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Feature 112116 Pazos

Monday, November 21, 2016

Donald Trump is not Mexico's Biggest Danger

By Luis Pazos 

While Donald Trump's victory creates additional pressures on the Mexican economy, it is not the greatest danger. [The latter] is the wrong policies that have prevailed in the country over the past four years, which will tend to get worse without deep and adequate corrections.

The construction of a wall is not the main problem. On the 3,200 kilometers of border with the United States there are already walls totaling 1,200 kilometers, and along the rest of the distance there are strong security devices to prevent the crossing of illegals. 

The revision of the North American Free Trade Agreement was seen as coming regardless of who won, Clinton or Trump. As to Mexico, the country from which the most immigrants to the United States come, Trump used it as a scapegoat for unemployment in his country.  As well, the policies chanted by the future president are already harmful, even before they materialize, more to our country than to China, Germany and other countries.

The greatest danger for Mexico is the indecision of our government to take precautionary measures to minimize the impact of the 'Trump effect.' If a weather forecaster tells us a hurricane is coming, with an intensity that can vary at the last moment, measures must be taken – not just the creation of committees to face it. If the hurricane deviates, or becomes a tropical storm, good, but one must be prepared in case it comes with the preannounced strength. And major or minor damages will depend on that preparation, not only the hurricane. 

They are not going to counter economic woes expected in Mexico with the triumph of Trump with statements that Mexico will not pay for the wall, or by inviting Trump to talk once again with President Enrique Peña Nieto.

The only thing that can offset the Trump policies is a stronger and solid macroeconomic framework that includes the reduction of labor and tax burdens for job creators, [and] truly austere public sector spending that allows debt, deficit and tax reduction, so that they are competitive with the tax cuts Trump is planning in the United States. 

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Luis Pazos (e-mail: lpazos@prodigy.net.mx), who heads the Free Enterprise Research Center (CISLE) in Mexico City, holds a master's degree in Public Finance and a doctorate in Law from the National Autonomous University of Mexico (UNAM).  A prolific writer and forethoughtful analyst, Dr. Pazos' commentaries on Mexican economics, finance and politics have appeared in newspapers and magazines throughout the Americas.  As well, he is the author of numerous books.  Edited translation by MexiData.info.

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