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Did NAFTA lift millions out of poverty or feed the flood of illegals into the US?
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WYDave
Posted 1/29/2007 13:26 (#96067 - in reply to #95091)
Subject: RE: Did NAFTA lift millions out of poverty or feed the flood of illegals into the US?


Wyoming

It wasn't NAFTA, per se, that resulted in the flood of illegals post-'94. It was the attending devaluation of the peso.

One day, most middle-class Mexicans were enjoying a reasonable life.

Then NAFTA passes and within a few months, the peso plummeted in value to about 50% of pre-NAFTA buying power. In time, the collapse would worsen. Foreign investors yanked their money out of the Mexican stock market and capital-intensive investments in Mexico. Then the IMF stepped in and things really went sideways.

The reasons for the collapse aren't to be found entirely within NAFTA. There were many political issues in Mexico which attended the peso collapse.

What NAFTA did do, however, was put the Mexican worker in a situation where his one viable option was clear: he could stay in Mexico, getting paid for work in money that was rapidly becoming worthless, or he could cross the border, get a job and get paid in a relatively stable currency, send that currency back home (easily, thanks to NAFTA making cross-border transactions easier than ever), where it would be translated into a rather amazing pile of increasingly worthless currency, but a big enough pile so that his family could live.

What NAFTA did do was quickly reverse the flow of trade across the US/Mexican border and suddenly made it not only profitable, but absolutely necessary for Mexico to export everything they had to keep their heads above water: oil, food, goods, people.

One "good" thing that came of NAFTA and Mexico's experience with same: other small nations looked at how these free trade deals work and how the IMF works and when their currencies collapsed, they refused IMF aid. Without IMF meddling, these nations were back on their feet faster than neighbors who took IMF bailout money. 

 



Edited by NVDave 1/29/2007 13:37
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