To readers who missed my column last week, I must explain. Representative Noel Campbell and I were in Mexico as part of the largest Legislative Delegation from Arizona ever to make an official visit. Traveling against the backdrop of the reopening of NAFTA trade negotiations and the publicity surrounding President Trump's pardon of Sheriff Joe Arpaio, our visit was intended to foster understanding and stronger trade relations between Mexico and Arizona. Along with 26 state legislators and guests including Corporation Commissioner Andy Tobin, Prescott civic activist Mary Beth Hrin, Arizona Chamber of Commerce President Glen Hamer, and former Congressman Barry Goldwater Jr., we met with national political leaders in Mexico City before journeying to the industrial heartland of Guanajuato.
For readers who have not traveled in Mexico recently or only know the country from the border areas, Mexico today is far from the Mexico of even a few decades ago. What we saw over our five day visit is a rapidly growing industrial powerhouse with modern infrastructure and gleaming new industrial parks. The dysfunctional narco state sensationalized by the media was nowhere in evidence. The Mexico City Metro Area with a population of 22 million is the largest city in the Western Hemisphere and continues to be a magnet for jobs and economic opportunity. The state of Guanajuato, like Arizona, is landlocked. A short two decades ago it was primarily an agricultural and mining region. But by developing new roads and rail links to the Atlantic and Pacific coasts, and cultivating a civic culture friendly to trade, it has created over 50 industrial parks employing tens of thousands of workers and become a manufacturing base for many of the worlds tops companies. Ninety percent of Guanajuato's trade is with the United States, most of which enters duty free under NAFTA thru Arizona and Texas.
Over the last two decades, the GDP growth of Guanajuato has averaged 6% compared with 2% in the United States. During the Great Recession, when the US economy was contracting and unemployment climbed to 10%, Guanajuato continued to grow. When economic nationalists speak of outsourced American manufacturing and a shrinking middle class, think of Guanajuato.
This remarkable growth has been fueled by a state government that does not impose a personal income tax. Government services are funded thru a variety of business and consumption taxes. The labor force needed to fill their growing manufacturing base depends on a system of free public education---thru the 9th grade. Higher education is available at public expense for those with talent and ambition and there are many private institutions as well. But unlike American public schools, Mexico takes the position that public education is designed to teach skills that lead to a job and economic self sufficiency.
There is a growing perception in the United States that we are slipping and other countries, including Mexico, in particular, are growing at our expense. In the 23 years since NAFTA, the American middle class has shrunk. Many working class Americans have watched their well paying manufacturing jobs vanish and their standard of living decline. During this time the Mexican middle class has grown dramatically and standards of living have improved.
In attempting to renegotiate NAFTA, President Trump recently told a cheering audience in Phoenix that "We're working right now on NAFTA, the horrible, terrible NAFTA deal that took so much business out of your state and of your cities and towns..." (WSJ , A9, September 2, 2017).
Surely there is more to our national decline than NAFTA. The changing demographics of our country--the immigration that was supposed to enrich us---has likely played a role in hollowing out and ghettoizing our cities, dumbing down our schools and public institutions, increasing welfare dependency and filling our prisons with angry, alienated and hopeless people.
But there is a silver lining in NAFTA and the contribution it has made to improving living standards south of the border. A prosperous Mexico supports American prosperity. Guanajuato, with its expanding factories, does not send economic migrants streaming across the border.
For decades America has made a fatal miscalculation in its foreign policy. Instead of investing in our neighbors, we have squandered our treasure in a futile attempt to bring stability to the Middle East. We need little from the rest of the world. All the natural resources we need to thrive, including oil, are available in the United States or other countries of the Western Hemisphere.
Illegal immigration from Mexico and central America, driven by economic forces, has irrevocably changed the demographic destiny of the United States and Arizona. I cannot help but wonder how this might have turned out differently if we had invested our wealth in the economic development of the Americas. Raising the living standards of our neighbors would have reduced economic incentives to cross the border illegally. In the attempt to secure the borders of Middle Eastern countries who have fought each other for millennia, we left our own borders unsecured. Today we reap the bitter harvest of this mistake. The streets of Phoenix are now filled with the angry voices of ethnic and cultural resentment.
Is this not how nations fail – not from external conquest, but thru internal discord?