THE%20AMERICAS%20

1
CHAPTER 9
THE AMERICAS NAFTA
2
The Americas PRISMs

• Do regional free trade agreements discriminate
  against nations outside the region?
• Should the economic growth of developing nations
  hinge on opening their borders to Godzilla
  nations?
• Should the U.S. evaluate NAFTA strictly on the
  basis of what it does for America?

3

1. Should U.S. immigration laws be strictly
   enforced?
2. Do Mexican immigrants contribute more to the USA
   than they receive from America?
3. Who should be responsible for the unintended
   negative impacts of free trade agreements on
   companies workers?

4
THE PURPOSE OF NAFTATo eliminate all tariffs
between Canada, Mexico, the USA
5
Whats better than a large slice of pie
(economic growth)?(A slice from a larger pie)
6
Cómo le compara NAFTA con el EU? (How do NAFTA
the EU compare?)
NAFTA is much more modest in scope than the EU,
since NAFTA does not seek political unity
7

• FTAs SHUFFLING CARDS
• Free trade agreements reshuffle nations
  economies some old jobs are lost, or receive
  higher pay, or lower pay some new jobs are
  created.
• Some companies go bankrupt some new companies
  are created
• Some cities boom others erode.
• FTAs are Social Darwinism (survival-of-the-fittes
  t) in action.

8

• Does NAFTA really stand for
• Not A Free Trade Agreement?
• (Because only 3 nations benefit--the rest of the
  world still has to pay tariffs to export into the
  NAFTA zone)

9
THE ABC's OF NAFTA
10
LAS ABCS DE LAS TARIFAS

• A category goods Zero tariffs immediately in
  1994
• B category tariffs Lower tariffs 20 for 5
  years (1999)
• C category tariffs Lower tariffs 10 annually
  for 10 years (2007)

11

• A category Mostly U.S. exports high tech
  products, pharmaceuticals, aerospace
• B category Low tech manufacturing clothing,
  construction supplies, etc.
• C category Agriculture, service industries

12
NAFTA's SENSITIVE SECTORS
13
Each NAFTA nation is allowed to designate one
industry (the nations sensitive sector)
thatdoes not have to comply with NAFTA
regulations
14
El sector sensible (sensitive) de México OIL
15
Por qué es la agricultura el sector sensible de
los los Estados Unidos?
16

• Because the U.S. government doesnt
• want to cut farm subsidies
• (required by NAFTA)
• for fear of causing American farm instability.

17
El sector sensible de Canadá
Canada wants to protect its small companies run
by indigenous non-Anglo-Saxon peoples from
fierce competition from the U.S.
18
NAFTA TENSIONS
19

• When nations make major economic changes, such as
  a FTA, there are both intended unintended
  outcomes. The unintended outcomes, both good and
  bad, must be considered in evaluating the success
  of any major economic change.

20
UNANTICIPATED OUTCOMES OF NAFTA

• Asian European companies built factories in
  Mexico in order to export goods to the U.S.
  without tariffs
• Many Mexican companies closed because they were
  no longer protected by tariffs
• China began to siphon off jobs FDI from Mexico

21
Mexicos infrastructure for doing NAFTA business
is not nearly big enough
22
NAFTA requires all manufacturers to purchase a
sizable of their parts from CanAmerIco (local
sourcing requirement)
23

1. Canadians are worried that NAFTA will undermine
   Canadian competitiveness, eventually cutting into
   their socialist comforts (high minimum wage, free
   health care, etc.)
2. Due to the backing of large farming subsidies,
   American farmers are a major threat to most small
   MX farms
3. Overall, NAFTA has not compensated for MXs
   innumerable social economic problems
   corruption, over-population, poor education,
   crumbling infrastructure, puny tax base, lack of
   credit, etc.

24
NAFTA HEAD-BUTTING

• Current legal action Mexico imposed a 20 tariff
  on U.S. soft drinks sweetened with fructose corn
  syrup.
• Mexico has charged the U.S. with anti-dumping
  tariffs over American beef exports

25
A coalition of environmental labor groups have
subjected Mexico to unfair trading practices in
restricting access (only 20 miles across the
border) of MX trucks to U.S. highways.
26

• THE POSITIVE IMPACTS OF NAFTA

27

• MXs trade with the USA has doubled since NAFTA
  went into effect exports to Canada have
  increased 40.
• 88 of MXs trade is with the USA 11 of USA
  trade is with MX.
• Between 1994-2000, MX received a record 74B in
  FDI
• 20M new jobs have been created in the USA
  overall wages increased in the first decade of
  NAFTA.

28

1. Doubling of USA-MX trade
2. CanAmerIco received record FDI
3. Boom for MX fruit/veg
4. Two-party MX govt.

29
INCREASE IN MEXICOS POST-NAFTA EXPORTS TO THE
U.S.

• 1981-1986 6 increase
• 1987-1993 12 increase
• 1994-2000 19.3 increase
• 2001-2005 5 increase
• MXs exports to Canada increased at a 14 average
  annual rate..

30
MEXICOS MARKET SHARE INCREASES IN THE NAFTA
ZONE, 1985 vs. 2000

• Simple manufactured products 4.5 of NAFTA zone
  vs. 9.5
• Natural resources mfg 3.1 vs. 3.7
• Non-natural resources mfg 2.9 vs. 10.6

31
NAFTAS CRITICAL MASS PROCESSHow CanAmerIco
benefits from greater trade cooperation

• Stimulates trade economic growth
• Creates resource synergy
• Attracts FDI
• Expands the size of the economic pie

32

1. NAFTA caused a critical mass process of
   economic development in CANIMERICO due to
   drawing in larger FDI to the region, enhancing
   business infrastructure, removing tariff
   protection from weak companies/industries in all
   3 NAFTA nations.
2. Critical mass occurs when change produces more
   change opportunity produces more opportunity.

33

1. Many attribute the emergence of Mexicos second
   political party (for the first time since 1929)
   in 2000 was directly tied to structural political
   changes stimulated by NAFTA.
2. The number of Mexican illegal immigrants into the
   U.S. has been tempered by new jobs generated in
   Mexico by NAFTA. The current immigrant problem
   would likely be far worse without the free trade
   agreement.

34

• Overall FDI for all 3 NAFTA members has increased
  
• The Mexican fresh fruit vegetable business has
  tripled
• NAFTA export activity through Texas has created
  250,000 new jobs in the state.

35
IMPACT ON THE USA

• 1. A net increase of 914,000 new manufacturing
  jobs minus a decrease of 766,000 jobs wiped out
  by increased imports from MX a net gain of
  approx. 200,000 jobs
• 2. Since the U.S. economy is 10X larger than
  Mexicos, the overall impact of NAFTA on the USA
  has been limited

36
Los nuevos servicios vienen con nuevo projectos
de negocio (New services come with new business
projects)
37
Pero el ganador más grande de NAFTA es(But the
biggest winner of NAFTA is TEXAS)
38
18 cents of each dollar stay in
the Texas economy in the form of insurance,
trucking, warehouses, etc.)
39
The poorest counties in Texas (light shaded)
stand to benefit most from NAFTA by their close
proximity of the border.
40

• THE NEGATIVE IMPACTS OF NAFTA

41

• IMPACT ON MX
• MX ag hit by US subsidies
• No net increase in MX mfging jobs
• Non-oil exports have quadrupled
• Wiped out the job infrastructure of lowest paid
  MX workers

42

• 5. About 30 of maquiladora jobs were siphoned
  off by NAFTA-created jobs in the interior of MX
• 6. MX agriculture has suffered a net loss in jobs
  revenue due to U.S. agricultural subsidies
• 7. No increase in net manufacturing jobs in MX
  due to its concentration in component parts that
  are exported to the USA for product assembly
• 8. Since 1994, MXs non-oil exports have
  increased 400 foreign direct investment by 14
  fold.

43

• In the decade before NAFTA, Mexicos average
  annual per capita GDP grew at 0.1, compared to
  1.8 in the decade after NAFTA. However,
  post-NAFTA economic structural changes forced
  on Mexico by the IMF (for huge loans made to
  Mexico after its major currency crisis in the
  mid-1980s) wiped out whole swathes of Mexican
  industry that had been painstakingly built up in
  previous years. The result was a slowdown in
  economic growth, lost jobs, and falling wages.
  In effect, the IMFs mandatory structural changes
  in Mexicos economy more than wiped out the gains
  of NAFTA.

44

• IMPACT ON USA
• Eliminated 1M jobs (by 2006), mostly in mfging
• Cumulative 1.2T in trade deficits with MX Can.
• A major factor in steadily eroding blue collar
  wages in both U.S. Can.

45

• NAFTA WORRIES
• Foreign companies exporting to US via MX
• Lack of tariff protection killed many MX corps
• No big dent in MX social problems or income gap
  between N S MX

46

• 4.After 15 years of the NAFTA effect in Latin
  America, only Chile had higher per capita output
  in 2000 than in 1980. A few other Latin
  economies had grown slightly, but they were no
  better off or worse off (during the period of
  NAFTA).
• 5. The large inflows of foreign capital into
  Mexico and Latin America sometimes destabilized
  banks and national economies (due primarily to
  lower foreign interest rates) and fueled
  inflation (due to temporary excesses of capital
  in affected economies).

47

• THE BOTTOM LINE ON NAFTA

48

1. The NAFTA regime and transformation of state
   policies has so far been a success. It has not
   only produced anticipated and desirable policy
   outcomes, but has led to anticipated future
   positive outcomes and rewards.
2. But the playing filed for the 3 partners has not
   been entirely leveled due to subsidies
   overzealous use of sensitive sector products.
3. NAFTA has not yet brought about progress in the
   economic gaps between north and south Mexico.
4. NAFTA has not caused any deterioration in
   Canadas welfare state as of yet.

49

• The increased FDI business activity associated
  with NAFTA has not yielded more net jobs, but it
  has affected the pattern of jobs, boosting
  employment in some industries, but wiping out
  jobs in others.

50

• NAFTA has shown that FTAs shift the composition
  of some jobs, with some winners some losers,
  but cannot be expected to create a net job gain
  in economies that are at full-employment, such as
  the USA Canada. In developing economies, such
  as MX, the NAFTA experience demonstrates that
  FTAs cant be counted on to produce much
  employment gain.

51

• NAFTA was an agreement designed to make life
  easier for corporations, not workers. (Economic
  Policy Institute)
• Since the 1980s, the wages of U.S. workers have
  not nearly kept pace with American productivity
  increases. If the min wage were based on
  productivity increases, it would 19.12 today.

52

• 5. NAFTA has been a laboratory for testing
  whether or not neo-liberal capitalism (with its
  emphasis on letting the market, rather than the
  state, control economic growth) is in the best
  interest of developing nations. The regional
  regime has put pressures tensions in
  state-market relationships in both Mexico the
  U.S., deepening domestic cleavages between those
  who advocate the (exclusive) role of markets vs.
  those who wish to let firms stay embedded within
  social, political, historical institutions.
  What is at stake is whether welfare policies will
  survive or be transformed after NAFTAS
  restructuring of state capabilities.

53
THE ECONOMICS OF IMMIGRATION
54

• LETTER TO THE EDITOR
• Our southern border is as imaginary as the
  equator. Our politicians cannot see it any more
  than those who are crossing it illegally.
  Politicians wring their hands on this issue as
  though they are being asked to police the
  equator. If they cannot do the job then they
  should turn it over to the private sector. There
  are companies in America that would do an
  excellent job of taking care of our immigration
  problem on the southern border. Policymakers
  tell us that fences will not work. Yet the White
  House still has a fence around it. An estimated
  12 million illegals are in our country. How is it
  that we can send men to the moon but we cant
  send these illegals home?

55

• LETTER TO THE EDITOR
• Years ago HMOs lowered premiums and increased
  benefits until they gained control of the health
  care system. Then they tripled and quadrupled the
  premiums and cut benefits. The illegals from
  Mexico are following the HMO playbook. They come
  into our country and work for a third of  the
  average wage. When they take over the food
  industry, field work, motel and hotel jobs,
  restaurant and landscaping, they will then go on
  strike, shut down mainstream America and then
  demand the high wages that the American people
  were being paid before they took their jobs away.

56

• Immigrant labor (10M strong) is the largest
  international industry in the Southwest USA

57
THE IMPACT OF ILLEGAL IMMIGRATION ON THE U.S.
ECONOMY

• 1.8 trillion annual spending, U.S.
• 220.7 billion annual spending, Texas
• 652 billion annual contribution to U.S. GDP
• 27 billion or more the costs of education,
  health care and incarceration in six states,
  including Texas

58

• A 2007 report by the federation said the costs of
  education, health care and incarceration of
  undocumented immigrants in six states, including
  Texas, exceeds 27 billion annually.
• "We need comprehensive reform that looks at our
  needs and addresses those needs," said the
  president of the group that examined data for 500
  sectors of the economy.

59
ILLEGAL IMMIGRANTS IN THE USA

1. Estimated 9.3M illegal aliens in 2002 50
   Mexican and 23 other Latin American 23 in
   California, 12 in Texas (approx. 1.1M), 10 in
   Florida
2. 6M of the 9.3M are believed to be employed,
   making up 5 of the total U.S. labor force.
3. Growth of the illegal alien population in
   America 13M in 1994 16M in 1997 17.4M in
   2000 19.7M in 2003

60

• 4. Median weekly earnings of full-time illegal
  immigrants in America 489 versus 643 for
  legal Americans
• 5. Twenty thousand new H-1B visas were approved
  by Congress in 2004 to bring in skilled specialty
  immigrant workers (computer programmers, nurses)
  to the American economy
• 6. 75 of day laborers in the U.S. (including 2/3
  of all workers in construction agriculture) are
  illegal.
• 7. 2/3 of the 20M foreign-born workers in the
  Texas workforce are non-citizens.

61
RECENT GLOBAL LABOR TRENDS

• 1. The overall of immigrants in the European
  American workforces is rising. Immigrants
  comprise approx. 15 of the American workforce
  today.
• 2. China developing nations have doubled the
  amount of manufacturing they do for Western
  nations since the early 1990s.
• 3. The IMF estimates that the global labor supply
  has increased 4-fold since 1980.
• 4. In a recent study of 18 nations, the average
  real pay of workers has increased 0.24, raising
  questions about how much workers have benefited
  from the worlds recent growth.

62
ESTIMATED OF IMMIGRANT EMPLOYMENT IN U.S.
INDUSTRIES

• Agriculture 61
• Domestic housekeeping 36
• Drywall installers 27
• Landscaping 26
• Maintenance 26
• Meat handlers 25
• Hand packers 22
• Cement finishers 22
• Roofers 21
• Animal slaughter 20
• Cleaning 19
• Laundry 17
• Apparel 16
• Hospitality 14
• Restaurants 11
• Construction 10

63

• Recent efforts to heavily fine U.S. companies
  who employ illegal Mexicans have already caused
  serious disruptions in the operations of many
  American businesses, especially in agriculture.
  Many farmers will produce only half of their
  normal crops due to growing labor shortages
  many farmers have chosen not to plant at all.

64
SHOULD AMERICA CLOSE ITS BORDERS?

• Those who simply want to deport all unauthorized
  immigrants might be surprised at the economic
  result. I dont think they would be very happy.
  It would cause a lot of dislocation in terms of
  trying to maintain industries such as
  agriculture, construction, and hospitality.
• Curbing the use of immigrant labor would cause
  the Central Texas building boom to fall flat on
  its back.
• Theres just not enough raw bodies in the
  construction trades. I dont think that Congress
  recognizes the full impact of a closed border
  system.

65

1. Theres an absolute numerical decline of Anglos
   in the labor force nationwide and in Texas.
   Without people from other cultures and origins
   coming here, wed actually see a decline in the
   American labor force.
2. The jobs immigrants take are not the jobs
   Americans wont do. Immigrants are doing the
   jobs at the prices that are offered. Roofers and
   cement mixers who used top make 15 an hour
   arent going to work for 8.
3. Were not just workers. Were not murders or
   criminals. We do important work. We work
   faster, for less money, and we do good work.

66

• The U.S. has 12-15M undocumented workers
  employed primarily in agriculture, construction,
  food services, tourism. With the low
  unemployment rate below 5, where do we think we
  can realistically find people to fill unskilled
  or semi-skilled jobs? If every illegal immigrant
  was sent back to his country of origin, America
  would have a worker shortage across the board,
  not just in a few industries. Prices would
  skyrocket and it would take longer to get work
  doneif you could find people to do the work at
  all.

67

• Looked at from a Christian point of view,
  nationalism is a very dangerous principle. The
  Christian understanding of who is our neighbor is
  not limited to those who look like us or who have
  the same citizenship papers.

68
MEXICOS SOCIAL ECONOMIC STRUGGLES
69
MXS CURRENT SOCIAL/ECONOMIC PROBLEMS

• Rapid population growth (70m to 100M in last 20
  years) has outstripped good economic growth
• Poor public education (national average of an 8th
  grade education)
• Systemic corruption saps economic growth from the
  grass roots level drives off investors
• Low farm subsidies cant compete with high USA
  farm subsidies
• Mass urban overcrowding under-employment

70

1. Because MXs average age is one of the youngest
   in the world (22), a million job seekers enter
   the MX economy each year.
2. But the MX economy creates only 100,000 new jobs
   annually, clearly showing the need for NAFTA.

71

1. 19m more Mexicans in poverty than 20 years ago,
   despite impressive NAFTA gains
2. Half of population unable to meet daily needs
3. 40 of rural Mexicans earn 1.40 daily
4. Every day, 400-600 rural Mexicans move to urban
   areas, adding to the gross over-crowding
   under-employment

72

1. China has used labor costs 75 lower (about 50
   cents daily) than Mexicos to pull away 300,000
   manufacturing jobs (especially in clothing) from
   300 MX plants
2. Chinese workers are much better educated than MX
   workers, making it hard for MX to move up the
   value-chain in manufacturing
3. MX is overly dependent on unskilled labor jobs

73
MEXICOS CORN DEPENDENCE

1. MXs corn productivity increased by 30 from
   1993-1999, but wages fell 20.
2. MX corn farmers largely dropped out of the market
   when heavily subsidized American Canadian corn
   flooded MX.
3. Then when the U.S. Canada hit corn shortages in
   1996, MX ran out of corn the fatality rate of
   malnourished MX children soared.

74
OVERVIEW OF LATIN AMERICA
75

• S.A. PER CAPITA GDP
• Chile 14,500
• Argentina. 14,400
• Uruguay 13,300
• Venezuela 12,800
• Peru 8,600
• Columbia 8,200
• Ecuador 7,700
• Paraguay 4,800
• Bolivia 4,300

76

• C.A. PER CAPITA GDP
• MX 9803
• Costa Rica 9481
• Dominican 7499
• El Salvador 5041
• Guatemala 4313
• Honduras 2876
• Nicaragua 3634

77
LATIN AMERICAN EXPORTS AS A OF 2004 NATIONAL
GDP

• ARGENTINA 25
• BRAZIL 18
• CHILE 41
• COLOMBIA 22
• MEXICO 30
• PERU 21
• VENEZUELA 36

78
LATIN AMERICAN IMPORTS AS A OF 2004 NATIONAL
GDP

• ARGENTINA 18
• BRAZIL 13
• CHILE 32
• COLOMBIA 22
• MEXICO 32
• PERU 18
• VENEZUELA 20

79
AVERAGE GROWTH RATE OF LATIN AMERICAN NATION,
1990-2000

• ARGENTINA 3.2
• BRAZIL 1.3
• CHILE 4.9
• COLOMBIA 0.8
• MEXICO 1.8
• PERU 2.1
• VENEZUELA -0.1
• LATIN AMERICA OVERALL 2.0

80
SOURCES OF FDI TO MEXICO

• USA 63 of MX FDI
• EU 26
• Canada 3
• Japan 2
• All other nations 6

81
MIDDLE CLASS GROWTH IN LATIN AMERICA
82
LATIN AMERICAN PER CAPITA GDP

• Mexico 9803
• Costa Rica 9481
• Dominican Rep 7499
• El Salvador 5041
• Guatemala 4313
• Honduras 2876
• Nicaragua 3634

83

• 1. Economic growth in several South American
  nations is spurring significant middle class
  growth (in contrast to the historical demographic
  profile of a small minority of upper class rich
  vs. a giant majority of lower class poor).
• 2. The new economic growth is based on
  proliferating small family businesses in contrast
  to the socialized government-backed state
  companies of the 1970s 1980s, which fell apart
  in the regions debt crisis of the 1990s.

84

• 3. Under new government definitions of poverty,
  families that can provide for their own economic
  needs free of government support are classified
  as residing above the poverty level. Forty
  percent of Argentinas families have now reached
  this level.
• 4. Economic growth projections for 2010 predict
  that approximately half of Latin American
  families will move above the poverty level, 15M
  Mexican households out of the 27M total by 2012.

85

• 5. In both Brazil Mexico, the incomes of the
  poorest half of the population are growing faster
  than the average, the overall poverty rate is
  steadily declining.
• 6. Poverty has declined more in Chile than
  anywhere else in Latin America due to sustained
  new job growth fewer children in families.
  Chiles income distribution is also becoming less
  unequal.
• 7. Latin America is going faster towards a
  middle class society than we could have imagined
  20 years ago.

86
FREE TRADE AGREEMENT OF THE AMERICAS (FTAA)
87
Creation of a free trade zone from Canada to
Argentina
88
BEYOND NAFTA?

• When NAFTA came into effect in 1994, 34 nations
  in the Americas pledged to negotiate a regional
  free trade agreement, the Free Trade Agreement of
  the Americas, by 2005. The U.S. initially
  championed the FTAA, hoping it would erode high
  Latin tariffs against American exports. But at
  the 2005 Summit of the Americans conference,
  Latin American nations declined to pursue the
  FTAA for the time being, but Chile, Brazil,
  Colombia pursued bilateral free trade agreements
  with the U.S.

89

• In recent years, the Andean Community (Bolivia,
  Colombia, Ecuador, Peru, Venezuela) developed
  much closer trade ties with the EU , eclipsing
  the amount of trade Latin American now does with
  the U.S. Brazil Chile have the largest trading
  relationship with the EU overall. The EU now
  invests more in CAN (Andean Community) than the
  U.S. does, accounting for a quarter of all Latin
  American FDI.

90
LATIN AMERICAN FREE TRADE PROGRESS

• 33 nations have worked since 1998 to put together
  a free trade zone in the Americas by 2005.
• The Andean Community recently merged with
  MERCOSUR (The Southern Common Market nations of
  Brazil, Argentina, Paraguay Uruguay) to form
  the South American Community of Nations.
• The U.S. currently has unilateral FTAs with
  Chile, Colombia, Panama pending possible approval
  by Congress.

91

• Mexico has free trade agreements with the EU,
  Israel, Japan, and several South American
  nations.
• In addition to its free trade agreement with the
  U.S., Chile has also brokered free trade deals
  with Canada, China, the EU, South Korea, Mexico,
  Panama, Peru, Singapore.

92
CAFTA

• The Central American Free Trade Agreement (2005)
  removes tariff barriers between the USA 6
  nations El Salvador, Nicaragua, Honduras,
  Guatemala, Costa Rica, the Dominican Republic
• 80 of the goods from these 6 nations were
  already free of tariffs before CAFTA went into
  effect
• CAFTA has only 44M people most are not yet
  middle class consumers.

93

• Latin American opponents of free trade with the
  USA worry that farmers, especially of corn,
  cotton, and wheat, will struggle to compete with
  their heavily subsidized counterparts in the U.S.
  They also worry that American corporations will
  try to take out patents on native plants that can
  be cultivated for medicinal purposes.

94

• 4. Central American leaders
• view CAFTA as vital in order to
• force the region to upgrade
• competitivelyespecially to keep
• China from siphoning off FDI and
• labor-intensive jobs from the region.
• 5. The U.S. feels CAFTA will also strengthen
  protection of American intellectual property
  (trademarks, patents, etc.) in Central America.

95

1. CATFA will increase the openness and
   accountability of Central American governments
   because their economies will be subject to close
   scrutiny.
2. CAFTA will also stimulate regional trade, since
   tariffs and other protectionist barriers will be
   largely outlawed. This will be especially
   important to Nicaragua, the poorest CAFTA member,
   which still has no paved roads to its Atlantic
   coast.

96

• 8. Economists estimate that CAFTA will produce
  only a .01 annual export gain for the U.S.
  economy, but total annual exports of the 6 CAFTA
  nations to the U.S. should increase by nearly 15
  (2.7B).

97
FTAA THREAT TO MEXICO

1. If the Free Trade Agreement of the Americas
   becomes reality in some form, Mexico will
   probably face tough competition from the labor
   cost advantages of many Central American
   Caribbean nations.

98

• THE CAPITALISM SPLIT IN SOUTH AMERICA

99

• Since 2005, South American nations have diverged
  in capitalist ideology. Chile, Brazil, Colombia,
  Mexico want to pursue neo-liberal
  (traditional non-socialist) capitalism based on
  close ties to the U.S. Venezuela, Bolivia,
  Ecuador, and Argentina favor a less pure form of
  capitalism mixed with varying degrees of
  socialism. (21st century socialism). This
  mixed capitalism is based on the governments
  running utilities, airlines, the oil industries
  as well as forming joint ventures with large
  private corporations holding a large economic
  stake in Latin America.

100

1. The economic income gap between rich and poor is
   a major reason for growing uneasiness with
   capitalism. In many South American nations, the
   richest 20 own over 60 of the total wealth,
   while the poorest 20 typically average only 5.
2. Also high inflation (20) the resulting high
   interest rates are commonplace throughout the
   region.

101

• 3. Venezuelan President Hugo Chavez has launched
  his own Bolivarian Revolution (named after
  Simon Bolivar, who liberated several South
  American nations from colonial control in the
  19th century) designed to lessen the regions
  perceived economic domination by the U.S.
  Western global government organizations (the
  IMF/World Bank, the World Trade Organization)
  to promote greater trade cooperation from
  within the Andean Community.

102

• US clout in Latin America has sunk to
• perhaps the lowest point in decades. Latin
  Americans now view the US as a banana republic.
  The major causes are
• 1.The US financial collapse which promises to
  have significant negative spill over effects for
  Latin America. US lectures to Latin America
  about excess greed and lack of accountability
  have long run hollow, but today they sound even
  more ridiculous.
• 2. Economic austerity measures pressed on Latin
  America by the US over the past decade.
• 3. The re-emergence of anti-American leftist
  leaders in several LA nations.

103

• 4. A significant decline of US investment in LA
  from 30 to 20 over the past decade.
• 5. Rapid trade growth with LA by both China the
  EU.
• 6. Russian provision of arms military equipment
  to Venezuela.
• 7. Increasing trade of technology between LA
  France. Similar deals could have been made with
  the US had it been willing to share its
  technology.