Tournament: Blake | Round: 2 | Opponent: Marquette CV | Judge: Jon Sussman
Plan
The United States Federal Government should enforce formal labor requirements within Mexico under the North American Free Trade Agreement.
Inherency
The North American Free Trade Agreement, also known as NAFTA, is primarily responsible for the large informal workforce in Mexico.
Ghosh et al, 9
Tilottama Ghosh PhD, Research Associate with Earth Observation, University of Colorado Boulder, Sharolyn Anderson PhD Professor at University of Denver, Rebecca L. Powell, Professor at University of Denver, 2006 PhD, geography, University of California-Santa Barbara, Paul C. Sutton Professor and Director of Graduate Studies, Department of Geography and the Environment at University of Denver and Christopher D. Elvidge National Oceanic and Atmospheric Administration, National Geophysical Data Center, USA, Quantitative Social Research “Estimation of Mexico’s Informal Economy and Remittances Using Nighttime Imagery” Remote Sens. 2009, 1, 418-444; Published: 18 August 2009DoeS
A visible manifestation of informal economy is an increase in the number of street vendors in Mexico City, rickshaw pullers in Calcutta, barbers, cobblers, and vendors selling an increasingly diverse array of products including vegetables, fruit, dead fish, live chickens, cell phone batteries, and cigarettes. A less visible manifestation of this process are the informal workers who work in small shops or workshops (e.g., workshops that repair bicycles and motorcycles, tan leather and stitch shoes, make and embroider garments, sort and sell cloth, paper and metal waste). The least visible informal workers are mostly women who sell or produce goods from their homes, garment makers, paper bag makers, embroiderers, food processors, incense stick rollers, domestic laborers, and others 5. This increased participation in the informal economy is associated with neoliberal policies such as the North American Free Trade Agreement (NAFTA). Mexico was selected as the country of study in this paper because in the past quarter century Latin American countries have adopted these neoliberal doctrines (General Agreement on Tariffs and Trade, NAFTA, and World Trade Organization membership) almost universally, and this has had profound repercussions on the livelihoods of those who live and work in cities 6. Policies associated with neoliberalism (e.g., privatization, deregulation, and trade liberalization) were expected to remove the obstacles to economic growth and result in job creation with respect to employment 7. Nonetheless, these neoliberal reforms have had two primary consequences that many consider negative: 1) downsizing of the role of the state, 2) reduced employment in the traditional public sector, and 3) creation of more temporary, low wage and unprotected (i.e., informal) employment 8-10. Thus, in the past two decades, men and women in cities throughout Latin America have increasingly taken up informal work as a livelihood strategy 10,11. Informal economic activity, although a continuum of formal economic activity, has been recognized as a distinct economic sector throughout this paper because of its place of significance in the Mexican economy.
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Poverty (1/6)
The vast majority of Mexicans live in abject poverty- there is little middle class, despite misleading reports defining “poverty” artificially low.
Ramsey 7/30
Geoff Ramsey is a researcher for the Open Society Institute's Latin America Program. He has also worked as a researcher and writer for InSight Crime, a think tank dedicated to tracking organized crime and corruption in the Americas.TUESDAY, JULY 30, 2013 “45 of ‘Middle Class Mexico’ Lives in Poverty” http://panamericanpost.blogspot.com/2013/07/45-of-middle-class-mexico-lives-in.html//DoeS
Although it is becoming increasingly popular to describe Mexico as a middle-class country, official statistics suggest this is inaccurate. Recently, reports on a growing middle class in Mexico have become more and more common in the U.S. Analysts have proclaimed that Mexico’s “tenacious middle class is fast becoming the majority,” the country is approaching a “middle class society,” and even that its citizens are “becoming too bourgeois to cross illegally into the United States.” Although definitions of “middle class” are frequently tied to cultural identification, in economic terms the evidence that for this phenomenon is mixed at best, as illustrated by two recent reports. In June, the National Institute of Statistics and Geography (INEGI) released an analysis which found that the middle class accounted for roughly 39 percent of the country’s 112 million people, only a four percent increase since 2000. While the report did not establish clear criteria for its definition of middle class, it did say that in general middle class households have a credit card, at least one member who is formally employed, and are headed by a high school graduate. By contrast, some 60 percent of population belonged to the lower classes in 2010, according to INEGI. Yesterday, Mexico’s National Council of Evaluation of Social Development Policy (CONEVAL) published a report which put economic inequality in the country into further perspective. El Universal reports that CONEVAL found that from 2010 to 2012 the number of people living in poverty rose from 52.8 to 53.3 million. The organization defines poverty as lacking welfare or employment, and making less $120 a month in rural areas or $186 in urban areas. Perhaps even more jarring to the middle class narrative is the variation of poverty across Mexico’s 32 states. Animal Politico has a graphic showing that 11 of these have populations in which the majority fall below the poverty line. In three states (Chiapas, Guerrero and Puebla) more than two-thirds of residents meet this definition. While -- as Reuters and La Jornada report -- in percentage terms the number of Mexicans living in poverty during this period actually reduced slightly (from 46.1 to 45.5 percent) and the number living in extreme poverty fell from 13 to 11.5 million, it’s clear from these figures that the country has a ways to go before it even approaches the middle class ideal.
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Poverty (2/6)
A large informal economy makes it impossible for a middle class to sustain itself and keeps the majority of Mexicans in third-world conditions.
Aguila et al, 12
Emma Aguila, Ph.D. in economics, University College London; M.Sc. in economics, University College London; B.A. in economics, Instituto Tecnológico Autónomo de México (ITAM), Alisher Akhmedjonov, Assistant Professor of Economics Zirve University Gaziantep, Ricardo Basurto-Davila, Ph.D., is a health economist at the Los Angeles County Department of Public Health. Krishna B. Kumar, Ph.D. in economics, University of Chicago, Sarah Kups, Ph.D. candidate in policy analysis, Pardee RAND Graduate School; M.A. in economics and international relations, University of St Andrews; M.Phil in economics, University of Cambridge and Howard J. Shatz Ph.D. in public policy, Harvard University; M.I.A. in international policy analysis and management, Middle East studies, School of International and Public Affairs. United States and Mexico: Ties That Bind, Issues That Divide. Santa Monica, CA: RAND Corporation, 2012. http://www.rand.org/pubs/monographs/MG985-1.//DoeS.
A large informal sector, which avoids paying taxes, is another reason for Mexico’s low tax collection. Studies by INEGI show that informal activity accounts for about 20 percent of the profits generated by the economy. A study by the International Monetary Fund (IMF) (2006a) found that the informal sector represents more than 50 percent of the economically active population (EAP). About 30 percent of nonagricultural jobs are in the informal sector, with the service sector employing the greatest number of workers. Tax Policy Reform A marked increase in nonoil tax revenue cannot be expected without significant fiscal reform. In September 2007, Mexico enacted new tax reform to improve corporate tax collection and take a first step toward eventually eliminating the more complex traditional corporate income tax system. The bill proposes an alternative flat tax on business, known as the Flat Rate Business Contribution (Contribución Empresarial de Tasa Única, or CETU). Starting at a rate of 16.5 percent in 2008, the CETU rose to 17.0 percent in 2009 and to 17.5 percent in 2010. In practice, the CETU would act as a minimum corporate tax and as an alternative to the corporate income tax (that is, companies would have to pay either 28 percent minus all eligible deductions, or the flat tax, whichever is higher). The CETU eliminated the existing 2-percent corporate asset tax. One estimate (Economist Intelligence Unit EIU, 2008) indicates that the new tax system would increase federal revenues by around 2 percent of GDP by the end of 2012. Although these are important steps in the right direction, Mexico should further broaden the tax base and strengthen its tax administra- 2 Mexico, like the United States, is a democracy, and one can place Mexico’s difficulty in enacting tax reform in perspective by observing how contentious an issue it is in the U.S. Congress.80 United States and Mexico: Ties That Bind, Issues That Divide tion. Preferential regimes and deficiencies in tax administration remain the main concerns. Government officials will be hard pressed to break Mexico’s informal economy from its culture of tax evasion. Labor Market and Regulation Labor legislation in Mexico is very detailed, complicated, and outdated. Mexico’s labor regulation is contained in the federal labor law, which went into force May 1, 1970, and in Article 123 of the country’s constitution, which dates back to 1917. This legislation regulates labor contracts, minimum wages, hours of work, legal holidays, and paid vacations, among other working conditions, as well as trade unions, strikes, and dismissal compensation. As Figure 9.1 shows, labor regulations in Mexico have been among the most rigid in the OECD and emerging markets. They generally establish that the working relationship between an employer and an employee is permanent; severance payments are high. Restrictive Figure 9.1 International Comparison of Labor-Market Rigidity OECD average Chile Argentina Bolivia Colombia Venezuela Ecuador Brazil Peru Mexico SOURCE: Botero et al., 2003. RAND MG985/1-9.1 Rigidity rating (index 0–6) 0.10 0.2 0.3 0.4 0.5 0.6 0.7 0.8 MarketMexico’s Economic Management 81 hiring and firing modalities could increase the cost of labor considerably and deter entrepreneurship by keeping firms informal. Informal Economy Informal workers do not receive job benefits, such as medical insurance and retirement plans. Trade unions and social security protection are rarely found in the informal sector. Furthermore, in many largescale formal-sector enterprises, workers are often hired “off the books.” According to the IMF (2006b), around 50 to 60 percent of the Mexican working population might be classified as informal. Incentives to move into the formal sector are weak. According to INEGI data, between July 2010 and July 2011, a total of 853,778 jobs were created (nearly 60 percent of them in services), and 142,485 of them were in one-person firms. These jobs tend to be created in low productivity and low-income areas. More than 70 percent of all firms have fewer than ten employees (Antón, Hernández, and Levy, 2011). In firms with more than 51 employees, in which productivity and wages are typically higher than in other firms, 318,159 jobs were created (INEGI, undated b). One analysis of Mexican data found that, from 2001 to 2010, for every 100 Mexicans who joined the workingage population on an annual basis, only 26 found formal employment (Hussein, 2011; INEGI, undated a). We therefore see significant polarization in job creation in Mexico and creation of jobs in businesses with ten employees or more as a high priority.
Poverty (3/6)
The majority of the Mexican population is excluded from participating in and overseeing their democracy because they live in abject poverty.
Holzner 7
Claudio A. Holzner is an assistant professor of political science at the University of Utah. His research examines the impact of institutional reforms and democratization on political participation in Mexico. His research has appeared in Mobilization, América Latina Hoy, and as a chapter in the book Latin American Social Movements: Globalization, Democratization, and Transnational Networks (ed. Hank Johnson and Paul Almeida, 2006). He has received grants and postdoctoral fellowships from the National Science Foundation; the Center for U.S.-Mexican Studies at the University of California, San Diego; and the Tanner Humanities Institute at the University of Utah. “The Poverty of Democracy: Neoliberal Reforms and Political Participation of the Poor in Mexico” Latin American Politics and Society 49.2 (2007) 87-122. PMuse. DoeS
What does this all mean for democracy in Mexico? The signing of NAFTA in 1994 and the defeat of the PRI in the 2000 presidential elections were regarded by many as high points in Mexico's political development. The decline in petitioning activity among the poor documented in this study can also be interpreted positively, as a sign of the decline in clientelistic practices that undeniably subordinated the voice of the poor under authoritarianism. A closer look reveals, however, that the roots of democracy are still shallow in Mexico. The decline of corporatism in Mexico has not meant an end to clientelism, nor have autonomous organizations in civil society been capable of mobilizing the poor into politics (Holzner 2004). Though, in principle, voting is still an option, elections are losing their luster for the poor. Still missing are real opportunities for the poor to voice their preferences effectively between elections and to exercise collective control over the government decisions that affect their lives (Roberts 1999, 2). As Gutmann observes, “One noteworthy feature of NAFTA-era popular nationalism in Mexico is the heightened conviction on the part of many that they are unable to influence national politics. . . . They grow less and less optimistic about Mexico's political future and increasingly disillusioned about the nature and import of democracy in their country. . . . The reality, most feel, is that only rarely are they able to politically control their own daily lives, and even less frequently can they End Page 116 influence any political process that might conceivably be regarded as democratic self-determination in Mexico.” (Gutmann 2002, 88) We do not know yet whether these trends are a temporary adjustment or whether they signal the beginning of fundamental change in patterns of political participation in Mexico. For now, it is apparent that the new linkages between the state and citizens established as a result of the transition to a free market development model are stifling the voice of the poor not through the threat of force or sanctions, as authoritarian regimes might do, but by establishing an institutional framework that constrains people's choices and makes mobilization and demandmaking more difficult and costly. This is not to say that the poor stop looking for ways to improve their situation. Indeed, many are seeking solutions to their problems through private, nonpolitical strategies, such as taking on an additional job, engaging in street vending, migrating, or joining grassroots organizations that promote self-help and community problem solving (Gutmann 2002; Portes and Hoffman 2003). Popular politics in Mexico increasingly revolves less around big political questions of ideology and how best to influence the direction of reform—the issues that motivated social movements in the past—than around more basic, everyday issues of survival: getting access to clean water and electricity, organizing trash pickup among neighbors, gaining access to affordable housing. Though important, such activities do not transfer easily into political power or give the poor voice in political institutions and parties, where power is held and decisions are made in Mexico's democratic system. As a consequence, the voice of the poor in Mexico is heard neither loudly nor clearly, and certainly not equally, which gives policymakers little incentive to pay attention to what the poor have to say.
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Poverty (4/6)
The plan forces labor for manufacturing for trade to be regulated formally, which substantially improves working conditions, wages, labor rights, and benefits.
Aguila et al, 12
Emma Aguila, Ph.D. in economics, University College London; M.Sc. in economics, University College London; B.A. in economics, Instituto Tecnológico Autónomo de México (ITAM), Alisher Akhmedjonov, Assistant Professor of Economics Zirve University Gaziantep, Ricardo Basurto-Davila, Ph.D., is a health economist at the Los Angeles County Department of Public Health. Krishna B. Kumar, Ph.D. in economics, University of Chicago, Sarah Kups, Ph.D. candidate in policy analysis, Pardee RAND Graduate School; M.A. in economics and international relations, University of St Andrews; M.Phil in economics, University of Cambridge and Howard J. Shatz Ph.D. in public policy, Harvard University; M.I.A. in international policy analysis and management, Middle East studies, School of International and Public Affairs. United States and Mexico: Ties That Bind, Issues That Divide. Santa Monica, CA: RAND Corporation, 2012. http://www.rand.org/pubs/monographs/MG985-1.//DoeS.
Our research into the state of Mexican labor policy suggests that it is time to build on reforms enacted recently in order to meet new 21stcentury challenges. Early in his presidency, President Obama called for stronger labor rules enforceable within NAFTA (“Obama Hopeful of Fixing Truck Dispute with Mexico,” 2009). Developing greater flexibility in Mexican labor markets need not be incompatible with the U.S. president’s call if the overall aim is to provide better working conditions for Mexican labor. Several steps might be taken in this direction: Engender growth in the Mexican formal economy. Working conditions would improve for many more citizens if workers were able to move from the informal to formal economy, because there are better retirement plans and medical coverage for workers in the latter. Policies to retain individuals in the formal sector are hard to implement, but programs to generate employment and economic growth and to improve country comparative advantages are key to improving conditions in the labor market.
More evidence- NAFTA is a major contributor of jobs and the impact of the plan would be substantial.
White et al 4
Marceline White, Global Trade Director, Women’s Edge Coalition, Sarah Gammage, Economist, Centro de Estudios Ambientales y Sociales para el Desarrollo Sostenible, El Salvador and Affiliated Fellow, Center for Women and Work, Rutgers University, Carlos Salas Paez, Economist, Universidad Nacional de Mexico “NAFTA and the FTAA: Impact on Mexico’s Agriculture Sector” http://www.iatp.org/files/NAFTA_and_the_FTAA_Impact_on_Mexicos_Agricultu.pdf//DoeS
NAFTA created 5.3 million jobs both in the formal and informal sectors. The TIR uncovered that approximately 36 percent of these jobs were created in the informal sector where workers typically receive no benefits, are not entitled to vacation pay or overtime, and routinely have no contract protections. Many of the women who entered the informal sector were selling food on the streets and this "market" became flooded. Wages went down in this area considerably as a result. The remaining jobs were created in the formal sector, primarily manufacturing jobs. Women for the most part went to maquilas. While these jobs may provide increased autonomy for women, many of these jobs are lowwaged, precarious, and exist in difficult working conditions. Simply stated, these types of jobs do not enable women to pull themselves and their families out of poverty. Women work all day in the maquilas and then come home to care for the house and their children – they work a total of 18 hours a day. Moreover, to achieve the same level of income that one farmer received in 1990 prior to NAFTA, three people now have to work to achieve the same level of income– and that is with inflation included. It should also be noted that many of the new jobs created are now going to Asia. For example, an assembly line worker earns U.S. $.50 to .80 per hour in China. Her counterpart in Mexico gets U.S. $2.50 to $3.50. The jobs created by NAFTA are not long-term, stable jobs. Jobs Lost In addition, almost 1.3 million agriculture jobs were lost in Mexico due to NAFTA (1 million men and 300,000 women). The TIR discovered that these jobs were primarily small and subsistence farmers in the rural sector that worked with corn and bean production, in essence the poor. The majority of these farmers have limited education and cannot transfer their skills to the newly created jobs. Essentially, many of these people were "abandoned". In desperation, a great number of men emigrate to the U.S. in search of better jobs, increasing the number of female-headed households. Immigration increased from Mexico from approximately 350,000 per year in 1992 to approximately 500,000 per year in 2002 – 60 percent are undocumented. Data shows that they are coming from the rural agriculture sector. This can be also be correlated to an increase of poverty in female-headed households as they were left with limited job opportunities and households to run without a male bread-winner. Remittances For many of the poor, remittances from the U.S. keep them alive, but barely. Earlier privatization in Mexico caused healthcare costs to increase, so many of the remittances are being spent on healthcare leaving little money for anything else. This is not an effective development strategy and was not the goal of NAFTA. A TIR would have been able to identify these consequences before they happened and helped policy-makers plan accordingly. Although NAFTA created jobs, the truly poor in Mexico could not access these jobs, and have now become poorer.
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Poverty (5/6)
The governmental oversight and democratic participation a more middle-class population would provide is Mexico’s only hope to resolve crime, drug, violence and corruption issues.
O’Neil 9
Shannon O’Neil, Douglas Dillon Fellow for Latin America Studies at the Council on Foreign Relations and Director of the CFR task force on U.S.-Latin American relations. “The real war in Mexico: how democracy can defeat the drug cartels.” Foreign Affairs. 88.4 (July-August 2009) p63.DoeS
BRAZEN ASSASSINATIONS, kidnappings, and intimidation by drug lords conjure up images of Colombia in the early 1990s. Yet today it is Mexico that is engulfed by escalating violence. Over 10,000 drug-related killings have occurred since President Felipe Calderon took office in December 2006; in 2008 alone, there were over 6,000. Drug cartels have begun using guerrilla-style tactics: sending heavily armed battalions to attack police stations and assassinating police officers, government officials, and journalists. And they have also adopted innovative public relations strategies to recruit supporters and intimidate their enemies: displaying narcomantas--banners hung by drug traffickers--in public places and uploading videos of gruesome beheadings to YouTube. Washington is just waking up to the violence next door. Last December, the U.S. Joint Forces Command's Joint Operating Environment, 2008 paired Mexico with Pakistan in its discussion of "worst-case scenarios"--states susceptible to "a rapid and sudden collapse." In January, Michael Hayden, the departing CIA chief, claimed that Mexico could become "more problematic than Iraq," and Michael Chertoff, the departing secretary of homeland security, announced that the Department of Homeland Security has a "contingency plan for border violence, so if we did get a significant spillover, we have a surge--if I may use that word--capability." The U.S. media breathlessly proclaims that Mexico is "on the brink." This rising hysteria clouds the real issues for Mexico and for the United States. The question is not whether the Mexican state will fail. It will not. The Mexican state does, and will continue to, collect taxes, run schools, repair roads, pay salaries, and manage large social programs throughout the country. The civilian-controlled military has already extinguished any real guerrilla threats. The government regularly holds free and fair elections, and its legitimacy, in the eyes of its citizens and of the world, is not questioned. The actual risk of the violence today is that it will undermine democracy tomorrow. What has changed in Mexico in recent years is not the drug trade but that a fledgling market-based democracy has arisen. Although an authoritarian legacy persists, power now comes from the ballot box. This transformation has coincided with the rise of Mexico's middle class, which, now nearly 30 million strong, has supported more open politics and markets. But Mexico's democratic system is still fragile. And by disrupting established payoff systems between drug traffickers and government officials, democratization unwittingly exacerbated drug-related violence. The first two freely elected governments have struggled to respond, hampered by electoral competition and the decentralization of political power. Yet in the long run, only through true democratic governance will Mexico successfully conquer, rather than just paper over, its security challenges. For the safety and prosperity of Mexico and the United States, Washington must go beyond its current focus on border control to a more ambitious goal: supporting Mexico's democracy.
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Poverty (6/6)
Systemic violence must be given priority. Ignoring it results in a mindset of “sacrificial genocide” that will result in extinction.
Santos 3
Professor of Sociology at the University of Coimbra Boaventura de Sousa, March 28, 2003 “Collective Suicide?”, http://www.ces.uc.pt/opiniao/bss/072en.php//DoeS
According to Franz Hinkelammert, the West has repeatedly been under the illusion that it should try to save humanity by destroying part of it. This is a salvific and sacrificial destruction, committed in the name of the need to radically materialize all the possibilities opened up by a given social and political reality over which it is supposed to have total power. This is how it was in colonialism, with the genocide of indigenous peoples, and the African slaves. This is how it was in the period of imperialist struggles, which caused millions of deaths in two world wars and many other colonial wars. This is how it was in Stalinism, with the Gulag and in Nazism, with the holocaust. And now today, this is how it is in neoliberalism, with the collective sacrifice of the periphery and even the semiperiphery of the world system. With the war against Iraq, it is fitting to ask whether what is in progress is a new genocidal and sacrificial illusion, and what its scope might be. It is above all appropriate to ask if the new illusion will not herald the radicalization and the ultimate perversion of the western illusion: destroying all of humanity in the illusion of saving it. Sacrificial genocide arises from a totalitarian illusion that is manifested in the belief that there are no alternatives to the present-day reality and that the problems and difficulties confronting it arise from failing to take its logic of development to its ultimate consequences. If there is unemployment, hunger and death in the Third World, this is not the result of market failures; instead, it is the outcome of the market laws not having been fully applied. If there is terrorism, this is not due to the violence of the conditions that generate it; it is due, rather, to the fact that total violence has not been employed to physically eradicate all terrorists and potential terrorists.?This political logic is based on the supposition of total power and knowledge, and on the radical rejection of alternatives; it is ultra-conservative in that it aims to infinitely reproduce the status quo. Inherent to it is the notion of the end of history. During the last hundred years, the West has experienced three versions of this logic, and, therefore, seen three versions of the end of history: Stalinism, with its logic of insuperable efficiency of the plan; Nazism, with its logic of racial superiority; and neoliberalism, with its logic of insuperable efficiency of the market. The first two periods involved the destruction of democracy. The last one trivializes democracy, disarming it in the face of social actors sufficiently powerful to be able to privatize the State and international institutions in their favour. I have described this situation as a combination of political democracy and social fascism. One current manifestation of this combination resides in the fact that intensely strong public opinion, worldwide, against the war is found to be incapable of halting the war machine set in motion by supposedly democratic rulers. At all these moments, a death drive, a catastrophic heroism, predominates, the idea of a looming collective suicide, only preventable by the massive destruction of the other. Paradoxically, the broader the definition of the other and the efficacy of its destruction, the more likely collective suicide becomes. In its sacrificial genocide version, neoliberalism is a mixture of market radicalization, neoconservatism and Christian fundamentalism. Its death drive takes a number of forms, from the idea of "discardable populations", referring to citizens of the Third World not capable of being exploited as workers and consumers, to the concept of "collateral damage", to refer to the deaths, as a result of war, of thousands of innocent civilians. The last, catastrophic heroism, is quite clear on two facts: according to reliable calculations by the Non-Governmental Organization MEDACT, in London, between 48 and 260 thousand civilians will die during the war and in the three months after (this is without there being civil war or a nuclear attack); the war will cost 100 billion dollars, enough to pay the health costs of the world's poorest countries for four years.?Is it possible to fight this death drive? We must bear in mind that, historically, sacrificial destruction has always been linked to the economic pillage of natural resources and the labor force, to the imperial design of radically changing the terms of economic, social, political and cultural exchanges in the face of falling efficiency rates postulated by the maximalist logic of the totalitarian illusion in operation. It is as though hegemonic powers, both when they are on the rise and when they are in decline, repeatedly go through times of primitive accumulation, legitimizing the most shameful violence in the name of futures where, by definition, there is no room for what must be destroyed. In today's version, the period of primitive accumulation consists of combining neoliberal economic globalization with the globalization of war. The machine of democracy and liberty turns into a machine of horror and destruction.
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China (1/5)
There will inevitably be tension between the US and China as Chinese military and economic influence increases.
Art 10
ROBERT J. ART is Christian A. Herter Professor of International Relations at Brandeis University and Director of MIT's Seminar XXI Program. His most recent book is America's Grand Strategy and World Politics. "The United States and the rise of China: implications for the long haul." Political Science Quarterly 125.3 (2010): 359+. Academic OneFile. Web. 19 Aug. 2013. DoeS
Today, economically wounded though it is, the United States nonetheless remains the world's most powerful state when power is measured in terms of economic and military assets. In the future, the U.S. economy will continue to grow, and the United States will remain the most powerful military nation on earth for some time to come. However, America's economic and military edge relative to the world's other great powers, will inevitably diminish over the next several decades. The country best positioned to challenge America's preeminence, first in East Asia, and then perhaps later globally, is China. If China's economy continues to grow for two more decades at anything close to the rate of the last two decades, then it will eventually rival and even surpass the United States in the size of its gross domestic product (GDP--measured in purchasing power parity terms, not in constant dollar terms), although not in per capita GDP. (1) Even if its economy never catches up to America's, China's remarkable economic growth has already given it significant political influence in East Asia, and that influence will only grow as China's economy continues to grow. Moreover, having emerged as the low-cost manufacturing platform of the world, China's economic influence extends well beyond East Asia and affects not only the rich great powers but also the struggling smaller developing ones, because of both its competitive prices for low-cost goods and its voracious appetite for raw materials. China is determined to climb up the technological ladder and may well give the United States a run for its money. (2) China is already the dominant military land power on the East Asian mainland, and it has made significant strides in creating pockets of excellence in its armed forces. If it continues to channel a healthy portion of its GDP into its military forces over several more decades, and if it makes a determined naval and air power projection effort, China might be able to deploy a maritime force that could contest America's supremacy at sea in East Asia, much as the German fleet built by Alfred von Tirpitz in the decade before World War I posed a severe threat to the British fleet in the North Sea. Historically, the rise of one great power at the expense of the dominant one has nearly always led to conflictual relations between the two, and, more often than not, eventually to a war between them that has dragged in other great powers. (3) Is the history of rising versus dominant great-power competitions, including great-power war, the future for U.S.-China relations? Clearly, there will be political and economic conflicts and friction between the United States and China as China's economic and military power in East Asia and its global economic and political reach continue to expand. Clearly, there will also be some arms racing between China and the United States as each jockeys for advantage over the other, as each is driven by its respective military necessities of intimidating and defending Taiwan, and as the United States responds to China's growing power projection capabilities. Historically, dominant powers have not readily given up their position of number one to rising challengers, and rising challengers have always demanded the fruits to which they believe their growing power entitles them. There is no reason to expect that things will be different in this regard with China and the United States. Thus, they will not be able to avoid a certain level of conflictual relations and political friction over the next several decades.
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China (2/5)
Thorough analysis of US China relations reveals the only check against total collapse of relations is symmetric economic interdependence.
McCarthy 4
Mary McCarthy, PhD Columbia University in Political Science. Paper read at the Midewest Political Science Association. Peer-reviewed. "The Impact of Economic Interdependence on US-China Relations" Paper presented at the annual meeting of the The Midwest Political Science Association, Palmer House Hilton, Chicago, Illinois, Apr 15, 2004 Not Available. 2009-05-26http:www.allacademic.com/meta/p84304_index.htmlDoeS
As hypothesized, my analyses show that high levels of interdependence reduce the likelihood of high-intensity conflict in the US-China relationship. It is the interaction between salience and symmetry that produce this result. On the other hand, I cannot state with any degree of confidence that there is a relationship between interdependence and cooperation. Looking at the impact of dependence on the actions of China and the US separately, my analyses show that China is pacified by its own increasing dependence and by the interdependence of the bilateral relationship, but emboldened by high levels of US dependence. This statement cannot be said with confidence about the US. In fact, although anecdotal evidence illustrates that the US does use trade as a weapon, that use does not seem to have anything to do with a decrease in symmetry or an increase in the dependence of one’s partner. This finding, combined with the consistent lack of statistical significance when the US was the initiator of actions, suggests that the case of the US provides some support for the realist theory that, although a state will use trade to pursue its interests, economic interdependence is not a good explanatory factor when trying to explain conflict. As Russett (2003) remarks, we should be exploring how to use our analyses to create policy prescriptions that would illustrate what types of incentives would dissuade China from the use or threat of military force. My tentative conclusions are that engaging in a more interdependent relationship with China and increasing China’s economically important trade will have pacific benefits.
Here’s more evidence- symmetrical economic interdependency is key to maintain favorable US China relations.
Nye 11
Joseph S. Nye, Jr. University Distinguished Service Professor and former Dean of Harvard’s Kennedy School of Government. He received his bachelor's degree summa cum laude from Princeton University, won a Rhodes Scholarship to Oxford, and earned a Ph.D. in political science from Harvard. He has served as Assistant Secretary of Defense for International Security Affairs, Chair of the National Intelligence Council, and a Deputy Under Secretary of State. “Can China afford to downgrade the U.S.?” August 8, 2011 http://blogs.reuters.com/great-debate/2011/08/08/can-china-afford-to-downgrade-the-u-s///DoeS
But actions speak louder than words. The real test will be whether China moves away from the dollar in any significant manner. While it makes modest adjustments to its reserve holdings, there are few good alternatives to the dollar. And while it calls for an international basket of currencies to replace the dollar, there are few takers. Of course, China might move toward opening its currency and credit markets in an effort to make the yuan a reserve currency, but the authoritarian political system is unwilling and unprepared to move to that degree of economic freedom. Many commentators see the downgrading of American debt as a great shift in the global balance of power between the U.S. and China. Some wags have warned the American navy not to sail too close to China, because if the Chinese captured our ships, we would no longer have enough money to ransom them. But such jokes misunderstand the nature of power. Analysts point to China’s seemingly unstoppable growth and its holdings of United States dollars. But as I show in my latest book, The Future of Power, they fail to take into account the role of symmetry in interdependence in creating and limiting economic power. If I depend on you more than you depend on me, you have power. But if we both depend equally upon each other, there is little power in the relationship.
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China (3/5)
In the status quo, China is pushing Mexico out of the market for US manufacturing jobs, but it isn’t because their wages are cheaper. Forcing American manufacturers to pay more in wages in Mexico and follow legal avenues of employment would actually increase the amount of manufacturing companies sent to Mexico because increase in worker skill, productivity and infrastructure is perceived by American companies, according to a World Bank survey.
Robinson 10
Ian Robinson, Ph D in Political Science from Yale, professor of Sociology at the University of Michigan. Former Assistant Professor of Political Science at Reed College (Portland, OR), a Visiting Assistant Professor of Political Science at Northwestern University (Evanston, IL), an advisor on constitutional and trade policy to the Ontario government, a post-doctoral fellow at Harvard's Center for European Studies, and Assistant to the Director of Research on Federalism and Constitutional Reform for the Royal Commission on the Economic Union and Development Prospects for Canada. "The China Road: Why China Is Beating Mexico in the Competition for U.S. Markets." New Labor Forum 19.3 (2010): 51-56. Project MUSE. WebDoeS
In 1998, China and Mexico had the same share of U.S. apparel imports: 13 percent each. By 2008, Mexico’s share had fallen to 6 percent, while China’s had increased to 34 percent. This was a stunning contrast with the previous decade (1989-1998) when Mexico’s share of U.S. imports quadrupled from 3 percent, while China’s share rose by just one percentage point.1 Why did Mexico do so well against Chinese competition in the first decade and so badly in the second? Critics of neoliberal globalization, myself included, have argued that suppressing worker rights is a powerful—though ultimately self- destructive—source of international competi- tive advantage for both firms and nations.2 We have used the term “race to the bottom” as a shorthand for this argument. There is no question, I think, that the vast difference in compensation rates between the countries of the global North and countries such as Mexico and China in the global South—combined with diminishing labor productivity differences— has played an important role in gutting apparel and electronics industries in the global North. But is Mexico now losing those same industries to China because its workers are paid “too much”—that is, considerably more than China’s, though only about one tenth of U.S. wages? If so, then the race to the bot- tom (RTB) argument applies to competition among countries in the global South as well as to North-South competition. Many firms, government officials, and media pundits in Mexico make this argument. So does the World Bank when it asserts that Mexico’s labor law must be reformed to eliminate severance pay and other provisions that make Mexican labor too expensive and “inflexible.”3 Some on the left also believe in a China-driven South-South RTB.4 This version of the RTB argument doesn’t stand up to the evidence. One problem has already been noted: Mexico-based firms were beating China-based firms in the 1989-1998 period, despite the fact that the China-Mexico wage difference was greater in that decade than in the subsequent one. So much lower wages were not enough to enable firms based in China to compete successfully in the first decade, and the reduction of that wage gap in the second did not stop those firms from competing much more successfully. This was true even in the apparel sector, where labor costs are a much higher share of production costs than in industries such as electronics or auto assembly. Another kind of analysis leads to the same conclusion. In 1997, according to economist Robert Pollin and colleagues, the cost of pro- ducing a typical men’s shirt in Mexico was about $4.45 in U.S. dollars. Of this, wages and salaries accounted for about fifty cents.5 At this time, China’s hourly wage was about one fifth of Mexico’s, which means that the labor cost A Mexican-made shirt went from 10 percent more expensive than its Chinese counterpart in 2000 to 38 percent cheaper in 2010. of the same shirt made in China was just ten cents.6 So the cost of making the same shirt in China, all other things being equal, was $4.05. Other things were not equal, however. Between 1995 and 2000, the peso lost 48 per- cent of its value against the U.S. dollar, while the value of China’s currency (the yuan) remained stable; between 2000 and 2010, the peso lost another 33 percent of its value against the U.S. dollar, while the yuan increased by about 18 percent. This means that a Mexican-made shirt that cost $4.45 in 2000, cost only $2.98 in 2010, if the costs of inputs had remained constant in peso terms, a savings of $1.47 (i.e., almost four times the savings from China’s lower wages). If the costs of Chinese apparel inputs had also remained constant in yuan terms, the U.S. dollar cost of the Chinese shirt would have increased to $4.78 because of the exchange rate change. Taking labor cost differences and exchange rate movements together, the Mexican shirt went from 10 percent more expensive than its Chinese counterpart in 2000 to 38 percent cheaper in 2010. In reality, labor and other production costs, measured in their domestic currencies, increased in both countries over these years. By one estimate, the rate of wage increases in the two countries in the last three years of this period (2005-2008) was about the same, resulting in a five-percentage-point reduction in the cost advantage of manufacturing production in both China and Mexico, relative to the U.S.A. But in Mexico’s case, this change was more than offset by the twelve-percentage-point improvement in Mexico’s cost advantage caused by the fall of the peso against the dollar; by contrast, the rise of the yuan against the dollar reduced China’s cost advantage by another nine percentage points.7 According to an AlixPartners study,8 by 2008 these shifts made Mexico a lower-cost producer than China for all six of the types of manufactured goods that they considered. Nevertheless, China greatly improved its export competitiveness—measured by its share of U.S. imports—against Mexico between 1998 and 2008, both in the apparel sector and in the more capital-intensive electronics sector. (Chinese export competitiveness also improved dramatically in Mexico in these years, despite the fact that the peso’s fall against the yuan was even greater than its fall against the U.S. dollar. By 2009, for every dollar of Mexican exports to China, China exported $15 of goods to Mexico!)9 These Chinese export gains had to be due to factors other than lower Chinese wages and in spite of adverse exchange rate movements and rising transportation costs, relative to Mexico. What were those factors? China benefited in these years from less restricted access to the U.S. market, due to its admission to the World Trade Organization in November 2001 and (for apparel) the termination of the Multi-Fiber Arrangement’s system of country quotas in January 2005. But these changes did not give China anything that Mexico did not already have, and Mexico still has advantages under NAFTA that China lacks. There must be something else. A 2004 World Bank survey of big U.S. and European apparel buyers operating in multiple Asian economies found that most believed that Chinese factories have “the best skilled workers and productivity, quality, speed, production capacity, product development, technol- ogy, storage facilities, and transportation.”10 Analysts responding to the 20-30 percent wage increases that have occurred this year in China’s highly industrialized Guangdong province echo this point. Financial Times reporters Tom Mitchell and Kathrin Hille state that the manufacturers they interviewed “argued that better wages would reap other rewards, including higher worker retention rates and increased efficiency. Combined with first-rate infrastructure and dense ‘clusters’ of components suppliers, which tended to group round big assemblers such as Foxconn, China would remain a formidable manufacturing power.”11 Pansy Yau, deputy chief economist at the Hong Kong Trade Development Council, agreed: “Well established industrial clusters, a highly efficient and skilled labour force, and infrastructure systems are able to offset the disadvantage of rising labour costs.”12 China has pursued a low road on worker rights and wages, but a high road on public investment. High levels of workforce and infrastructure development are characteristics normally asso- ciated with the high levels of public investment found in rich countries pursuing “high road” competitive strategies. Thus, China has pur- sued a “mixed” competitive strategy: a low road on worker rights and wages, but a high road on the range of factors noted by the World Bank. Mexico’s government has likewise repressed labor and kept wages low, but without mak- ing infrastructure investments on the same scale. The high-road components of China’s mixed strategy gave it a decisive edge over Mexico in the competition for U.S. apparel and electronics markets.
China (4/5)
More evidence- elimination of the informal economy will increase labor productivity and free up infrastructure funds in the Mexican government.
Villareal 12
M. Angeles Villarreal- Specialist in International Trade and Finance “U.S.-Mexico Economic Relations: Trends, Issues, and Implications” August 9, 2012 Congressional Research Service- Prepared for Members and Committees of Congress http://www.fas.org/sgp/crs/row/RL32934.pdf//DoeS
Mexico has a large informal sector that is estimated to account for approximately one-quarter to one-third of total employment.31 Mexico’s legal framework makes a distinction between salaried and non-salaried employment and is fundamental to Mexico’s social policy.32 Workers in the formal sector are defined as salaried workers employed by a firm that registers them with the government and are covered by Mexico’s social security programs. Informal sector workers are defined as non-salaried workers who are usually self-employed. These workers have various degrees of entitlement to other social protection programs.33 Salaried workers can be employed by industry, such as construction, agriculture, or services. Salaried employment is the most common form of employment, accounting for approximately 57 of the workforce. Non-salaried employees are defined by exclusion and can be defined by various categories. These workers may include agricultural producers; seamstresses and tailors; artisans; street vendors; individuals who wash cars on the street; and other professions.34 Many workers in the informal sector suffer from poverty, which has been one of Mexico’s more serious and pressing economic problems for many years. Although the government has made progress in poverty reduction efforts, poverty continues to be a basic challenge for the country’s development. The Mexican government’s main program from which many informal sector workers benefit the Oportunidades program (formerly known as Progresa). The program seeks to not only alleviate the immediate effects of poverty through cash and in-kind transfers, but to break the cycle of poverty by improving nutrition and health standards among poor families and increasing educational attainment. This program provides cash transfers to families in poverty who demonstrate that they regularly attend medical appointments and can certify that children are attending school. The government provides educational cash transfers to participating families. The program also provides nutrition support to pregnant and nursing women and malnourished children.35 Economists and other experts often cite the informal sector as a hindrance to the country’s economic development. A recent report by the Migration Policy Institute contends that there are two lines of argument that attempt to explain the reason for such a large informal sector: (1) overregulation of businesses; and (2) an unintended incentive to informality created by Mexico’s social protection programs.36 The report cites evidence suggesting that the scale of informality in Mexico may result in a lower level of productivity, but it is not clear whether it hinders economic growth.37 Another study published by the Brookings Institution presents a hypothesis that Mexico’s social programs benefitting the informal sector have led to larger than optimal informal employment that lowers aggregate labor productivity and causes a lower rate of growth in GDP.38
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China (5/5)
By bolstering Mexican manufacturing and trade opportunities with the US, the plan prevents total US economic dependence on China.
Russell 7/26
K Alan Russell- President and C.E.O. of the Tecma Group of Companies, Regional Member of the Merida II Initiative between the U.S. and Mexico and actively works on the Model Ports Sub Committees. He is also member of the Southwest Maquila Association; member of the University of Texas at El Paso 2014 Centennial Commission; member and major investor in the El Paso Chamber of Commerce and member of the Hispanic Chamber of Commerce. July 26, 2013, “Mexican Manufacturing Benefits U.S. Industry” http://www.mexicorepresentation.com/?p=1145//DoeS
When NAFTA was first implemented in the early 1990s, the fear was that Mexican manufacturing would cost the U.S. jobs and wreak havoc upon U.S. industry. Mexico was viewed largely as an economic competitor that would pilfer U.S. employment opportunities, businesses, and bring about the demise of national economic prosperity. This set of assumptions was merely the result of a misconception of the nature of the U.S.-Mexico industrial alliance. In reality, China has been a much more formidable concern in terms of low wages and competition for industry stateside. The past decade, however, has amply shown that the best way for U.S. industry to meet this challenge is partnership – not competition – with Mexico through production sharing, or vertical specialization, which occurs when two or more countries bilaterally produce a product. In other words, Mexican manufacturing firms rely upon materials produced by U.S. suppliers. The geographic proximity of Mexico and the U.S. has actually led to greater opportunities for U.S. suppliers vs. China. This is demonstrated by the fact that Mexican imports contain ten times more U.S. content than similar items manufactured by the Chinese. In fact, 40 of the United States’ imports from Mexico contain material inputs that originated in the United States. Thus we see that “near-sourcing” manufacturing jobs to Mexico is, in a palpable way, beneficial to U.S. industry, fostering a partnership that keeps high paying jobs in the U.S. and sustains a demand for suppliers to feed the manufacturing done in Mexico that will then be exported, in most instances, back to the U.S.. This partnership results in products that, when sitting on shelves next to those produced in China and other developing countries such as India, Brazil, Indonesia, Vietnam and Malaysia, are price competitive. With the aforementioned in mind, it is no surprise that one in twenty-four U.S. jobs is dependent on the Mexican maquiladora industry. Over 6 million U.S. jobs are dedicated to supplying manufacturing operations in Mexico, which means there is significant opportunity for U.S. suppliers to expand to meet the demand created by Mexican manufacturing activities. Four segments in particular presently stand out as unique growth opportunities for U.S. industry: In 2011, the Mexican automotive industry achieved a growth rate of thirteen percent. As a result, the demand for U.S. made parts and supplies is on the rise – these include items such as spare and replacement parts for gasoline and diesel engines, electrical parts, collision repair parts, gear boxes, drive axles, catalytic converters, and steering wheel assemblies, for example. In 2010 alone, Mexico imported approximately $3.5 billion worth of products for the manufacturing of medical devices, $2 billion of which were from U.S. suppliers. Key opportunities for medical products suppliers include anesthesia equipment, defibrillators, electrocardiographs, electro surgery equipment, incubators, lasers for surgery, etc. Total Mexican packaging production reached 9.1 million tons of containers and materials in 2010 for a value of $10.1 billion, of which $2.5 billion came from U.S. industry. There is significant growth potential for U.S. suppliers of metal, plastics, glass, wood, and cardboard packaging materials. $1.4 billion was invested in plastics manufacturing in Mexico in 2011, revealing a steady rise in the demand for plastic materials and resins. Additionally, Mexico exports Ethylene and imports Polyethylene, which shows the opportunity for U.S. industry to supply polymerization technology. Mexican manufacturing, although this may be counter intuitive to some, should be viewed as a partner to the U.S., rather than exclusively as a competitor.
Symmetrical relations with China allow cooperation as China rises. This solves multiple impacts including US-China war, nuclear proliferation, climate change, the energy crisis, and bolstering defense against terrorism and other threats.
Gross 13 (Donald senior associate at the Pacific Forum of the Center for Strategic and International Studies (CSIS), a former State Department official, and author of The China Fallacy), Mar. 19, 2013, Retrieved May 24, 2013 from http://www.huffingtonpost.com/donald-gross/us-china-relations_b_2891183.html?view=printandcomm_ref=false)
Better relations with China would support wide-reaching political reform and liberalization. They would undercut the repressive internal forces that legitimize one-party authoritarian rule as a means of protecting the country against foreign military threats, particularly from the United States. In the field of national security, through an ongoing process of mutual threat reduction, the United States can ensure that China is a future partner and not a danger to the interests of America and its allies. The greatest benefit is that the U.S. would avoid a military conflict for the foreseeable future with a country it now considers a major potential adversary. Other critical security benefits to the United States and its allies include: • Significantly reducing China's current and potential military threat to Taiwan, thus securing Taiwan's democracy; • Utilizing China's considerable influence with North Korea to curb Pyongyang's nuclear weapon and missile development programs; • Increasing security cooperation with China on both regional and global issues, allowing the United States to leverage Chinese capabilities for meeting common transnational threats such as climate change, energy insecurity, pandemic disease, cyberterrorism and nuclear proliferation; • Curtailing cyberattacks by the Chinese military on U.S.-based targets as well as enforcing stringent measures against private individuals and groups in China that engage in cyber-hacking; • Having China submit its maritime disputes in the South and East China Seas to an independent international judicial body to prevent festering conflicts over uninhabited islands and energy resources from escalating to armed conflict; and • Reducing the scope, scale, and tempo of China's military modernization programs by discrediting the rationale for conducting a focused anti-U.S. buildup, especially since the country has so many other pressing material needs