www.CostaRicaTicas.com

That is probably the first time anyone here ever said I oversimplified things. Of course, you are right. It IS oversimplified. Necessarily. Do you really want me to provide my complete thoughts on the matter with all the various permutations and contributing factors? I don't think so.

Tman:

I am confused. ( Yes that has come up before ) Are you saying that Costa Rica is not going to sign the agreement. Thereby reducing their produce exports to the point that Planters will be going out of business and agricultural workers will be moving to the already overcrowded cities.

Lee

_________________
PS: DO NOT SEND MONEY!

There is no other way to talk about this than to oversimplify it meaning we talk about the part we think we know and all the parts we don't know crap about we leave out. No offense but a bean counter and I, a software engineer, can't begin to talk about this in depth with any real expertise. We can pretend, but in the end the PhD in economics can and would embarrass us. Even the PhDs would end up arguing over what effect this will have and who benefits the most. If anyone thinks he can talk about this as if what he says is absolute, then I’d just have to say “what an ego you have!” (anyone, not talking directly at you Prolijo)

In my last post, I wasn’t much talking about CAFTA. I was talking more about what we have done to ourselves – basically how stupid we are to buy into everything that is marketed to us. Much of what is marketed to us as needs are really just wants, but they are convincing us otherwise. A woman at work thinks her 10 year old needs a cell phone, because he walks home from school (but he is with a ton of other K*ds – she ignores this part – has a great excuse for it) – he needs a cell phone!

I love water, but not so much that I buy a bottle of it. The water bottlers however have many people believing that their water is healthier and tastes better. Before the latest rise in gas prices, a bottle of water in some places cost more than gasoline! When I recognized this, I knew it wouldn’t be long before gasoline would rise (really) so I put my entire savings in energy stocks and what a windfall. Back to the marketing – in the case of water, they were marketing fear saying that municipal water is dangerous (sometimes yes but not true overall). I heard a mattress commercial on the radio 2 days ago marketing fear too. They say that their mattresses have no chemicals in the fabrics and will let you breath better at night so we’ve finished with comfort market and moved on to comfort and chemicals (fear).

CAFTA, NAFTA and the rest of the future “AFTAs” – I could care less about them because I’m going to buy what I need first and what I want last and with cold hard cash just like I pay for the pu*sy in CR, with cold hard cash. The AFTAs can’t screw you over, but you can screw yourself over.

The trickle down thing was oversimplified (maybe? haha!). I was thinking more products on the market, more avenues to sell products; it has to help someone that is trying to feed their K*ds. Who does it hurt? I guess those that buy that shouldn’t be buying (talking material goods, not food).

Gee, I’m thinking of a lot of crap, but I might sound too much like a pessimist for saying it so I’ll end here. My only hope is that CR doesn’t attempt to repeat what we’ve done to OURSELVES in America.

I’m not really pessimistic, I’m just amazing at what people will accept and do to themselves and then try to blame it on big corporations, on globalization or on government (speaking about those in the USA).

No PhD here though my undergrad was in Economics. Back then we used to have a joke. If you took all the economists in the world and laid them end to end you still wouldn't reach a conclusion. I won't pretend to have all the answers. But I wasn't just making those comments up. They come from some pretty smart PhD's and there are some basic facts that are hard to argue against:

You can talk all you want how we have a more expensive lifestyle now than we did when we were K*ds. That is undoubtedly true. Of course I realized that when I made my post. But while that explains why one income doesn't go as far it used to it can't explain by itself why it now takes two full incomes to maintain our present middle class lifestyle and still have less to show at the end of the day. You actually left out the biggest part of our increased cost of living (and it isn't an extra cell phone bill or anything we can really do without). Healthcare costs have literally exploded even after inflation adjustment. The declining quality of public education is another factor. When I was a K*D it was a big deal if a K*D brought a knife to school, now they have guns and metal detectors. This forces those that can afford it (or those who have a wife that can bring home an extra income) to pay for private schools or to buy homes in expensive districts with better schools just to get what we took for granted back then. In other words, in many ways we pay more and still get less.

Whatever. However you measure it on the cost side the inescapable and indisputable fact remains that in real terms, unless you're on the top, most of us work harder to make less however we end up spending it. There's even a term for it. It's called "The Great U-Turn". You can see it graphically here based on US census data http://www.unc.edu/~nielsen/soci209/s2/hs12003.gif. No less than the US Census Bureau itself has concluded "it is clear that the household income distribution became increasingly unequal beginning in 1981. [as evidenced by several measures]" The Gini Coefficient, a unified widely used measure closely related to the Lorenz Curve provides good comparisons over time (though not so good between different sized regions), shows very clearly that things have been getting relatively worse in the US http://upload.wikimedia.org/wikipedia/en/d/d4/Gini_since_WWII.gif. The inflation-adjusted minimum wage is one third less than it was 35 years ago [url[http://members.fortunecity.com/multi19/images/minimum_wage_usa_1954_on_5KB.gif[/url]. I could cite other examples, but the point is that very few if any Economics PhD's would dispute those points.

What is subject of more debate is what is the cause of this growing inequality. Globalization of trade and the Reagan/Bush tax cuts are a big part of the cause. But they are certainly not the only contributing factor. Other reasons include the decline of trade unions (arguably not entirely a bad thing), the increase in the number of single-parent households (often female headed), the increased entry of women into the workforce that increased the labor supply (they also generally earn less), competition from unskilled immigrants, the decline in the inflation adjusted minimum wage (already mentioned), and the shift of the economy from high-paying manufacturing jobs that have been shipped overseas to lower paying service jobs (think McDonalds and WalMart). So in short, you are absolutely right. It isn't that simple.

The other inescapable fact is that Perot's prediction turned out to be true. While US companies and their shareholders may have benefited from NAFTA, the NET job flow has been to the south and to the extent the jobs we lost have been replaced it has been with lower paying ones. Since NAFTA, US factories have closed and jobs have been outsourced. The bulk of the new jobs that have been created to replace them are in lowpaying service jobs. In other words, people now work at WalMart for little more than minimum wage selling clothing made in China (I know - not a NAFTA partner, but still now an MFN) while they used to have higher paying jobs manufacturing those clothes. And how do we afford to buy all those clothes since we don't have the jobs to cover the cost? We run up our credit card bills and operate on debt just like our government, writing IOU's to the Chinese and others. No wonder we're not in a position to have them back us up regarding North Korea (let alone honor our intellectual property rights). But that is a whole 'nother subject of debate.

Some points:

-I find an interesting irony in the CAFTA debate. Unions here oppose the treaty because it will cost jobs. Unions in the US were opposed to the deal because it would cost jobs. I loved it when the two sides banded together to oppose the treaty; who was right, and who's going to lose the jobs?

-NAFTA gets a bad rap. The whoosh sound heard in the US manufacturing base is coming from China, not Mexico. In fact, the Mexican industrial base is also under attack, getting undercut by the Chinese. The US has bent itself backward to accomodate China because all these multinationals have the dream of penetrating (had to throw a CRT friendly word in there) the Chinese market. It was frustrating that CAFTA and NAFTA get a bad rap while trade policy with Cina goes unchecked (intelectual property, dumping, valuation of the yuan etc.). One interesting fact pops up in this. Central America imports $9billion worth of goods from the US, while China with more than 30 times the population only imports $27 billion.

-Belize has a separate set of trade deals, some of which are much more favorable than CAFTA. They form part of the Caribbean bloc which gets special concessions from the US and Europe. IIRC, the Caribbean Basin Initiative gave Caribbean nations excellent access to the US, a benefit that was later expanded to include Central American nations. That continued access, however, was a unilateral concession by the US which can be terminated at any time. One of the main objectives of CAFTA is to formalize this benefit in a bilateral treaty.

-My guess is that Costa Rica will be one of the bigger winners of CAFTA. Of these CA nations, CR hastwo big advantages. It has a workforce that is more ready to compete in the global marketplace. Look through the paper and you see plenty of ads for call centers, software development, online marketing, pharma, etc. Compared to its neighbors, CR has a much more educated and bilingual workforce which will allow it to take advantage of CAFTA. The other great advantage is that CR already has a critical mass of export goods; exporting to US or Europe is not something new, there is certain expertise acquired among a fairly diverse base. That doesn't mean everything will be rosy. Some sectors will suffer, which in my view is okay. Some of the protected industries should not exist. For example, chicken here costs 75% per lb than on the international markets. Why? We got a virtual monopoly with high barriers of protection. Who gets hurt by this? The millions of CR consumers who pay this high price.
-CAFTA, however, is not the cure to everything. CR has some serious problems that have been ignored by the current administration and are not addressed by the legislative gridlock. Let's take one example; the transportation infrastructure is poor, particularly when you consider the impact on tourism and exports. There is a road that has been perpetually three bridges away from being finished; in theory it would reduce transit time to the coast to forty minutes or so. Imagine how that would open things up on the coast. Take a look at how long the Liberia airport has taken to get to a functional level, and even now it lags demand. How pissed would you be as a resident of the coast, knowing that the gov has dragged its feet for 20 years with these upgrades, changes that would significantly impact your community?
-Besides transportation CR faces important issues with its debt, communication infrastructure, educational system, and crime.
-My guess is that the factors most impacting chicas and their fees: immigration policy (crack down on foreign chicas which help expand supply), unemployment (goes down with CAFTA), avg income (will likely continue to grow), and finally number of touritsts, particularly mongers who tell their friends how wild it was down at the gulch.

I do agree that Mexico seems to have taken less of our jobs than China. I thought Perot made it seem as if all of the automobile factories would be in Mexico? That isn't true - they've actually built auto factories in the USA since NAFTA.

I don't think we lost any jobs to Mexico based on cheap labor alone - how about the expenses related to protecting the environment and safety regulations and labor force regulations and how about defending all the lawsuits? MNC can go south and to China for many reasons. We are a "rules" society. There is way more regulation here than probably anywhere in the world. China is a monster compared to anything south of us - way more hardcore and without any emotions.

As it relates to China, MNCs aren’t going to China; they are simply closing up here and then buying from China. It is more of an outsourcing deal when it comes to China. Why make it here for 8$$ if China is making for 1$$, right? Let’s buy from China. Let’s close this factory down, yeah!

What is extremely sad is that if you watch “All in the Family,” you'll hear them complain about the same crap 30 years ago as we complain about today!

What else can I say? Oh, again, I hope CR doesn't buy into the crap that we've bought into (marketing bullcrap)! I'm moving to CR early next year so if they become America - I'll look for another frontier. Philippines? Brazil (no Brazil - get killed there).

I'll try to keep this short and only address a few of the above points because this is getting way to deep for this late at night.

In a way they're both right. The jobs lost in CR will not all just go to the US. The unions that oppose the treaty in CR are the public employees of the ICE and INS. Many of their jobs are make work ones maintained due to pressure of the unions themselves. Most of those jobs will just disappear as competition requires greater efficiency. US jobs will flow to CR, especially such things as call-center and low or semi-skilled manufacturing jobs. Whether there will be enough or more than enough to soak up all the unemployed ICE and INS workers remains to be seen and whether higher paying tech and insurance industry jobs that flow to the US will offset the loss of the lower wage jobs that flow out also remains to be seen. I certainly wouldn't want to bet on either outcome.

In fact, I said as much about China but the fact remains that the balance of trade between the US and Mexico was postive in 1993 when NAFTA passed and has worsened virtually every year since (the deficit was over $45B last year) source:http://www.census.gov/foreign-trade/balance/c2010.html I'd hardly call that a bad rap. BTW, the trade balance with CR so far this year is $100M in the black.It will be interesting to come back and check that number in a few of years. The trade deficit with Canada had averaged around $10B/yr o more or less before NAFTA. Last year it was a record $66.5B. Last year's deficit with China was $162B (scary). The problem isn't really what we import from them though. We imported nearly $60B more from Canada than we did from China. The problem is that they close their market to nearly all of our products (or simply steal it as in the case of intellectual property).

Don't even get me started on this. I agree completely.

Dragon's other comments are interesting but I won't argue with any of them.

I won't address all of Dwayne's points either and some have already been addressed above anyway, but I will add few comments here as well
That is all definitely true and I think we have too much regulation here particularly as it is manifested in many frivolous lawsuits whose costs ultimately get passed along to consumers. However there is such a thing as a happy medium. What is it they say? Everything in moderation. I'm not crazy about the idea of eating lettuce from Mexico that may have been grown using DDT. Lets face it despite spotty inspection at the border a lot of stuff slips through the cracks. What about the farm workers who dispense those chemicals usually without any masks, gloves or other form of protection? Basic worker safety is not just an expense. Its a moral necessity. And what about all the chemicals that the Maquiladoras are dumping into the ground and which ultimately finds its way into the Rio Grande and down into the Gulf of Mexico? I could go on, but hopefully you see my point.

That is very true. In fact, it's that way because thats the way the Chinese insist we do it (more money for them). However it really doesn't change anything as far as the unemployed worker is concerned. Outsourced or out of work, it all amounts to the same thing.

Boy, we sure have started a firestorm of ideas and economic philosophies.

Lee, I do think CR will eventually sign the agreement. To not do so would be economic suicide in this ever increasing globalization we are all living in the middle of. The current administration in CR has been gutless and has confused the public AND private sectors with changing stances seemingly every other day...or using the agreement as ransom to get the new tax increases and code it has been trying to pass for 5 YEARS.

I have many MACRO view points on these issues under discussion that probably differ considerable from my respected friend Prolijo...but for now I think we can use CR as a micro study on the affects of government, taxation reform, international trade, national sovereignty security, 3rd world education and social reforms, and yes, even a study of free enterprise/free trade versus controlled markets and protectionistic attributes. And yes, you can scrunch some of this study down to the tiny tiny industry in CR of P4P.

Take the product/service for example. You have many domestic products (Ticas) who have a long history of availability, sweetness, reasonable value, and for a long time...protected markets with foreign "product" being quite limited and unknown. Many foreigners used to come for this special service and were quite content in general with the quality of service, relative safety of travel and beauty of surrounding environment. Going rate was maybe $25-$50 per hour or 2. Over the past 15-20 years you have seen a large influx of "foreign" product hitting the market. You have hugely discounted imports from Nicaragua (Nicas) usually available at nearly 50% discount over the Ticas. You also have had some specialty imports coming in from Colombia and Panama...who started the "CIEN CIEN CIEN" creed and started driving up prices over all in the P4P marketplace. Combining the imports and domestic product, many would suggest the variety and freedom of choice is a positive thing for this market...proven by the growing hordes of foreign Mongers hitting town on a weekly basis...and almost 5,000 people "of interest" involved in this CRT board.

Now, the domestic market in many ways is NOT happy with the combined lower priced and higher priced imports that are now competeing for their previous monopoly on the monger market. AT first, they liked letting the low priced Nicas in to service the jobs and Tico men that the Ticas no longer wanted to service...since they now catered and preferred north american buyers. So, the open market was open as long as it served their needs or preferences. But then, when Colombianas, Panamenas, and yes even Dicas (Dominicanas) came in providing more educated, attractive and challenging services...well, the Ticas would now like all these foreign products OUT of their marketplace. BUT...IF they were able to roll back to years gone by, got all the Nicas, Colombianas and Panamenas out of their market...a large percentage of their "buyers" would follow the product they have gotten a taste for to wherever that product was available. In turn, many of the establishments that offer these services/products would become empty losers, the Ticas would sit around tapping their fingernails (and their last manicure they can afford) on the top of the bar wondering where all their customers and funds went.

Once they woke up and smelled the "death stench", in desperation they would start moving to where ever their CIEN paying customers were traveling. In some cases they would move themselves, Mom and their fatherless Ch*ldren to Panama City, Medellin, or wherever the mongers moved their attentions to. This would leave CR in the hands of the Ticos who now have to go to work pulling oxen carts of wood and produce to market just to survive...because the working girls are no longer paying for their cars, gas, and taxi service to the Delrey and back home.

Many mongers would probably follow the inexpensive but sweet Nicas back to their homeland...and with the money flowing there, you would see the infrastructure and tourism in Nicaragua almost overnight surpass that of the historic Costa Rica. Many other rich and noble mongers with big bucks will take their preference to Colombia and Panama. They will be motivated to strike deals with the guerillas in Colombia just so they can safely come in and harvest the beauty and specialness of the Colombiana. The GNP, trade balances, EVERYTHING would be turned around almost overnight because of...$$$ changing venues.

Sorry for the long parody. My point for those that do not see the obvious is that the world at large operates and grows from TRADE. Money/currency is only useful in exchange of good and services. It has little value after death...except for those DEPENDENTS you have allowed to live off of YOU (it is better if you teach them to fish than just give them fish). Money represents value of goods and services...not much more. If you cut off money flow in the markets, limit peoples ability to negotiate their own fair deals, and to live freely in the world at large...well, you just suck the life and purpose out of living.

Trade agreements are primarily controlled by governments and large corps as we have all stated here. Those governments and corps are controlled by PEOPLE somewhere down the line. Usually these people are not "majorities", but tend to be able to manipulate the masses with promises and slogans...giving away just enough to stay in power or control for at least their own generation. These complex governments and corporate institutions DO employ a vast majority of human kind. That gives them the influence and power to keep "individuals" in place and force us to trade and play by their rules. We can either try and make the most of this by finding our own way in it, or...

What some of us are forgetting is the HUGE black markets on a global basis that do trade on a smaller basis, but en masse. They move terrible sinful things like drugs, gambling opportunities, sex workers, and even legitimate goods like cars, electronics and information UNDER the radar. These businesses do not want legalization of these things or even FREE trade. They make a lot of money under the table and at high premiums.

Between these two extremes are a FEW sovereign individuals like some of us on this board...who just want to live, work, party, and Phuck in peace. We dont steal, lie or cheat...but we want the freedom to live anywhere in this shrinking world we choose, WORK anywhere WE choose, and TRADE anywhere we choose. As the world is now, between the government complexes and the black markets controlling much of global trade, it is truly difficult for the soveriegn individual to fine a reasonable place to do all this. The USA to many of us is not as FREE as it used to be. Places like CR are contemplating more laws and taxes to make it harder for "foreigners" to live and work here, and the places that are still more purely free sovereign countries welcoming foreign investment and ideas are constantly harrassed by the Super Powers and Central Banks to help them place controls on their "citizens".

OK, I have succumbed to a Prolijo esque long post of many complicated thoughts and challenges. In summary, I wish CAFTA was GAFTA...GLOBAL American Foreign Trade Agreement. But for now, I will accept one step at a time...and hope 2-3 generations down the road will find the balance and equity that should exist globally...not just among SOME regions, certain races or religions. Give trade and marketing of it a chance to create world peace. It MUST be a better alternative to guns, tanks and atomic bombs...

Finally...good night.

WOW! Tman, awesome, a really nice read. Your post should be the last of them all on this subject, I mean what else could anyone say except THANK YOU!

Thanks for everyone's input on this, Projoli, Dragon, Lee, LVSteve and more... I'm done with this one, I can't add anything else that would be meaningful.

Prolijo,
I think we're talking about the same animal; just groping around on different parts. My point about the bad rap is that you hear bloody murder about the trade deficit with Mexico (at around $40 B), but until recently we didn't hear an outcry about China and its $ 160 B (and growing quickly). The deficit in large part exists--as you pointed out--because the Chinese limit access to their markets (something Japan does to this day...IIRC the trade deficit with Japan is either larger than with Mexico or roughly the same size...could be off but Iremember being surprised when I saw te numbers).

My guess is that CAFTA will do wonders for the insurance sector, creating jobs and new products. I'm less enthusiastic about telecom, though I sharply disagree with the ICE union's stance. Some areas need to be opened up to free ourselves of gov red tape...but I think one of CR's successes has been the high penetration of phone lines. Also, I'm not too thrilled about the oligopoly in mobile phones that has come about in Latin America. Replacing a public monopoly with a private duopoly will get us all screwed.

Another short example came to mind today from a consumer standpoint. I have been pricing electronics between CR, Panama and the USA for a project here in CR. I think I have a pretty good idea...but can anyone tell me why the same Samsung 42" Plasma flatscreen TV is $3995 in CR, $2995 online at BestBuy USA, and $2500 at Panafotos in Downtown Panama City?

Its called lack of FREE trade...and China and Asia at large are still getting a big profit at half these prices. Who are all the middlemen getting the "slush" (tariffs and duties)...and WHY do we need them again?

Article from A.M. Costa Rica

---Leftist students from the Universidad de Costa Rica plan to march on the assembly building Tuesday, and students at the Universidad Nacional also plan a march this week. Union leaders whose members oppose the treaty said they will mount an extensive protest beginning in November. They have threatened to close down the country and did so last January with road blockades.---

There is a difference in protesting and closing down the country. The unions have a right to protest but not disrupt the country's functioning.

I think that if they try to close down the country, then President Pacheco needs to arrest every one of them. He doesn't need to allow all the chaos that happened last year. He had the guts to send CAFTA to Congress last Friday, regardless of threats from the unions. It makes no difference if the unions protest, they are still going to lose their jobs eventually because they are not competitive enough to survive.

Glduke...problem is...Pacheco has no army or forces at his disposal to dispell major strikes and blockages in the country. Thats the main reason he hasnt had the balls to send the agreement to the congress until 3 months before the election. He doesnt want to deal with it really. It will probably take a new president and another year to ratify the agreement here. It will be a shitty economic year in CR.

Tman



Maybe there is a time & a place to have this stuff after all?? Oh well nothing will ever be perfect but the women come pretty close in CR to me anyway! I just know one thing for sure in all the years I have enjoyed CR the economy has not really done that much one way or the other but my mongering dollars have increased in value with the influx of the always increasing supply of prettier younger talent sure this talent now has more body hardware & tatoos I have to put up with compared to the past but those handle bars they put thru their backs can cume in handy . The only thing I see consistent is the consistent mess their more socialist nature keeps things in so I believe from this consistent backward natural self perpetuating state they keep themselves in that my mongering money will always go along way there.

Peace & happiness.
Zip

TMan,
The respect is mutual even if we sometimes disagree. I think more often than not we actually do agree. Even in this case I don't think we're so far apart as you suggest. A lot of what I have posted is sort of devil's advocate position.

I actually come from a free trader background. My early career was in import-export. I worked with an "801" factory in Haiti (801 was a trade provision which allowed for duty-free import of goods assembled overseas from US materials). I've seen directly the benefits of trade in the form of jobs for impoverished Haitians and cheap goods for US consumers. I also saw old footwear and textile factories in New England after sitting idle for a period of time converted over to high-tech manufacturing industries.

The theoretical benefits of free trade from an Adam Smith or David Hume perspectives are quite clear. The problem I have with world trade as it works in the real world is that it's never really quite free. There are always some sort of duty, tariff, fee or other impediment. Where there aren't there are blatant and not so blatant subsidies to industries to try to give them an advantage in either the domestic or export arena. The playing field is never really even and the so-called FTA's always have hidden language to protect one interest or another. Consumer, worker's rights and environmental groups have some input but I seriously doubt low prices, safer workplaces and cleaner environments are the main goals of the people drawing up those rules. What's good for GM may or not be good for the rest of the country.

For example, despite the CBI we haven't eliminated the sugar subsidies that benefit Big Sugar in states like FL and LA. Haitians and Jamaicans still come over here to harvest the cane instead of being able to do it at home where it would make more sense (instead of near the environmentally sensitive everglades) and US consumers pay higher prices for food that contains sugar (which in the american diet includes just about everything).

Similarly despite CAFTA, is the US going to do away with all the other farm subsidies and how well will the small farmers in Central America be able to compete with US corporate farms? CAFTA could change the very landscape or CR and instead of a patchwork quilt of small farms worked by the owner, rural farmers could become just another low-paid employee for ConAgra or ADM.

But I digress into devil advocacy again. I still will maintain that the negative consequences of NAFTA in terms of its effect on the Balance of Trade is extremely clear-cut and indisputable. What is much harder to see are all the benefits that were promised us when it was promoted. However, in spite of all that, I couldn't say NAFTA has hurt me. Some manufacturing jobs have been lost and some service jobs have been created. Consumer prices have been kept low and corporate profits kept high. There is an interesting article written by the conservative CATO institute in 1998, which questioned whether the simple measure of a negative trade balance was even necessarily a bad thing. http://www.freetrade.org/pubs/pas/tpa-002.html In the conclusion they made an interesting statement:

Ultimately, I think Dwayne really had it right. None of us really know how CAFTA will effect everything. It could be great. I hope it is. Some people will clearly gain and others will lose. As a potential retiree to CR I'd love to see lower priced more efficient phone service. I won't lose a lot of sleep for ICE or INS bureaucrats in make-work jobs that get put out of work and hopefully they'll find real work somewhere else. All I was trying to say was that any change brings uncertainty and given the power of MNC's in trade negotiations I do not have a lot of faith in how the little guy will fare in all of this.