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Mexico does not get richer when corporations move their operations there. How does anyone belief this codswallop? Say I own a factory and it makes 100 million

Mexico does not get richer when corporations move their operations there. How does anyone belief this codswallop? Say I own a factory and it makes 100 million dollars gross per year and I have to pay my American workers 40 million dollars and the other running costs are 40 million. Now I've made 20 million in profit. Now I move operations to Mexico and I pay my cheaper workers 10 million dollars. Maybe I lower my product prices a little but I can still make it away with massively larger profits, which is why I moved operations there in the first place! Where is the money going into Mexico in any of this? Sure, the government taxes you but odds are that tax is less than in the US, since you wouldn't otherwise set up there (take a look at Ireland for a good example of this). You probably did some greasing up of politicians to get a good deal and much of that tax money is not reaching the people of Mexico in the form of decent services, as is the case in most government expenditure (US military budget anyone?) Now you say, well I'm hiring Mexican employees who are being paid and can now put that money back into the Mexican economy. This all sounds good in theory but you are paying them the bear minimum that you can (the whole reason you moved over there in the first place, remember) which ionly has to be marginally better, if at all, than the money they were making before you showed up. It's been shown that NAFTA killed local industry in a lot of Mexico because American companies could sell their products more cheaply to the Mexican market, thereby killing the local competition. This forced people to abandon their businesses and work for American companies for pitiful wages. Nothing about this neoliberal form of globalisation is helping to alleviate economic disparity in the world. We have seen inequality increase and real wages stagnate in the time since this whole project started.

schoen 10y ago
> This all sounds good in theory but you are paying them the bear minimum that you can (the whole reason you moved over there in the first place, remember) which ionly has to be marginally better, if at all, than the money they were making before you showed up. But haven't you increased the aggregate demand for labor in Mexico, since people who came to work in your factory are no longer doing other jobs? So either total employment could increase as other people start to do those jobs, or wages could rise more than marginally. (If Google comes to town somewhere and hires away the whole IT department from a local hospital -- even for a 1% pay rise -- presumably the hospital will now be looking to hire some new IT staff.)

schoen 10y ago

> This all sounds good in theory but you are paying them the bear minimum that you can (the whole reason you moved over there in the first place, remember) which ionly has to be marginally better, if at all, than the money they were making before you showed up. But haven't you increased the aggregate demand for labor in Mexico, since people who came to work in your factory are no longer doing other jobs? So either total employment could increase as other people start to do those jobs, or wages could rise more than marginally. (If Google comes to town somewhere and hires away the whole IT department from a local hospital -- even for a 1% pay rise -- presumably the hospital will now be looking to hire some new IT staff.)