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4. The Profits in Poverty

 
 
In prior chapters, we learned that Mexico is not a democracy, but an oligarchy. We also learned that 20% of the population controls 54.1% of the wealth. We learned that Mexico is not a poor country, but an upper middle class country, in relation to the rest of the world.
 
Yet, there is a lot of poverty in Mexico.
 
Why? Because it is profitable for the Mexican oligarchy to maintain a high poverty level to create an atmosphere of desperation that forces the poor to seek relief by migrating to the United States.
 
The Mexican oligarchy is purposely creating poverty to export to the United States for economic and political reasons.

Poverty is Mexico’s most profitable asset.

 
The oligarchy that controls the political system also controls economic production, infrastructure, communications, transportation, entertainment, food, apparel, and more.
 
It is impossible for any Mexican to purchase anything, goods or services, without contributing to the profits of the oligarchy. The oligarchy grows richer, the poor grow poorer.
 
However, not only do Mexican interests derive profits from the displacement of Mexicans to the United States. There are American interests which also have a stake in the migration of poor Mexicans to the United States.
Let us review some of them.
Communications
 
This is obvious. Mexicans who move to the United States utilize long-distance telephone services to talk to their family who remain in Mexico. Electronic communication (e-mail) is not prevalent among the poorer classes, from which most migrants come. They even have difficulty obtaining direct telephone service in Mexico, particularly in rural areas.
 
In Chapter 3, I explained the monopoly that Mr. Carlos Slim has over the telephone service in Mexico and his investment in TracFone Wireless, Inc., a United States company that sells prepaid telephones and cards. The rate per minute for telephone calls to Mexico using Tracfone is $0.0495 per minute, while the rate to Colombia is $0.0276, and to Germany is $0.018. (Rates from TracFone’s website).
 
Let us ponder over this. A telephone call from Los Angeles, California to Bogota, Colombia (3,476 miles), or from Los Angeles, California to Berlin, Germany (5,781 miles), will cost substantially less than a telephone call from Los Angeles, California to Tijuana, Mexico (140 miles)!
 
Is this because of the inefficiency of the telephone system controlled by Mr. Carlos Slim in Mexico, or is this the result of his monopoly?
 
You do not need much imagination to see that, as more Mexicans relocate to the United States, more money this monopoly will make.
 
As mentioned in Chapter 3, the increase of immigrants from Mexico parallels the increase in wealth of Mr. Carlos Slim. Mr. Slim did not create the circumstances for a system of economic oppression in Mexico. Those circumstances already existed. Mr. Slim is an astute newcomer into this oligarchy, an olirchachy that has strangled Mexico for centuries. He simply took advantage of the existing circumstances by questionable methods.
 
Since long-distance calls need a local telephone company to initiate the call, telephone companies in the United States, such as AT&T, Sprint, Verizon, and others also benefit from this dislocation. These American companies have a vested interest that 11 million illegal immigrants remain in the United States.
Auto manufacturing
 
Autoguide.com is a source that reviews and reports the latest automotive trends. According to Autoguide, as of April 22, 2015, there were nineteen car models made in Mexico which are sold in the United States.
(Footnote 1).

 
This appears to be great news for Mexican workers. However, a closer look at the factors involved reveals something different.
 
No Mexican wants to leave Mexico, if it is avoidable. Why leave Cuernavaca, Puebla, Aguascalientes, Salamanca, Celaya, or Hermosillo for Detroit? Geographically, Mexico is a paradise. Mexicans do not leave Mexico for political reasons. When they leave Mexico, it is for economic reasons. So, if you can get a "good" job in Mexico, why leave for America’s rust belt?
 
This benefit for the Mexican workers is just an illusion. The main reason why car manufacturers are building plants in Mexico is low wages, not the technical prowess and obsession for quality of the Mexican worker. An article in CBS News, dated April 21, 2015, informs us that the average daily cost of an autoworker in Mexico is $8, including benefits, while the lowest daily cost of an autoworker in the United States is $52.
(Footnote 2).

 
The result of this disparity between U.S. autoworkers and Mexican autoworkers is that Mexico siphons jobs from the United States. A New York Times article dated July 22, 2015, expresses the concerns of the United Automobile Workers Union (UAW) regarding loss of jobs to Mexico.
(Footnote 3).
 
If the main reason to use Mexican autoworkers is low wages, this means their wages must never rise, keeping them in poverty forever. If their wages increase, the benefit of using Mexican workers disappears. Therefore, the oligarchy must see that wages for Mexican autoworkers are kept low!
 
Who benefits from this economic situation? The shareholders and top-level executives of the auto manufacturing industry, and the Mexican oligarchy. The Mexican oligarchy is committed to preserve a near slave-level working force for the auto manufacturers who invest in Mexico.
 
How does the oligarchy benefit? Let us not be naive. We all know about corruption in Mexico. Mexican governors (all of European ancestry), grant land for the use of the investing auto manufacturers. Ignoring that this land belongs to the Mexican nation.
 
Is the oligarchy acting for the benefit of the Mexican workers, or for a more selfish motive? What are the foreign investors giving to such leaders for these preferential treatments? Who gets the top-paying jobs in these companies, the average Mexican citizen, or family members of the oligarchy?
Remittances
 
Remittances, for our purpose, refer to the funds expatriates send to their country of origin.
 
According to the World Bank organization, migrants from Mexico sent $25 billion to Mexico during 2014. That is $25 billion leaving the United States, not invested here. There is no quid-pro-quo. These funds leave the country without any reciprocal benefits to the United States from the Mexican government.
 
Let us have a brief review of history of migration to the United States since this country was created. Traditionally, the migrant to the United States came as a legal immigrant, with the intentions of creating a new life in the United States, and leaving the life in their country of origin behind. They came to become Americans!
 
Migrants from Mexico are different. Most of them did not arrive via legal means. Mexicans do not come to the United States with the idea of becoming "Americans" and forget their prior life. Of all the hundreds of Mexican migrants to the United States that I have met, I found only one who told me "I came to the United States to stay and create a new life for me". Most Mexicans come with the idea they will work hard for five years, save a lot of money, and then return to Mexico. They do. They return to Mexico, spend their money, then return to the United States, again, to work hard and save money, so that they can re-return to Mexico. The cycle repeats.
 
The consequence of this attitude is that they do not endeavor to integrate with U.S. culture. Their aims and aspirations continue to be focused on Mexico. Then, their children are born in the United States. The immigrants do not return to Mexico, but do not take advantage of all the opportunities that this country offers. They do not pursue education, learn English, nor strive for lofty goals. They remain an underclass.
 
If they are able to save money, they send it to Mexico to save it there, most often with relatives, since they do not trust banks, or, they invest in real estate in their hometown.
 
According to articles in Fox News Latino, annual remittances from the U.S. to Mexico run to billions of dollars.

 
 
Annual Remittances: U.S. to Mexico.
First-half 2015 12.08 Billion
2014 23.64 Billion
2013 21.89 Billion
2014 22.44 Billion
Total
80.05 Billion

 
In 3½ years, Mexico has siphoned off more than $80 billion dollars from the United States’ economy, funds that could have been invested in the United States in equipment, infrastructure, research, health, homes, and more.
(Footnote 4).
A cunning trick on funds remitted to Mexico:
 
The government of Mexico (its oligarchy), created a devious program to siphon more money away from the United States. It invented the "Tres por Uno" plan (Three for One).
 
For every dollar that an organization of Mexicans living in the United States sends to the government of Mexico, the government will contribute three dollars.
 
Purportedly, the Mexican government will utilize these funds to build Mexican infrastructure, and provide education and social services in the municipality selected by the group in the United Sates. The group may be a club composed of at least ten individuals over eighteen years of age, a majority of whom must be Mexican. How is that for discrimination based on origin?
 
The migrants may form a federation composed of at least five clubs. The majority of the members of the board of directors of that federation must be Mexican. The Spanish language website of the governmental entity administering this program, Secretaría de Desarroyo Social (SEDESOL) does not give a definition of "Mexican".
 
What a ruse! In effect, the Mexican government is taxing people who reside and work in the United States to do what the Mexican government is obligated to do in Mexico in the first place! Moreover, it is doing it with U.S. money!
 
The Mexican government started with a "Dos por Uno" (Two for One) plan. It soon increased it to the "Tres por Uno" plan (Three for One) to incentivize remittances. This method of siphoning funds from the United States to the Mexican government must be working for them.
 
If you read newspapers or watch internet news, or if you had ever anything to do with Mexican functionaries, as I have, you have heard about the corruption that exists in the Mexican government. The Mexican government takes control of these remittance funds, but what accountability does it provide? The Mexican government is not renowned for its transparency and honesty. Who is receiving the contracts to provide these infrastructures and services? I leave that to your imagination.
 
The point is, if the Mexican migrants were noble and loyal, he, or she, would invest those funds in the United States, the country that has provided them with sustenance and prosperity. We need to invest in our own infrastructure and our own social services.
 
By the way, we spend a large amount of social services on Mexican immigrants. Shouldn’t these immigrants reciprocate?
 
In the United States, there is a myriad of interests benefiting from these remittances. Wells Fargo Bank is a great beneficiary with its ExpressSend[®} program. Quoting from an article in MarketWatch, November 10, 2015,
 
"’Our ExpressSend[®} customers send more money to family and friends in Mexico than to any other country,’ said Daniel Ayala, head of Global Remittance Services at Wells Fargo."
(Footnote 5).

 
Western Union CEO, Hikmet Ersek, told The Washington Post, "Our largest market is the U.S. outbound market, sending money. In the receiving market, the No. 1 country is India, then it’s Mexico, then the Philippines, then China."
 
Mr. Ersek continued, ". . . we don’t see a lot that people will get money on their mobile phones and then use that phone to go and shop for milk. So, the use case on the mobile receive side is less. In practice, that means money receivers still have to cash out their remittances at a Western Union office or agency in Mexico — something that remains an unchallenged strength for the company..."
(Footnote 6).

 
Roughly, 60 percent of Western Union’s customers are now migrants sending money back to their home countries. There are dozens of other companies engaged in the remittance services.
 
Obviously, these companies do not want to see 11 million illegal migrants returned to Mexico, either.
Business environment
 
Remittances from the United States to Mexico should be a boon for Mexicans who receive them. With those remittances, they purchase clothing, electronic equipment, food, and all other necessities.
 
This should stimulate Mexican businesses resulting in a stronger Mexican economy.
 
However, the result is the contrary. Mexico is a country plagued with monopolies. A few companies control the production and distribution of consumer products and services. These few monopolies keep prices high for the Mexican consumer. This increases profits for the monopolies, therefore, creating an incentive to continue the cycle of poverty that forces poor Mexicans to seek economic sanctuary in the United States.
 
For more information on Mexican monopolies read the article Monopolies Hold Back Mexico’s Economy with High Prices, Poor Service .
(Footnote 7).

 
According to Professor Celso Garrido, economist at the Universidad Nacional Autónoma de México, Slim's domination of Mexico's conglomerates prevents the growth of smaller companies, resulting in a shortage of paying jobs, forcing many Mexicans to seek better lives in the United States.
 
Carlos Slim not only controls telecommunication services, he also has huge investments in real estate, minerals, tire production, hotels, tobacco, food and candy retailing, and more. It is almost impossible to spend a peso in Mexico without contributing to the profits of Carlos Slim.
 
Large businesses control the economy in Mexico. Large businesses also control the economy in the United States. However, in the United States it is far easier for a person to start a small business. A person who wants to start a small business in Mexico faces gargantuan bureaucratic and financial impediments. By comparison, in California, a bureaucratic State, unless the proposed business involves a controlled substance, such as alcohol, firearms, or requires a health permit, an entrepreneur could obtain a business license, register the name with the taxing authorities, and lease a place in one day.
 
By contrast, in Mexico, it requires at least three months, and lots of "pecuniary lubrication". Yes, nothing moves in Mexico without the legendary "mordida" (bribe). Financing is difficult to obtain. Mexico does not have a Small Business Administration, and banks are not friendly to the small entrepreneur.
 
The result is that there is a large underground economy unable to operate efficiently, an economy that does not contribute to the treasury of the nation.
 
It is a vicious cycle: the small business cannot operate in the open; therefore, it does not have documentation to prove that it is credit worthy, therefore, it cannot expand, and therefore, it cannot compete with the monopolies.
U.S. subsidy payments to the Mexican government
 
This is a clever scheme. The majority of the public in the United States is not aware that we, the United States taxpayers, are bribing the Mexican government for the Mexican government not to violate the civil rights of its people in Mexico!
 
On December 2008, the United States and Mexico signed a treaty known as "The Merida Initiative" (Merida is a city in Yucatan, Mexico).
 
Under this agreement, the United States Congress appropriated $2.3 billion for Mexico for the following purposes:

1. To disrupt the capacity of Organized Crime to operate. The funds provided should be used to purchase equipment, aircraft, training of Mexico’s armed forces, etc.
2. To institutionalize the capacity of Mexico to sustain the rule of law. It means Mexico will have to establish judicial Due Process, which Mexico does not have, institute an oral Jury System, which Mexico does not have, assist the Mexican government in vetting new police, a process which Mexico does not practice, and generally, to cease violating the human rights of its population. The Mexican government apparently is unaware that its citizens have rights.
3. Create a 21st Century Border Structure.
4. To build strong and resilient communities.

 
You can access information about these delusional ideas on the U.S. Department of State website.
(Footnote 8).

 
Note: Mexico is not giving anything to the United States in return.
 
I am not going to discuss the drug trafficking problems. That would take a book. Drug trafficking is another method that Mexico uses to bleed money and vitality out of America in the amount of $45 billion a year.
 
However, as a longtime observer of Mexico, I will expound on the social and political environment.
 
In Mexico, you cannot tell the "good guys" from the "bad guys". They are interchangeable. The same individual working for a drug cartel today may be a police officer tomorrow, and vice versa. The military has been known to escort convoys of drugs for drug lords to protect them from competitors.
 
Killings of innocent Mexican citizens have been attributed to government forces. Anyone can become a police officer. Background checks, psychological training and the strenuous training that U.S. police officers go through is unknown in Mexico. A person can be driving a taxicab today, and be a police officer tomorrow.
 
The United States provides military equipment and training to the Mexican military. How do we know that once provided, the equipment and the men trained does not end up with the drug cartels? In the Middle East, we have had similar experience. We train the military, then the trainees join the Islamic extremists.
 
The military and police forces in Mexico are brazen. They have no concept of respect for the people and rights of the people. Due process is an enigma to them. They are abusive and arbitrary.
 
People disappear, sometimes abducted by drug lords, sometimes by government forces. Forty-three students disappeared in September 2014. They have not been seen since. The Huffington Post, in an article dated November 14, 2015, quotes the following: "The Mexico attorney general’s office says police handed the abducted students over to a drug gang, which killed them and incinerated the corpses. But families of the victims say the government have mishandled the investigation and doubt all of those responsible for the attack have been arrested".
(Footnote 9).

 
Do not take my word. Just read any newspaper, or google on the internet. You will understand.
 
As of April 2015, more than $1.3 billion of Mérida Initiative assistance had been delivered (Congressional Research Service).
 
However, in October 2015, the U.S. State Department decided to withhold $5 million from Mexico due to the failure of Mexico to prevent abuses of human rights by its security forces. The U.S. State Department pointed to the abduction of the 43 students, the killing of 22 people in a warehouse a few months before, and other 16 civilians on January 6, 2015, all perpetrated by Mexican federal and state government forces.
(Footnote 10).

 
Furthermore, Mexican citizens protest the assistance by the U.S. government to the Mexican government. There is an outcry by the citizenry that the Mexican government uses the aid to oppress the people further, not to fight the drug lords. The citizens claim that what they really need is not protection from the drug lords, they need protection from their own government.
 
The United States has agreed to give the Mexican government $2.3 billion of U.S. taxpayers’ money, so that the Mexican government will become honest. Ridiculous!
 
Mr. Carlos Slim’s net worth in 2015 was $77.2 billion. The $2.3 billion that the U.S. taxpayer will provide for Mexico represents only 3% of his total net worth. Why cannot Mr. Slim contribute that money to his own government, instead of taking it from U.S. taxpayers? Simple: he does not derive a profit from the Merida Initiative. United States companies and United States military are the interests that derive profits from these funds.
 
The United States government provides helicopters, aircraft, forensic equipment, surveillance equipment, inspection equipment (scanners and X-ray machines), canine units, and other military and interception type equipment. The United States government procures these items and services from United States companies, and turns them over to the Mexican government. Obviously, various U.S. companies lobbied for the Merida Initiative. Based on well established patterns, these items probably will end up in the hands of drug lords.
 
An important, if controversial, part of the Merida Initiative is the training of Mexican military and police personnel by the U.S. Army’s Western Hemisphere Institute for Security Cooperation (WHINSEC), at Fort Benning, Georgia. WHINSEC’s mission, according to its website, is to provide professional education and training to eligible military, law enforcement, and civilian personnel of nations of the Western Hemisphere. See its website.
(Footnote 11).

 
Critics of WHINSEC call it "The Creator of Dictators", since they claim WHINSEC trains enforcers for Latin American dictators. Ex-dictator of Panama, Manuel Noriega, was one of its graduates. Other graduates were Heriberto Lazcano, founder of The Zetas, a Mexican drug cartel, and Arturo Guzman, his second-in-command. The Zetas is a drug cartel composed of former Mexican Army soldiers.
 
Controversy permeates the Merida Initiative.
The question again is: why are the United States taxpayers bribing Mexico for the Mexican government to do what decency requires?
Net immigration:
 
An article by the Pew Research Center, dated November 19, 2015, informs that the net immigration from Mexico to the United States, from the years 2009 to 2014 is a negative 140,000 people. Net immigration from Mexico means the number of Mexicans coming to the United States, minus the number of Mexicans returning to Mexico. The article does not show totals for this period, just the net. The meaning of this is that, according to their research, the United States has 140,000 fewer Mexicans as of 2014.
 
The report compiled this information from statistics provided by the U.S. government (U.S. Census Bureau’s American Community Survey and the Current Population Survey) and from statistics provided by the Mexican government (2014 Mexican National Survey of Demographic Dynamics, or ENADID and the 2010 and 2000 Mexican decennial censuses).
 
These numbers are unconvincing. The numbers of Mexicans returning to Mexico may be reliable, but how can the surveyors count the number of illegal migrants from Mexico, when their main characteristic is that they are not "documented"? Intuitively, you are aware that Mexicans could be returning to Mexico. Mexicans are in the United States for one reason only: work! They are not here for the climate, nor to seek refuge from persecution.
 
Since 2005, the United States has been in a recession. This recession has affected the construction industry severely. Mexicans are a large part of this industry. Without work, the Mexican worker does not have an incentive to stay. In addition, most Mexican immigrants, legal or illegal, work in menial jobs or agriculture, where minimum wages pay from $8 to $10 an hour, generally without benefits. Auto manufacturers now have established plants in Mexico that pay similar wages. So, why stay in the United States?
 
However, the statistics presented by the Pew Research Center do not consider one important factor. In 1986 when Congress passed the Immigration Reform and Control Act (IRCA), 2.3 million Mexican-born aliens became legal residents. To this, add the over 2 million already legally here. (See Chapter 3). The "Mexican dream" is to come to the United States to achieve the "American Dream", and then return to Mexico.
 
Millions of Mexican-born legal aliens have attained retirement age, and are now returning to Mexico.
 
This may account for the decrease in net immigration from Mexico. Millions of young Mexicans are still coming, the old ones are returning to Mexico, and receiving U.S. Social Security payments, in Mexico. The United States will not pay Medicare benefits for a beneficiary who lives in Mexico, but it will make regular Social Security payments to people who worked in the United States, qualified to receive Social Security benefits, and now live in Mexico.
 
This is another way Mexico siphons funds from the United States. Rather than show loyalty, and benefit the United States economy by spending retiree funds in this country, these retirees spend their funds in Mexico, to increase the wealth of the controlling oligarchy.
Other beneficiary interests
 
There are many other interests here in the United States that benefit significantly from the displacement of Mexicans to the United States, and desire for the displacement to continue.
 
I will not analyze these beneficiaries. I will name a few. The reader may think of some more:
 Personnel of tax exempt organizations giving aid to illegal Immigrants.  
 Immigration Lawyers.  
 Spanish translators and interpreters.  
 Border Patrol personnel.  
 Canine kennels and trainers.  
 Food providers for holding facilities.  
 Medical personnel.  
 Transportation companies.  
 Detection equipment providers (binoculars, airplanes, boats, etc.)  
 Judiciary personnel.  
 Real estate construction companies and developers.  
 Banks.  


Footnotes:

The following are references to outside websites that support the data presented. If you visit them, you leave this website. You can return by clicking on arrow on top, left side.

 
 
1. Autoguide.com

 
 
2. CBS News - Made in Mexico.

 
 
3. NY Times - Loss of jobs.

 
 
4. Fox news Latino 2014-5.

 
 
5. MarketWatch.

 
 
6. Washington Post.

 
 
7. Monopolies.

 
 
8. Merida Initiative.

 
 
9. Huffington Post.

 
 
10. Funds withheld.

 
 
11. WHINSEC.