November 29, 2010

"Why isn't Mexico rich?"

Asks Stephen Dubner on the Freakonomics blog, citing a paper by an American economist about how the Mexican government has done much of what American economists have advised them to do, with only fair to middling results.

The comments are relatively interesting. I would add that it's worth looking at areas in the U.S. with a traditionally Hispanic dominant population, such as parts of the upper and lower Rio Grande Valley as a test of the institutionalist explanations. They tend to be much richer than Mexico, but much poorer than the rest of the U.S., thus showing the institutionalist theory's glass is part full and part empty.

I would also add that a lot of Mexico isn't terribly poor anymore. Overall, the current life expectancy in Mexico is 97.5% of the life expectancy in the U.S.

32 comments:

John Derbyshire said...

P.J. O'Rourke asked a Mexican this question in his book Holidays in Hell. Answer: "Because, Senor, you Yanquis took away from us the best part of our country -- the part with all the good roads!"

Dutch Boy said...

Mexico IS rich (comparatively). Unfortunately, a disproportionate amount of the gravy goes to the usual suspects who govern:

Distribution of Income or Consumption by Percentage Share: Mexico Lowest 10% 1.4 Lowest 20% 3.6 Second 20% 7.2 Third 20% 11.8 Fourth 20% 19.2 Highest 20% 58.2 Highest 10% 42.8 Survey year: 1995

Chicago said...

Because it's run by Mexicans, that's why. See how simple that is?

Anonymous said...

Mexico is relatively poor because it is full of Mexicans.

Mexico is relatively wealthy because of its proximity to the US and its wholesale dumping of millions of otherwise lumpen proletariat across the border.

Mac said...

Let's see what commenter Dean Grant Baker suggested:
"the theft of California and Texas, in an illegal war of Imperialism and Colonialism are the reasons as to why Mexico suffers poverty.

If all that oil money and the gold rush had belong to the rightful owners of the land, the USofA would be even more impoverished that it already is."

I'm two pages into the comments and the American and Canadian reasons are more anti-American than the Mexicans' suggestions.

Disgusting.

Mac said...

Let's see what commenter Dean Grant Baker suggested:
"the theft of California and Texas, in an illegal war of Imperialism and Colonialism are the reasons as to why Mexico suffers poverty.

If all that oil money and the gold rush had belong to the rightful owners of the land, the USofA would be even more impoverished that it already is."

I'm two pages into the comments and the American and Canadian reasons are more anti-American than the Mexicans' suggestions.

Disgusting.

Severn said...

"Why isn't Mexico rich?"

Because it's full of Mexicans.

Anonymous said...

As some have noted, Mexico is rich and growing faster than the USA over the past decade. It isn't among the very richest 10% of the world with France and Japan and the USA and Germany but it is in the richest 20%.

The panoply of NYTimes reader reasons for poor Mexico are entertaining. Extreme illiteracy, sky high birth rates, and lack of entrepreneurial spirit are all mentioned multiple times but very much the opposite prevails in Mexico today. What can you expect from people who read the Times, though?

A Mexican who studies hard, gets a good university education, and develops profession, skill, trade, or career can expect to live a higher material and social quality of life than an American who does the same. More and more Mexicans are doing that so competition for good positions in life is intensifying. Still, many of the artificial limits on space and growth in American life are still absent.

There are problems, of course, but no more than other countries in the same income range like Korea or Brazil or Poland. And the oil curse will be dissipating soon as Mexican oil is about to run out. Oil money funds and supports corruption that costs the economy more than oil revenue can contribute.

If you knew you would be you and could choose to be born in Mexico or the USA, the best choice is not clear. If you would be an illiterate peasant manual laborer, you might choose to migrate north, but then you wouldn't be reading this blog.

Anonymous said...

Mexicans have been living in New Mexico for a few generations. Maybe somebody could do a study on some predominately Mexican section of the state and analyze what's going right/wrong.

Here are the per capita incomes for some largely Hispanic counties in South Texas:

Zavala: 10K
Atacosa: 14K
Bee: 10.6K
Zapata: 10K
Willacy: 9.4K

For Mexico, the per capita income is around 14K. So not only is Mexico a sleepy country, we seem to be getting a lot of people from the lower half of the Mexican bell curve.

Having lived near a few Mexicans, they seem like okay people, but fairly lethargic and happy enough to just get by. In a lot of ways, completely the opposite of East Asians and Indians. Combine this cultural/behavioral attitude with a low level of human capital, and you got a group of people that aren't going to accomplish a lot.

In comparison, African-Americans seem more ambitious and driven than Mexicans too.

I wonder what Asians and Indians think about Mexicans.

Oh well.

Sylvia said...

John Derbyshire said...

P.J. O'Rourke asked a Mexican this question in his book Holidays in Hell. Answer: "Because, Senor, you Yanquis took away from us the best part of our country -- the part with all the good roads!"

Which, of course, was an anecdote pulled out of thin air for whatever he happened to be writing.

jody said...

i wonder how protective the mexican national government really is about blocking and preventing US companies from coming into mexico and dominating every industry. certainly they are highly protectionist, otherwise, gringo businesses would come in and in short order wipe out almost every domestic mexican company. making it illegal for gringos to even purchase land goes a long way in that effort, but i'm confident there are myriad laws to prevent american businesses from any kind of expansion into mexico. only a few factories would be allowed, in industries which mexico does not have a domestic version of, to provide more jobs for mexicans. absolutely NO competitors to existing domestic mexican businesses would EVER be allowed, or all the mexican companies would be put out of business quickly.

seems mexico does not take every last piece of advice from english speaking economists. only some of them. protecting their highly inefficient domestic industries is high on their economic agenda. it seems they put mexicans first. thing like efficiency and GDP growth are secondary.

Anonymous said...

P.J. O'Rourke asked a Mexican this question in his book Holidays in Hell. Answer: "Because, Senor, you Yanquis took away from us the best part of our country -- the part with all the good roads!"

"Which, of course, was an anecdote pulled out of thin air for whatever he happened to be writing."

But it sums up an attitude common amongst many non-whites - and many whites too.

Anything created by the collective efforts of white folks is just there. Its like a mountain or sunshine, its there for everyone.

eg Blacks are often heard to complain that whites have appropriated black musical forms. The technology that underpins this; records, CDs, tapes, MP3s, internet, radio, TV is of course taken entirely for granted. Thats just there for everyone to use, it fell out of the sky.

tanabear said...

Mac, "I'm two pages into the comments and the American and Canadian reasons are more anti-American than the Mexicans' suggestions."

What would Tocqueville say,

"The Constitution of the United States is akin to those fine creations of human endeavor which crown their inventors with renown and wealth but remain sterile in other hands. Contemporary Mexico has illustrated this very thing.

The Mexicans, aiming for a federal system, took the federal constitution of their neighbors, the Anglo-Americans, as their model and copied it almost exactly. But although they transported the letter of the law they failed to transfer at the same time the spirit which gave it life. As a result, they became tangled endlessly in the machinery of their double system of government. The sovereignty of the states and Union entered into a collision course as they exceeded the sphere of influence assigned to them. Even today Mexico veers constantly from anarchy to military despotism and back again."
Alexis De Tocqueville, Democracy in America 1832

It seems that Tocqueville is blaming Mexicans, not Americans.

Anonymous said...

"I'm two pages into the comments and the American and Canadian reasons are more anti-American than the Mexicans' suggestions."

We want the San Juans, northern Maine, the Red River valley, and preferably Alaska. (We'll even make Palin Governor General.)

Then we'll stop hating you.

Anonymous said...

Oh, and Point Roberts.

Anonymous said...

Won't somebody please blame American-exported freemasonry? Mexico's an obvious test case for the obsessive critic.

Captain Jack Aubrey said...

"Blacks are often heard to complain that whites have appropriated black musical forms. The technology that underpins this; records, CDs, tapes, MP3s, internet, radio, TV is of course taken entirely for granted. Thats just there for everyone to use, it fell out of the sky."

Yes - as well as musical notation and most of the instruments they use.

"I would also add that a lot of Mexico isn't terribly poor anymore. Overall, the current life expectancy in Mexico is 97.5% of the life expectancy in the U.S."

OK. But what is it relative to Hispanics living in the US? Or Hispanics of Mexican descent? Even closer to 100%, probably.

Just shoot me said...

"Thats just there for everyone to use, it fell out of the sky."

I get the idea non-Whites think White-built infrastructure was created by sprinkling magic fairy dust and us Whites are evilly hogging all the magic fairy dust to keep them from having their own beautiful cities.

Janus said...

Mexico isn't especially poor. To Central Americans it's considered the great rich country to the north. The white population of Mexico probably lives at a higher standard of living than the mestizo population of America.

So why are mestizos poorer? They're less talented in those things that lead to success in the modern world combined with the fact that they simply aren't that interested in that sort of success anyway. Most hispanics in the Southwest are happy to work a low paying job, spend time with their friends and family, and drink Bud Light. They are poor, but there is a world of difference between New Mexico poor and Philadelphia poor. There is far less resentment and hostility in the air and things generally function, although less efficiently. Of course even their relatively poor lifestyle is still subsidized by the anglo tax payer through food stamps, HUD, etc. If those subsidies disappear, it's hard to say how that would change the atmosphere. And by allowing unfettered immigration we are ensuring those subsidies are unsustainable.

@Jody

I may be wrong, but I think an American can own land in Mexico as long as it's not within 100 miles of the coast.

Anonymous said...

"Having lived near a few Mexicans, they seem like okay people, but fairly lethargic and happy enough to just get by. In a lot of ways, completely the opposite of East Asians and Indians. Combine this cultural/behavioral attitude with a low level of human capital, and you got a group of people that aren't going to accomplish a lot."

But Mexico is richer than either China or India. You know, Mexicans are closer by blood to those Asians anyways than whites.

Jim O said...

So, Derb reads Steve's blog! Cool.

Those who say that the existence of poverty demands an explanation are looking through the wrong end of the telescope. Only four thousand years ago, everybody was "poor." It's prosperity that requires an accounting.

jody said...

"Blacks are often heard to complain that whites have appropriated black musical forms. The technology that underpins this"

not just the technology. 99% black american music is written using european music theory, on european instruments. well, at least it was, before black americans began abandoning instruments. but all of it still written using the major and minor scales developed by europeans, the dominant worldwide music theory. black americans rarely use any music theory from africa, or instruments. they seem to retain only their own distinct ideas about rhythm, and some ideas about harmony. but those rhythm ideas are expressed in the language of the drum kit, which is also not african. now that black americans rarely drum, all their studio programming of drums is also written in the language of the drum kit. snare, bass, and tom drums, hi-hat, ride, and crash cymbals: none of it african. all of this is, for instance, why jazz was developed in the US and not in africa. heck, almost no important music comes directly out of africa. 100 times more africans in africa, making...not much music.

having been involved in music production, i would say almost nothing in a rapper's studio was developed by them. the huge 48 track mixer at the heart of their setup, the speakers (monitors is what they're called in-studio), the microphones. rack effects, amplifiers, this stuff is all so, so totally, wildly out of their realm, out of their world - it might as well be alien technology from another planet, they had so little to do with it's development.

it's wrong to discredit black americans as a major force in modern music. almost all modern music arises from an exchange of ideas between europeans and black americans. they come up with new and interesting ways to use existing tech. they have their own perspective. but they don't do much on their own. how does rap even exist without a microphone? an MC shouting into a microphone, demonstratin' his skillz, is the basis of rap. it can't even happen without europeans developing microphones. the entire year 2010 black american music paradigm, which consists almost entirely of studio produced hip hop and R&B, how does that exist without...a studio? something which africans had almost zero to do with developing.

jody said...

"Anything created by the collective efforts of white folks is just there. Its like a mountain or sunshine, its there for everyone."

right. i've posted about this many times. european culture is so ultra dominant that most of it becomes the standard, default, background culture. this disassociates it from europeans. this is why "white guys are boring". because they're so ultra dominant, that we just can't keep track of everything that comes from them. it would be stupid and a huge waste of time. none us need to pause and think "and a white guy came up with this" or "i'm acting white by doing this" 20 times a day. so "white stuff" simply becomes "stuff". in general we only notice the exceptions - something in widespread, mainstream use which did NOT come from europeans. those things retain their association with the group who developed it because it's mentally easy. the actual measure of just how interesting a group is, by how much the other groups copy them, shows that it's a total one sided destruction in favor of the europeans. all groups copy most of the stuff europeans do or develop.

if television wasn't interesting, why watch it? why watch hours and hours of it every single day? after invention, it would have just remained a local, cultural phenomenon in the US if nobody else found it interesting. sitting on a couch watching television would be something only a few pasty white americans did. people would come to the US and be like "I've never seen a television before" and then when they went back to country X they would tell their friends "And some Americans sit there, not moving for hours, just staring at this box, this rectangle, with pictures. How bizarre." television would be no different than whatever method the various backwater people around the world used to pass the time. an isolated phonomenon in the rural US.

instead, this innovation, pioneered wholly by europeans, is now standard, default culture around the world. by definition, watching television is copying whites. all the other humans around the world had thousand and thousands of years to come up with it on their own, they didn't, europeans did, case closed. same for the telephone, an even more basic case that is pretty much impossible to argue away as "just stuff, that anybody could have come up with, it's definitely not a white thing". there are no humans in the history of the world who would not have found a telephone extremely useful, and who hadn't wondered about how to communicate quickly over great distance. in fact, they worked on doing that, and STILL never came up with the telephone. if we were using smoke signals instead of telephones to communicate across distances of several miles, you can BET YOUR ASS that "long distance communication" would be totally and completely associated with american indians. our educrats and political leaders would regularly remind us that the daily functions of our entire civilization was very dependent on american indians and their inventions. repeat as necessary for controlled electricity, automobiles, air conditioning, refined petroleum (the real basis of our modern world), airplanes, highways, spacecraft, et cetera.

Anonymous said...

Indians and Chinese tend to be hyper industrious on an individual level, but conformity and rigid thinking tend to inhibit their societal progress and reduce the society's ability to effectively train/utilize labor. So you end up with pools of capable laborers that are underemployed and undereducated. In the U.S., which is already societally innovative enough to utilize everyone's talents well, eastern conformity and rigid thinking are a ticket to good grades and a middle/upper class life.

Take university education. British/Americans/Canadians/Australians have the ingenuity to run better universities (hence the flocking of Asians/Indians to Western schools), but Indians and Chinese have the work ethic to get the research and coursework done.

Or IT. Americans created it, but Indian labor now powers it. On their own, Indians probably wouldn't have come up with the software industry. With investment and know how from the West, they've leveraged their tenacity and good English skills into well paying IT jobs.

Mexicans, regardless of whether they run their own society or immigrate across the border, consistently fare poorly. They have a tough time getting a quality university system going at home - and have a tough time getting into the UCs and UTs when they migrate. There's no IT industry in Mexico and hardly any Mexicans in Silicon Valley. Unfortunately, most Mexicans have neither industriousness nor ingenuity. Fortunately, for them, they don't seem to care that much and take what life hands them.

""They are poor, but there is a world of difference between New Mexico poor and Philadelphia poor.""

Yes. Blacks seem to be angry at society and feel that the world is holding them back from achieving their potential. Latinos, even some of the black Carribean Latinos from the Dominican Republic and Puerto Rico, are more apathetic than anything. They also are less violent on an individual level, but highly prone to gangsterism. Some of the poorer parts of New Mexico and south Texas are sleepy and depressing, but okay to walk around.

The upside to black mentality is that they have more ambition and take school, sports, fashion, culture, and music more seriously.

jody said...

instead this innovation, pioneered wholly by europeans, is now standard, default culture around the world. by definition, watching television is copying whites. by definition, all other groups admit that television is more interesting than whatever stuff they came up with on their own to entertain themselves. all the other humans around the world had thousands of years to come up with it on their own, but they didn't. while i certainly don't suggest we should all think about it this way in our day to day activities, the fact is that television is "white stuff". it's not simply "stuff". this is why the argument about "If they can have BET, why can't we have WET?" is stupid - because television is already intensely white. BET is kind of a contradiction. it's africans acting european.

same for the telephone, an even more basic case that is pretty much impossible to argue away as "just stuff, that anybody could have come up with, it's definitely not white stuff." all humans in the history of the world who would have found a telephone extremely useful, and have wondered about how to communicate quickly over great distance. in fact they worked on that, but never came up with the telephone. once europeans came up with the telegraph, then telephone, everybody else tossed out all the other methods they were using and just starting using telephones. by definition, imitating europeans. by definition, admitting that european culture was superior on the matter.

if we were using smoke signals instead of telephones to communicate across distances of several miles, you can BET YOUR ASS that "long distance communication" would be totally and completely associated with american indians. our educrats and political leaders would regularly remind us that the daily function of our entire civilization was highly dependent on american indians and their inventions. repeat as necessary for controlled electricity, automobiles, air conditioning, refined petroleum (the real basis of our modern world), airplanes, highways, spacecraft, and so forth.

Anonymous said...

Mexico is poor for the same reason, mostly, that India was porrr until recently. the government is corrupt.

Provide rule of law, honest government, the ability to contract, a safe store of exchange and value and people naturally improve their lot by voluntary agreement. Every single one of billions of transaction benefits both parties creating value for the society.

Anonymous said...

Only four thousand years ago, everybody was "poor."

I dunno about that.

We have a fairly good idea of what the ancient world looked like status post about 1500BC, and, at that point, we already have what we would recognize as "civilization" in Greece, Turkey ["Troy" & the Hittite kingdom], the Levant [Phoenicia, early "Canaan"], Egypt, possibly Tunisia ["Carthage"], and certainly at the nexus of the Tigris & the Euphrates [Iraq].

Anyway, 1500BC gets you to 3500 years ago, and in 1500BC there was already a very clear division between the civilized world & the barbarian world.

Anonymous said...

Mexico isn't relatively poor. It's middle income.

GDP per capita in nominal figures for 2009.

United States 45,934 - rich
Mexico 8,134 - middle income
China 3,735 - relatively poor
India 1,032 - poor

Anonymous said...

Good call on China and India being poor, even in comparison to Mexico, but..........

Look at the trajectory. China has a 3700 per capita nominal GDP today, but that amount is going to increase by several times by the end of the century. Same with India. Mexico will most likely rise, or fall, with the fortunes of the U.S.

Mexico has an easier time having a high per capita GDP, due to their small population. If they had 1 billion plus people, things would be a mess.

I'm not trying take shots at Mexico. I think it seems like an okay country and Mexicans are pretty content with their moderate standard of living. By no means is it is a particularly bad place to live. I just don't see them competing in the major leagues with the U.S., India, Russia, Brazil, China, and Japan.

I also would say that if our longterm goal is to be the top dog, mass immigration from Mexico and the Carribean doesn't advance that.

There are many that would rather see us be racially diverse, non-competitive nation than be like Japan or Germany.

David said...

>[T]he current life expectancy in Mexico is 97.5% of the life expectancy in the U.S.<

Have they improved, or have we fallen? Or a little of both? If the latter, who got the worst of it? (I could probably guess that correctly....)

Anonymous said...

Indians and Chinese tend to be hyper industrious on an individual level, but conformity and rigid thinking tend to inhibit their societal progress...

All societies, even Western ones, have no shortage of conformity and rigid thinking. It all depends on the amount and type of such rigidity.

Asia, for example, has no tradition of nonconformists being branded as "witches, wizards, and necromancers." Instead they are more likely to be politely ignored. When was the last time anyone has heard of a Chinese Galileo or an Indian Bruno?

OTOH, the western innovators' onus to prove themselves to be useful, patriotic, and working for the public good (and making a few bucks in the process) has been a powerful motivator - and largely reponsible for the vaunted western dynamism.

Anonymous said...

"the Mexican government has done much of what American economists have advised them to do"

If so, then we gave them stupid advise. The obvious smart thing for Mexico to do is to allow foreign investment in their oil industry. They would be a much richer country if the incompetent, 100% state-owned Pemex wasn't in charge.

To suggest Mexico has actually opened up to foreign investment is retarded.