After centuries of lagging behind, Mexico seems to be headed on the right track, especially with the recent election of Felipe Calderon. Has Mexico set the foundation for its return to greatness?
In the grand history of civilization, the case of the United States vs. Mexico is one of the most prime examples of how governmental interference in markets increases poverty, decreases standards of living, and wrecks millions of lives. Much of the western part of America was under Mexican rule as late as the mid 1800’s. That area retained many of the Mexican people, cultures, and traditions of their former nation. Yet, once they joined the new Union, where governmental interferences in economics were virtually zero, their access to food, healthcare, shelter, water, and other necessities and desires became much more abundant. Yet, just across the border back in Mexico, the people were suffering.
Amazingly enough, despite being right next to the largest economy in the world for centuries, Mexico’s corruption and continued socialistic regimes kept their citizens is constant poverty. The beginnings of change came during the hotly contested election of 1988, That year, Salina de Gortari won the Presidency by a narrow margin and entered the position amidst accusations of fraud. During his tenure he removed restrictions on foreign investment, paid back debt and signed the North American Free Trade Agreement. All of these were a step in the right direction, but as is common when rogue states attempt to transition to capitalism, a currency crisis occured in 1994. At that point, however, Mexico, instead of going back to its normal nationalistic ways, continued its deregulation of industries. US manufacturer’s set up shop, bringing large amount of dollars into the country, boosting economic progress and validating the temporarily harsh capitalistic steps the country had undergone. A few years later, Mexico established itself as a true democracy, as the ruling party finally lost after 71 years of rule.
The new party, led by Vincente Fox, was an even more aggressive supporter of capitalism than the previous leaders. Mexico continued to gain under his leadership, and Calderon should continue this trend. Finally, after centuries, it seemed that the United States had helped Mexico return to economic prominence. Despite optimism on the political front, there is a huge cloud over Mexican success, which is, ironically, the dire position of the United States. The old saying that when the US sneezes, Mexico catches a cold is as true today as it was in the 1990’s. Unfortunately, the proverb provides no predictions to what happens when the US does more than sneeze. The Commodity Investor is predicting a louder than normal sneeze next year for the United States, making Mexico a short term sell, despite the promising victory of Calderon. What happens after the sneeze is over is what will determine Mexico’s promise for the next few decades. Will the people revolt in the street demanding a return to socialism, or has the country joined the league of politically stable nations, with no major political upheavels in the process. That outcome will show the true fate of Mexico.
The Commodity Investor