Fostering the Tortilla Revolution

 by Timothy Birdnow  

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Ronald Reagan understood the principle of economic leveraging, and his Strategic Defense Initiative so hamstrung the Soviet government financially that it was eventually toppled.  Perhaps George Bush's ethanol initiative can have a kinder, gentler effect on our southern neighbor.

President Bush, in his State of the Union Address, proposed a major initiative to develop ethanol to wean Americans from their dependence on oil — particularly oil from Middle-Eastern Arab nations.  Dry up the oil money and you can defund terrorism, the thinking goes. If we can create an alternative fuel supply, we can stop the hemorrhaging of our national treasure to sponsors of Jihadist thugs bent on killing us; it is a national security issue.

But there are always unintended consequences in this world; and in this case the President`s proposal has set off a firestorm south of the (largely imaginary) border because the plan would require converting American grown corn into alcohol, and this will, of course, raise the price through the roof. Corn is a staple in Mexico, and it is the mainstay of the poorer Mexican's diet.  A serious rise in corn prices could be catastrophic, and the President's speech touched off "tortilla riots" protesting anticipatory price increases.

Caspar Weinberger, Jr., writing about this in Human Events, explains the political fallout from these riots and it occurs to me that this actually offers the United States an opportunity to affect positive change both here and in Mexico, and may well have been something the President planned all along.

In short, we have corn and Mexico has oil, and we both need what the other possesses.

Mexico sits on one of the world's larger oil pools but has done a poor job of developing her fields thanks to a nationalized industry and government granted monopoly.  Petroleos Mexicanos, or Pemex, the Mexican oil company, is forced to share profits with the government along a 60/40 split, with the corporation taking the lesser share.  The Mexican government does little to offer incentives for exploration and development, while banning foreign firms from entering the market. As a result, huge amounts of wealth sit buried beneath the Gulf of Mexico, doing no earthly good for the numerous poor of our southern neighbor, who are forced to either sneak into the United States or slowly starve.

Mexico suffers from terrible poverty, the results of a poverty of Capitalism, and it will not change unless forced by circumstances.  Reform of the oil industry would be a major boon to Mexico's economic development, but it will not happen by itself; American policy must propel this change.  But how to accomplish this?  Pressure must be exerted based on need, and we have something they need very much — corn. They have something we need as well, something that could earn them a decent profit.

Did President Bush perhaps realize this?  Ethanol has been a boondoggle for 30 years; it is much more expensive to produce than gasoline, requiring almost as much energy to make as we get back from it.  Also, it puts out about 60% as much energy as gasoline (making it ideal in vehicles which utilize super-oxygenation that would explode gasoline), meaning that you will have to use more of it.  As serious solutions to our energy needs go, this is a loser.  Of course, it will drive the price of corn through the roof . . ..

Will the threat of rising corn prices be enough to force the liberalization of the Mexican oil market? How long can the government stand with tortilla riots? The Mexican government desperately needs the United States to scotch this initiative.

It will be argued that using food as a weapon is immoral, that we are trading "starvation for oil."  I ask this question; is it somehow more moral to allow Mexicans to starve slowly rather than force reform through rising prices now?  We saw this principle in action with the grain sales to the old Soviet Union, and we kept that gang of criminals in power for decades by propping them up at critical times while their people slowly starved.  Wouldn't it have been better to have pulled the rug out from under them in the 1970's than to have forced the people to suffer for another decade?  Ronald Reagan understood the principle of economic leveraging, and his Strategic Defense Initiative so hamstrung the Soviet government financially that it was eventually toppled.  Perhaps George Bush's ethanol initiative can have a kinder, gentler effect on our southern neighbor.

The immigration issue starts well before the U.S. border — it starts in the streets and alleys of the poorer parts of Mexico.  Nobody takes leave of their homeland to settle in a strange country without great need.  Mexico will never do anything to stop the tide of colonization of Los Estados Unidos, since money sent home by expatriated Mexicans has become one of the country`s most lucrative industries (to the tune of $23 billion in 2006).  Serious border enforcement here in America will help, but how do you stop the swarm? The best place to stop them is in Mexico itself; if they have no reason to leave they won't come here.

Mexico sent few settlers into their province of Tejas because the land was poor and unsecured.  Norte Americanos came for cheap land, but Texas never truly prospered until oil was discovered.  Now Texas has used much of her oil, but the money made from that industry has positioned Texas as one of the wealthier states in the Union. (It would have the eighth largest GDP of any nation, according to this 2005 report.) Ditto Oklahoma, which rightly should have been abandoned after the Dust Bowl.  Money from oil could turn Mexico around, but the Mexican system of doing business is going to have to change.  If they want us to sell them corn they are going to have to sell us oil, and that means denationalizing the oil industry. 

Perhaps President Bush understands this, and his continued advocacy of ethanol for fuel may be a tool to force Mexico into desperately needed reforms?  I suspect that is not the case, but it should be; we will all profit from an oil-rich Mexico.  The day may come when 12 million illegal aliens will decide to give up the  life of vagabond workers, and return home to their families.  THAT would be the truly decent way to do immigration reform.

Immigration

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