Mexico's Answer -- And Ours? Communism

Andres Manuel Lopez Obrador, the leftist candidate for Mexican president, says mass emigration to the United States is a disgrace -- and he blames outgoing President Vicente Fox's administration:

"They are the ones mostly responsible for what is going on because there is no employment, there are no jobs in Mexico so people need to emigrate," Lopez Obrador said on his morning television show."

He said Bush's plan, announced on Monday night, to deploy up to 6,000 National Guard troops to help secure the Mexican border would not end the flow of illegal aliens.

"It is not the solution. It is not an alternative but it is a disgrace for us Mexicans because of the irresponsible rulers of this country," the leftist said.

Fox, a conservative, has not lived up to a campaign promise to create 1 million jobs a year and oil-rich Mexico's economy has grown only slowly in his 5 1/2 years in office, although it is expanding rapidly this year.

If Obrador had only stopped there, he might have found some allies here in the States. Instead, he rolls out the tired leftist ideology of pumping government dollars New Deal-style into the Mexican economy. Of course, it won't be money from his government. Instead, Uncle Sam gets to pick up the tab.

But he said Washington also needs to help Mexico economically if it is to stem the illegal immigration which has mushroomed in recent years.

"The relation we should have between nations and governments is a relation marked by cooperation for development. They need to contribute so that there is development in Mexico," he said.

Of course, the real issue in Mexico is the culture of corruption that permeates the government and business. Until true reform is enacted, foreign capital will steer clear of the country. When people write articles about your business climate, the Chamber of Commerce doesn't want it to be headlined "Greasing Palms."

Wei found that reducing the level of corruption from the Mexican level to that in Singapore would have the same effect on foreign investment as reducing the tax on capital income by 50 percentage points. In other words, corruption reduces foreign investment as much as a tax that takes half of net income!

This does not mean that corruption in Mexico in fact does take half of net income. Wei showed in another paper that unpredictable corruption is more harmful than routine corruption with a steady cost. Part of the stifling effect of corruption on the economy comes through the uncertainty and insecurity it forces on businesses, above and beyond the financial cost.

Mexico has significant oil reserves. Yet when I was in the business, it had to ship the crude to Texas for refinement then import it back in -- simply because none of the world's major oil companies would build plants there. It was too costly -- i.e. the payoffs were higher and the threat of nationalization too great compared to the financial rewards.

So bring on the leftists in Mexico, and watch them run the country further into the ground -- much like Chavez has done in Venezuela -- by continued nationalization of the oil and gas industry and corruption. The key to an improved Mexican economy is not New Deal "economics." Instead, it is economic liberalization and creating a climate conducive to international investment.

Mexico does not have the expertise nor the cash to take advantage of its oil reserves. If it would open this area to foreign investment, it could not only provide jobs and additional tax revenue, but also turn the infrastructure improvements over to private entities. The government could then spend its money on bolstering education and other social programs that would keep its citizens from fleeing north.

Of course, the Mexicans could always choose to install the near-communist Obrador, since the pinkos ... as I wrote here on May Day ... have a history of building walls -- to keep their people in.

It would certainly save us the trouble of building one to keep them out.