BajaNomad

Mexico's Growing Middle Class

Iflyfish - 3-18-2012 at 09:45 AM

http://www.washingtonpost.com/world/mexicos-middle-class-is-...


Iflyfish

CortezBlue - 3-18-2012 at 10:05 AM

Quote:
Originally posted by Iflyfish
http://www.washingtonpost.com/world/mexicos-middle-class-is-...


Iflyfish



Very interesting read.

Kalypso - 3-18-2012 at 10:17 AM

The same information is covered in great detail in the book Maņana Forever? by Jorge Castaņada

bonanza bucko - 3-18-2012 at 10:22 AM

The Mexican middle class is growing whie ours is shrinking.....wonder why?

BB

Iflyfish - 3-18-2012 at 10:23 AM

I have spent considerable time in Queretaro and recently in Panama and can attest to the growth of the middle class in both countries and in conversation with friends in both places it is clear that this trend exists throughout Latin America.

The unknown is whether or not the growing Mexican middle class can address the underlying structural problems of corruption and nepotism that exist on all levels of government and commerce. If it is not able to do so then the current boom will be self limiting. In the mean time it looks to this writer that Latin America is a good place to be investing.

I think that Baja is a bit late to the table but one can certainly see the huge influx of consumer goods now available and the improved quality of Mexican produced goods.

A major problem of course is the ongoing battle between the cartels for lucrative trade routes. It would appear to this writer that either a compromise with the government, a process that would no doubt involve picking winners and losers in this turf war, or legalization of drugs in the US, a third rail politically, would be the only real game changers in the current wack a mole game being played out on Mexican streets. The outcome of this will also have a major affect on commerce and safety in Mexico.

The cartels have huge quantities of cash that could be infused into legitimate enterprise if some solution can be achieved. As long as the economy of drugs is underground it is difficult to tap in some other way besides laundering, a very wasteful enterprise as witnessed by the abandoned building projects in Baja.

Iflyfish

Iflyfish - 3-18-2012 at 10:30 AM

Wonder why Latin America is booming while the US struggles?

In WWII the US and it's allies had destroyed the production capacity of the two great powerhouses in the East and West, Japan and Germany. There was therefore little competition for the goods and services produced in the USofA. The USofA engaged in numerous wars, an arms race and deregulated the banks and wall street so that a massive house of economic cards could be built in a time of decreased manufacturing base. NAFTA has also opened up trade as never before and now Mexico is free to engage in the manufacture of goods that it was not by treaty allowed to do.

The USofA will rise out of this near Depression and will be leaner and more productive and will continue to produce quality goods that will continue to be in high demand. Innovation is still a very strong suit for the USofA

Iflyfish

bonanza bucko - 3-18-2012 at 11:04 AM

I agree with all of that, Flyfish.

Here in Baja we are seeing the natural product of decent transportation which is being produced by the new road from Puetecitos to Gonzaga Bay. New and quality building...not the start and then abandon building of the Mexican past....is sprouting up all over the place and there is at least the strong expectation of prosperity in the population. As you said, however, that will come only if the "commerce" is not drugs.

Last spring we flew from Frankfurt, Germany to Athens, Greece over the Balkans. Looking down at those sad lands you could see poverty and the reasons for it....the road all were crooked, unpaved and hard to use....they followed the canyons and river beds and the distance between towns was pretty much doubled from the "as the crow flies" distance. It was obviouls that the "leadership" there cared not one bit about the people who lived there.

BB

Bajatripper - 3-18-2012 at 05:34 PM

Quote:
Originally posted by Iflyfish
Wonder why Latin America is booming while the US struggles?

In WWII the US and it's allies had destroyed the production capacity of the two great powerhouses in the East and West, Japan and Germany. There was therefore little competition for the goods and services produced in the USofA. The USofA engaged in numerous wars, an arms race and deregulated the banks and wall street so that a massive house of economic cards could be built in a time of decreased manufacturing base. NAFTA has also opened up trade as never before and now Mexico is free to engage in the manufacture of goods that it was not by treaty allowed to do.

The USofA will rise out of this near Depression and will be leaner and more productive and will continue to produce quality goods that will continue to be in high demand. Innovation is still a very strong suit for the USofA

Iflyfish


Your summation is interesting and I'm in agreement with most of it (although I would have mentioned that our allies manufacturing base was also destroyed, but you imply it when you mention the US alone emerged from WWII with its industrial infrastructure intact).

But I am curious about those treaties that have kept Mexico from pursuing its manufacturing potential until NAFTA came along. Which would those be?

I'm also wondering about the quality goods the US will continue to manufacture once this most recent economic crisis is resolved since the empirical evidence suggests otherwise if we continue to follow our current trade policies.

Bajatripper - 3-18-2012 at 06:04 PM

Quote:

...to Athens, Greece over the Balkans. Looking down at those sad lands you could see poverty and the reasons for it....the road all were crooked, unpaved and hard to use....they followed the canyons and river beds and the distance between towns was pretty much doubled from the "as the crow flies" distance. It was obviouls that the "leadership" there cared not one bit about the people who lived there.

BB


Actually, what ails those regions has little to do with crooked roads following rivers and much to do with the current world economic order--but I agree that their leadership has helped much in the process of getting to where they are today. International power brokers (often called "investors" or "transnational corporations") look for local elites (or often, promote their own among the local people) who can be recognized as the leaders of a given region/people by the powers-that-be and are then used to assist in raping the lands/local economy while enriching these local elites and, of course, their international sponsors. But such exploitations are never sustainable, and we are now witnessing in those regions what such "development" produces as its end result.

In fact, such economic theories as Dependency (Andre Gunder Frank) or World Systems Theory (Emmanuel Wallerstein) point out that when transnational corporations go into developing nations, one of the first things they do (right after coopting the local elites) is improve the infrastructure connecting sources of raw materials with newly-built port facilities. We saw this in Mexico in the early 1900s when a rail road was built to connect the heartland of the nation's raw resources to our own southern border. President Marcos of the Philippines had a brutal 20-year dictatorship thanks to this arrangement, too. His chief international sponsor: the US government.

What is best for the local people is NEVER taken into consideration in this type of development model. Any benefit they get out of it is nothing more than a happy coincidence.

805gregg - 3-19-2012 at 08:30 AM

You have to remember in Mexico earning $7000 a year is considered middle class.

mes1952 - 3-19-2012 at 08:59 AM

If you have any doubt about the Mexican middle class buying power, just go across the border to the Costcos, Walmarts, Petcos, Petsmarts, etc. and you find that there are more Mexicans buying more products than Americans. I live in a middle class apartment building in Rosarito and half the tenants/owners are Mexican. And most tourist destinations here in Baja are frequented more by Mexicans than Americans.

J.P. - 3-19-2012 at 09:13 AM

Quote:
Originally posted by 805gregg
You have to remember in Mexico earning $7000 a year is considered middle class.




7,000dls.




In Mexico maybe, Its hard to compare Baja to the Mainland.
I have lived in Baja N. for almost 9 years.
Every time I go shopping I notice the local population out shopping and it's impresive the monies they have at thier disposal . If I had to live on 7,000 a year It would be possible.
I find it hard to accept the attitude of some that compare the U.S. living standard to that of a foriegn country. it,s unrealistic and not fair to the people of that land
Just stop and think why is their money worth more or less than yours. and go from there.

805gregg - 3-19-2012 at 06:42 PM

Did you ever think that it might be the trickle down effect of the narco drug trade? Australia is booming, they are mining in western Australia for the Chinese, some 5 billion invested by the Chinese. So a guy driving a mining dump truck is making about $10,000 per month, he buys, houses, cars, services,etc., that money eventually makes it to the east coast, they have more money to spend, etc. Is the narco money helping to drive the Mexican surge? I spent a few days in Mazatlan a couple of years ago, we were one of 2 US couples at the beachfront resort. The rest were alligator shoes and belt wearing Mexicans, all driving large SUV's, middle class or drug money?

[Edited on 3-21-2012 by 805gregg]

Bajatripper - 3-19-2012 at 10:21 PM

Quote:
Originally posted by 805gregg
Did you ever think that it might be the trickle down effect of the narco drug trade?


Yes, all the time.

Iflyfish - 3-19-2012 at 10:54 PM

This addresses the issue of how treaties, trade policies, etc. have affected the history of trade between the US and Mexico prior to NAFTA. It's a new ball game.

http://american-business.org/536-maquiladoras.html

Iflyfish

MitchMan - 3-20-2012 at 10:16 AM

I read once that La Paz has the highest per capita income in all of Mexico. Compared to 12 years ago, I am seeing more and more new big cars on the streets of La Paz. Calibur of cars in the parking lots and on the streets of La Paz don't look much different that those in the US. In La Paz, they are building more and more retail stores than ever before, certainly at a higher rate than in Orange County, California.

Bajatripper - 3-20-2012 at 01:29 PM

Quote:
Originally posted by Iflyfish
This addresses the issue of how treaties, trade policies, etc. have affected the history of trade between the US and Mexico prior to NAFTA. It's a new ball game.

http://american-business.org/536-maquiladoras.html

Iflyfish


Yes, it is as I remember from my readings. Mexico wasn't prevented from industrializing because of trade treaties signed with other nations. They DID industrialize; it was called Import Substitution Industrialization (ISI). They were trying to compete with manufactured items from (most notably) the US. Since they couldn't do it with a quality product, they tried to compete through pricing. Protectionistic legislation was passed that made imported items much more expensive than what was made in country. The result was a market for the rich (imported items) and a market for the poor.

Of course, now, with open borders and all that, the two-market system is taking place at the source; manufacturers produce products for developed nations and products for developing nations. The Nissan vehicles produced in Mexico for the home market have little in common with those made to be exported from Mexico. For instance, the engines tend to be less performance-oriented and more utilitarian, using push rods instead of overhead cams. The stereos, refrigerators, etc that are destined for the first world are a better product than what is sold locally. What I find most interesting is that the price I pay for first-rate merchandise in the US is about the same that I would have paid for an inferior product in Mexico. Rich people still have the option of importing their own stuff from abroad.

I won't even start with what is wrong with the NAFTA treaty, that's a whole 'nother subject. Lets just say that we have returned full circle to the era of the Porfiriato, and it will likely end similarly.

[Edited on 3-20-2012 by Bajatripper]

Bajahowodd - 3-20-2012 at 02:44 PM

Some interesting and perceptive comments in this thread.

From my perspective, there may well come a time in the not too distant future when the wealth of Mexicans and that of the US intersect, as one declines and the other increases.

Everyone in the world needs "stuff". Someone has to make that stuff. In the past few decades, as manufacturing has increased in Mexico, it has continued to decline in the US.

Fact is that the US middle class was late to awaken to what was happening, as jobs were continually being shipped offshore, simply because to artificial housing and real estate boom (bubble) allowed people to substitute this ephemeral wealth for real wealth.

Barry A. - 3-20-2012 at 03:04 PM

"real wealth"??? So, Howard, are you stocking up on Silver and Gold? ;)

Barry

J.P. - 3-21-2012 at 08:41 AM

A few weeks ago I was in Ensenada shopping , we were at the Levi store , and I was shopping for a Levi jacket, which they didnt have. The clerk a nice young man that spoke better English than I do told me that Levi's are now made in China and were harder for them to get, but that had all changed as of a few weeks before and now they could import directly from China.