Mexico seeks to solidify rank as top U.S. trade partner, push further past China(dallasfed.org)
dallasfed.org
Mexico seeks to solidify rank as top U.S. trade partner, push further past China
https://www.dallasfed.org/research/economics/2023/0711
15 comments
Because it is in a lot of ways?
[Mexican living in Mexico here]
I've had the chance to live in other countries in Europe (Germany and the UK) for 8 years. I also have lived most of my life (and currently live) in Mexico.
As someone else said, "rich" people in Mexico can live a good-enough life. But the problem is that 43.9% [1] live in poverty in Mexico. That is, they don't have a way to make ends meet. Worse, the next 20% are just barely living by.
On top of that, society is naturally corrupt. You have corruption ingrained in the Mexican culture. From the typical politician corruption, the "plata o plomo" narco corruption, the police officer "get out of a fine" layman corruption; to the "inconsequential" I'll stop in the middle of the street for one minute, just-because. Like, normal layman people always have some reason why some law or rule wont apply to them. It's freaking enraging.
Finally you have lack of accountability. In Mexico only 1% [2] of the crimes are resolved. There's murders, assaults, robberies, violations, everything you can think of, and police, the judicial system and all that branch does absolutely nothing. They don't do their work. Moreover, normal people are scared of going to the Prosecution Authority (Ministerio Publico) because they know most likely they will be abused and further defrauded there.
> Mexico has it's problems,
You have to have lived in Mexico to understand the extent of the brokeness that we have here. A lot of people who live in Mexico and haven't had the chance to live somewhere else will tell you that "it is not that bad", but it is just a lack of knowledge of what "Normal" should be, part a coping mechanism and part Stockholm syndrome. (What else can people do?)
[1] https://imco.org.mx/las-cifras-mas-recientes-de-pobreza
[2] https://www.impunidadcero.org/impunidad-en-mexico/#/
[Mexican living in Mexico here]
I've had the chance to live in other countries in Europe (Germany and the UK) for 8 years. I also have lived most of my life (and currently live) in Mexico.
As someone else said, "rich" people in Mexico can live a good-enough life. But the problem is that 43.9% [1] live in poverty in Mexico. That is, they don't have a way to make ends meet. Worse, the next 20% are just barely living by.
On top of that, society is naturally corrupt. You have corruption ingrained in the Mexican culture. From the typical politician corruption, the "plata o plomo" narco corruption, the police officer "get out of a fine" layman corruption; to the "inconsequential" I'll stop in the middle of the street for one minute, just-because. Like, normal layman people always have some reason why some law or rule wont apply to them. It's freaking enraging.
Finally you have lack of accountability. In Mexico only 1% [2] of the crimes are resolved. There's murders, assaults, robberies, violations, everything you can think of, and police, the judicial system and all that branch does absolutely nothing. They don't do their work. Moreover, normal people are scared of going to the Prosecution Authority (Ministerio Publico) because they know most likely they will be abused and further defrauded there.
> Mexico has it's problems,
You have to have lived in Mexico to understand the extent of the brokeness that we have here. A lot of people who live in Mexico and haven't had the chance to live somewhere else will tell you that "it is not that bad", but it is just a lack of knowledge of what "Normal" should be, part a coping mechanism and part Stockholm syndrome. (What else can people do?)
[1] https://imco.org.mx/las-cifras-mas-recientes-de-pobreza
[2] https://www.impunidadcero.org/impunidad-en-mexico/#/
That is definetly true.
Lack of law and order is a massive issue in Mexico, as well as the collusion/merger of organized crime and politics.
That said, all the exact same fears you mentioned that average Mexicans have are the exact same ones that your average Chinese, Indian, Russians, Brazilians, non-Singaporean ASEAN nationals, etc have as well.
Mexico is not a "First World" (aka Advanced Economy) in 2023, but it is a solidly upper middle income/lower high income country. If China can be counted as a "developed" country, then by extension Mexico and pre-2022 Russia should as well.
My comment stems from the fact that the American image of Mexico resembles that of Syria, Libya, or Venezuela.
The kind of horror stories you hear in Michoacan, Oaxaca, or Tamaulipas are similar to those you'd hear of Guizhou, Yunnan, or Xinjiang. The difference is the Chinese govt used a mix of severe repression AND co-opting cartels/triads into the economy (eg. "incentivizing" Triad members to leave Macau and invest in Cambodia)
Lack of law and order is a massive issue in Mexico, as well as the collusion/merger of organized crime and politics.
That said, all the exact same fears you mentioned that average Mexicans have are the exact same ones that your average Chinese, Indian, Russians, Brazilians, non-Singaporean ASEAN nationals, etc have as well.
Mexico is not a "First World" (aka Advanced Economy) in 2023, but it is a solidly upper middle income/lower high income country. If China can be counted as a "developed" country, then by extension Mexico and pre-2022 Russia should as well.
My comment stems from the fact that the American image of Mexico resembles that of Syria, Libya, or Venezuela.
The kind of horror stories you hear in Michoacan, Oaxaca, or Tamaulipas are similar to those you'd hear of Guizhou, Yunnan, or Xinjiang. The difference is the Chinese govt used a mix of severe repression AND co-opting cartels/triads into the economy (eg. "incentivizing" Triad members to leave Macau and invest in Cambodia)
>The kind of horror stories you hear in Michoacan, Oaxaca, or Tamaulipas are similar to those you'd hear of Guizhou, Yunnan, or Xinjiang.
C'mon this is kind of assinine comparison/argument. It's fine to remind everyone that Mexico is comfortably middle income, and well beyond development indicators needed to build effective manufacturing sectors but they also have law and order problems leading to homocide rates 4x higher than US, 60x higher than PRC. Mexican dysfunction gets disproportionate reporting in US media being basically domestic news adjacent, but it's not completely unwarranted. Mexico may not be categorically an war zone like Syria or Libya but with homocide rate like Venezuela, domestic serenity is closer to failed state territory. That's what people think about when they think of Mexican 3rd world horror stories - open, persistent level of extreme violence gov can't control. Perception worsened by Mexican geography where unlike PRC where violence (especially gun) is thorougly suppressed or extreme persisent violence previously limited to largely frontiers (also now suppressed), in Mexico one is rarely ever more than a few 100 km from crazy town - it seems close everywhere. Mexico still feels like worse 90s Hunan where armed villages had homemade artillery battles. It certainly feels more dysfunctional than ASEAN barring Myanmar, including Sihanoukville Cambodia where PRC pushed triad operations. I say this as a Chinese shill who ranks Mexico city over most tier1/2 PRC cities.
C'mon this is kind of assinine comparison/argument. It's fine to remind everyone that Mexico is comfortably middle income, and well beyond development indicators needed to build effective manufacturing sectors but they also have law and order problems leading to homocide rates 4x higher than US, 60x higher than PRC. Mexican dysfunction gets disproportionate reporting in US media being basically domestic news adjacent, but it's not completely unwarranted. Mexico may not be categorically an war zone like Syria or Libya but with homocide rate like Venezuela, domestic serenity is closer to failed state territory. That's what people think about when they think of Mexican 3rd world horror stories - open, persistent level of extreme violence gov can't control. Perception worsened by Mexican geography where unlike PRC where violence (especially gun) is thorougly suppressed or extreme persisent violence previously limited to largely frontiers (also now suppressed), in Mexico one is rarely ever more than a few 100 km from crazy town - it seems close everywhere. Mexico still feels like worse 90s Hunan where armed villages had homemade artillery battles. It certainly feels more dysfunctional than ASEAN barring Myanmar, including Sihanoukville Cambodia where PRC pushed triad operations. I say this as a Chinese shill who ranks Mexico city over most tier1/2 PRC cities.
Basically:
US GDP per capita: ~$69k
Canada GDP per capita: ~$52k
Mexico GDP per capita: ~$10k[1]
China has a similar GDP per capita, but makes up for it in volume. China's total GDP is closer to the US's than to Mexico's.[2]
That, combined with the fact that Mexico seems to have a serious issue with cartels within their borders[3], and the constant flood of illegal border crossings gives the impression of a state that isn't particularly well run, despite the government otherwise being a functioning democracy.
Basically, I think if it got a better handle on its organized crime problem Mexico would be viewed much more favorably by the average American citizen. Hopefully the recent increase in economic activity and resulting GDP boost will help with that.
[1]: https://www.wolframalpha.com/input?i=US+GDP+per+capita%2C+Ca...
[2]: https://www.wolframalpha.com/input?i=US+GDP%2C+Canada+GDP%2C...
[3]: https://travel.state.gov/content/travel/en/traveladvisories/...
US GDP per capita: ~$69k
Canada GDP per capita: ~$52k
Mexico GDP per capita: ~$10k[1]
China has a similar GDP per capita, but makes up for it in volume. China's total GDP is closer to the US's than to Mexico's.[2]
That, combined with the fact that Mexico seems to have a serious issue with cartels within their borders[3], and the constant flood of illegal border crossings gives the impression of a state that isn't particularly well run, despite the government otherwise being a functioning democracy.
Basically, I think if it got a better handle on its organized crime problem Mexico would be viewed much more favorably by the average American citizen. Hopefully the recent increase in economic activity and resulting GDP boost will help with that.
[1]: https://www.wolframalpha.com/input?i=US+GDP+per+capita%2C+Ca...
[2]: https://www.wolframalpha.com/input?i=US+GDP%2C+Canada+GDP%2C...
[3]: https://travel.state.gov/content/travel/en/traveladvisories/...
There are similarly issues with criminalization and organized crime within China itself.
Only 10 years ago there was a significant chance that the bus you were taking in Xinjiang might be blown up or shot up, though this has been resolved via severe repression and human rights abuses.
Furthermore, Red-Black Collusion has been a very real issue in China to this day, yet hasn't been uprooted [0] [1]. In fact, this was the technical reason used by Xi to purge Bo Xilai (Bo was extremely corrupt, but so is everyone else)
The difference is American tourists aren't walking around the equivalent of Shenzen c. 2005 or Chongqing c. 2010 or Kashgar C. 2011, but plenty of Americans are more keyed into and cognizant of crime in Mexico.
[0] - https://www.jstor.org/stable/27027760
[1] - https://academic.oup.com/book/25594/chapter-abstract/1929386...
Only 10 years ago there was a significant chance that the bus you were taking in Xinjiang might be blown up or shot up, though this has been resolved via severe repression and human rights abuses.
Furthermore, Red-Black Collusion has been a very real issue in China to this day, yet hasn't been uprooted [0] [1]. In fact, this was the technical reason used by Xi to purge Bo Xilai (Bo was extremely corrupt, but so is everyone else)
The difference is American tourists aren't walking around the equivalent of Shenzen c. 2005 or Chongqing c. 2010 or Kashgar C. 2011, but plenty of Americans are more keyed into and cognizant of crime in Mexico.
[0] - https://www.jstor.org/stable/27027760
[1] - https://academic.oup.com/book/25594/chapter-abstract/1929386...
You could have similar links about any country on earth. It doesn't change the fact that the crime rate in Mexico is orders of magnitude higher than China, and something that affects its image deeply abroad, just like Colombia.
Wow, genocide justification Spam this high up.. New low HN
Not justifying the camps. Check my comment history.
There were multiple ways to tamp down on the insurgency in East Turkestan without resorting to Nazi or Soviet-esque reeducations camps.
There were multiple ways to tamp down on the insurgency in East Turkestan without resorting to Nazi or Soviet-esque reeducations camps.
The guy literally called it “severe repression and human rights abuses” and you somehow twisted your thoughts to think he’s justifying it…you like outrage huh?
Can't we just read the words in the comments without trying to ascribe hidden meaning to them? The comment you're replying to was merely describing facts in a neutral manner.
Or replying with your same style:
Wow, unfounded ragebait Spam this high up.. New low HN
Or replying with your same style:
Wow, unfounded ragebait Spam this high up.. New low HN
> Why do HN commentators assume Mexico is a 3rd world shithole?
Because the economic disparity between the US and Mexico is so vast that in comparison, it is a 3rd world country. Also, the millions of mexicans immigrating to the US, the neverending news about cartels, etc adds to the perception.
Also, most HN commentators are americans, not chinese. Not sure why you are comparing mexico to china.
> Mexico has it's problems, but most of that stems from the Peso Crisis in the 1990s
No it doesn't. The negative perception of mexico goes back to the first half of the 1800s when we conquered 51% of mexico and turned it into texas, california, etc. Remember the alamo, mass deportation of mexicans and so forth and that negativity has existed ever since. Also, the peso crisis affected mexico only, while the pandemic affected everybody, not just china. The world endured the recession while only mexico suffered immensely during the peso crisis.
Because the economic disparity between the US and Mexico is so vast that in comparison, it is a 3rd world country. Also, the millions of mexicans immigrating to the US, the neverending news about cartels, etc adds to the perception.
Also, most HN commentators are americans, not chinese. Not sure why you are comparing mexico to china.
> Mexico has it's problems, but most of that stems from the Peso Crisis in the 1990s
No it doesn't. The negative perception of mexico goes back to the first half of the 1800s when we conquered 51% of mexico and turned it into texas, california, etc. Remember the alamo, mass deportation of mexicans and so forth and that negativity has existed ever since. Also, the peso crisis affected mexico only, while the pandemic affected everybody, not just china. The world endured the recession while only mexico suffered immensely during the peso crisis.
Your numbers are way off. Mexico has a slightly lower GDP per capita ($10k) than China ($12k) as per 2021 according to the world bank [1]. Mexico has a median household income of $3.5K compared to China's $4.8K [2]. Mexico just fell behind China in both measures a couple of years ago.
The reason that Americans see Mexico as poor is that much of Mexico's wealth and higher standing of living is away from the border that Americans are more likely to visit. So we go by what we see in Tijuana and never make it to Mexico City. Its like if someone evaluated the USA based on Louisiana, Arkansas, Mississippi, and Alabama, they might have a wrong impression of the rest of the country also.
[1] https://datacommons.org/place/country/MEX/?utm_medium=explor...
[2] https://www.ceicdata.com/en/indicator/mexico/annual-househol...
The reason that Americans see Mexico as poor is that much of Mexico's wealth and higher standing of living is away from the border that Americans are more likely to visit. So we go by what we see in Tijuana and never make it to Mexico City. Its like if someone evaluated the USA based on Louisiana, Arkansas, Mississippi, and Alabama, they might have a wrong impression of the rest of the country also.
[1] https://datacommons.org/place/country/MEX/?utm_medium=explor...
[2] https://www.ceicdata.com/en/indicator/mexico/annual-househol...
> Mexico has a slightly lower GDP per capita ($10k) than China ($12k) as per 2021 according to the world bank
GDP/GDP per Capita =/= Household Income
GDP is a representation of economic production (ie. how much shit you can produce).
Economic Productivity doesn't neccesarily scale with Wage Growth, hence why you see America's GDP per Capita approach $80k/yr yet median income around $60-70k/yr
> Mexico has a median household income of $3.5K compared to China's $4.8K [2].
CEIC Data's numbers are off on both matters.
The datasets I've included in my citations are those from the Govt of China (National Bureau of Statistics of China [0]) and the Govt of Mexico (National Institute of Statistics and Geography [1]).
The Chinese numbers I provided were released last year in 2022 and the Mexican numbers I provided were for 2020 (Mexico computes median income every 2 years)
In my experience CEIC Data's datasets are entirely off. Furthermore, digging into their datasets, it appears they aren't translating numbers correctly.
Some countries like Mexico and Italy report Median household income on a quarterly cadence, which CEIC doesn't take into account and explains why Italy's household income is listed at $15k despite the numbers provided to the EU are much higher.
> Your numbers are way off
In the future, when discussing economic metrics, I recommend sourcing directly from that Nation or State's Statistical Agency. The data they provide is more up to date and provides relevant context that 3rd party scrapers like CEIC or Statisa don't provide. Learning to speak/read Mandarin or Spanish helps as well, as policy discussions in China and Mexico tend to occur in those languages respectively.
[0] - http://www.stats.gov.cn/
[1] - https://www.inegi.org.mx/
GDP/GDP per Capita =/= Household Income
GDP is a representation of economic production (ie. how much shit you can produce).
Economic Productivity doesn't neccesarily scale with Wage Growth, hence why you see America's GDP per Capita approach $80k/yr yet median income around $60-70k/yr
> Mexico has a median household income of $3.5K compared to China's $4.8K [2].
CEIC Data's numbers are off on both matters.
The datasets I've included in my citations are those from the Govt of China (National Bureau of Statistics of China [0]) and the Govt of Mexico (National Institute of Statistics and Geography [1]).
The Chinese numbers I provided were released last year in 2022 and the Mexican numbers I provided were for 2020 (Mexico computes median income every 2 years)
In my experience CEIC Data's datasets are entirely off. Furthermore, digging into their datasets, it appears they aren't translating numbers correctly.
Some countries like Mexico and Italy report Median household income on a quarterly cadence, which CEIC doesn't take into account and explains why Italy's household income is listed at $15k despite the numbers provided to the EU are much higher.
> Your numbers are way off
In the future, when discussing economic metrics, I recommend sourcing directly from that Nation or State's Statistical Agency. The data they provide is more up to date and provides relevant context that 3rd party scrapers like CEIC or Statisa don't provide. Learning to speak/read Mandarin or Spanish helps as well, as policy discussions in China and Mexico tend to occur in those languages respectively.
[0] - http://www.stats.gov.cn/
[1] - https://www.inegi.org.mx/
You are comparing numbers taken from two different sources using two different methodologies, that isn't going to work. You need to take from one data set or do a lot of work to adapt "Govt of China" numbers and "Govt of Mexico" numbers.
> In the future, when discussing economic metrics, I recommend sourcing directly from that Nation or State's Statistical Agency.
This doesn't work. You are basically taking apples from one place and comparing them to oranges from another place. Unless you are willing to do a few years of meta-research to see how the numbers really compare with each other, they can't be compared in any meaningful way.
You are basically stating that all agencies that compare China and Mexico GPD/per capita along with incomes are wrong? Because I don't think you can find an aggregated data set out there anymore that has Mexico richer than China by most income and per-capita measures (and anyways, this only happened a couple of years ago, a couple of years in the future it will be no contest).
> In the future, when discussing economic metrics, I recommend sourcing directly from that Nation or State's Statistical Agency.
This doesn't work. You are basically taking apples from one place and comparing them to oranges from another place. Unless you are willing to do a few years of meta-research to see how the numbers really compare with each other, they can't be compared in any meaningful way.
You are basically stating that all agencies that compare China and Mexico GPD/per capita along with incomes are wrong? Because I don't think you can find an aggregated data set out there anymore that has Mexico richer than China by most income and per-capita measures (and anyways, this only happened a couple of years ago, a couple of years in the future it will be no contest).
> two different sources using two different methodologies, that isn't going to work
They use the same methodology and provide the USD conversion they used. This is all in the docs. Don't argue with an ex-Policymaker who's job was devoted to analyzing and distilling policies from these metrics
> agencies that compare China and Mexico GPD/per capita
When comparing development and quality of life, Median Income is generally the goto, along with Health metrics, Internet Penetration, Education Access, etc.
GDP per capita was NEVER meant to compare quality of life, as it is Gross Domestic PRODUCTION. If ownership of production was 100% distributed equally, then GDP per Capita would be the same as your Median Income, but such is not the case.
They use the same methodology and provide the USD conversion they used. This is all in the docs. Don't argue with an ex-Policymaker who's job was devoted to analyzing and distilling policies from these metrics
> agencies that compare China and Mexico GPD/per capita
When comparing development and quality of life, Median Income is generally the goto, along with Health metrics, Internet Penetration, Education Access, etc.
GDP per capita was NEVER meant to compare quality of life, as it is Gross Domestic PRODUCTION. If ownership of production was 100% distributed equally, then GDP per Capita would be the same as your Median Income, but such is not the case.
Even comparing average income, for all aggregated data sets, China comes out a $1 or 2k or so ahead of mexico per year. E.g.
https://wisevoter.com/country-rankings/median-income-by-coun...
https://wisevoter.com/country-rankings/median-income-by-coun...
> Mexico has it's problems
Like being completely compromised by the drug cartels and effectively a narco-state?[0]
[0]https://www.nbcnews.com/news/latino/mexico-s-former-defense-...
Like being completely compromised by the drug cartels and effectively a narco-state?[0]
[0]https://www.nbcnews.com/news/latino/mexico-s-former-defense-...
That level of criminalization and corruption is no different than any other middle income countries sadly.
For example, the ex-Interior Minister in China getting arrested for corruption in 2014 as $14.5 Billion in assets were found [0]
Or $20 Billion in Russian investments being laundered in 2010-17 by the Laundromat [1]
Or the Odenbrecht Scandal in Brazil that toppled Dima Roussef due to $0.5 Billion in bribes [2]
Or the 2G Spectrum Allocation scandal in India that caused the govt to lose $25 Billion [3]
There is a whole subfield related to this which I did some research and policywork in.
[0] - https://www.reuters.com/article/us-china-corruption-zhou/exc...
[1] - https://www.occrp.org/en/laundromat/
[2] - https://en.m.wikipedia.org/wiki/Odebrecht_Case
[3] - https://en.m.wikipedia.org/wiki/2G_spectrum_case
For example, the ex-Interior Minister in China getting arrested for corruption in 2014 as $14.5 Billion in assets were found [0]
Or $20 Billion in Russian investments being laundered in 2010-17 by the Laundromat [1]
Or the Odenbrecht Scandal in Brazil that toppled Dima Roussef due to $0.5 Billion in bribes [2]
Or the 2G Spectrum Allocation scandal in India that caused the govt to lose $25 Billion [3]
There is a whole subfield related to this which I did some research and policywork in.
[0] - https://www.reuters.com/article/us-china-corruption-zhou/exc...
[1] - https://www.occrp.org/en/laundromat/
[2] - https://en.m.wikipedia.org/wiki/Odebrecht_Case
[3] - https://en.m.wikipedia.org/wiki/2G_spectrum_case
The best living conditions in Mexico are better than the average in the US. The same applies to most Latin American countries. But the average living conditions in Latin America is still not great, and that is what drives perception.
Someone with US$1M of retirement savings would likely have a better retirement in Mexico than in the US - assuming they speak the language and understand the culture.
Someone with US$1M of retirement savings would likely have a better retirement in Mexico than in the US - assuming they speak the language and understand the culture.
I hope everyone realizes that this doesn't mean less trade with China and Mexico is filling the gap. The Chinese continue to use Mexico to by pass US import controls and send products and materials through to the USA. Stainless Steel, Aluminum, Rubber, etc. How many of these factories in Mexico that are exporting to the US Chinese? What we need to look at is how much trade has risen between Mexico and China, that will give us a better indication of what really is going on.
> What we need to look at is how much trade has risen between Mexico and China
Total trade between America and Mexico rose from $613bn in 2019 to $779bn in 2022, an increase of $166bn [1]. Total trade between China and Mexico was $100bn in 2019 and 2021 [2][3]. America's trade with Mexico in the last three years grew by more than Mexico trades with China altogether.
It seems unlikely that Mexico's trade growth with America is being driven by playing middle man to China. (Keep in mind: Mexican manufacturing wages are lower than China's [4].)
The contrast is particularly poignant today, with China's announcement of a surprise July export decline of "14.5 per cent year on year in dollar terms...the steepest fall since the outset of the coronavirus pandemic in February 2020" [5]. Mexico, meanwhile, seems to be fine.
[1] https://www.census.gov/foreign-trade/balance/c2010.html
[2] https://journals.sagepub.com/doi/full/10.1177/18681026211038...
[3] https://mexiconewsdaily.com/business/exports-from-china-to-m...
[4] https://www.china-briefing.com/news/reshoring-from-china-to-...
[5] https://www.ft.com/content/6318c973-1ff7-44b6-9f4b-177e0706f...
Total trade between America and Mexico rose from $613bn in 2019 to $779bn in 2022, an increase of $166bn [1]. Total trade between China and Mexico was $100bn in 2019 and 2021 [2][3]. America's trade with Mexico in the last three years grew by more than Mexico trades with China altogether.
It seems unlikely that Mexico's trade growth with America is being driven by playing middle man to China. (Keep in mind: Mexican manufacturing wages are lower than China's [4].)
The contrast is particularly poignant today, with China's announcement of a surprise July export decline of "14.5 per cent year on year in dollar terms...the steepest fall since the outset of the coronavirus pandemic in February 2020" [5]. Mexico, meanwhile, seems to be fine.
[1] https://www.census.gov/foreign-trade/balance/c2010.html
[2] https://journals.sagepub.com/doi/full/10.1177/18681026211038...
[3] https://mexiconewsdaily.com/business/exports-from-china-to-m...
[4] https://www.china-briefing.com/news/reshoring-from-china-to-...
[5] https://www.ft.com/content/6318c973-1ff7-44b6-9f4b-177e0706f...
That's absolutely true and it's a national strategy in China to get around.
Not just Mexico, Chinese companies set up offshore entities everywhere, from Vietnam to Singapore to Canada, Mexico, etc. Basically everywhere. They then ship components there, assembly there and ship the full product to US.
I dare to claim 80% or even more trade increase between Mexico and US is done that way.
Not just Mexico, Chinese companies set up offshore entities everywhere, from Vietnam to Singapore to Canada, Mexico, etc. Basically everywhere. They then ship components there, assembly there and ship the full product to US.
I dare to claim 80% or even more trade increase between Mexico and US is done that way.
They'll need to work on the cartel / illegal immigration problem if they want this to happen. I'm still surprised some kind of "economic zone" south of the border hasn't been created to allow US companies to engage with non-citizen workers from mexico. Seems like a win-win.
In 2023 many of my friends from asia and india who went through the process to legally become citizens or acquire work authorization have voiced highly negative opinions of the current admin and migrants who cross the border illegally.
In 2023 many of my friends from asia and india who went through the process to legally become citizens or acquire work authorization have voiced highly negative opinions of the current admin and migrants who cross the border illegally.
Is it all that surprising that people who go through the legal immigration process will have a visceral distaste for people who immigrate illegally?
Not at all, I could not imagine being in their position. Literally sacrificing a decade of your life and nearly $100k to do things the right way - only to be told by "morally superior" lefties that you need to let someone in from latin america or africa because "they deserve it" when migrants also add zero value to the economy other than a small percentage that choose to work.
You're completely off the mark with your last sentence. Migrants make up almost 1/5 of the US civilian labor force, and Hispanics are a half of that [0]. If that's a "small percentage" of migrants, then I guess the has more migrants than citizens.
Also from that source
> Foreign-born men continued to participate in the labor force at a considerably higher rate in 2022 (77.4 percent) than their native-born counterparts (66.0 percent).
You simply couldn't be more wrong.
[0]: https://www.bls.gov/news.release/pdf/forbrn.pdf
Also from that source
> Foreign-born men continued to participate in the labor force at a considerably higher rate in 2022 (77.4 percent) than their native-born counterparts (66.0 percent).
You simply couldn't be more wrong.
[0]: https://www.bls.gov/news.release/pdf/forbrn.pdf
Indians and East Asians are sprinting to the Right because of this, DEI, and the movement to neuter schools. It’s not a huge thing yet - i still see a truly enormous amount of second gen Boba Liberals - but it will be.
Theres a dead comment by @dontmobile that I think is worth it:
I love my country , but it is a fact that China has invested REALLY heavily in technology education. Mexico has about 30 years of catchup, in addition to solving our narco, corruption and political problems.
[1]https://level2.vc/a-short-story-of-3dfx/
The industriousness of the Chinese can't be replaced. Mexico will never be as good as china in terms of speed, volume and capability. It will overall be an inferior partner, but because of this, it will never be a threat either.
I love my country , but it is a fact that China has invested REALLY heavily in technology education. Mexico has about 30 years of catchup, in addition to solving our narco, corruption and political problems.
[1]https://level2.vc/a-short-story-of-3dfx/
As expected, this is not due to trade with Mexico increasing, but due to trade with others decreasing.
Is it because the US economy is becoming stale or because it is diversifying its trade partners?
Also, this is just another sign that the world is indeed shifting to a multipolar order.
Is it because the US economy is becoming stale or because it is diversifying its trade partners?
Also, this is just another sign that the world is indeed shifting to a multipolar order.
> this is not due to trade with Mexico increasing, but due to trade with others decreasing
We traded more with Mexico in 2022 than ever before, and are on track to beat that in 2023 [1]. Trade with Mexico is increasing. It's just not doing so as dramatically as China's trade with America is decreasing.
[1] https://www.census.gov/foreign-trade/balance/c2010.html
We traded more with Mexico in 2022 than ever before, and are on track to beat that in 2023 [1]. Trade with Mexico is increasing. It's just not doing so as dramatically as China's trade with America is decreasing.
[1] https://www.census.gov/foreign-trade/balance/c2010.html
Thanks for adding more context around this!
The US (and world) economy has been pumping out geometrically increasing amounts of wealth for centuries now.
This is due to frosty relations with China decreasing trade with them.
This is due to frosty relations with China decreasing trade with them.
[deleted]
The US economy is not stale, it is growing faster than Europe. I raise this comparison because the Euro block was the most similar thing to it in terms of development for the past decade. Other emerging economies have been developing faster and their percentage of trade with the US may be decreasing, but I don't see any sign of the US stalling.
“In 2008 the EU’s economy was somewhat larger than America’s: $16.2tn versus $14.7tn. By 2022, the US economy had grown to $25tn, whereas the EU and the UK together had only reached $19.8tn. America’s economy is now nearly one-third bigger. It is more than 50 per cent larger than the EU without the UK.” Source: https://www.ft.com/content/80ace07f-3acb-40cb-9960-8bb4a44fd...
“In 2008 the EU’s economy was somewhat larger than America’s: $16.2tn versus $14.7tn. By 2022, the US economy had grown to $25tn, whereas the EU and the UK together had only reached $19.8tn. America’s economy is now nearly one-third bigger. It is more than 50 per cent larger than the EU without the UK.” Source: https://www.ft.com/content/80ace07f-3acb-40cb-9960-8bb4a44fd...
Comparisons based on nominal exchange rates are misleading, because the rates fluctuate a lot. The 2008 numbers in particular are not based on the strength of the EU economy but on the weakness of the US dollar during the financial crisis. Back then, €1 was worth $1.5 to $1.6 for a while, while the long-term average is closer to $1.2. And right now, the real year-on-year GDP growth rate in the EU is ~10% (when measured in US dollars), because the euro was particularly weak a year ago.
> right now, the real year-on-year GDP growth rate in the EU is ~10% (when measured in US dollars)
I'm seeing this figure for '21 [1]. Not "right now."
[1] https://www.macrotrends.net/countries/EUU/european-union/gdp....
I'm seeing this figure for '21 [1]. Not "right now."
[1] https://www.macrotrends.net/countries/EUU/european-union/gdp....
The projected real GDP growth rate for the EU in 2023 is 1.0%, when measured in euros. Right now, €1 is about $1.1, while it was around $1.0 a year ago.
> projected real GDP growth rate for the EU in 2023 is 1.0%, when measured in euros. Right now, €1 is about $1.1, while it was around $1.0 a year ago.
Ah, I see the problem.
1% real GDP growth means €1 becomes €1.01. If, in the same time, €1 went from buying $1 to buying $1.1, then you--round trip--went from having €1 that buys $1 to €1.01 that buys $1.11.
But! That $1 doesn't buy today what it bought one year ago. (The precise point of fudgery is when I say "€1 went from buying $1 to buying $1.1." We went from one 2022 € buying one 2022 $ to one 2023 € buying one 2023 $. We deflated the euro GDP but not the exchange rate.)
TL; DR The EU is not experiencing double-digit real growth in dollar terms.
Ah, I see the problem.
1% real GDP growth means €1 becomes €1.01. If, in the same time, €1 went from buying $1 to buying $1.1, then you--round trip--went from having €1 that buys $1 to €1.01 that buys $1.11.
But! That $1 doesn't buy today what it bought one year ago. (The precise point of fudgery is when I say "€1 went from buying $1 to buying $1.1." We went from one 2022 € buying one 2022 $ to one 2023 € buying one 2023 $. We deflated the euro GDP but not the exchange rate.)
TL; DR The EU is not experiencing double-digit real growth in dollar terms.
That 1% already the real GDP growth rate. Nominal growth is more like 6-7%, as inflation is a bit higher in the EU than in the US.
> 1% already the real GDP growth rate
In Euros. The dollar was also losing real value in that time. You can't compare a real figure from one time period with nominal figures from another without doing some adjusting. (You're describing, in essence, a carry trade.)
In Euros. The dollar was also losing real value in that time. You can't compare a real figure from one time period with nominal figures from another without doing some adjusting. (You're describing, in essence, a carry trade.)
You earned €1 last year and €1.06 today. You could exchange that to $1 last year and $1.17 today. If US inflation is currently 3.1% and you go to the US, that money buys you 13% more than $1 last year. These numbers change from day to day, because exchange rates are full of effectively random noise.
Of course, the real growth was only 1% and not 13%.
Of course, the real growth was only 1% and not 13%.
There are countries, like China, who are in a period of population decline. If you have less people YoY and your population is weighted towards retirement age it can spiral to where the entities producing things produce less each year and foreign businesses/countries buying those things will find them elsewhere. Mexico's population is growing, younger and much closer for trade and friendlier to the US. Its almost inevitable that the trade relationship strengthens amongst Mexico, US and Canada.
If you were playing the game Civilization, North America is more self-sustainable than other continents as far as access to materials, food, water, etc. goes. Easier to defend as well with friendly neighbors. Countries with population decline (Russia is in this boat as well and then throwing their young males into war which might compound population decline) can't reverse that very quickly - there are "boomer" populations all over the globe at various stages entering retirement age (i.e. not working and not spending) with younger generations being much smaller in size. I think the pandemic threw a brick on the accelerator for shaking up trade relationships when people realized how just-in-time doesn't work well when things get disrupted.
If you were playing the game Civilization, North America is more self-sustainable than other continents as far as access to materials, food, water, etc. goes. Easier to defend as well with friendly neighbors. Countries with population decline (Russia is in this boat as well and then throwing their young males into war which might compound population decline) can't reverse that very quickly - there are "boomer" populations all over the globe at various stages entering retirement age (i.e. not working and not spending) with younger generations being much smaller in size. I think the pandemic threw a brick on the accelerator for shaking up trade relationships when people realized how just-in-time doesn't work well when things get disrupted.
The problem with Mexico is that their government has deep ties with organized crime.
Is it really a problem in the practical, realistic, maybe a bit jaded way?
The US (and basically every other country, too) always find a way to strike a deal with the most corrupted and backwards countries if needed.
Then, when they plan a coup, the propaganda machine revs up, and everybody is suddenly worried about democracy, women's rights, gay rights, religious freedom, radical left or right in that country and that country only.
The US (and basically every other country, too) always find a way to strike a deal with the most corrupted and backwards countries if needed.
Then, when they plan a coup, the propaganda machine revs up, and everybody is suddenly worried about democracy, women's rights, gay rights, religious freedom, radical left or right in that country and that country only.
> everybody is suddenly worried about democracy, women's rights, gay rights, religious freedom
Mexico's record on each of these fronts is, while imperfect, commendable.
Mexico's record on each of these fronts is, while imperfect, commendable.
[deleted]
I think that’s backwards. The problem is the extremely powerful cartels, one consequence is the subverted governments.
I'd love to read a great book about that chicken or egg problem and what role the US leadership and populace has played in forming or altering it.
[Mexican living in Mexico here]
There's a GREAT book about a lot of that, at least the Mexico side. It is called "Narcoland: Mexican Lords and Their-Godfathers" (original name "Los Señores del Narco) by Anabel Hernandez. She is a renowned journalist in Mexico who has lived threatened to death for several years, by several narcos and government officers.
The book shows how the real "Lords" or "Godfathers" of Drug Trafficking are not some illiterate-uneducated kid from a small town in the middle of nowere in Mexico who becomes a "drug kingpin" with all connections and whatnot (CEOs and Cofounders who have struggled doing real word/legal relationships know that's a fairy tale), but rich people in Mexico, members of the elite class.
That's why nothing real happens with cartels. The real bosses are people who have the real power, they control the government, control the narcos and control the money in Mexico. It's no conspiracy theory, everything is documented in that book.
Here in Mexico society just "knows it". "Secreto a voces" they say it is, every state and city knows their narcos. To give you an example, in the "La Laguna" area of Durango, an ex-mayor, prominent businessman in the region and VERY rich guy named Carlos Herrera Araluce has been known to be a narco and in relationship with narcos. He was an elected officer (city mayor!!) with everybody knowing what he was doing. And the same is "known" in each state. You just have to ask some of the locals.
There's a GREAT book about a lot of that, at least the Mexico side. It is called "Narcoland: Mexican Lords and Their-Godfathers" (original name "Los Señores del Narco) by Anabel Hernandez. She is a renowned journalist in Mexico who has lived threatened to death for several years, by several narcos and government officers.
The book shows how the real "Lords" or "Godfathers" of Drug Trafficking are not some illiterate-uneducated kid from a small town in the middle of nowere in Mexico who becomes a "drug kingpin" with all connections and whatnot (CEOs and Cofounders who have struggled doing real word/legal relationships know that's a fairy tale), but rich people in Mexico, members of the elite class.
That's why nothing real happens with cartels. The real bosses are people who have the real power, they control the government, control the narcos and control the money in Mexico. It's no conspiracy theory, everything is documented in that book.
Here in Mexico society just "knows it". "Secreto a voces" they say it is, every state and city knows their narcos. To give you an example, in the "La Laguna" area of Durango, an ex-mayor, prominent businessman in the region and VERY rich guy named Carlos Herrera Araluce has been known to be a narco and in relationship with narcos. He was an elected officer (city mayor!!) with everybody knowing what he was doing. And the same is "known" in each state. You just have to ask some of the locals.
You don't seem to be familiar with the root cause. The revisionists rewriting history did they job very well.
So? Feel free to educate me. This is HN and not reddit. We value meaningful contributions here. As it stands, your comment is just saying " I think you are wrong and have been brainwashed ". It doesnt add anything to the discussion.
I'm not saying I have all truths, but I provided a book recommendation and gave my POV. I am positive you can do better.! I'll be authentically interested in learning your POV .
I'm not saying I have all truths, but I provided a book recommendation and gave my POV. I am positive you can do better.! I'll be authentically interested in learning your POV .
Read this most excellent comment
https://news.ycombinator.com/item?id=37056453
The truth hidden from you your entire life in plain sight.
https://news.ycombinator.com/item?id=37056453
The truth hidden from you your entire life in plain sight.
In reverse chronological order:
1940s: Mexico was the top producer of opiates during WW1 and WW2. After those conflicts ended, the opium planters turned to illegal trade.
The opium poppy plant, the plant from which opium and related opiate drugs are produced, is not endemic to the Americas.
1882: The US Chinese exclusion act caused the expulsion of many Chinese, among them, opium poppy planters. Many of them relocated to to Mexico where they started planting opium again.
1860s: The Chinese immigrants involved in opium trade had opium dens in San Francisco and other places. They became addicted during an opium epidemic in China.
1839: The Chinese as a nation were against opium use, but the British forced them to legalize opium. All that is known as the Opium wars, which was the British weaponization of opium to extract wealth from China to make up for the lost money in the Americas.
1776: The British lost the American revolutionary war and started to accumulate a trade deficit with other countries, notably China.
Conclusion: The East India Company was the first modern narco organization, Lord Palmerston is personally responsible for centuries of drug related violence. The guy was an educated person (in fact, 2x Prime Minister) and knew what he was doing all along.
This comment will make everyone angry but it is the truth.
1940s: Mexico was the top producer of opiates during WW1 and WW2. After those conflicts ended, the opium planters turned to illegal trade.
The opium poppy plant, the plant from which opium and related opiate drugs are produced, is not endemic to the Americas.
1882: The US Chinese exclusion act caused the expulsion of many Chinese, among them, opium poppy planters. Many of them relocated to to Mexico where they started planting opium again.
1860s: The Chinese immigrants involved in opium trade had opium dens in San Francisco and other places. They became addicted during an opium epidemic in China.
1839: The Chinese as a nation were against opium use, but the British forced them to legalize opium. All that is known as the Opium wars, which was the British weaponization of opium to extract wealth from China to make up for the lost money in the Americas.
1776: The British lost the American revolutionary war and started to accumulate a trade deficit with other countries, notably China.
Conclusion: The East India Company was the first modern narco organization, Lord Palmerston is personally responsible for centuries of drug related violence. The guy was an educated person (in fact, 2x Prime Minister) and knew what he was doing all along.
This comment will make everyone angry but it is the truth.
Whereas, China of course has clean hands.
Mostly due to the generous use of rubber gloves in their internment camps.
Mostly due to the generous use of rubber gloves in their internment camps.
Stares in confusion; because the US has a larger imprisoned population; and the commonplace of sexual assault joked about; and it's only recently been said it's illegal for guards to have sexual relationships with inmates.
Because the U.S. reports actual numbers and doesn't just vaporize its own people :)
I'm hoping that more investment and trade will make legal enterprise more profitable than the alternative.
Well, I doubt doing things legally will ever be cheaper than illegally.
I assume at some point the drug market will saturate and at that point why not use profits to expand into legal enterprises and push out any purely legal competitors?
I assume at some point the drug market will saturate and at that point why not use profits to expand into legal enterprises and push out any purely legal competitors?
It doesn't need to be cheaper when a possible outcome of the alternative is a bullet. There are always people who turn to illegalities because they're forced to, and would gladly make less money in order to lessen their chance of imprisonment or worse. The easier you make it to make a living legally, the more people will turn away from crime and the stronger they'll oppose it in general.
[deleted]
That only works though if you approach the problem from both angles. Often attempts to create legal alternatives are accompanied by decreases in enforcement action against the illegal options (sometimes intentionally, sometimes as a natural consequence of the fact that you can no longer treat all possession as illegal).
[deleted]
> I doubt doing things legally will ever be cheaper than illegally
Economies of scale.
Economies of scale.
> Economies of scale.
https://en.wikipedia.org/wiki/Diseconomies_of_scale
https://en.wikipedia.org/wiki/Diseconomies_of_scale
This is bad news for the elite class in Mexico. They abhor their populist president (AMLO) and USA demands cheap labor which aligns with AMLO populist movement. The question is, who is going to replace him?
[deleted]
Mexico gdp per capita, $10,000
USA: $70,000
It's going to be a heinously asymmetric exchange. Good longterm trade demands equity. Not equality, but some basic equity. Australia's experience with US trade negotiations is that it's highly distorted and suits America better. The TPP was shedloads better without the US, for everyone else.
I'm not saying it's a bad aspiration, just "be careful what you wish for"
That said, NAFTA wasn't bad for Mexico. There's hope.
USA: $70,000
It's going to be a heinously asymmetric exchange. Good longterm trade demands equity. Not equality, but some basic equity. Australia's experience with US trade negotiations is that it's highly distorted and suits America better. The TPP was shedloads better without the US, for everyone else.
I'm not saying it's a bad aspiration, just "be careful what you wish for"
That said, NAFTA wasn't bad for Mexico. There's hope.
Similar to poor southern US states being forced to do business with Californians and NY because all the copyrights and government blessings are controlled by Californians and New Yorkers. Want to borrow money? Got to get permission from NY. Want to use software? Got to pay a certain couple company's tax.
Parody of course... but highlights the complexities of trade arrangements as well as the absurdity of simply writing off a trade agreement as only harmful to the poorer entity.
Parody of course... but highlights the complexities of trade arrangements as well as the absurdity of simply writing off a trade agreement as only harmful to the poorer entity.
Not similar at all. The federal government is very clear that only they can affect interstate commerce.
Businesses can register in however many states they want, and state governments have no say on how the business is conducted in other states.
Businesses can register in however many states they want, and state governments have no say on how the business is conducted in other states.
> The federal government is very clear that only they can affect interstate commerce.
Well, the federal government is very clear on that they can regulate anything that has an effect on interstate commerce. So, if you grow some corn for personal consumption that's regulated by the federal government because you wouldn't need to buy it on the open market which affects interstate commerce.
But yeah if you don't operate in a state there's a lot of difficulty in that state coming after you. However, that state may try to be a nit about federal rules if you do something they don't like (say operate a coal plant on the border of your state so pollution goes into not your state [1]).
[1]: https://whyy.org/articles/pa-coal-power-plant-closing-leads-...
Well, the federal government is very clear on that they can regulate anything that has an effect on interstate commerce. So, if you grow some corn for personal consumption that's regulated by the federal government because you wouldn't need to buy it on the open market which affects interstate commerce.
But yeah if you don't operate in a state there's a lot of difficulty in that state coming after you. However, that state may try to be a nit about federal rules if you do something they don't like (say operate a coal plant on the border of your state so pollution goes into not your state [1]).
[1]: https://whyy.org/articles/pa-coal-power-plant-closing-leads-...
In reality, producing different product variants is infeasible and so bigger states drive standards. That's why cars used to be marketed as having "California emissions", and why textbook companies kowtow to Texas.
That is not the same as a poor southern state having to pay CA or NY. That is a business deciding to choose certain economies of scale.
And California and New York’s population is not that big, the US south has quite a lot of people, and the #2 and #3 states in terms of population, so I doubt the premise that CA/NY standards are “taxing” consumers in the US south as implied earlier.
And California and New York’s population is not that big, the US south has quite a lot of people, and the #2 and #3 states in terms of population, so I doubt the premise that CA/NY standards are “taxing” consumers in the US south as implied earlier.
GP said nothing about taxing, only "having a say". But standards can cost more. Lots of people grumbled about about paying extra for those damned gold-plated hippy mufflers, etc.
A single big state can and will enforce a product rule in their state, with the explicit knowledge that by doing so they will cause a change in the other 49. Many smaller states explicitly default their rules to some other state, eg Texas teaching.
A single big state can and will enforce a product rule in their state, with the explicit knowledge that by doing so they will cause a change in the other 49. Many smaller states explicitly default their rules to some other state, eg Texas teaching.
The first thing to understand about trade is that it is always beneficial for both parties.
Because each side can simply decline a transaction that doesn't help them.
Because each side can simply decline a transaction that doesn't help them.
What you’re saying is correct but a tad bit theoretical. If a country is flooding your market with goods your manufacturers cannot possibly compete with, it leads to the destruction of your manufacturing capacity. So while the consumers are better of in the short/medium run in your country they are left vulnerable in the long run. The issue is balancing the short term positive impact of trade with the long term strategic impacts on your economy. Customs duties can help level the playing field a bit and allow local manufacturing to adjust. Sometimes local manufacturing can never adjust and as a country you need to make the tough decision that it’s ok for those factories to close permanently.
Comparative advantage is a thing, an economy can function perfectly fine without a local source of steel manufacturing. I don’t understand why people fetishize manufacturing of cheap consumer goods as a sector that is more essential than anything else.
> without a local source of steel manufacturing
Good luck when the war starts and you can’t build weapons anymore because your source of strategic ressources are not under your direct control.
There are good reasons modern economists are so critical of Ricardo. You need to take what he wrote with a major grain of sand. The actual situation is a lot more nuanced.
Good luck when the war starts and you can’t build weapons anymore because your source of strategic ressources are not under your direct control.
There are good reasons modern economists are so critical of Ricardo. You need to take what he wrote with a major grain of sand. The actual situation is a lot more nuanced.
Comparative advantage is a thing but in some cases those comparative advantages are an ability to turn a blind eye to the environment or the ability to repress your population. Also, if there were no strategic implications there would be no nations that perused mercantilist policies and no need for WTO dispute resolution over things like dumping and subsidies.
Because if that trade partner unilaterally shuts off trade with you due to a dispute or war, then you are hosed. They can probably find other buyers for their steel, but you will have to pay a lot more, if you can find enough at all.
Tariffs, which each country can apply, limit any trade it doesn’t believe are in its interest
This problem seems completely unrealistic because then you simply buy through the countries they haven't banned? What you're suggesting will only work if said country is a global superpower that can bully every country to tow the line. At the end of the day, no country can produce all the "critical" things it needs so this national security defence of restrictions on trade seems like a very unwise insurance to buy in almost all cases except maybe your millitary supply chain.
This is fucking ridiculous, and I have a degree in economics.
Even in the sort of useless basic neoclassical models there are a million exceptions to this rule like incubation of infant industries, resource extraction, national defense and health, and so on.
And nobody sane even believes that stuff any more. Trade can benefit societies or destroy them. Details matter.
Even in the sort of useless basic neoclassical models there are a million exceptions to this rule like incubation of infant industries, resource extraction, national defense and health, and so on.
And nobody sane even believes that stuff any more. Trade can benefit societies or destroy them. Details matter.
I happen to have a client right now who is in the midst of a massive downturn in business but is also obligated to pay for our services at a rate negotiated more than a year ago when they were in the midst of a brisk upswing in business; an upswing that had been going on for several years with no obvious indication that it would ever change.
Our services, though immensely useful, are not absolutely necessary for their business to function and frankly are much more of a burden than a benefit for them at this point. Yet they cannot refuse to do business with us, and must pay for services that are unnecessary every month until either this obligation becomes part of what kills them, or their fortunes return to the state they were in a year ago.
I'm sorry, but your belief is simplistic, shallow and naieve to the realities of business and trade as they are actually practiced.
Our services, though immensely useful, are not absolutely necessary for their business to function and frankly are much more of a burden than a benefit for them at this point. Yet they cannot refuse to do business with us, and must pay for services that are unnecessary every month until either this obligation becomes part of what kills them, or their fortunes return to the state they were in a year ago.
I'm sorry, but your belief is simplistic, shallow and naieve to the realities of business and trade as they are actually practiced.
> Yet they cannot refuse to do business with us...
I obviously know little about business and "trade", because this strikes me as odd. I mean, I get that it's contractual, but how could a well-written contract not anticipate a time when doing said business with you would be detrimental to the company forced to pay...
And, long term, such a situation hurts both parties, because if "this obligation becomes part of what kills them", the business on the receiving end also loses a customer.
I obviously know little about business and "trade", because this strikes me as odd. I mean, I get that it's contractual, but how could a well-written contract not anticipate a time when doing said business with you would be detrimental to the company forced to pay...
And, long term, such a situation hurts both parties, because if "this obligation becomes part of what kills them", the business on the receiving end also loses a customer.
It’s how SaaS and most business contracts operate. Only tiny personally negotiated ones will have downturn provisions - and many companies have never experienced a downturn.
[deleted]
Incidentally, how do you handle such a situation?
I'm a bad business man and would probably let them off the hook for a while so they can recover. In my dreamworld this will build significant amounts of longterm goodwill.
I'm a bad business man and would probably let them off the hook for a while so they can recover. In my dreamworld this will build significant amounts of longterm goodwill.
During COVID lockdown, I asked my boss how things were going for our customers, suspecting it might be bad.
Fortunately most managed just fine, however a few of our customers really struggled as they had almost zero income due to the lockdown. These had asked for a pause of the SaaS contract they had with us.
My boss agreed to this, after all these had been good customers for years and if they survived would likely still be.
Of course my boss was in a relatively comfortable position, given that our other customers were doing fine, so we had plenty of income.
Now, if the downturn was more self-inflicted that kinda changes things a bit I guess. Still, we operate in a niche market, so my boss makes a point to keep good relations with our customers as the people tend to shuffle around between the companies in the niche.
Fortunately most managed just fine, however a few of our customers really struggled as they had almost zero income due to the lockdown. These had asked for a pause of the SaaS contract they had with us.
My boss agreed to this, after all these had been good customers for years and if they survived would likely still be.
Of course my boss was in a relatively comfortable position, given that our other customers were doing fine, so we had plenty of income.
Now, if the downturn was more self-inflicted that kinda changes things a bit I guess. Still, we operate in a niche market, so my boss makes a point to keep good relations with our customers as the people tend to shuffle around between the companies in the niche.
Just ask all the companies with expensive office leases whether they can get out of their contracts on the basis of hardship. Their answer is RTO.
This looks like an argument against enforcing long term contracts, not against trade.
The crux of your argument doesn't hold water outside of economics circles.
The power imbalance between parties makes "simply declining" as real a possibility as Plato's Forms.
In a perfect world with almost all degrees of freedom removed, yes, you're correct. But the world is not perfect, ensuring a beneficial transaction to both parties for every transaction is simply intractable without infinite time/computational resources to brute force a solution, every time.
To expand on the dogmatic proclamations economists are prone to making, this is why almost all natural and formal scientists have conscious or unconscious disdain for the claim that economics has a claim to the same epistemological rigour as other sciences.
You can't extrapolate results and lemmas from within a domain of discourse to the outside world.
Even the best economic models and the real world are not isometric. Implying that they are has so far resulted in some fantastic and incomprehensibly efficient systems but also an untold amount of human suffering.
The power imbalance between parties makes "simply declining" as real a possibility as Plato's Forms.
In a perfect world with almost all degrees of freedom removed, yes, you're correct. But the world is not perfect, ensuring a beneficial transaction to both parties for every transaction is simply intractable without infinite time/computational resources to brute force a solution, every time.
To expand on the dogmatic proclamations economists are prone to making, this is why almost all natural and formal scientists have conscious or unconscious disdain for the claim that economics has a claim to the same epistemological rigour as other sciences.
You can't extrapolate results and lemmas from within a domain of discourse to the outside world.
Even the best economic models and the real world are not isometric. Implying that they are has so far resulted in some fantastic and incomprehensibly efficient systems but also an untold amount of human suffering.
Sorry, this is just drivel. Trade happens between individuals or businesses, not countries. If the numbers don’t make sense for a business they will certainly “just decline,” although the numbers might make sense for another business. The large disparity in wealth actually helps the economically weaker party oftentimes because a X% increase in cost will often mean less to the wealthy purchaser (who will mark up the product accordingly) than to the poor seller relatively.
All of that is true and yet it is still mostly true that most transactions are beneficial to both parties — or at least appears more beneficial than known alternatives which is in practice a synonym of “beneficial.”
Is this ChatGPT generated?
It's good for someone on each side, but necessarily the population at large on each side...
Plenty of dictators will happily sell off their country's natural resources to line their own pockets, and the same general principal holds true for many other types of transactions.
Plenty of dictators will happily sell off their country's natural resources to line their own pockets, and the same general principal holds true for many other types of transactions.
The only parties to a trade are the buyer and the seller.
If both don't think they'll be better off doing the trade, it won't happen. No one else is materially affected.
You can think of this as how trade creates wealth!
If both don't think they'll be better off doing the trade, it won't happen. No one else is materially affected.
You can think of this as how trade creates wealth!
This assumes that both parties are rational agents acting with full knowledge, no coercion and no externalities. The rational agent in economics is similar to the spherical cow in physics. Great for modeling but pretty useless to a cowboy.
I think you missed the word "think".
Countries aren't Borg ships. Trade between countries have beneficiaries and victims in both countries. The victims usually have zero say in the trade so, no, they can't simply decline a transaction that harms them.
Who are the victims when someone buys something from someone in another country?
How is that different from when they buy from someone in the same country?
How is that different from when they buy from someone in the same country?
The typical argument is in a closed market everyone buys something produced locally by local labor. In an open market the lowest cost supplier wins. Which will mean when costs of production are asymmetric, the supplier in the more expensive market loses.
So while a single transaction has occurred, someone loses because of the trade agreement. This is because in a market that’s not theoretical there are actual people losing out. But this is the typical argument against free trade and protectionism - I assume it’s not new?
I’m sympathetic fwiw. But I think maximizing trade is generally good and don’t want to see a reversal. The real issue in my mind is trade allows for environmental, labor, and other regulatory arbitrage. If the benefits in pricing were just market based I’d be down with it no matter the pain. But that’s not really what’s going on. The regulatory arbitrage is a race to the bottom not just in wages or other spaces that in my belief stabilize over time, in irreversible spaces like destruction of the earth.
So while a single transaction has occurred, someone loses because of the trade agreement. This is because in a market that’s not theoretical there are actual people losing out. But this is the typical argument against free trade and protectionism - I assume it’s not new?
I’m sympathetic fwiw. But I think maximizing trade is generally good and don’t want to see a reversal. The real issue in my mind is trade allows for environmental, labor, and other regulatory arbitrage. If the benefits in pricing were just market based I’d be down with it no matter the pain. But that’s not really what’s going on. The regulatory arbitrage is a race to the bottom not just in wages or other spaces that in my belief stabilize over time, in irreversible spaces like destruction of the earth.
Millions of people who formerly worked in those factories that lost their jobs to outsourcing and have never economically recovered? How can you ask such a question when we have the answer here in the real world?
The USA dumps food and clothes on many poor countries, absolutely destroying their own agriculture and clothing industries.
They can decline the whole agreement. Thus the agreement has to be a win for them too else there is no reason to sign.
This is assuming that every trade delegation can accurately predict all the impacts into the future. This is especially difficult now because the pace of change in the world is only increasing. In general trade is a good thing. It must be encouraged but everything is not so open and shut.
Inaccurate predictions go “both ways” and applies to both countries.
The benefits and consequences of which are entirely asymmetrical. There’s a reason poor people engage in significantly higher rates of some of the worst “trade decisions” in the form of gambling.
On top of that, when your pool of resources are closer to skim, poor trade decisions result in health-harmful effects, which continue to contribute to poor decision making.
On top of that, when your pool of resources are closer to skim, poor trade decisions result in health-harmful effects, which continue to contribute to poor decision making.
You ever heard of the opium trade force on China?
> The first thing to understand about trade is that it is always beneficial for both parties.
Not true. There can be winners and losers in 'trading' and usually there are. For example, the native americans and europeans being a prime example.
> Because each side can simply decline a transaction that doesn't help them.
Not if one side is much stronger and liable to invade or punish you. The past 500 years is essentially a story of europeans invading/'exploring' to get better 'trade terms' from natives, africans, indians, chinese, ottomans, japanese, etc.
The biggest winners of trade in the last 500 years were europeans and the biggest losers are everyone else.
Not true. There can be winners and losers in 'trading' and usually there are. For example, the native americans and europeans being a prime example.
> Because each side can simply decline a transaction that doesn't help them.
Not if one side is much stronger and liable to invade or punish you. The past 500 years is essentially a story of europeans invading/'exploring' to get better 'trade terms' from natives, africans, indians, chinese, ottomans, japanese, etc.
The biggest winners of trade in the last 500 years were europeans and the biggest losers are everyone else.
“Give me 10 dollars or I shoot you in the head”
“Give me 10 dollars or I stop supporting your industry and threaten famine”
Trade includes leverage and threats
“Give me 10 dollars or I stop supporting your industry and threaten famine”
Trade includes leverage and threats
There is a significant pillar of free trade called “grifting” that this seems to ignore.
China did pretty well in last 30 years despite inequality with US. Trade with the US and those GDP gaps tend to narrow in the long term.
> Mexico gdp per capita, $10,000
USA: $70,000
Honest and direct question: how much drug trafficking adds to the GDP of a country? [1] I think we need a realpolitik/freakonomics approach to these discussion to get the whole picture and take decisions.
[1] https://www.washingtonpost.com/politics/2019/06/24/do-mexica...
Honest and direct question: how much drug trafficking adds to the GDP of a country? [1] I think we need a realpolitik/freakonomics approach to these discussion to get the whole picture and take decisions.
[1] https://www.washingtonpost.com/politics/2019/06/24/do-mexica...
> Honest and direct question: how much drug trafficking adds to the GDP of a country
$0. The underground economy isn't included in GDP calculations. This was a major reason why China and India both tried to force cashless transactions so as to tamp down on the more egregious forms of tax evasion.
$0. The underground economy isn't included in GDP calculations. This was a major reason why China and India both tried to force cashless transactions so as to tamp down on the more egregious forms of tax evasion.
I mean, the real GDP. I understand that the GDP does not include illegal activities. Even if not, money laundering is included in the GDP [1].
[1] The Relationship between Economic Growth and Money Laundering, a Linear Regression Model
[1] The Relationship between Economic Growth and Money Laundering, a Linear Regression Model
> the real GDP
Probably somewhere around a 30-50% increase in true GDP based on similar investigations done in India and China.
Probably somewhere around a 30-50% increase in true GDP based on similar investigations done in India and China.
Every trading relationship will favour the stronger side.
EU and China in particular have been far more aggressive than the US has in pursuing their interests against smaller countries. Australia in particular has been subject to unprecedented economic coercion and manipulation by China. It's not pretty.
But still trading ultimately does benefit both sides.
EU and China in particular have been far more aggressive than the US has in pursuing their interests against smaller countries. Australia in particular has been subject to unprecedented economic coercion and manipulation by China. It's not pretty.
But still trading ultimately does benefit both sides.
Yeah, for example China's position of overwhelming strength vs. weak little USoA meant that China's wages have risen by an order of magnitude and their technology catapulted into the present century, building them in to the world's largest economy.
China has gotten far more out of trading with the US than the US has, and that is accounting for the significant amount of free stuff that China effectively donated to the US in exchange for worthless paper. Trade relations favour the side who adopts the most liberal economic posture.
China has gotten far more out of trading with the US than the US has, and that is accounting for the significant amount of free stuff that China effectively donated to the US in exchange for worthless paper. Trade relations favour the side who adopts the most liberal economic posture.
i don't necessarily disagree, but why do you think it absolutely has to be symmetric in order for both parties to gain? When Japan was allowed on the US market, around 1960, their GDP per capita was like $400 vs. $3000 in the US. both turned out alright.
If referring to me I said equity not equality. The gdp difference makes it implausible for the balance of trade to reflect domestic patterns. It will be cheap labour in Mexico and goods imported to the USA at lower tarrifs. Like NAFTA, it will have internal opposition.
> I said equity not equality
I have never seen these terms used in international relations. In American English, I take them to be synonymous with equality outcome versus equal opportunity. How does that map to entire nations?
I have never seen these terms used in international relations. In American English, I take them to be synonymous with equality outcome versus equal opportunity. How does that map to entire nations?
Normally equity refers to everyone getting their fair share.
It's never been synonymous with equality of outcomes.
For example, equal opportunity might dictate that you consider both women and men for a job position, giving women equal opportunity. But equity demands that they'd be paid the same for the same work.
It's never been synonymous with equality of outcomes.
For example, equal opportunity might dictate that you consider both women and men for a job position, giving women equal opportunity. But equity demands that they'd be paid the same for the same work.
> equity demands that they'd be paid the same for the same work
Which is equality of outcomes. (What “fair” means is the entire debate. Redefining fair as equitable doesn’t move us forward. Maybe we have this contortion because equality of outcomes became synonymous with communism, so now we get equity and equality with no bearing for those terms’ histories.)
This redefinition of “equity” is modern and regional to parts of America. It sounds like it’s based on equity in law [1], but it’s not. That newness and regionality makes it difficult to predict what someone launching it into a new domain, like international relations, means, hence why I asked.
[1] https://en.m.wikipedia.org/wiki/Equity_(law)
Which is equality of outcomes. (What “fair” means is the entire debate. Redefining fair as equitable doesn’t move us forward. Maybe we have this contortion because equality of outcomes became synonymous with communism, so now we get equity and equality with no bearing for those terms’ histories.)
This redefinition of “equity” is modern and regional to parts of America. It sounds like it’s based on equity in law [1], but it’s not. That newness and regionality makes it difficult to predict what someone launching it into a new domain, like international relations, means, hence why I asked.
[1] https://en.m.wikipedia.org/wiki/Equity_(law)
> Which is equality of outcomes
It's not though. Equality of outcomes would be something like, we should all make the same salary. But equity says that discrimination or favoritism should have no impact to the salary you make, you should make a salary that's purely dependent on the work you're doing.
Or another example. If black people represent 20% of the population, but companies boards are 100% made up of white members. Equality of outcomes would say that you'd need the same amount of white and black board members, 50/50. But equity would say you need 20% of them to be black, thus proportional representation.
Equality of outcomes can itself be unfair, like in that example. Equity is about fairness.
When has equality of outcomes not been synonymous with communism? I mean, communism has more to it, but equality of outcomes is one of its propositions. Everyone should make the exact same money, no matter what they do.
Equity distinguishes itself from that, by focusing on fair outcomes, that remove prejudice and addresses discrimination.
So my read of OP about international trade was similar to how I think of equity. They're saying that the trade shouldn't be made by the rich country as a way to take advantage of a poorer country such as paying a lot less than what it would pay for the same if trading with a richer country or sourcing something from within their own country, just because the poor country is more desperate.
It's not though. Equality of outcomes would be something like, we should all make the same salary. But equity says that discrimination or favoritism should have no impact to the salary you make, you should make a salary that's purely dependent on the work you're doing.
Or another example. If black people represent 20% of the population, but companies boards are 100% made up of white members. Equality of outcomes would say that you'd need the same amount of white and black board members, 50/50. But equity would say you need 20% of them to be black, thus proportional representation.
Equality of outcomes can itself be unfair, like in that example. Equity is about fairness.
When has equality of outcomes not been synonymous with communism? I mean, communism has more to it, but equality of outcomes is one of its propositions. Everyone should make the exact same money, no matter what they do.
Equity distinguishes itself from that, by focusing on fair outcomes, that remove prejudice and addresses discrimination.
So my read of OP about international trade was similar to how I think of equity. They're saying that the trade shouldn't be made by the rich country as a way to take advantage of a poorer country such as paying a lot less than what it would pay for the same if trading with a richer country or sourcing something from within their own country, just because the poor country is more desperate.
> both turned out alright
Ever been to Detroit?
Ever been to Detroit?
Detroit auto had their own undoing. Protecting them vs. allowing cheaper and better Japanese cars would be terrible for the average American.
Germany auto handled global trade just fine.
Germany auto handled global trade just fine.
It’s a symptom of a national disease which has been terrible for half the country. Not allowing corporations to outsource all manufacturing would not have been terrible for the average American.
That’s the argument of those who got extremely rich while selling off Americans globally dominant manufacturing position and abandoning large swathes of the country. There are more important things to a nation in the medium to long term than cheap trinkets and a small minority becoming wealthier.
That’s the argument of those who got extremely rich while selling off Americans globally dominant manufacturing position and abandoning large swathes of the country. There are more important things to a nation in the medium to long term than cheap trinkets and a small minority becoming wealthier.
The Detroit Big 3 have themselves to blame for that, they chose to fixate on short term profit maximization at the expense of their cars being garbage in quality.
For a period, Britain tried to keep its car industry going through protectionism. This went out the window when they joined Europe, of course, but by then the car industry was in a very bad way anyway. Protectionism _alone_ won’t save an industry (possibly unless it is very absolutist North Korean style protectionism; “you _must_ buy British Leyland’s crap; it is literally the only option”.) Otherwise, protectionism might slow the decline a bit, but it won’t save an industry determined to destroy itself.
Detroit is not a simple situation, many factors aside from NAFTA have resulted in its decline.
To your point though, Michigan absolutely needs to continue diversifying its economy. It has prestigious education yet tremendous brain drain. Wages are low, yet some costs like auto insurance are among the most expensive in the nation.
To your point though, Michigan absolutely needs to continue diversifying its economy. It has prestigious education yet tremendous brain drain. Wages are low, yet some costs like auto insurance are among the most expensive in the nation.
Detroit is one mono-industrial city out of 20,000 cities in the US. Did the country as a whole gain by trading with Japan?
It wasn't a rhetorial question. Have you gone there in the past 10 years, and driven through the bombed out neighborhoods, seen the aging factory complexes?
It's very hard to do that and then think there was nothing we could have done differently and better with our post-1970's industrial and trade policies.
It's very hard to do that and then think there was nothing we could have done differently and better with our post-1970's industrial and trade policies.
you're cherry-picking one city, in one industry that fell behind, and using it as an argument against all international trade? or just some international trade? what is your point?
One city? At minimum it’s a massive region of the country stretching from Allentown to Omaha and up to Rochester and down to Cincinnati.
More accurately it’s basically every part of the country that’s not a city oriented towards finance or media.
We’re talking millions upon millions of families shattered, communities left to die, whole areas racked by joblessness and addiction, and a society more unequal than ever.
My argument would be that we shouldn’t have fucking done that. It’s possible to invest in and support domestic manufacturing. The Europeans aren’t this dumb they haven’t gone down this road.
More accurately it’s basically every part of the country that’s not a city oriented towards finance or media.
We’re talking millions upon millions of families shattered, communities left to die, whole areas racked by joblessness and addiction, and a society more unequal than ever.
My argument would be that we shouldn’t have fucking done that. It’s possible to invest in and support domestic manufacturing. The Europeans aren’t this dumb they haven’t gone down this road.
Trade is always better without the US until someone needs the US military. Then if the US doesn’t step in, someone is gonna complain about the morality of it. You can’t have it both ways.
>The TPP was shedloads better without the US, for everyone else.
The US shouldn't have been allowed to negotiate anything in the TPP; they should have just been allowed to sign on or not, after everything had been negotiated among all the other nations.
The US shouldn't have been allowed to negotiate anything in the TPP; they should have just been allowed to sign on or not, after everything had been negotiated among all the other nations.
> Mexico gdp per capita, $10,000
> USA: $70,000
China: $12,000?
> USA: $70,000
China: $12,000?
The biggest loser out of this isn't necessarily the US, it's Canada, who was US's biggest trading partner until 2014 when China displaced us. I guess this makes us 3rd.
The two economies are highly integrated, especially in the auto sector where parts move back and forth multiple times for a single vehicle, and manufacturing plants in Ontario playing the role of slightly-cheaper-skilled labour integrated into a continent-wide system. But the trend in the last 20 years has been a one-two-punch with the movement of manufacturing capital to China, but also to Mexico, putting Canadian workers in secondary industries at a disadvantage.
Didn't help that the previous conservative government heavily promoted primary industry (primarily raw oil exports) over secondary; pushing resource exports over manufacturing, letting the dollar rise, etc. And then after that, Trump stirred up a trade war around steel and other exports, etc. That has improved, and with a weaker dollar, Biden in power, and cooling relations with China... manufacturing has started to improve here again. But it's not a long term good situation, I think.
The two economies are highly integrated, especially in the auto sector where parts move back and forth multiple times for a single vehicle, and manufacturing plants in Ontario playing the role of slightly-cheaper-skilled labour integrated into a continent-wide system. But the trend in the last 20 years has been a one-two-punch with the movement of manufacturing capital to China, but also to Mexico, putting Canadian workers in secondary industries at a disadvantage.
Didn't help that the previous conservative government heavily promoted primary industry (primarily raw oil exports) over secondary; pushing resource exports over manufacturing, letting the dollar rise, etc. And then after that, Trump stirred up a trade war around steel and other exports, etc. That has improved, and with a weaker dollar, Biden in power, and cooling relations with China... manufacturing has started to improve here again. But it's not a long term good situation, I think.
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It's kind of surprising how a country that China has only just caught up to in GDP per Capita [3] and HDI [4] is assumed to be a shitshow of an economy.
Hell, the household income in China [0] (~$4,000) is still 30-50% of Mexico's [1] (~$12,000)
Mexico has it's problems, but most of that stems from the Peso Crisis in the 1990s, which was similar to the recession China is faced during COVID.
[0] - http://www.stats.gov.cn/english/PressRelease/202201/t2022011...
[1] - https://www.economia.gob.mx/datamexico/es/profile/geo/mexico
[2] - https://data.worldbank.org/indicator/NY.GDP.PCAP.CD
[3] - https://hdr.undp.org/data-center/country-insights#/ranks