Sometimes a narrowly framed news item offers a glimmer of a path toward a possible solution to a larger problem. This week was no different. new york times The article was briefly promoted with a red-letter label reading “Breaking News,” which heralded Mexico’s rise as America’s leading import source, overtaking China for the first time in 20 years.
Sometimes a narrowly framed news item offers a glimmer of a path toward a possible solution to a larger problem. This week was no different. new york times The article was briefly promoted with a red-letter label reading “Breaking News,” which heralded Mexico’s rise as America’s leading import source, overtaking China for the first time in 20 years.
The long-term significance of this trade data may not be entirely clear. And how big a deal it becomes will ultimately depend on a concerted long-term geopolitical strategy.
But Mexico’s rapidly growing role as a major trading partner of the United States could provide a treasure trove of solutions to some of the toughest challenges facing the United States. These include managing peaceful competition with China, defusing the political crisis over immigration, and renewing America’s status as a positive-sum actor for the 21st century.
For a country that declared de facto domination of the hemisphere with the Monroe Doctrine dating back to the early 19th century, the United States has long been strangely indifferent to the economic health of the American world to its south. Putting aside the 1994 North American Free Trade Agreement, to find a policy that engages Latin America with real economic or political impact, we have to go back to the Kennedy administration and its Cold War-driven Progressive Alliance.
America’s rivals are far more strategic in tying their economic future to their neighbors. After experimenting with a new globalization model in the 1990s by building large-scale infrastructure in Africa, China followed suit with the Belt and Road Initiative (BRI) at the beginning of the last decade. While many Western commentators were alarmed and perplexed by China’s grand entrance into Africa, something they had long taken for granted, the Belt and Road Initiative was a far more ambitious plan.
With the aim of slapping large parts of Central Asia and Western Europe along with China through the construction of huge railway, road, port and telecommunications projects as a means of integrating China ever deeper into the global economy. But at the same time, I wanted to tie all of this together more closely. Countries closely tied to China itself. In Chinese, China’s name means “Central Kingdom,” which very well sums up the Belt and Road ambitions to further elevate China to the center of the rest of the world.
Belt and Road has lost some momentum recently as China’s economy has begun to slow. But it wasn’t until Beijing’s interest extended to the far-flung shores of Latin America, considered America’s backyard, that Beijing loosened its focus on overseas infrastructure projects. Thanks to its economic structure and strategy, China has been able to accumulate trade surpluses with most of the world every year.
Something has to be done about this surplus, and investments in Africa, the Belt and Road, and expansion in Latin America are key parts of the strategy. China is not just amassing trillions of dollars in rapidly expanding wealth by trading in U.S. debt, it is also seeking to profit from global infrastructure development. When this works well, the benefits extend well beyond the balance sheet.
Beijing’s global construction boom and lending programs have arguably turned China into the largest provider of so-called public goods, just as Washington did after World War II. The United States is often touted as an indispensable nation, but that claim has long been made in economic terms. In recent decades, Washington’s main business has been brokering and guaranteeing some form of security. Although most Americans seem to be largely unaware of this, a growing number of people across large swaths of the world view the relationship with China as primary in economic matters.
How does all this relate to the new Mexican trade data? From a rational and objective demographic and economic perspective, America’s ongoing panic about immigration is unfounded. The United States is in no danger of becoming an overpopulated nation. It has had the best employment data in half a century, meaning immigrants are not taking jobs away from citizens. On the contrary, they play an important role in economies without which it would be difficult to sustain recent rapid growth. This means jobs on farms, in factories, and in all kinds of service industries, from food preparation to health care and nursing care.
Continuing to update the U.S. population through immigration is equally important to the nation’s fiscal health. Like most wealthy countries, birth rates in the United States are continually declining. Immigrant populations tend to be younger, and these young people are looking for jobs. They pay taxes as they gain employment, which funds the retirements of millions of American baby boomers who are out of the full-time workforce.
It is self-inflicted to think of the United States and Latin America as completely separate territories that can effectively prevent the movement of people from the South to the North. We live in not just a contiguous geography, but a contiguous reality, and no matter what this administration or future administrations do on our southern border, Latin Americans will continue to head to the United States. Dew. There are many established relatives.
Moreover, numerous studies show that encouraging, or at least tolerating, large-scale migration flows is the most effective known way to reduce global poverty and inequality. In other words, it’s a kind of public good, a way for America to continue to be a leader as a nation, to continue to do good by doing good.
Finally, as the American population continues to age, the U.S. economy will eventually seek more immigrants, giving neighboring Latin America a significant competitive advantage over even more rapidly aging China and Western Europe. It would be considered that there is an advantage. Europe is engulfed by an even stronger current of anti-immigrant sentiment than the United States. Much of it appears to be based on narrow-minded and anachronistic views of race and civilization on the African continent, fueling fears of black immigrants from Africa and Muslim immigrants from some neighboring regions. China has long been a net exporter of human resources, with little experience or prospect of large-scale immigration.
Although it may be difficult to imagine now, American public opinion will eventually recognize this reality. Why not take action now and stay ahead of the curve?
The way to do that is through a large-scale economic initiative that connects the United States and Latin America. This need not include exactly the same mechanisms that China has adopted for the Belt and Road initiative, but it must be consistent with Beijing’s recent ambitions. Washington needs to come up with big new ways to engage with the global South economically to boost Latin America’s prosperity and transform its economy into a place of greater hope. This must be innovative and sustainable, mobilizing capital investment and promoting the spread of manufacturing and innovation to America’s neighbors.
Miracles don’t happen overnight. This only works for decades. Therein lies the greatest potential for moderating, rather than stopping, the flow of migration from the south to the north. The economic transformation of the American South also means the transformation of the workforce through much better education, much higher skills, and the development of high value-added activities that raise income levels. And as all of this happens, something will start to happen to the immigrants that continue to flow in from these countries. They will arrive with the ability to contribute increasingly and dramatically to America’s own economic growth and prosperity.
There’s yet another bonus here. It’s kind of a bank shot. If Latin America became economically active, as Mexico is doing, it could be much easier for the United States to avoid risks in its economic relationship with China. This is not an argument for isolation or disengagement, but rather a gradual, step-by-step diversification of America’s economic relationships away from its biggest trade rival.
Several objections come to mind. First of all, it’s unrealistic. But those who doubt this ask themselves whether the neglect and inertia that have characterized U.S. economic relations with Latin American countries in recent years is realistic for the parties involved, or even remotely good. Should. The view here is no.