A damn good case of the Mexicali Blues
Nicholas Kristoff wrote and Op-Ed in the New York Times last Sunday that stated that 2016 was the best year for Humanity….ever. And that 2017 is on track to be even better than that.
As a Unitarian Universalist, and as a person deeply committed to being compassionate in all my actions in the world, I have been thinking a lot about Kristoff’s article. If you did not read the article here are some quick facts.
1) In the early 1980’s 40% of the world lived in extreme poverty (less than $1.90 per person a day). Today, less than 10% live in extreme poverty
2) Until the 1960’s, over 50% of humans were illiterate, today 85% of adults are literate.
3) Every day, about 250,000 people will graduate from extreme poverty.
How did this happen? I don’t know. I know that technology has something to do with it. I know that education has something to do with it. But I think the biggest factor would have to be free trade. The cell phone in your pocket brought someone in China into the middle class. That shirt you are wearing brought someone in Bangladesh out of extreme poverty. This thought has been quite profound for me. For many years I thought that buying clothes from “Third World” counties was a negative – the people were being paid so little and the conditions were so poor. Yes, it’s true that there is exploitation is these places, but exploitation is a side effect of Capitalism and it is certainly not restricted to just the Third World. Based on the statistics that Kristoff presents, the rich folks (that would be you and me) have somehow changed the world and made it a better place for all to live. Congratulations.
But we are now in a time where our leaders are looking to stop the flow of goods and services across our borders in an effort to recapture the manufacturing jobs that once existed here in America. Let’s look at the Trump tariff on Mexico. I like to use small, local examples to illustrate my point, so I would like to introduce you to Pete and Kim Erskine, owners of a chain of stores called Mexicali Blues. As stated on their website, it all started in 1988 when they got “a trove of funky, handmade clothes and accessories during a post-college ramble through Mexico and Guatemala”. They now own six shops in Maine and New Hampshire.
So let’s use their business to illustrate what happens. Pete and Kim buy a lot of goods for $5,000 from a Mexican vendor who produces those woven pull over shirts that are rather warm (you know the ones I mean). As stated in Forbes magazine, “The people who pay tariffs are the people who buy the goods which tariffs are imposed upon”. That means that Pete and Kim will pay the US government $1,000 over the price the vendor charges for the product. Next, they will add 20% to the cost of the shirts here in their Portland store. So… who pays for the wall?
The sad side of this discussion is that the shirt you are wearing - the one that you bought at Macy’s or Walmart or from Land’s End - will still be cheaper if made in Bangladesh vs made in America. And regardless of your political position on free trade, you are going to buy the cheaper shirt. It’s not Mexican shirts that this is about, you say…well, that IPhone is going to cost you a lot more in the future if Trump has anything to say about it, and it will still be cheaper than one made here.
So…stuff will be more expensive, there will be few if any new jobs developed here in America, and we will all pay a lot more to the government for the imported goods and services that we purchase.
But I want to look at this from the human side. Why would we, who live in what is considered vast luxury, willfully hurt those struggling entrepreneurs in Mexico, Bangladesh or China? We Americans taught these people how to make a living through Capitalism. And even though the tariffs will dampen the growth of industries in other countries, there is no stopping it. No amount of import tax will stop people who have learned how to “make a buck” from doing so. It’s like trying to hold back the sea.
The really awesome development in all this is the literacy of the world coupled with technology. With 85% of the world now able to read, and many of those newly educated people now have a device in their pockets that will give them access to all the world’s ideas, literature, art, music and culture, we are looking at a World Renaissance that will make what happened in Europe look like a walk in the park.
So cheer up. Things are not as bad as we thought. And we will have the ability to reverse what this truly dangerous president is doing now. The arc of history is long....