Let's hope that this is only empty rethoric, as the United States would be shooting itself on its own foot, and damaging its relationship with its neighbours to boot. More information in the Economist.
Tag Archives: economy
Globalisation, competition and the American way
The United States is a very exceptional country, in that it was originally founded on ideas, mostly. I'm sure you've heard about the "American way" and the right to "life, liberty and the pursuit of happiness". The American people are capable of great things, and the 20th century was indeed theirs.
This century, however, seems a little more threatening, with the war on terror and a weaker economy. The rise of China also means there is another big competitor in the world stage. To make matters worse, their country also has a little of an image problem currently.
Sadly, I find that the instinct is to close up, to keep on ignoring what is happening in the rest of the world, and to refuse to understand how others see what is going on. Hardball negotiation doesn't work anymore.
Thankfully, there is also a group of people who understand that the US cannot afford to do that.
Answering Ohio
It is said that Hillary Clinton won Ohio due to her opposition to NAFTA (an initiative that her husband put into force, by the way). I understand that Ohio has lost quite a few jobs during the last 15 years, but renegotiating free trade is not a solution.
The American consumer on one hand loves low prices, which needless to say are helped by free trade. On the other side, however, the same person, now as American voter is afraid of the state of the American economy, and would like to protect it as much as possible.
The problem is, however, that the Ohio voter is between a rock and a hard place for one reason: if the United States shuts the door to free trade, many of those employed producing goods for the American market abroad will lose their jobs, and I wouldn't be surprised if they would try to migrate to find a better life.
Therefore, the question is the following: free trade or immigration?
En conclusión: México sigue dormido / Wrap up: Mexico is still asleep
Quisiera compartir con ustedes, apreciados lectores, la conclusión a la que llegué después de escribir mis entradas más recientes sobre México al concluir mi viaje por allá. Por desgracia, pienso que el país parece que sigue dormido como menciona Oppenheimer en el capítulo de su libro dedicado a México. Aunque encontré bastante capacidad emprendedora, también me topé con evidencia de que el sistema político y económico está inclinado hacia la parálisis en lugar de las reformas que necesita el país. Lo más preocupante para mí fue que no noté que la actitud de la población en general haya cambiado mucho, con una mentalidad conformista francamente desalentadora.
Me parece que seguimos esperando algo, pero no sé qué. Mientras tanto, el resto de los países recientemente industrializados siguen marchando hacia adelante.
¿Queremos tomar el mando de nuestro propio destino, o no?
As a conclusion to my recent posts on Mexico given my last trip there, I have to say that the country appears to be still asleep, as Oppenheimer mentions in his book in the chapter devoted to Mexico. Even though there is entrepreneurship, I also found evidence that the political and economic system is skewed towards inaction rather than reform. Even more troubling was that I didn't see signs of change in the attitudes of the general population, with a mindset of conformism that was frankly quite disheartening.
It is like we're waiting for something, but I don't know what. In the meantime, the rest of the newly-industrialised countries are powering ahead.
Do we want to take control of our destiny, or not?
The two sides of the Mexican economy
I bought the "1000 most important companies in Mexico" edition of Mundo Ejecutivo magazine for my trip to Cancún, hoping to find some insightful understanding of the Mexican market and how are they driving the globalization process. Instead I found a horrible, boring megaleaflet where all sorts of companies where trying to sell their product or service, but without focusing on the added value, only on market domination.
When I came back from the beach to Mexico City, I found the airport "maleteros", or luggage trolley employees, that offer their services to carry your luggage from the arrival gate to your car. This service in many other countries is not provided, as you would be able to get a trolley yourself for free. These guys, however, are unionised, and not only they not allow the introduction of trolleys, but they also forbid the entrance of competition. Again, the same situation, no focus on added value, only monopolies.
With this kind of thinking pervasive in the economic activities of the country, it is no surprise a significant sector of the population perceives globalisation more as a threat than an opportunity.
Finns and poverty
Finland is a very egalitarian society, as anyone who has visited Helsinki can attest to. Given that it is also a relatively affluent society, I have somehow come to the conclusion that maybe some Finns (especially of the younger generation) cannot relate to poverty anymore, as they don't necessarily see it (if Kontula & Suvela are the worst the country can throw at you, you're not doing so bad). Or rather, some cannot see it as something that could happen to them, and "if it can't happen to me, it isn't real".
This is especially interesting since Finland was not such a well-off country until the 80's, and even in the 90's there was a terrible economic crisis. How can people so easily forget?
Seaside guacamole economics
When I was still having fun and enjoying the sun, sea and sand in Cancún, I had an insight that may be good to explain the concept of added value.
Whereas the ingredients for a plate of guacamole would cost you around 15 pesos (1 EUR) if bought at the supermarket, when I ordered it at my hotel it costed more than 80 pesos (5 EUR). If we take into consideration that the different farmers got probably a few peso cents for selling the individual avocados, onions and other individual ingredients this begs the question: Why the increase?
For starters, I didn’t have to grow the crops myself. I didn’t have to go to the supermarket and buy the ingredients and I didn’t have to prepare it either. Furthermore, I was at the beach and had a very nice view.
All these extras are called added value. This is why higher profits are not in the production of raw materials, and why I think that the strategies being followed by many Latin American countries in focusing on extraction of raw materials are not right for the medium/long term.
Strong euro
With the current exchange rate, having expenses in US dollars or Mexican pesos and earning in euros is quite a nice value proposition. I could truly see that my money would last longer, and get more for it.
I have to say it was really nice since I already have a shopping list before arriving in the place.
What if your consumer can’t afford it?
This BusinessWeek article on Mexican microlending and a newspaper note I bumped into detailing the growth of luxury brands in Mexico made me wonder on whether it is ethically sound to sell high-ticket products to a consumer if said person can't afford it.
On one side you have the free will of your customer, on the other the fact that you may knowingly sell them something that will cause them more trouble than enjoyment. I'm all for giving all the necessary information to the consumer, but he/she has to take their decisions independently.
Contrapunto
De pura casualidad durante mi visita en México me encontré un programa de discusión y análisis de tópicos de política y economía nacional llamado Contrapunto, el cual por desgracia ya ha sido cancelado. En esta ocasión la conductora y los invitados discutieron sobre el balance de México en 2007 y las perspectivas para 2008. Me quedo con los siguientes puntos:
- Aunque la economía mexicana se ha mostrado fuerte durante el año, está por ver qué tanto resistiría una probable recesión en Estados Unidos, dada la fuerte interacción comercial entre ambos países.
- Las reformas que necesita el país siguen (y seguirán) estancadas, y seguiremos con medidas a la Frankenstein.
- Aún así, no ha habido un colapso como se esperaba después de un 2006 tan crispado.