South of the Border

Mexico’s Next Chapter

July 04, 2018

It’s a fair argument, one that American patriots have also made. It’s nice that Oklahoma farmers benefited from NAFTA, but there weren’t really enough of them to have justified the giant influx of displaced Mexicans.

The two nationalists, AMLO and Trump, appeared to get off to a good start, talking for a half hour on the telephone on Monday.

The Mexican politician floated a grand deal in which America invests in Mexican infrastructure in return for lower immigration.

Less ambitiously, it hardly seems impossible for Trump and AMLO to find some common ground, such as in Mexico keeping Central Americans from traversing a thousand miles of Mexico to assert asylum in the U.S.

Moreover, AMLO might be able to sell Trump on Mexico as the American economy’s local partner for laborious or polluting industry as being more in America’s strategic interest than continuing to outsource American jobs all the way to China, which Trump foresees as the USA’s long-term rival. Unlike China, Mexico will never be a military rival to the U.S.

Mexico’s most obvious economic endeavor would be revitalizing its stagnant Pemex energy monopoly.

The 1938 expropriation of foreign oil companies remains the proudest moment of Mexican socialist nationalism. On the other hand, Pemex is a disgracefully somnolent government-owned company that has fallen vastly behind American oil companies in refining, offshore, and shale drilling technology.

America has made huge strides in energy self-sufficiency in recent years, and it is hardly surprising that Mexico wants to do the same. AMLO ran on the protectionist platform that Mexico should refine more of its own oil instead of shipping crude to U.S. refineries and then importing gasoline back.

The ineptitude of Mexico’s oil monopoly is a disgrace, and perhaps AMLO could sponsor an influx of young engineering talent into Pemex. With a population of 130 million, Mexico ought to be able to find enough competent people to staff a modern oil company.

The American energy industry has long suggested a simpler solution for Mexican energy incompetence: let American firms take over Mexico’s oil business.

It’s not widely recognized in the U.S. media that the Bush dynasty’s fundamental strategic vision over the last half century has been to knock down the barriers keeping American business out of Mexico in return for lowering the barriers keeping Mexican people out of America. (It’s not a coincidence that two President Bushes’ oil firms were named Zapata and Arbusto.)

This is not an irrational plan, but it benefits elites more than publics.

More generally, Mexico’s fundamental problem/blessing is summed up in another of Porfirio Diaz’s observations: Mexico, so far from God, so close to the United States.

Mexican elites traditionally resisted the threat of American dominance, but at the expense of tolerating (and even promoting) a culture of mediocrity and accident-proneness in its population. Mexico’s superb real estate would attract an influx of Americans, but Mexicans have managed to make their country boring and distasteful to most Yankees besides Jeb Bush. Mexico’s shoddiness successfully repels gringos, but also limits its potential.

Whether Mexico’s new president will (or can) do anything about that remains to be seen.


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