bears a large share of responsibility for most of the economic crises that have sparked mass migration since the 1980s. These crises have their roots in economic policies dictated either directly by the U.S. government through its regional trade agreements, or indirectly through its influence over international lending institutions like the World Bank and the International Monetary Fund (IMF).9
How do U.S. economic policies affect migration?
The IMF and the World Bank function by making loans to countries that are already heavily indebted, on the condition that their governments follow an economic model promoted by U.S. economists and the media as “open markets,” “free trade,” and “globalization.” Analysts in Latin America and much of the rest of the world call this model “neoliberalism.” (This comes from the old sense of “liberalism,” which referred to the free trade policies of classical economists like Adam Smith and David Ricardo.)10
The neoliberal model and its “structural adjustments” involve reducing the supply of money; selling off state-owned industries and services to private companies; scaling back and privatizing healthcare, education, and other social programs; and eliminating or sharply reducing tariffs that protect domestic industries and agriculture. Such measures generally reduce inflation and stabilize currency exchange rates, but at a cost. Privatization throws tens of thousands of public employees out of work and reduces government revenues. Service cutbacks leave people without a social safety net when they fall on hard times. “Free trade” forces local farmers and manufacturers to compete with huge multinational corporations that are often subsidized by the governments of the wealthy countries where the multinationals are based.
The most dramatic result of such policies was a series of economic crises that followed their implementation: in Mexico in 1994 and 1995, in several Southeast Asian countries in 1997 and 1998, in Russia in 1998, in Brazil in 1999, and in Argentina in 2001.11 But even in areas without major crises, these neoliberal policies cause exactly the sort of economic hardships that lead people to migrate.
Why do so many Mexicans come here?
After its 1910 revolution, Mexico grew from a primarily agricultural country to what in 2013 was the fifteenth-largest economy in the world, right behind Spain and South Korea. Until the 1980s its economic growth rate was frequently as high as 6 percent a year. Poorer Mexicans often didn’t share equally in the benefits of this growth, but life did improve for many people: the illiteracy rate was cut in half and mortality rates fell dramatically.12
In the early 1980s, Mexico suffered a financial crisis brought on by a worldwide recession and the government’s overborrowing during the 1970s oil boom. To get out of the crisis, the government started implementing a neoliberal economic model. Proponents of the change claimed that unemployment and other dislocations caused by these policies would be more than made up for by foreign investment, expanded trade, and a rapid expansion of industrial jobs in the maquiladoras—the largely tax-exempt assembly plants producing goods for export, including hundreds of factories along Mexico’s border with the United States.
Mexico forged ahead with the plan, signing a letter of intent to sell off 1,200 state-owned companies in 1984, and then amending the Mexican constitution in 1992 to allow the privatization of many ejidos, the campesino-controlled cooperative farms that were the heart of Mexico’s agrarian reform in the 1930s.13
In the early 1990s, the government of Mexican president Carlos Salinas de Gortari negotiated a model neoliberal trade accord with the United States and Canada—the North American Free Trade Agreement, better known as NAFTA.
Mexico’s economy had shown no sign of recovery by the time NAFTA went into effect on January 1, 1994, but the United States promoted the Mexican experience as an example for the rest of Latin America. In December 1994, U.S. president Bill Clinton hosted a “Summit of the Americas” in Miami, with thirty-four heads of state meeting to ratify a plan for a Free Trade Area of the Americas, which was supposed to extend NAFTA to the whole hemisphere by 2005. Two weeks later, the Mexican peso collapsed. On January 31, 1995, fearing a total breakdown of the Mexican economy that would affect a large number of U.S. investors, the Clinton administration patched together a $48.8 billion bailout package of loans and credit lines for Mexico from various countries and financial institutions. The U.S. share was $20 billion.14
Under NAFTA and other trade agreements that forced the reduction or elimination of protective tariffs, more than 1.5 million Mexican farmers lost their sources of income and had to sell or abandon their farms; total agricultural employment fell from 8.1 million in the early 1990s to 5.8 million in the second quarter of 2008. Consumer prices were supposed to decline under NAFTA, yet while the prices paid to farmers for their products plummeted, consumer food prices rose in all three NAFTA countries. As of 2005, Mexican farmers earned 70 percent less for their corn than they did before NAFTA while Mexican consumers paid 50 percent more for tortillas, a corn-based staple of the Mexican diet. Without the protection of tariffs, Mexico became increasingly dependent on food imports: in 1995 the country’s grain imports jumped to ten million tons a year, from five to seven million tons previously. The dependence on imports means that when the local currency loses value against the U.S. dollar, real prices for food can double or triple.15
It’s true that the maquiladoras added some 660,000 manufacturing jobs after NAFTA took effect, but this wasn’t nearly enough to offset the loss of 2.3 million jobs in agriculture—and the maquiladora sector itself started losing jobs in 2000-2001 because of competition from countries like China.16 Meanwhile, the real purchasing power of the Mexican minimum wage fell by nearly three-fifths from 1980 to 1996.17 It continued to fall after NAFTA went into effect in 1994—by 25 percent from 1994 to 2009.18
Rising unemployment and shrinking pay resulted in a growing gap between Mexican and U.S. wages. Up to the 1970s, Mexican workers were paid about one-fourth to one-third of what their U.S. counterparts got. (The cost of living in Mexico is generally much lower than it is in the United States, although items like electronics, cars, and name-brand clothes usually cost more.) After the decline of real wages in the 1980s, Mexican workers in manufacturing in the late 1990s were making about one-eighth what they would be making for the same job in the United States; in some occupations Mexican workers were being paid one-fifteenth what they would get north of the border.19
In 1981, a Mexican factory worker could have made three or four times as much money by crossing the border, not necessarily enough of a difference to make up for the risks and hardships of immigration. Just a few years later, the same factory worker’s actual purchasing power in Mexico had dropped to about one-third of its previous level but now the worker could get paid eight to fifteen times more by going north. A 2009 study by the Carnegie Endowment for International Peace concluded that “one of the paradoxes of NAFTA, which leaders promised would help Mexico ‘export goods, not people,’ is that Mexico now ‘exports’ more people than ever and more of them reside permanently in the United States without documents.”20
Why don’t people stay home and fix their own countries?
In the 2001 documentary Uprooted: Refugees of the Global Economy, “Maricel,” an immigrant from the Philippines, tells how she ended up going overseas as a domestic worker. Seeing ads everywhere encouraging people to work abroad, and facing a lack of opportunities at home, Maricel made a tough decision. “I realized that it’s just a waste of time for me to go to college,” she said, “because those people who went to college, they wasted four years studying hard, and then they have to go abroad to work as domestics. And I said that I just don’t want to waste any more time. I’m just going to go abroad.”
At the time, the Philippines had a total foreign debt of more than $52 billion.21 “On top of that the economy is not
