Mexican economics


While I didn't know that Mexico depends on $25 billion dollars a year sent by legal and illegal immigrants in the United States, I did know the cause of much of the misery.
Paul Driessen lays out some history and the reasons why the economies of the United States and Mexico are so different.

Spanish colonists arrived first in the Americas, installing their seigneurial (feudal) system in lands claimed for king and church. The state gained title to all mineral rights, upper classes acquired vast land holdings, and often corrupt bureaucrats regulated markets and businesses. The vast majority of families worked the land or did menial labor, with few opportunities to own property, become educated or improve their social status.

By the time the English began establishing colonies, their system of laws, democratic government, property rights, free enterprise and individual rights had evolved far beyond feudal concepts. Even poor entrepreneurs could and did acquire property, patent inventions, mine gold and silver, and build businesses, factories and industries. When wars and treaties added Texas, New Mexico, Arizona, Nevada and California to the expanding nation, those new states exchanged Spanish feudalism for the dynamic American system.

But even today in Mexico, key industries remain nationalized, and wealth is concentrated in the hands of elites. Prevalent ideologies view wealth as "a zero-sum game," in which what one person acquires can come only by taking money or property from someone else. These doctrines help foment class conflict, demand "more equitable" distribution of wealth, and condemn globalization and foreign investment, rather than seeing them as agents of improved opportunity, health and environmental quality.

Mexico's poor own their limited property in "deficient form," says Peruvian economist Hernando de Soto, with inadequately documented rights and assets. They have what he terms "dead capital" - "houses but not titles; crops but not deeds; businesses but not statutes of incorporation." Worse, they have little opportunity to improve their lot, as long as they remain in Mexico.

Anybody who cites de Soto is okay in my book, but he has a point.

Without the ability to borrow against their assets, their is no real way for the poor to increase their wealth, even if the total assets of the poor are much larger than those of the middle class and "elites" combined.

The American system of law handles titles and deeds because it was designed to, that is where the real wealth lies. If someone can buy a house AND borrow against it, they have a higher cash flow.

The United States was founded and bankrolled by the merchants, that's why we've managed to grow.

Free markets with the rule of law are the keys to liberty.

— NeoWayland

Posted: Tue - May 16, 2006 at 05:42 AM  Tag


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