3. Migration and Economic Domination
As stated in Chapter1, The World Bank classifies Mexico as "Upper Middle Income". Yet, millions of its citizens have migrated, legally or illegally, to the United States. In Mexico, only 20% of the population holds 54.1% of the wealth. This 20% is the oligarchy.
All Mexicans could have a comfortable style of living if the wealth was equitably distributed. However, we see that there is extreme poverty. While the top 20% live in luxury, the majority of the population are paupers, living in shacks without running water and at semi-starvation levels. It is not uncommon to see a multimillion-dollar mansion next to a dilapidated hovel that pretends to be someone's residence.
Mexico has sufficient wealth and intellectual capacity to create a strong middle class, and provide its citizen with a suitable standard of living.
However, the oligarchy that controls Mexico will not accept a change in conditions. It will not allow a middle class to exist.
It is to its advantage that poverty persists. Furthermore, the oligarchy purposely creates, or you may say, "manufactures" poverty for exportation to the United States. Why? Because the oligarchy profits from poverty!
Exportation of poverty from Mexico to the United States provides profits to various interests, not just for the oligarchy in Mexico, but also to interests in the United States.
Let us look at some statistical data about immigration from Mexico to the United States within the last fifty years.
The United States takes a census of its population every ten years. I obtained and computed the following statistics from the U.S. Census Bureau (See: The Size, Place of Birth, and Geographic Distribution of the Foreign-Born Population in the United States: 1960 to 2010, Population Division Working Paper No. 96, October 2012), (Page 6 and Table 1).
Foreign-born Population in the United States
(Authorized and Unauthorized)
|| Total in millions
|| From Mexico only
What we see is that the percentage of foreign-born Mexicans became almost six times larger in fifty years, from 5.9% of the total foreign-born to 29.3% of the total, a disproportionate increase. In numbers, the population of foreign-born Mexicans in the U.S. rose from 576,000 in 1960 to 11,711,000 in 2010, an increase of over 11 million! Between 1960 and 1980, the increase was normal. The increase from 1980 to 2010 was 9.5 million, a whopping 432% increase. Why?
On November 6, 1986, the United States government passed the Immigration Reform and Control Act (IRCA) Pub. Law 99-603. This act permitted unauthorized aliens who resided in the United States continuously from January 1, 1982, to become authorized legal residents. Certain conditions needed to be met, including a mea culpa admission of wrongdoing, and payment of taxes owed. All sources agree that close to 3 million unauthorized aliens took advantage of this amnesty, 2.3 million of them Mexican-born aliens.
From 1990 to 2010, the number of Mexican-born aliens surged from 4.3 million to 11.7 million. According to an article by the Pew Research Center, dated November 19, 2015, there were 5.6 million unauthorized Mexican immigrants living in the U.S. in 2014, even though the surge had leveled off.
The conclusion is obvious. Amnesty to unauthorized aliens encourages more unauthorized aliens to sneak across, lay low, and wait for the next amnesty. Indeed, people from other countries have learned to expect serial amnesties from the United States.
On November 29, 1990, the government enacted the Immigration Act of 1990, which provided more liberal immigration policies. On August 1, 2001, the Senate introduced the Dream Act. Each year, either the Senate or the President, introduces immigration reform acts, or executive actions. Political infighting precludes these acts from approval. In 2015, Congress introduced the "Fairness for High-Skilled Immigrants Act of 2015", which, at the time of this writing, is not approved.
Poor Mexicans in Mexico do not understand what all these politically motivated immigration reform acts mean. What they see is a ray of hope that may allow them to come to the United States, legally or illegally, to escape the miserable economic conditions created in Mexico by the ruling oligarchy. Furthermore, they do not understand that a small group of people, the oligarchy, produces their misery deliberately, creating desperate conditions for them to seek Nirvana in another country, when their own country could and should be their Nirvana. Poverty stricken Mexicans blame it all on "The Government" as an amorphous entity responsible for all their despair, not realizing that they could be "The Government" if they stayed in their country, and demanded what is their right: a life with dignity and economic comfort.
In the midst of persistent poverty, Mexico has one of the wealthiest men in the world. Billionaire Carlos Slim, a Mexican entrepreneur, ranks among the wealthiest persons in the world:
||Net worth in Billions
If you observe the raise in unauthorized immigration from Mexico during the same period, you will notice a correlation with the rise of the net worth of Carlos Slim.
The source of wealth of Carlos Slim:
The source of wealth of Mr. Carlos Slim can be explained with one simple word: monopoly. Mr. Slim and his family control Grupo Carso S.A. de C.V. a conglomerate that controls America Movil and Telmex. America Movil is Latin America’s largest mobile-phone carrier. Through its subsidiary, Telcel, it controls about 70% of all mobile telephones in Mexico. Telmex is a wholly owned subsidiary of America Movil which controls about 90% of all landlines in Mexico City, a city with more than 21 million inhabitants, a number similar to half the population of California. Telmex also controls 80% of all landlines in the rest of Mexico.
In the United States, America Movil has a subsidiary, TracFone Wireless, Inc. Its website claims to be America’s #1 national prepaid cellphone and prepaid wireless service provider. This service is preferred by illegal Mexican-born immigrants to the United States because, as the website informs, "No Contracts, No Bills, No Credit Checks" are required, while to open a credit wireless service account does. It is ideal for an illegal resident who wants to call home.
If a person makes a telephone call anywhere in, or to, Latin America, that person is probably using a company controlled by Carlos Slim.
How did Mr. Slim manage to acquire this monopoly? Very simple. He bought an existing monopoly!
In 1972, the Mexican government purchased the existing private telephone services and turned them into a state-run monopoly, just as it did with oil. The name was Telmex.
During 1990 and 1991, Grupo Carso, owned by Carlos Slim (an astute and wealthy businessman), purchased Telmex from the Mexican government in partnership with France Telecom, a French company, and Southwestern Bell Corporation, a United States company. Grupo Carso obtained a 10.4% stock interest. France Telecom obtained a 5% stock interest, and Southwestern Bell obtained a 5% stock interest, with another 5% stock interest option. Although these purchases do not represent the majority of all stock outstanding, they represent 51% of all voting stock, in effect giving control of Telmex to this group.
Controversy encircles this transfer of the control of a state run monopoly, to a private capital monopoly. According to an article in the New York Times, (December 10, 1990), sixteen companies made a bid for the controlling interest in Telmex. The Carlos Slim group won the bid. However, they also made the highest offer.
The President of Mexico at the time was Carlos Salinas de Gortari (1988-1994). The President, of course, is of European ancestry.
The President was a close friend of Mr. Slim. According to New Internationalist Magazine
, in 1993, at a gala fundraising dinner, Carlos Slim, along with 30 other business leaders, pledged an average $25 million U.S. dollars each to Gortari’s PRI political party.
After Carlos Salinas de Gortari left office in 1994, the succeeding president, Ernesto Cedillo, (of course of European ancestry), charged Carlos Salinas de Gortari with massive fraud and corruption. Critics say Carlos Salinas de Gortari brokered the Telmex deal to favor his friend, Carlos Slim. There is no evidence that a bribe took place, just suspicious circumstances.
Carlos Salinas de Gortari left Mexico for Ireland. He has been in self-imposed exile since.
Setting aside all inferences of impropriety, Carlos Slim (former family name Salim), is a shrewd, calculating and pragmatic individual. He was formerly a civil engineer and university professor of algebra and linear programming. He looked at the chaotic state of the bureaucrat-run monopolies owned by the Mexican government, (which at the time included railroads), and of the inefficiency and civil and cultural disarray in Mexico, and recognized an opportunity to obtain a monopoly in communications.
From a practical point of view, that Mr. Carlos Slim took over the dilapidated state of telephone communications in Mexico may have been a blessing.
Nevertheless, his group has a monopoly on telecommunications. Even if monopolies are run efficiently, in the long run, absence of competition inevitably results in higher costs for the customers of a monopolistic enterprise, particularly when maximizing of profits occurs when the monopoly encourages the dispersion of the population to other countries, as is the case in Mexico.
The United States does not permit such type of complete monopoly. The theory is that businesses must compete with each other, and out of that competition the public obtains the benefits of better service and/or lower prices.
The United States does not maintain a form of “pure” capitalism; the government regulates businesses heavily, particularly when a “natural monopoly” is involved. A natural monopoly exists when fixed costs are high and there is a need for large-scale infrastructure. It would not be efficient to duplicate the infrastructure and distribution system. For example, it would not be economically practical to have two railroad lines covering the same two points, or lay various sets of cables for telephone services between two cities.
When such conditions arise, the United States government permits a natural monopoly. However, that natural monopoly is highly regulated.
The United States has anti-trust laws. These laws are in place to assure that no one company controls the largest component of an industry or service.
A good example of the anti-trust laws application was the break-up of the Bell Telephone Company by the U.S. Department of Justice in 1984. Bell Telephone had a near complete monopoly over all telephone service in most of the country. Western Electric, a wholly owned subsidiary of AT&T Corporation, who in turn owned Bell Telephone, manufactured all telephones, supporting accessories, and equipment used by Bell Telephone. This resulted in a vertical and horizontal monopoly by Bell Telephone.
The U.S. Department of Justice decided that Bell’s monopoly stifled competition and kept prices up. It filed suit in 1974. Finally, in 1984, the Bell Telephone Company was broken up into several "Baby Bell" companies limited to certain geographical regions, and AT&T was limited to long-distance service.
Ironically, the monopoly by Bell Telephone Company originated as a government-supported monopoly. The government had exempted AT&T from anti-trust laws on the theory that having one company provide all telecommunications services was more secure for the country.
Mexico has a Federal Economic Competition Commission (Comisión Federal de Competencia Económica), but the corruptive atmosphere that pervades the Mexican economy makes any anti-trust laws futile.