The most obvious problem facing Mexico is that its the rich won't pay their fair share of taxes, so there isn't enough money for schooling, law enforcement, agricultural productivity development, and the like. Life is pretty crummy for the tens of millions of poor people, but it's sweet indeed for Mexico's remarkably rich rich people. From the LA Times:
$49 billion is Slim's pickings in Mexico
By Marla Dickerson
MEXICO CITY — On Thursday, Forbes magazine estimated [Carlos Slim Helu's] net worth at $49 billion.
That represented a stunning $19-billion increase from 2006, the biggest one-year jump in a decade for anyone on the magazine's annual list of the world's richest people.
In other words, Senor Slim personally made about as much money last year in Mexico after taxes (such as they are), $19 XXXXXXtra Large, as all the Mexicans in the U.S. sent home to relatives in Mexico.
Microsoft Corp. co-founder Bill Gates' $56 billion helped him retain the top spot. Investor Warren Buffett was again runner-up with $52 billion. …
Although his third-place ranking didn't change from 2006, he increased his wealth by 63%. That's a growth rate of $2.2 million an hour.
When Mexicans talk on the phone or use the Internet, they're almost certainly doing it through a company controlled by Slim, who in 1990 bought control of the old state-owned telephone company Telefonos de Mexico, or Telmex, and turned it into a cash machine. …
The portly Slim has more than tripled his fortune since Forbes published its 2004 list, thanks to a string of acquisitions and the ballooning value of his telecom holdings. His current net worth is equivalent to nearly 6% of his nation's gross domestic product, a feat unmatched even by America's robber barons at the height of their influence. …
That's the equivalent of $780 billion in America, fourteen times the size of Bill Gates' fortune.
To some Mexicans, the son of a Lebanese immigrant shopkeeper represents the triumph of hustle over heredity in a nation where a few dozen families have held sway for generations. …
But critics say his purchase of Telmex was a sweetheart deal that merely replaced a public monopoly with a private one. Studies have shown that Mexicans pay some of the highest telecom rates in the world, which is undermining the nation's competitiveness. …
And it's not just telecom that's locked up tight. Of the 10 Mexican billionaires listed on the latest Forbes list, seven made their fortunes in industries where there is little competition in Mexico.
Mexico's problems are severe, yet they are hardly as incomprehensibly insoluble as Iraq's, where we throw $1 or $2 billion per week down the toilet just making things worse. But the idea of America exerting any pressure on Mexico to push it in the direction of meaningful reforms, such as having its billionaires cheat on their taxes a little less, is simply not part of normal public discourse in America.
My published articles are archived at iSteve.com -- Steve Sailer
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31 comments:
The most obvious problem facing Mexico is that its the rich won't pay their fair share of taxes, so there isn't enough money for schooling, law enforcement, agricultural productivity development, and the like.
I think a significant difficulty here is the same sort of problem you've mentioned previously regarding African rulers: the lower the IQ of the population, the less it pays to invest in them and do right by them.
I wonder how many whites in the United States will feel about paying their taxes in decades to come as it becomes increasingly true and increasingly obvious that a large chunk of tax revenues are going down an unproductive Hispanic sinkhole.
You should check out the article on Wal-Mart's Mexican subsidiary ("Wal-Mex") in the WSJ this week. Wal-Mex hasn't had any trouble finding competent Mexican workers, and it has had a big impact on the places where it has opened stores.
The average illegal immigrant from Mexico may not be a rocket scientist, but there are probably enough smart Mexicans to make Mexico wealthier, if it could open up some of its monopolies to foreign competition. The average Mexican has a better shot working for a multi-national like Wal-Mart, where there's some measure of meritocracy, than trying to find a relative to hook him up with a sinecure at the state oil company.
Dave
I can vouch for the high rates of telecomunications in Mexico. We make a lot of international calls to the states, and we can purchase calling card of more than 500 minutes for 6 euros. The same 6 euros will buy about 30 minutes to mexico, as we have friend from mexico who complains about this all the time.
Mexico, like every third world country, can avoid reform as long as it's commodities are expensive and it has plenty of treasure to distribute.
Mexico's #1 commodity, oil, is rapidly drying up, though. Oil represents a third of Mexican government revenue. When that revenue starts shrinking, the Carlos Slim's of Mexico are going to be the next natural source of revenue.
As much as the readers of this blog will hate the idea, wouldn't we just be better off with a European Union system that made Mexico modernize in exchange for open borders and capital funding?
Slim is a crook and has used deregulation in much the same way as Enron did to enrich himself.
Does anybody else remember when Ma Bell only charged you 9 bucks a month to use your damned phone?
Whats was your AT&T bill before you chucked having a home phone and used your cell exclusively? Mine was 67$ a month.
Whats your cell phone bill? Lots of folks end up paying 150$-or so a month.
Are you sure we would not have been better off with ol' Ma Bell? Sometimes I wonder. When we hear about "privatization" and how it is supposed to make everything better, Im beginning to think that privatization will give us a few extra bells and whistles SOONER than we might have had them, but we end up just making a very few people rich and the employees of such enterprises poorer. The phone biz has been a let down to me personally.
By the way, in an age of SATELLITES, why do you have to pay for long distance in the same nation? It doesn't seem to me that calling another state should be any more of a problem than calling next door if we are using satellites to connect the phones, beamed up from cell towers? Am I missing something?
when i'm in mexico, i can receive calls on my cell phone, but not make them.
mexico sucks. an AU version of the EU, with canada and mexico, would be the end of the united states. there is nothing anybody could do to not make that a total disaster.
for instance, the majority of the AU citizens in the public school system would qualify for affirmative action.
of course, i'd be tempted to change my name to something spanish, which would magically change my race under the EXTREMELY STUPID RULES FOR "HISPANICS", and qualify me for affirmative action.
OK,so you hate Carlos Slim.(Interesting that he's Lebanese--Selam Hayek is 1/2 Leb. I wouldnt mind investing in her!:) )But what about OUR 500lb gorillas,like Bill Gates. This jerk foists his mediocre products on everybody,sucks up talent,slows down innovation and progress and is an over-all party pooper. Plus he is importing as many foreigners as poss to take hi tech jobs.Cant the govt break up his monopoly?
that reminds me, here is Ted Nolan, the head coach of the New York Islanders. Ted is an obvious "latino" who can really dance and works much harder than lazy white people. I guess "hispanics" really are making their mark in the USA.
http://en.wikipedia.org/wiki/Ted_Nolan
oops. he's an ojibwa indian from ontario, who never spoke a word of spanish, and has not a drop of hispanic blood.
there goes the stupid "Mexicans are Latino" argument. again.
real latinos made "Pan's Labyrinth", a movie that won 2 academy awards last month.
"of course, i'd be tempted to change my name to something spanish, which would magically change my race under the EXTREMELY STUPID RULES FOR "HISPANICS", and qualify me for affirmative action."
I have always wonder why whites don't do this. There is no way for anyone to prove that you are not Hispanic. For instance, Cameron Diaz qualifies for affirmative action yet she has blond hair.
"there goes the stupid "Mexicans are Latino" argument. again."
Mexicans are Latinos under the current classification system. This is not going to change regardless of how much you bitch about it.
As much as the readers of this blog will hate the idea, wouldn't we just be better off with a European Union system that made Mexico modernize in exchange for open borders and capital funding?
First, what's in it for us? Second, how is this going to work any better than admitting a similarly low IQ nation (like Turkey) to the EU would work?
"First, what's in it for us? Second, how is this going to work any better than admitting a similarly low IQ nation (like Turkey) to the EU would work?"
You are right, there wouldn't be much in it for the USA.
However, Mexico would benefit greatly. Mexico is an advanced Third-World country. It has a lot of modern infrastructure. The problem with Mexico is that the government ignores the Amerindians of the South (30% of the total Mexican population) by not investing in anything that would make their life better.
Again, Mexico is not some dirt poor African country with no infrastructure, so comparisons of Mexico to Africa don't make sense.
Again, Mexico is not some dirt poor African country with no infrastructure, so comparisons of Mexico to Africa don't make sense.
The existence, or lack thereof, of infrastructure has nothing to do with my point. The structure of IQ and wealth distribution is the issue.
The problem with Mexico is that the government ignores the Amerindians of the South (30% of the total Mexican population) by not investing in anything that would make their life better.
Again, you're not approaching my point directly. It's not about whether or not investment would make life better. Undoubtedly, spending more money on poor Mexicans would improve the quality of life for them. That being said, what incentives do wealthy people and governments have for investing in the lower classes of Latin America? Will the investment be returned in the form of a significantly wealthier society in the long run or will the money largely disappear down a sinkhole?
You wonder why Mexico doesn't invest in its Indian population. It couldn't have anything to do with the likelihood that they are the lowest IQ group in Mexican society, could it?
I want to be clear that I'm not arguing that wealthy Mexicans are right for not paying their taxes. As an ethical issue, I don't think they are. However, pragmatically speaking, there are reasons why things work out the way they do.
"That being said, what incentives do wealthy people and governments have for investing in the lower classes of Latin America?"
What incentive do wealthy Americans and the American government have to invest in the lower classes here in the USA? Why not allow the billionaires of America to not pay taxes?
There was a time when America had essentially no income tax (before the passage of the 16th ammendment in 1913) and had a high level of poverty as well. Why not go back to those times?
You haven't proven that investing in the Amerindian population is a wasted investment. Obviously they can get jobs and pay taxes as well (a lot of the recent illegal immigrants in the USA are from the south of Mexico and get jobs here).
The assumption is that the Amerindian population of Southern Mexico is comprised of mainly low IQ people incapable of sophisticated life in modern society.
I would challenge that assumption.
It would seem at first glance that the current indigenous population is comprised genetically of the same people who built extremely large urban centers in what is now jungle. Requiring a sophisticated understanding of marshalling resources, distributing them, architecture, astronomy, and applied mathematics.
I would argue that these actions are not the work of low IQ people.
More than likely, cultural issues that inhibit capital formation, investment in western education, and the like are responsible for the appalling poverty in Southern Mexico.
An analogous example would be Scotland. Under the old Scottish kings not much in the way of intellectual or industrial accomplishment was achieved, as the society was completely clan dominated. William Wallace and the Bruce may have fought for freedom, but the societies they fought for made very little contribution to mathematics, European culture, economics, etc.
Yet after the last Scottish uprising, perhaps only fifty years, we can speak of the "Scottish Enlightenment" where Scots figure highly in economics, mathematics, industry, astronomy, literature, physics, and more. An explosion of intellectual life under the English framework of non-clan law etc.
I don't think the Scots of say 1650 were extremely stupid (even though the intellectual life of say Edinborough at the time was likely nothing at all) and suddenly all the Scots got lots smarter by 1780.
By the way, we've been very happy with SunRocket's VOIP at $199 a year (including taxes!) for basically unlimited calling within the US. You need to pay for a broadband Internet connection on top of this, but I need one for the Web anyway.
Steve,
We've been discussing you on this thread.
Please make a contribution.
What incentive do wealthy Americans and the American government have to invest in the lower classes here in the USA?
I think wealthier people have more reason to invest in the bottom 80% of American society and expect some return in the way an improved society than in the bottom 80% of Mexican society. Still, even investment in America's least likely to succeed can be a mistake as the Bill and Melinda Gates Foundation is determined to prove.
Why not allow the billionaires of America to not pay taxes?
Because that would be immoral and, as I've already indicated, my point isn't one about ethics. The Mexican government should, by all means, compel Slim and others like him to pay their share. I would support that. However, there are also reasons, not all of them unjustifiable or irrational, why the wealthy are almost universally cynical about the potential of the poor in Latin America.
You haven't proven that investing in the Amerindian population is a wasted investment. Obviously they can get jobs and pay taxes as well
You haven't proven investing in the Amerindian population is likely to be a success and, if you were looking for investors, it would be up to you to make exactly that case. Anyone can get a blue-collar job and earn whatever the prevailing wage for that job is. The questions is not whether they can get jobs but whether they can create them.
Requiring a sophisticated understanding of marshalling resources, distributing them, architecture, astronomy, and applied mathematics.
This only proves the existence of high IQ people in a population, not the high intelligence of a population generally. I can point you in the direction of the The Nigerian Association of Mathematical Physics if you want a demonstration of the fact that smart people exist in West Africa. That doesn't mean the average Nigerian is capable of doing advanced physics or mathematics.
Tommy, the average American, Scot, or Englishman is not capable of doing advanced physics or mathematics either. You only need a small minority capable of doing that kind of thing. The vast majority of jobs require only modest intelligence.
c23
From a recent Noam Chomsky interview:
"...India is a complicated story; it has been independent since 1947. Before the British conquest back in the 18th century, India and China had been the commercial and industrial centers of the world. British conquest turned India into a poor, peasant society. [The British] built roads and infrastructure, but they were mostly for the benefit of the invaders, the export of goods and so on. There were hideous famines--Mike Davis has a wonderful book on this Victorian famines, huge famines that could have easily been prevented, right thru the British rule up to the very end in the 1940s. Since Indian independence, they resumed their growth and there were no more famines; it became a more or less governable society and was beginning to develop. In the 1980s, there was a significant increase in the rate of growth. In the 1990s, they instituted the so-called neo-liberal reforms on their own, I mean, that was not under IMF control, as you said, and since then there have been changes.
They're very highly praised in the West--you know, the Thomas Friedman-style adulation of the new India--and in fact growth has increased, and a sector of the society has become much better off, has been raised from poverty. But remember that means a sector of the society; the large majority of the society is deeply impoverished, maybe even harmed by the neo-liberal policies, the same policies that are responsible for the marvelous labs in Hyderabad and Bangalore - which are indeed marvelous, I've seen them and they're just like MIT - and there is increase in the wealth of that sector of society. Those same policies are undermining the large majority of the population, which is peasant-based. Also the government has withdrawn support for peasant agriculture, meaning cheap credits, irrigation, rural aid, assistance programs, and so on, and they've also kind of pressured the poor farmers to turn from subsistence crops to export crops--that's the advice of economists generally.
Mexico, for example, under NAFTA was supposed to turn away from producing rice for the population and corn, turned away from that to, say, producing flowers for export to the United States with "more valued added". In some seminar somewhere that might look good, but in the real world it happens not to work for very simple reasons. Commodity prices tend to vary quite a lot, and if there's like a natural disaster, say a hurricane or whatever, and you're producing flowers, they might be wiped out that year, just like the citrus crop has been pretty much wiped out in California this year because of the cold spell. Well if you're agribusiness, you can handle that. So wiping out the citrus crop in California may raise the price of oranges in the United States, but U.S. agribusiness is going to survive it just fine. However, poor farmers cannot, I mean a farmer can't tell his children 'don't bother eating this year' because cotton prices went down, or because a storm wiped out our flowers, and 'maybe you'll be able to eat the next year', you can't do that. So what you have to do is to try to get credit. Well with the government having withdrawn support for the vast majority of the population, you go to usurers, who charge you huge levels of interest, which you're not going to be able to pay, so then you have to sell off the little plot of land you have, and pretty soon you can't support your family at all, so you commit suicide.
And in fact the rate of peasant suicides has been rising [in India] about as fast as the adulation by Thomas Friedman for the marvels of the economy. The per capita grain intake for people in India has declined, the average has declined considerably, since the onset of the reforms. Manufacturing productivity has gone way up, manufacturing wages have gone way down. At the beginning of the so-called reforms, India was ranked around 124th or so in the UN development rankings, which measure infant mortality and so on. Since the reforms have been undertaken, it's actually declined--the last time I looked I think it was 127th, it certainly hasn't advanced.
Well, these are parts, I can go on, but these are the several aspects of the Indian development story. For some it's been very good, and for others it's been, at best, stagnation, at worst, a disaster. And remember, for huge parts of India, like say for women, life is kind of like under the Taliban. Careful studies of say [the Indian state of] Uttar Pradesh, which maybe has 160 million people, has found that they have about the lowest female to male ratio in the world and it's not because of female infanticide, it's because of the way women are treated, which would make the Taliban look pretty decent. And these are huge areas, and they're not getting better, many are getting worse. The same is true in China, it's harder to say about China, it's a closed society, I don't know the details, but it's probably quite similar. India's a more open society so there's a lot of evidence.
Going back to Mexico and producing corn and beans, I mean, why is there a vast increase in illegal immigration from Mexico in recent years? It's partly the predicted effects of NAFTA. If you flood, the worst is yet to happen but even the beginning of it, if you flood Mexico with U.S. agribusiness exports, which are highly subsidized--that's how they get their profits--then Mexican farmers aren't going to be able to compete. Then comes the economists' theory, you know, turn from producing corn and beans and rice to producing flowers and [other] export crops, and you have the mode I described, and people can't survive. So there's a flight of people from the countryside to the cities where there are no jobs because Mexican businesses can't compete with U.S. multinationals, which are given enormous advantages under the mislabeled trade agreements. And yes, you get a flight of population [across the border]. The price of tortillas, you know, the basic food for the poor, it's gone out of sight, people can't pay for it. If you're growing your own food, you can manage, or if there's a subsistence agriculture, yeah, you can kind of manage, but not when you abandon it.
Again, for parts of the population it's been a benefit, so the number of billionaires has gone way up, just like in India. India now ranks very high internationally among the number of billionaires, but also for peasant suicides, and for severe malnutrition and so on. These countries, which are pretty rich, [are in some respects doing worse than] the poorest countries. GDP per capita in India is below Bolivia. That's nothing to rave about, Bolivia is the poorest country in South America. These are several sides of the same policies.
Remember that when NAFTA was enacted in 1994, another policy was enacted. In 1994, Clinton militarized the border in Operation Gatekeeper. Now previously, that had been a pretty open border. The border, of course, was established by conquest, like most borders. And there were similar people on both sides, people who would cross the border to visit their friends and relatives and that sort of thing. Now the border was militarized in 1994. OK, maybe it's a coincidence, more likely I think it's because the Clinton administration understood that their glowing predictions [about the benefits of NAFTA] were for propaganda, and that the likelihood was that there would be effects in Mexico which would lead to substantial flight, immigration, joined by people fleeing the wreckage of Central America after Reagan's terrorist wars there. And yes, now you have what they call an immigration crisis. These things are connected, you can't look at them in isolation."
Alright, that's a long quote (but still only part of his answer to one question).
Tommy, the average American, Scot, or Englishman is not capable of doing advanced physics or mathematics either. You only need a small minority capable of doing that kind of thing.
You seem to have a way with missing my point. My point is that you cannot infer exceptional intelligence of a population based on the achievements of ancient civilizations when such achievements can easily be chalked up to a relative handful of bright people. I was not arguing that the average European was capable of doing advanced mathematics or physics.
The vast majority of jobs require only modest intelligence.
That being said, you have to have real work that needs to be done and that pays a decent wage. Work doesn't spring out of thin air. That is where job creation comes into play. You need people capable of creating jobs and while the average businessman need not be as intelligent as a physicist or mathematician, it does help to have reasonably smart people who can manage things and who won't run businesses into the ground. You're not likely to find a large number of such people among Mexico's poorest or least intelligent.
I think the wealthy should pay, but I don't have any great illusions that Amerindian southern Mexico is going to emerge as an economic powerhouse.
Steve, you've mentioned Mexico's rich cheating on their taxes before, but I'd like to know just what the tax-rates are and how much they are estimated to be cheating by.
Personally I don't think it would make all that much different. Government in Mexico is notoriously corrupt, so I doubt they'd put the increased revenue to very good use. Furthermore, our government is certainly not short of funds (it's in the red because it constantly keeps spending more and more) but it hasn't had much success in "investing in the human capital" of our inner cities, or those who have fled the shoddier government of Mexico. My prediction is that Mexico is going to remain Mexico for a long time.
This should be bad news for Mr. Slim
http://www.nytimes.com/2007/03/11/weekinreview/11levy.html?ref=weekinreview
Tommy,
Check out this article about Wal-Mart's success in Mexico. Wal-Mex has been able to find competent labor, even among the Zapotec-speaking Amerindian population.
Dave
Im no economist. They wouldnt let me--I passed the intelligence test. :) But the comments regarding NAFTA opening up markets in Mexico and small Mex farmers getting their butts kicked cuz they havent a prayer of competing with the Amer farms,which has had a huge effect on immigration,are noteworthy. It seems NAFTA has caused a lot of problems,tho the open-market types sing its praises to the sky. The American government must STOP immigration fr Mexico and C. America. We must pressure Mexico to take care of its problems-or we will!
Check out this article about Wal-Mart's success in Mexico. Wal-Mex has been able to find competent labor, even among the Zapotec-speaking Amerindian population.
OK. So what that says to me is that (a) jobs at Wal-Mart don't require too much intelligence and (b) Wal-Mart jobs are restricted geographically, meaning that they aren't in danger of being outsourced somewhere else. Wal-Mart employees do not face too much global competition for their jobs.
I wish the Zapotecs the best of luck and I hope their quality of life improves, but Wal-Mart will not make Amerindian Mexico an economic powerhouse. When the Zapotecs can produce a Sam Walton, I'll be more impressed.
For those who haven't read the WSJ article, below is an excerpt. The salient point isn't whether or not there are Amerindian Sam Waltons -- Sam Waltons are rare in any society. The salient point is that there are Gisela Lopezes in Mexico. Societies need Gisela Lopezes to succeed economically; they can get the benefits of Sam Waltons by allowing responsible, top-tier multinationals to compete in their economies. Corrupt monopolies hinder Mexico's economic growth more than the average IQ of its population does.
Dave
"Gisela Lopez, the 31-year-old head of billing at the Juchitan store, benefited from the retailer's system of promoting from within. Raised by her uneducated, Zapotec-speaking grandparents, Lopez earned a computer degree at Juchitan's small technical college and then left for the booming northern city of Monterrey in search of opportunity.
Lacking connections, she couldn't find the office job she dreamed about, and took a job at one of Wal-Mart's stores. After three months, Ms. Lopez made cashier supervisor, and later moved over to the billing department. When Wal-Mart opened a store in Juchitan, Ms. Lopez jumped at the chance to move home - and was promoted to billing chief in the process.
"It's a very different place to work, because you can succeed by your own effort," says Ms. Lopez, whose $12,000-a-year salary now puts her in Mexico's middle class.
Lopez's story of economic mobility is a rare one. Most of her childhood friends don't have steady jobs, she said. The success stories are friends who inherited jobs from their parents at the state oil company's big refinery in Salina Cruz, about an hour away."
"I wonder how many whites in the United States will feel about paying their taxes in decades to come as it becomes increasingly true and increasingly obvious that a large chunk of tax revenues are going down an unproductive Hispanic sinkhole."
One could ask the same question now about how high-achieving, well-paid Jews, Indians, Asians, and WASPs feel about paying their taxes while unproductive whites don't pay their fair share. The federal budget is now approximately $3 trillion. Divide that by 300 million (the number of Americans) and that's your share if you are single (add another $10k per child if you have children).
The fact is that income tax system is extremely progressive and have of Americans pay hardly any net income taxes. The percent of Americans who pay at their share or more is probably about 15-20%. The rest of you are dead weight, whatever color you are.
Irfan
One could ask the same question now about how high-achieving, well-paid Jews, Indians, Asians, and WASPs feel about paying their taxes while unproductive whites don't pay their fair share.
There's no talking to people who insist on confusing the underlying causes behind practical realities with moral judgments about the way things should be.
Tommy,
What are you trying to say? Spit it out. If you can.
Irfan
"The fact is that income tax system is extremely progressive"
This comment might be true if American wage earners didn't have to pay the extremely regressive FICA (Social Security and Medicare funding) payroll taxes which are then immediately spent as if they were part of general revenue.
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