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Home Publications Blogs Beat the Press Affirmative Action for Mexico in the NYT

Affirmative Action for Mexico in the NYT

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Thursday, 01 July 2010 03:47

The NYT had an article this morning reporting on the strong growth in much of Latin America, which it attributes in part to the high demand for commodities coming from Asia. At one point it comments:

"After a sharp contraction last year, Mexico’s economy grew 4.3 percent in the first quarter and may reach 5 percent this year, the Mexican government has said, possibly outpacing the economy in the United States."

This is actually rather weak growth given that Mexico's economy contracted 6.5 percent last year. By comparison, Brazil and Peru, two of the other countries highlighted in the article anticipate growth of more than 7.0 percent in 2010. Neither experienced a downturn as sharp as Mexico's.

Also, for Mexico it should not be much of an accomplishment to outpace the growth in the United States. Mexico's population is growing at a rate that is approximately half a percent higher than the rate in the United States. This means that it it doesn't grow more rapidly, then its people are getting poorer in average relative to people in the United States. It would be expected that its per capita growth rate would actually be faster, so that incomes are converging between the two countries. 

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written by izzatzo, July 01, 2010 7:28
The economic growth theory of Bounceback from Slackback by Baker is a phenomena typically missed by MSM which wants to report high or low growth and come up with reasons afterward to justify it.

The lower the starting point of growth in terms of capacity and labor utilitization, the more available are idle resources to bounce back from slack use, which is not true net growth in terms of new resources, but rather an increase in demand for existing resources.

To miss this is like saying a car goes from 0mph to 50mph in 7 seconds without reporting that maximum efficiency is achieved in one more second at 60mph, which appears as justification of a 10% underemployment rate of the car, or in a macro context a justification that 10% of all cars that should be driven to avoid waste are instead idle and unemployed altogether.

The car only looks like it's going fast due to increasing returns starting from 0mph, but compared to other cars in other countries at other times running at a 96% utilization rate and only 4% car unemployment, it's not going fast at all in terms of output efficiency.

Bounceback from Slackback has to be ignored by MSM because otherwise it looks like Keynesian socialism instead of good old fashioned free trade that always ticks along at a steady pace of full employment equilibrium when left to its own devices free of government interference.

Stupid liberals.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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