Points to Ponder in This Election Year

By Karl Reiner

The government’s latest economic figures show the current recession as being a record setter.  The precipitous economic decline in the wake of the 2008 financial crisis was much steeper than analysts previously believed.  The newly released data confirms the recession as being the worst of the post-war years.  Economic activity declined by 4.1%, the drop was more severe than it appeared at the time.

As the effects of recession, including a stubbornly high unemployment rate linger, the political debate over the applicability of the government’s responses will carry into the autumn elections.  What is known for certain is that the collapse was severe; it caught the government regulators and Congress completely off guard.  As the failed policy of over stimulating the housing sector fades, the recovery is expected to be slow, especially in states like foreclosure rich Arizona. 

The most controversial provisions of Arizona SB1070 have been blocked from implementation by U.S. District Court Judge Bolton. Not to be thwarted, the financially insecure state of Arizona promptly filed an appeal.  Although the governor’s request for an expedited review was rejected, the 9th U.S. Circuit Court of Appeals will take up the matter in November. Given the issue’s fractious nature, the side suffering defeat in the circuit court is sure to push the matter to the U.S. Supreme Court.

It will be an interesting legal exercise as Arizona’s attempt to expand its role in immigration enforcement is dissected and redefined by the courts.  Arizona’s voters should not allow the attention grabbing legal battles obscure the harsh realities.  A noxious mix of problems remains to be dealt with.  As such, those seeking election to office should be prodded to do more than engage in fear mongering and promising easy fixes to problems that have been decades in the making.  

The U.S. cannot continue to ignore the chronic economic problems in the developing country with which it shares a 2,000 mile border.  Of the 540,000 illegal border crossers apprehended in a twelve month period in the Tucson Sector of the Arizona-Mexico border, 95% originated in Mexico.  More than beefing up border security on the U.S. side needs to be addressed.  Mexico’s government does not meet the minimum standards the U.S. considers necessary to stop human trafficking.

Economic reality is not going to change due to election time diatribes. The U.S. and Mexican economies will remain closely tied with the U. S. taking approximately 72% of Mexico’s exports and supplying 57% of the country’s imports.  We should recognize the fact that the recession caused a drop in demand for the products Mexico exports to the U.S.  The resulting slowing of the Mexican economy pushed an estimated four million Mexicans back into poverty.

Membership in the North American Free Trade Agreement includes the United States, Canada and Mexico.  In the United States, gross domestic product per capita is $45,592, in Canada it is $40,330.  Mexico’s lags far behind at $9,720.  A number of analysts believe that if the Mexican government had been able to better manage the economy during the last 30 years, the country would now have a per capita gross domestic product of $20,000, equal to what South Korea has achieved.

Along with tighter border security considerations, it is imperative that the U.S. goad Mexico into getting its economic house in order. The movement of workers from countries lacking in opportunity to rich ones offering a chance of betterment is a worldwide phenomenon.  It should not be surprising that large numbers of Mexicans have entered the United Sates in search of a better life.  Part of the solution to the irritable immigration issue is to push Mexico to live up to its potential.  

The illegal drug trade is worked by the crime syndicates in the U.S. and Mexico. The market for illegal drugs in the U. S. has been valued at around $65 billion per year.  It’s part of a two-way illegal trade pattern.  Drugs are moved in the U.S., cash and weapons slide back into Mexico.  The Mexican cartels engaged in moving the illegal goods into the U.S. funnel over $25 billion back into Mexico yearly.  The financial impact of the booming drug business has started to pervade nearly every level of Mexican life.  Drug earnings are being invested in real estate and other enterprises.  There is a growing danger that Narco-capitalists will take over big chunks the economy as legitimate business people get pushed aside.

The massive demand for drugs in the U.S. is one of the causes of destabilization in parts of Mexico. The human cost of the brutal drug wars has been horrific. Some 28,000 people have been killed as the cartels fight each other and battle the government forces trying to enforce a crackdown.  Although the government’s attempt to control the drug gangs has met with some success, public support for the effort is diminishing due to the human and economic cost.

Severely battered by the drug wars, Mexico appears to be jumping ahead of the U.S. in regard to the issue of legalization. The matter has been abruptly placed on the country’s political agenda by Mexico’s president.  In a surprise move on August 3, President Calderón shifted his position. He asked for a debate on whether to legalize the use some types of drugs in Mexico.  With marijuana providing the drug gangs with 50% of their income, legalizing its use would reduce the funds flowing into the drug gangs’ coffers. As the biggest illegal drug market in North America, the U.S. is going to have to look at the same alternatives being considered by Mexico at some time in the future.