President Trump may not want to hear this, but things in Mexico are not all that bad. Until recently, Mexico’s middle class was growing and poverty rates declining. The surest sign that things are not as dire as alarmists would have us believe is that more Mexicans are actually leaving the United States then coming in.
How’s that for alternative facts?
What’s more, Mexico’s success is a direct result of embracing markets, supporting the free enterprise system, and turning its back on protectionism and cronyism. To be sure, much work remains, but today’s Mexico is a far cry from where it was, say, 25 years ago.
Back then Mexico was the poster child for crony capitalism, corruption and impunity. Many of Mexico’s most lucrative industries including oil and telecommunications were nationalized and Mexican politicians shielded their friends in the private sector from outside competition. Not surprisingly, much of the Mexican population lived in poverty and had few prospects to live comfortably.
No surprise then that many Mexicans at the time left everyone and everything they knew to head north to a country unapologetically capitalist and of abundant opportunity.
Since then, things have changed. Mexican families have gotten smaller and Mexico has been steadily embracing the virtues of the free enterprise system, albeit slowly. The most significant development was Mexico signing onto the North American Free Trade Agreement back in 1994. Tariffs were lifted and the free flow of goods and services followed. Over time, the standard of living improved and Mexican families were able to purchase cheaper goods and products thanks to free trade.
None of this was easy. Detractors at the time were sounding the alarm saying that NAFTA and free trade would kill jobs on both sides of the border, weaken labor protections, and decimate the environment. Sound familiar?
In fact, the opposite has happened. Since Mexico’s peso crisis back in the late 1990s, real wages have risen significantly according to research from The Heritage Foundation’s trade expert, Bryan Riley. The same research also found that American wages have gone up since NAFTA was enacted.
But perhaps the most compelling case for how Mexico has benefited from free trade is what happened to its population living in poverty. Before NAFTA, 14 percent of Mexico’s population subsided on $2 a day. Since then, that number has dropped to less than 5 percent.
Mexico gets this. Which may help explain why some in Mexico’s government have been fighting labor unions and environmental groups to build on the success of NAFTA and increase trade and commerce. The unthinkable recently happened when Mexico amended its constitution to allow partial foreign ownership of its oil industry. That was unimaginable 25 years ago.
But if Trump has his way, Mexico may very well end up reverting back to its protectionist and nationalistic ways. Threats of imposing a border tax and renegotiating, or even scrapping, NAFTA is music to socialists in Mexico like Andres Manuel Lopez Obrador, a likely presidential candidate in next year’s Mexican election. He has such extreme views on economics that it would make Sen. Bernie Sanders, I-Vt., blush.
Mexico has dodged the socialist bullet twice, but given Trump’s hysteria and chest pounding, what’s not to say the Mexican people won’t fight fire with fire by electing a brash, unconventional protectionist of their own?
If Trump wants to reduce illegal immigration (already at an all-time low), the best thing he can do is to encourage our neighbors to the South to continue embracing free trade and commerce that has been empirically proven to raise the standard of living, create jobs, and lift millions out of poverty. To the extent we are able, we should be encouraging increased economic opportunities for Mexicans in Mexico. This will result in even less migration.
If Trump thinks Mexico is bad now, just wait until our neighbors to the South turn their back on the free enterprise system.
Israel Ortega (@IzzyOrtega) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior writer for Opportunity Lives, an online news publication.
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