't find the office job she dreamed about, and took a job at one of Wal-Mart's stores. After three months, Ms. López made cashier supervisor, and later moved over to the billing department. When Wal-Mart opened a store in Juchitán, Ms. López jumped at the chance to move home -- and was promoted to billing chief in the process.

"It's a very different place to work, because you can succeed by your own effort," says Ms. López, whose $12,000-a-year salary now puts her in Mexico's middle class.

Ms. López's story of economic mobility is a rare one. Most of her childhood friends don't have steady jobs, she said. The success stories are friends who inherited jobs from their parents at the state oil company's big refinery in Salina Cruz, about an hour away.

 

For the full story, see:

JOHN LYONS.  "SOUTHERN HOSPITALITY; In Mexico, Wal-Mart Is Defying Its Critics; Low Prices Boost Its Sales and Popularity In Developing Markets."   The Wall Street Journal  (Mon., March 5, 2007):  A1 & A14. 

(Note:  ellipses added.)

 

WalMartJuchitanMap.gif MatusHector.gif LopezGisela.gif Source of map and images:  online version of the WSJ article cited above.

 




June 25, 2006

Illegal Immigration Reduces Wages for High School Dropouts by Only 3.6%

ImmigrantEffectOnWages.jpg  Source of graphic:  online version of the NYT article cited below.

 

As Congress debates an overhaul of the nation's immigration laws, several economists and news media pundits have sounded the alarm, contending that illegal immigrants are causing harm to Americans in the competition for jobs.

Yet a more careful examination of the economic data suggests that the argument is, at the very least, overstated.  There is scant evidence that illegal immigrants have caused any significant damage to the wages of American workers.

The number that has been getting the most attention lately was produced by George J. Borjas and Lawrence F. Katz, two Harvard economists, in a paper published last year.  They estimated that the wave of illegal Mexican immigrants who arrived from 1980 to 2000 had reduced the wages of high school dropouts in the United States by 8.2 percent. But the economists acknowledge that the number does not consider other economic forces, such as the fact that certain businesses would not exist in the United States without cheap immigrant labor. If it had accounted for such things, immigration's impact would be likely to look less than half as big.

. . .

. . . , as businesses and other economic agents have adjusted to immigration, they have made changes that have muted much of immigration's impact on American workers.

For instance, the availability of foreign workers at low wages in the Nebraska poultry industry made companies realize that they had the personnel to expand.  So they invested in new equipment, generating jobs that would not otherwise be there.  In California's strawberry patches, illegal immigrants are not competing against native workers; they are competing against pickers in Michoacán, Mexico.  If the immigrant pickers did not come north across the border, the strawberries would.

"Immigrants come in and the industries that use this type of labor grow," said David Card, an economist at the University of California, Berkeley.  "Taking all into account, the effects of immigration are much, much lower."

In a study published last year that compared cities that have lots of less educated immigrants with cities that have very few, Mr. Card found no wage differences that could be attributed to the presence of immigrants.

. . .

When Mr. Borjas and Mr. Katz assumed that businesses reacted to the extra workers with a corresponding increase in investment — as has happened in Nebraska — their estimate of the decline in wages of high school dropouts attributed to illegal immigrants was shaved to 4.8 percent. And they have since downgraded that number, acknowledging that the original analysis used some statistically flimsy data.

Assuming a jump in capital investment, they found that the surge in illegal immigration reduced the wages of high school dropouts by just 3.6 percent.

 

For the full commentary, see:

EDUARDO PORTER.  "ECONOMIC VIEW; Cost of Illegal Immigration May Be Less Than Meets the Eye."  The New York Times, Section 3  (Sunday, April 16, 2006):  3.




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