The U.S. should still be wary of Mexico's drug cartels

          A war has been raging south of the U.S. border and has claimed the lives of over 60,000 lives in the past five years. While the words "If you don't pay, the place burns down" may resonate near the U.S.-Mexico border, the scene is much different in the southern provinces of Mexico (Huffington Post). In southern states such as Guanajuato and Querétaro,  a growing auto industry has elevated Mexico to the position of the world's 4th largest exporter of automobiles. Much of this economic development is laid out in Stephanie's blog, in which she details both the bright spots and roadblocks of Mexico's development. Her main point, however, is to call for the U.S. to reform its trade, border, and immigration policies directed towards Mexico. In agreement with Stephanie, I think it is important to emphasize the significance of Mexico's economic rise, but it is equally important to recognize that drug cartels remain a large roadblock to developing stronger relations with Mexico.

          Although we did not get to cover the predominantly political issues of the trafficking of drugs, people, and weapons during our International Political Economy course, the prevalence of these issues around the world is a major concern in the international community. These three deplorable and sometimes horrific businesses operate not only on the global stage but also domestically in the United States. Fortunately, the violence along the U.S.-Mexico border has subsided, and murders, kidnappings, and other violent crimes have fallen drastically in some of the war-torn Mexican states like Chihuahua. However, some experts of the Mexican drug war say that this might simply be a sign that the drug cartels are biding their time to see what the new President Enrique Peña Nieto will do (Huffington Post). Meanwhile, despite the apparent success in Chihuahua, authorities are seeing negative results in other areas where drug cartels operate.

          In Ventura, California, located 200 miles north of the U.S.-Mexico border,  Martin Madrigal, a kind of regional manager for the Mexican Mafia, has been indicted along with 26 other suspects for violent crimes, drug and arms trafficking, and extortion (LA Times). The article notes how this one guy was so feared (his nickname is "Evil") that he was able to coordinate other Mexican gangs in the area.

          In a city not far from Guanajuato called Tiquicheo, the city's former mayor, a defiant opponent of drug cartels, was murdered by hitmen after a third assassination attempt on her life (Fox News Latino). The area has apparently been a hotbed for the growing of  poppy for heroin and marijuana, and it has also been importing large amounts of  chemicals for the production of methamphetamines and cocaine.

           These incidents show a still powerful and influential criminal network that can operate within U.S. borders and cause terror for many Mexican families. This is an issue that needs to be dealt with before the U.S. opens up the border to more immigrants precisely because liberalizing immigration policy would facilitate the movement of drug cartels into the United States. Because the United States is the main source of demand for these drug cartels, the United States would likely see an increase of drug cartel members crossing the border if immigration were to be liberalized. As President Obama said in his meeting with Mexico's next President, the United States certainly wants to aid hardworking Mexican immigrants who are coming here to work (Latino Post). At the same time, however, the U.S. should not run the risk of allowing drug cartel members to immigrate.

          Additionally, while many Mexicans are willing to do the menial and hard labor that other Americans will not do provide a boon for agribusiness in the United States, the many immigrants that want to bring their families may impose a stress on the already faulty and expensive healthcare and educational systems in the U.S.
         
          So for the time being, it is more important for the U.S. and Mexico to continue their efforts to control the prevalence of drug cartels and the violence that they cause. While the cartels have not really bothered the auto producers that have enabled Mexico's rise economically, they are still disrupting everyday life for Mexican local businesses, politics, and families (Wall Street Journal). Accordingly, the Mexican authorities still have a lot of work to do, and it may ultimately be impossible to eradicate the drug cartels. In order to eradicate drug cartels, there needs to be greater cooperation among the U.S. and Mexico in terms of criminal justice and possibly regulation of the drug industry. Thankfully, California and the Attorney General of Mexico have already begun to coordinate efforts against the drug cartels by agreeing to help one another in the prosecution of transnational criminal organizations (Fox News Latino).

         Despite the exciting developments of Mexico's economy, until the United States and Mexico can get the drug cartel problem under control, the U.S. should wait before liberalizing immigration on the southern border.



President of Mexico's plans for reform: http://www.reuters.com/article/2012/11/29/us-mexico-penanieto-idUSBRE8AS0YR20121129 (Reuters)
In depth article on Mexico's Auto Industry: http://online.wsj.com/article/SB10000872396390444083304578018462369529592.html (Wall Street Journal)

A Different Take on "Cities of the Future"

          After reading Annelise's post on Tianjin's new "Eco-City" (Mind the fact that Tianjin is actually already a city with a population of ~13 million) and having followed the link in her post, I wondered how I might address her last sentence: "America should also get on board because a city like Tianjin is the city of the future." Although I am excited by the enthusiasm and initiative of the project, I cannot help but wonder, how they expect to pull this project off. Tianjin itself is an extremely environmentally-unsafe city, which has lead some critics to argue that attempting to build an eco-friendly city is simply a propaganda move by the Chinese government (ThinkDesign). I, however, do not think that making the Eco-City itself is actually the main focus of this project. Instead, the city provides a breeding ground for testing new approaches to creating greener cities.
          As Annelise said, over 600 companies already have signed on to the project, but going further, they have signed on to test out their own environmentally friendly products. Take for instance GM's driver-less cars that are expected to be ready or on the market by 2020. GM, like many other "green" companies, wants to use Tianjin as a proving ground/practice area to test their new technologies. Other innovations include in-home medical evaluations, a Swedish waste management systems that takes trash away from your house, and not to mention the widespread use of solar, wind, and various other green technologies that will be integrated throughout the city (Good but possibly outdated NY Times article discusses more of the proposed projects). 
          This city will not only feature many state-of-the-art green technologies but also the development of eco-friendly city planning on a huge scale. With seven city sectors, each designed for a specific purpose, and widely accessible green transportation, getting around the city will be very environmentally friendly. Reshaping our transportation practices, water and waste management techniques, and energy consumption proclivities certainly is on the cutting edge of city planning. Going back to Annelise's last sentence, I wonder whether the U.S. should get on board and how might we benefit from this forward-looking development in urban planning and green tech-integrated cities. 
          Obviously, with 80% of the population already living in urban areas, the U.S. will not be engaging in city building like China, but hopefully lawmakers can adapt the technologies that are going into these eco-cities into our own urban surroundings. However, if our cities, which are mainly centers of employment for people living in the suburbs, are unable to be re-planned, will we be forever stuck with this environmentally-unfriendly, antiquated public infrastructure?  Is Tianjin really a futuristic city or just some narrow experiment that does not apply to countries with already highly urbanized populations? What does this say about the idea of eco-cities as the "cities of the future"? Only time will tell to see if Tianjin can prove to be environmentally friendly. I would doubt that the Tianjin eco-city will change much for its future inhabitants, considering the widespread heavy pollution ~6 miles to the south, where morning commutes are like this:

(by the way that's not fog)


ThinkDesign Article: http://www.thinkdesignmagazine.com/architecture/tianjin-eco-city-the-future-or-a-chinese-hoax 

P4T: Africa, the Resource Curse, and China

          Last Thursday, I went to the second P4T (Preparing for Tomorrow) symposium, which focused on aid to Africa. One of the moderators, Blaise Buma, from Cameroon, mentioned how little the U.S. trades with African nations and how China has taken the route of trying to develop African countries through trade as opposed to aid. Reading Stiglitz's chapter on "Lifting the Resource Curse" after attending this P4T event, I found it interesting that Stiglitz mentioned using trade as a vehicle to help countries develop only at the end of the chapter in saying that trade practices can be used to enforce "good behavior," i.e. political openness, economic transparency, and fair-trading.
          I know I am probably forgetting my economics 101, but when there is a "resource curse," the economy becomes focused on developing natural resources, preventing workers from developing secondary, tertiary, or other industries. Given this understanding, could the problem of the "resource curse" be sidestepped by liberalizing trade?
          Earlier in the course, we discussed how trade liberalization can be a vehicle for national growth, but for the United States and Africa, from what I understand, there is a lack of bilateral economic and trade relations. The U.S. sends aid to Africa, hoping that this will help improve social or health conditions, but the U.S. does not focus on building up trade with Africa. Perhaps the reason is that the U.S. imposes social and political benchmarks for African countries applying for aid or trade agreements. This runs counter to what Stiglitz says. The demands for more liberal social and political policies are often forced onto countries that do not have a demand for such policies, which can hinder the development of liberal policies such as transparency or eliminating corruption (Stiglitz 152). Considering the U.S.'s development practices might do more harm than good, is it any wonder that China, which is focusing on trading with Africa rather than promoting democracy and anti-corruption policies, is quickly gaining influence in Africa?
          Already China is helping Africa develop their agriculture, which has to compete with U.S. subsidized agribusinesses on the global market. By helping Africa become self-sustaining agriculturally, they will not have to import food from the U.S. as they do now. Perhaps, this will help Africa to "stand on its own two feet" economically. If the real trouble in Africa is that they are under-developed because of social and political structural problems, i.e. corruption, lack of the rule of law, etc., could it be possible to sidestep these problems by focusing on their economic development rather than political and social development?         
          Using China as a case study, they have corruption on a massive scale, an undemocratic political system, and poor people on the scale of the hundreds of thousands. Because they are not exactly resource rich per capita, they do not have a "resource curse." However, they have developed at incredible rates, despite these perceived political and social shortcomings. It is interesting therefore that Blaise mentioned that many African countries are beginning to look to China as their bedrock for development.

P4T Latin America Summit

          Tonight, I took the opportunity to go to the Latin America - U.S. aid summit put on by P4T (Preparing for Tomorrow). With Stephen Vetter the president of Partners of the Americas, a historian on Bolivian history, and Bethany Reynolds, a W&L senior holding the presentation, the summit gave me some insight into the U.S.-Western Hemisphere relations.
          Bethany, who spent the past summer in Guatemala, discussed how around the start of the Cold War, because of the purported communist leanings of Guatemala's democratically elected president Bermejo, the U.S. used the CIA to force Bermejo out of government. The anti-communist measures employed in Guatemala drastically harmed the country's development. Even today, over half of the population lives below the poverty line because of the lack of economic development and other social problems in Guatemala, some of which arose from the civil war fomented by the U.S..
          Next, a historian on Bolivia covered the relationship between the U.S. and Bolivia from its inception up until the present day. He noted that the U.S. style of pursuing economic development is not received well in Bolivia, especially because the Bolivians have their own way of doing things. They have a particular cultural and social identity and traditional economic practices that they would like to keep in place, but US-AID would harm these things. Instead of supplying aid and experts who will only attempt to change Bolivian culture and traditional economic practices, he said that US-AID or other NGOs need to aim for a grass-roots development strategy. By helping Bolivians to have more education, open commercial markets, and an equal society, the U.S. can make a great deal of progress in helping Bolivia develop.
          Finally, Mr. Stephen Vetter spoke about the relations between the U.S. and other Western Hemisphere nations by highlighting the efforts of the not-for-profit "people to people" organization Partners of the Americas  in Jamaica and Brazil. In Jamaica, Partners of the Americas tried to create cultural centers that would help women, people in poverty, and the development of human capital in Jamaica, but they ran into limits imposed by multiple actors: the U.S. itself, Jamaican political parties, and other private sector organizations that wanted to put their own influence on what was intended to be a grass-roots project. However, the project never managed to get off the ground, but in Brazil, the story is different. Because the Partners of the Americas group garnered so much attention, other NGOs have taken its place, effectively allowing the grass-roots efforts to escape the limits imposed by other controlling parties. Recent proposals for development include encouraging college exchange programs between South America and the United States. By doing this, the U.S. can improve Western-Hemisphere relations, increase economic development and redefine the image of U.S. Aid.

          What I learned through all the stories was that the United States has been very controlling and lacking in empathy in attempting push its agenda for how countries should develop and become part of the global markets. It is this mindset, in fact, that has caused a lot of problems for development and for our international relations. Perhaps, the lesson is that, the U.S. should be thinking of these relationships in terms of partnerships  rather than as investments.

**There will also be another summit tomorrow night which will cover U.S. Aid to Africa. It starts a 7:00 in the Commons room 216. This time it includes a panel with professor Dickovick. I recommend going.

Krugman on Romney's Economic Advisors

          Here's an article written by Paul Krugman last week, in which he says that the U.S. is finally "recovering in earnest." The article has a political message in that it is meant to discredit those who favor Romney's economic plan, who believe that this recession is similar to the recessions in 1981-2 and that it is the mere presence of Obama in the White House that is discouraging economic success. he makes a point that is not strongly highlighted in his book "The Return of Depression Economics."
          In the article, he makes the distinction between this recession as a financial-crisis recession and the 1981-2 recession as a "postmodern recession," which are brought on by high interest rates. As Krugman argues in his book that a lack of understanding worsened the recession, it is important to make sure that we fully understand the nature of the crisis and of this current recession if we are to overcome it and prevent future crises (190).
          If Krugman is right that our economy is already well on the road to recovery, this will mean that regardless of who is elected today, the next President will have the opportunity to start with a much healthier economy. What will this mean for the next four years? Perhaps it will provide a free political range for the candidates to carry out their objectives, or considering there will be divided government with a Republican House maybe there will be greater partisanship.

Précis of Giles Chance’s “China and the Credit Crisis: The Emergence of a New World Order” 2010

            Having maintained an astonishing pace of economic growth even through the financial crisis[1], the continued growth of China’s economy has become essential to the recovery of the world economy. Giles Chance’s “China and the Credit Crisis: The Emergence of a New World Order” gives readers a wide, encompassing picture of China’s role in the lead up to and the aftermath of the global financial crisis. In this book, he posits that China’s economic resurgence had a substantial influence on the precipitation of the financial crisis and that the continued growth of China in combination with the decline of the U.S. through the course of the global recession will force China into an even more influential role in the international political and economic community.

            The book’s opening chapter outlines the ensuing chapters covering China’s influence on the economic conditions preceding the crisis, China’s admittance into the World Trade Organization (WTO), China’s international relations, the suggestions of China assuming a global leadership role, especially among developing countries, and many other subordinate topics.

            Following this, he begins with China’s effect on the Global Financial Crisis of 2008. While he argues that China did not cause the crisis, the massive supply shock to global markets stemming from the emergence of China as a global economic force set in motion the lowering of interest rates, allowing for huge over-borrowing, which eventually brought down the global financial system. The unexpected effects of China’s emergence coupled with the United States’ penchant for a low regulatory, free-market environment and high liquidity levels caused the catastrophic breakdown of the global financial system.

            The effect of the global financial collapse eventually ended up hurting Chinese exports, which had served as the growth machine of China’s economy. Recognizing that their economy relies heavily on foreign markets, the Chinese government has attempted to refocus the Chinese economy to be more reliant on domestic consumption by reducing the savings rate. As Chinese domestic consumption has not fulfilled the buoy that the Chinese economy needs, the Chinese government has launched huge public spending programs, but it can only use so much of the huge pool of Chinese savings. China will also have to look for places other than the U.S. in the international community to help continue the country’s development.

            Chance notes that China has a unique challenge in that it must rely on other countries to reach its full potential, and because China has claim over a number of firsts and seconds such as the largest population, second largest gross domestic product, etc. China has a “strong-yet-weak international position” (73). Because of the decline of the influence and credibility of the U.S. financial system, China is in the position to assume greater involvement in the international community. Consequently, China is pushing for fundamental reform of the global financial institutions the IMF and the World Bank, and along with other major emerging countries, China will begin to play an increasingly large role in world affairs.

            This ascension to global influence has not come without the decline of the United States, however. As the dollar grows weaker and the credibility of the U.S. financial system recedes, the attention to the issue of the dollar as the world’s reserve currency grows. Here, Chance lays out China’s position on the U.S. dollar as the world’s reserve currency, and he shows that China would like to have a new reserve currency as others such as economist John Maynard Keynes have suggested. In the meantime, China has taken matters into its own hands by establishing the Chinese yuan (China’s currency) as a reserve currency for Southeast Asia.

            China’s attempts to affect a change in the world’s reserve currency are part of the larger scope of Sino-American relations. In the sixth chapter, Chance describes the history of relations between the two countries from Communist China’s inception through the rise in global terrorism and the growth of China’s export industry to the ongoing shift in global power from the United States to China today. While they have had a history of mutual suspicion, the two countries are by far the most powerful and influential in the world, and as a result, they must learn to cooperate in this new, increasingly bipolar post-financial crisis world.

            The rise of China has also altered Asian politics and economics. The three competing countries, China, India, and Japan all struggle for the leadership role in Asia. However, China’s strong economic growth has surpassed the other two countries, allowing China to draw more power in the region. Since America has played a key role in counterbalancing China’s growing political and economic influence over the region, the retreat of U.S. influence allows China to assume greater influence. Resultantly, India and Japan will have to yield to China’s regional goals.

            Chinese growth paired with the U.S.’s decline has also allowed for a larger Chinese role in aiding developing countries around the world. Ever since the inception of Communist China, the country has assumed that all other emerging countries are partners with China pursuing a common goal. Now that China is in a better position to aid countries, it has developed many ties with Africa and Latin America despite some of the objections by Western countries. While many Western countries may look down on China for assisting undemocratic countries, they cannot avoid their own history of colonial imperialism that affected many developing countries. China on the other hand is aiming only for economic development as opposed to economic development with political restraints.

            China assumes a greater role in developing countries because it wants to resist a G2 between itself and the United States. China hopes to develop to its full economic capacity, and in order to do this, it must carefully manage relations with the United States, which has been on the decline economically and politically in the global community. China is ready to become the next global superpower by the numbers, having the largest population and having the potential to succeed the U.S. in GDP within a few decades. However, countries are reluctant to trust China, and China must carefully persuade other countries of its peaceful intentions in order to show leadership.

            In the last chapter, Chance describes the changed feelings of Chinese people. Today, more people identify themselves as middle class by having a high level of education and a white-collar job or perhaps they are starting to have consumption-driven class standards. Either way, the global financial collapse initiated by the United States has called into question the ascription of economic success to Western practices. China has a wealth of history to look back on, in which they had long periods of global dominance, and consequently, Chinese people are more frequently looking inward for a resurgence of Chinese methods and ideas.

            In conclusion, Giles Chance’s book on China provide a firm background for readers that are new to the economic and political developments of the past sixty years during which China has gathered more and more influence and power in the international community. His depiction of relations between China and the U.S., the global financial system, and other international players shows China as a reluctant, but ready leader in the global community. China has influence the global economy, and it will continue to as U.S. power declines and China’s influence rises.

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[1] The World Bank. "GDP growh (annual %)." 2012. <http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG> Accessed 11/5/2012