Monday, July 29, 2019

Why Are Americans Much Richer Than Mexicans?

According to the International Monetary Fund, per capita gross domestic product (GDP) in purchasing power parity (PPP) in the United States in 2017 was $59,495.  In Mexico, it was $19,480, 32.7% of that in the U.S.

The income of the average American is three times that of a Mexican, a ratio that has been relatively constant since 1990.  Mexicans have not narrowed the gap in purchasing power in close to three decades.

“Why” is a subject for serious research.  Answers lie in economic, political, cultural, and historical factors for later posts.  Here I want to ask a related question.

The conclusion of the Mexican-American War resulted in the 1848 Treaty of Guadalupe Hidalgo (the Mexican Cession).  The United States government paid Mexico $15 million for 529,000 square miles of territory that included the current states of California, Nevada, Utah, Arizona, one-half of New Mexico, one-quarter of Colorado, and a small sliver of Wyoming.

The U.S. paid another $10 million for the Gadsden Purchase of 1853, an 29,670 square miles region along Southern Arizona and Southwestern New Mexico.

Does anyone believe that the income of the residents in these 558,670 square miles of land would be higher if the territories had remained part of Mexico rather than being ceded to the United States? 

No reasonable person could possibly say yes.

Does anyone believe that Mexico will significantly close the gap in the next few decades?  What would it take?  Will the United States have to coexist with much poorer neighbors south of its border for years to come?  If so, what does that portend for the future of American politics and society? 

2 comments :

Unknown said...

Questions you might want to ask are---- What does Mexico do with the hundreds of millions of dollars the US gives that country annually?? and. What does Mexico do with the tens of billions of US dollars sent back home annually by its citizens living in the USA at our great expense (about 20 million illegal Mexicans, about 30 million legal Mexicans)?? Since Mexico has worked hard over the last 10-20 years to move its poorest/uneducated/unskilled/burdensome citizens into the USA (illegally preferred because it is faster and cheaper), it has become richer, again at our expense, but nothing changes.

Jacques Delacroix said...

Unknown: I don't think the US gives Mexico hundred of millions of dollars annually. If it did, that would still be peanuts, for them, and for us. "Mexico" as such as no say, except through taxation, on what Mexicans do with money sent back home annually from the US by Mexican citizens. What the recipients do with the money in Mexico is highly visible: They build houses, they buy land and farm it, more importantly, they start small businesses. Mexico - and Mexicans - have not become richer "at our expense." Most of the money Mexican citizens obtain in the US they get through work. When I buy a cup of coffee, the coffee shop owner is not getting rich "at my expense." He is just providing a service I want. I am puzzled about where your numbers about legal and illegal Mexicans come from. PS I am a conservative.