Outsourcing/Offshoring to Mexico

The New York Times issue of Jan 27, 2912, contained an enthusiastic opinion piece entitled Mexico:  The New China, by Chris Anderson, the former editor of Wired Magazine, and founder of 3d Robotics, extolling the virtues of manufacturing in Mexico.  It is here. Mexico is indeed a fine place to do business, but that has been known for as long as I remember. When I first came to Stanford as a student in the late 1950’s, there was a formal cooperative arrangement between the Engineering School and the Monterrey Technical Institute in Mexico, and although biased toward agriculture and materials, there was a good bit of trade going on. And of course, as is still the case, immigrants from Mexico were doing much of the work in many fields in the U.S., in particular agriculture.  But China officially became communist in 1949, was closed to visitors for thirty years, and still has slightly awkward relations with the U.S.

Mexico is potentially better for us than a new China.  It is much closer linguistically, culturally and physically, and it has been a strong trading partner of the U.S. for many years. In 2012, U.S. exports to Mexico totaled approximately 200 billion dollars, and imports approximately 257 billion dollars, for a trade deficit of 57 billion.  To put that in perspective with our China situation, our exports to China totaled about 100 billion, and our imports, 390 billion, for a negative trade balance of 290 billion.  Our exports to Canada, incidentally, totaled 270 billion, and our imports 298 billion, for a trade deficit of 28 billion.

If we add our trade to Mexico and Canada, we find that our exports are approximately 470 billion dollars, and imports approximately 555 billion, for a trade deficit of 85 billion dollars.  So our trade with Mexico and Canada far exceeds our trade with China.  Our trade with China annoys us more, because we seem to buy a lot more from them than they from us.  And perhaps China bothers us more than Mexico because we fear that China is threatening our status as the world’s leading power, is culturally and governmentally different, and we remember that they chased us out of the Chosin Reservoir in North Korea in 1950, 

 I must admit I am a life-long fan of Mexico. In fact, I once thought I wanted to be reincarnated as a guitarron player in a Mariachi band. Also, I feel that we forced them out of land that was rightfully theirs. Those of us those of us who live in California, Arizona, New Mexico, Texas, Utah, Nevada, and parts of Wyoming, Colorado, Oklahoma, and Kansas, live in land that was initially claimed by Spain, but then became part of Mexico when it became independent. This land was later taken by the expanding U.S. through military force and a 15 million dollar decrease in the debt owed the U .S. by Mexico — Manifest Destiny.  More details of all that are here. I certainly don’t begrudge people from Mexico attempting to emigrate to land that we took away from Mexico by force and a few bucks.  And I like doing business with them.

 I grew up in Southern California when the main business was citrus, and our favorite relatives farmed in Somerton, Arizona, which was a stone’s throw from San Luis, Mexico.  I grew up with people from Mexico. The Mexican population was particularly large in the agricultural Southwest, Spanish was a common language, and we were very aware that the nearest big city was El Pueblo de Nuestra Señora la Reina de los Ángeles del Río de Porciúncula .  Now I live on the Stanford Campus, which is on one side by a street called El Camino Real, and on the other by Junipero Serra — Mexican influence?  I am married to a woman whose mother left the U.S. for Mexico when her husband died, re-married to a U.S. citizen living there, and spent most of the rest of her life  there.  I have spent a relatively large time working and playing in Mexico, and in my opinion, most U.S. people know it mostly because of its resorts, food, border towns, and of course, tequila.  But a bit of time in Mexico City changes that impression. 

 Incidentally, Mexican towns on the U.S. border used to be lots more fun before our present concerns with immigration and their invasion by the drug business (supported, after all, by the high prices generated by our “war on drugs”.)  But these formerly small and marginally paved cities are no longer small and unpaved.  As an example, Tiajuana now has a population approaching 2 million. Mexico is a large and growing country, and in many ways a successful one.

 As an end note, the richest person in the world ($75 billion, even more than the $64.4. billion of Bill Gates or the $48.5 billion of Warren Buffet), is a Mexican telecom tycoon with the wonderful name of Carlos Slim, who lives there along with a very large number of successful manufacturing companies, including 16 automobile assembly plants, and Cemex, the world’s largest supplier of construction materials and 3^rd large producer of cement. Viva Mexico!