January 29, 2017

Random Thoughts on U.S.-Mexican Relations

Thanks to our new President, relations between the United States and the United Mexican States (i.e., Mexico) are exceedingly strained. Donald Trump is solely responsible for this state of affairs. A move toward more friendly relations seems unlikely in the near future.

U.S. and Mexico flags
Mr. Trump has two issues with Mexico. The issues are distinct, but he has, of late, managed to conflate them. First, there is the matter of illegal immigration, the “solution” for which, in the President’s mind, is to build a wall along our southern border. Pledging to build such a wall (and to have the Mexican government pay for it) was Mr. Trump’s signature issue as a presidential candidate. Like all of his proposals, this was simplistic, ill-conceived, and basically stupid. But simple solutions to complicated problems are the stock in trade of political campaigns, and the Republican candidate used them shamelessly and, alas, successfully.

In general, Mr. Trump’s policy proposals derive from his own reality, which is but tenuously related to actual facts. The U.S. is not being overrun by Mexican rapists and drug dealers streaming over the border. Although there have been periods of significant migration from Mexico in times past, the current net migration is or is near zero. Instead, the most significant source of unauthorized migration into the U.S. is the overstaying of visas by persons who have entered the country lawfully. No wall is high enough to deter such activity.

There are several problems with building a Great Wall of America. To begin with, building a wall would be inordinately expensive, and, because it does not address a significant problem, horribly profligate. Serious drug dealers have not been deterred by existing barriers—they have tunneled their way across the border, for example—and, as has been noted, a 50-foot wall will create a run on 51-foot ladders.

President Trump wants to expand greatly the number of officers patrolling the border. This, of course, adds to the cost of the wall itself.

If a wall is to be truly effective, we should take a lesson from the German Democratic Republic (i.e., East Germany). Now that country had a wall! What is needed is a concrete wall, land mines, and machine-gun towers. I doubt Americans will support such a construction—but I thought they wouldn’t vote for Trump, either—and even the Berlin Wall did not last. There is a lesson here.

Candidate Trump received the cheers of his multitudes by declaring that Mexico would pay for a wall—no need to think too deeply whether a wall is necessary if someone else is going to foot the bill. Of course, it was never clear why Mexico, which is hardly a rich country, would be willing to make such a generous gesture. The candidate never explained how Mexico would be enticed to fork over the billions of pesos needed for a wall, particularly in light of its president’s refusal to consider the matter. In fact, though, Trump never explained the mechanisms he planed to employ to achieve any of the exulted goals he so glibly proclaimed. Perhaps he never really expected to win the election and would never be called upon to fulfill his promises. Perhaps he thought—his first week in office suggests this—that everything could be effected with the stroke of a pen. Actual government experience really would have been helpful.

Mr. Trump’s other Mexican problem is the balance of payments. We buy more from Mexico than Mexico buys from us. Trump, in his simplistic, real-estate-mogul mind, sees this as a problem and blames NAFTA for it, If NAFTA were fairer, Mexico wouldn’t be “stealing” American jobs and profiting handsomely from it. The reality is complex, however, and both the U.S. and Mexico have benefited from NAFTA. Jobs have been lost; other jobs have been created; and consumers have enjoyed lower prices. Our two economies are not inextricably intertwined. This not only produces economic efficiencies, but it also discourages conflicts (or at least it does when countries are governed by rational leaders).

The President has floated the idea of financing the wall by slapping a 20% tariff on goods from Mexico. This would kill two birds with one stone—the wall would be paid for, and Mexico would pay the bill, improving the balance-of-trade in the process. Except, of course, that the American consumer would pay the bill, not the Mexican government, and would likely be none too happy about it. One of the dead birds would be the goose that lays the golden egg.

No doubt, NAFTA could be “fairer” or “better” for the U.S. Such agreements are complicated and never perfect. It is unlikely that there is a silver bullet that would satisfy President Trump short of some sort of coercion of our neighbor to the south. A better plan would be to encourage development in Mexico—perhaps a loosing proposition in the short run—so that more Mexicans could buy American goods and services. This would also keep Mexicans in Mexico. Some undocumented Mexicans in the U.S. might even want to return home.

In reality, many of the border-crossers these days come from Central America, where economic conditions are worse than in Mexico and where life is often threatened by violence. Investment in Central America could benefit the U.S. in a multitude of ways. But, in the meantime, we should allow refugees from Central American violence to resettle in the U.S. To Mr. Trump, however, such people are merely potential terrorists.

Unfortunately, President Trump cannot drop the demented idea of building the Great Wall of American without losing face, and nothing is more important to Donald Trump than protecting his adulation-hungry ego. And the thought of spending money in foreign countries for long-term benefit is anathema to an America-first President Trump.

So here we are. God only knows where President Trump will take us.

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