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Why Mexico is Such a Mess: NAFTA and Bad Ag Policy

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As someone who has lived in Mexico and who still visits the country regularly, news reports like this break my heart:

 Drug-related violence over the weekend claimed 51 lives across Mexico, including 15 decapitations in the beach resort of Acapulco, authorities reported.

Such stories have become the norm -- and the dominant lens through which we estadounidenses view our neighbors to the south. Bombarded with news of grisly murders, U.S. citizens now tend to dismiss Mexico as a narco-state and think of it only to gawk at the spectacular violence (and as the inspiration for certain fast-food dishes).

There is, of course, an element of exaggeration in the coverage. The drug violence is unspeakable, but limited to a few -- admittedly expanding -- geographical areas. For instance, Mexico City, for all of its reputation for high crime rates, remains mostly free of the gangland-style violence gripping, say, Acapulco. But no one can deny the power of the drug cartels, or the harm they're inflicting on the country.

So how, precisely, did the drug trade become such a prominent player in Mexican society? That question does not get asked enough. I'd argue that the drug trade has grown roughly in proportion to the long, slow decline in the legitimate Mexican economy.

To put the story briefly, Mexican policymakers in the 1980s decided to "modernize" the economy by pushing millions of smallholder farmers off of their land and into jobs in what was supposed to become a booming manufacturing sector. The idea was that Mexico would become the manufacturing base for the United States. The effort culminated in the passage of NAFTA in 1994, which allowed goods and investment capital (but not people) to flow freely across the border.


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