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April 2022, Volume 28, Number 2

Canada, Mexico

Canada. Truckers protesting a government requirement that everyone entering Canada be vaccinated occupied downtown Ottawa in February 2022 and closed the Ambassador Bridge that links Detroit and Windsor and carries Canada-US trade worth $300 million a day. As auto assembly plants closed, PM Justin Trudeau declared a national emergency that allowed police to seize the trucks used to block traffic.

Analysts attributed the protests to covid fatigue and Trudeau government policies that make life difficult for the unvaccinated. The Canadian truckers, some of whom said they wanted a restoration of their pre-covid individual freedoms, inspired similar protests against covid-related mandates in Europe.

The Toronto metro area of nine million residents has the third most tech workers in North America, after Silicon Valley and New York City, due to the high concentration of tech talent and Canada’s relatively liberal immigration policies. University of Toronto Professor Geoffrey Hinton is credited with spurring a boom in artificial intelligence startups in the Toronto area that is sustained by lower salaries, an average $90,000 in Toronto versus $165,000 in Silicon Valley in 2020.

Pope Francis met with indigenous Canadians and apologized for the role of Catholics in the residential school system that aimed to assimilate native children until the 1970s. Catholics operated 70 percent of the 130 residential schools. A 2006 suit brought a settlement of C$4.7 billion, most paid by the federal government; the Catholic Church paid C$1.2 million of a promised C$25 million.

Mexico. Mexico has been one of the most open countries during covid, with no vaccine or negative test requirements to support tourism, which accounts for 10 percent of GDP. CDMX or metro Mexico City with 22 million residents attracts the most tourists, followed by beach resorts on both the Pacific and the Caribbean coasts. Mexico has 65 recognized indigenous groups, including 700,000 indigenous residents of CDMX.

AMLO. President Andres Manuel López Obrador wants state-owned enterprises Pemex and CFE to produce and distribute the country’s energy. Mexico currently exports oil and imports gasoline and other refined products from the US. At the behest of AMLO, Pemex is building a new $8 billion refinery in AMLO’s home state of Tabasco, bought a refinery in Houston, Texas, and is spending $3 billion to refurbish six refineries in Mexico. AMLO’s goal is to halt Mexican oil exports and gasoline imports and to restore the luster of Pemex, which generates a third of Mexican government revenues and employs 120,000 people.

Mexico spends relatively little on health care, 5.4 percent of GDP compared to almost 20 percent in the US, and spends its public health care dollars inefficiently. Mexicans with formal jobs receive health care via IMSS for private sector workers and similar programs for public employees. The 55 percent of Mexicans with informal jobs have been served by Seguro Popular since 2003, a program funded by general tax revenues.

AMLO replaced Seguro Popular with the Institute of Health for Wellbeing, allegedly to extirpate corruption by having the finance ministry buy drugs and having the army distribute them. However, many clinics do not have needed drugs, so over 40 percent of health care spending is paid personally, the highest among OECD countries.

Three journalists were killed in January 2022, including a Tijuana journalist who had asked AMLO for protection during one of his press conferences. Over 30,000 people were killed in Mexico in 2021, most in disputes between drug gangs, but journalists are often targeted after they expose corruption, prompting the complaint “hugs for the narcos, bullets for the journalists.”

The minimum wage in Mexico rose to 173 pesos ($8.40) a day or 5,186 pesos or $250 a month on January 1, 2022, when INEGI reported that 19 million Mexicans earned the minimum wage, 18 million earned one to two times the minimum wage, 2.3 million earned three to five times the minimum wage, and 800,000 earned more than five times the minimum wage or more than 865 pesos a day or 25,950 pesos or $1,260 a month.

INEGI reported that there were 25 million formal sector workers covered by minimum wages and 30 million worked in the informal sector.

Export ag. Mexico’s Central Bank reported that the country’s agro-industrial exports were $44 billion in 2021, led by $5.1 billion worth of beer, $3 billion worth of tequila and mescal, and avocados, berries and tomatoes worth $2.7 billion each.

The US suspended avocado imports from Mexico in February 2022 for a week after a USDA APHIS inspector was threatened near Uruapan, Michoacán after discovering a scheme to export avocados from Puebla as Michoacán avocados. USDA has 77 inspectors and 13 staff in Michoacán, where 300,000 people are involved in the production and packing of avocados.

The Mexican Association of Producers, Packers and Exporters of Avocado (APEAM), which represents 29,000 growers and 65 packinghouses, promised to create a security and investigation unit to protect USDA inspectors. Some speculated that drug cartels could interfere with tomato, bell pepper and berry exports to the US by threatening USDA inspectors unless they were paid by growers. Americans consume an average nine pounds of avocados a year.

The US banned imports of fresh avocados from Mexico between 1914 and 1997, and today allows imports only from Michoacán, where drug cartels are active. Jalisco will export fresh avocados to the US in 2022.

Michoacán and Jalisco are also centers of berry production, with both states shipping the four major berries, blackberries, blueberries, raspberries and strawberries, to the US. Exports of strawberries, blueberries and raspberries almost tripled from 257,000 tons in 2011 to 754,000 tons in 2020; the value of these exports rose fivefold, from $516 million to $2.4 billion. Half of berry exports are from Jalisco, which has 10,000 hectares of the major berries.

Driscoll’s affiliated Berrymex, founded in Jocotepec in 1991, was joined by Berries Paradise in Tuxpan in 2008 to produce berries for export. Some residents complain that berry exporters lease land from local farmers, use scarce water to grow berries, and attract migrants from poorer southern Mexican states who settle in these relatively richer Mexican states.

The US is consuming more imported Mexican cucumbers as consumption rises and US production falls. Mexico is a low-cost producer of high-quality cucumbers, and Canada is a high-cost producer of premium English cucumbers.

Mexico in 2015 barred persons under 18 from working for wages in agriculture. One result was only workers 18 or older on export farms, but not on farms that produce for the domestic market. A reform approved in 2022 allows workers who are 15 to 17 to work for wages in farm jobs deemed appropriate by the Ministry of Labor. Allowing some of the 2.6 million 15 to 17 year olds in counties with fewer than 15,000 residents to work for wages in agriculture can enable youth to earn wages and reduce labor shortages, but could also reduce school attendance: 73 percent of 15 year olds were in school in 2020 in counties with fewer than 15,000 residents, 65 percent of 16 year olds, and 59 percent of 17 year olds.

Unions. Mexico revised its labor laws in 2019 to allow workers to elect unions to represent them in secret ballot elections in a bid to end the practice of unions signing “protection contracts” with employers before workers are hired that benefit union leaders but not necessarily employees.

The new law was put to the test at a GM truck assembly plant in Silao in February 2022, where the Independent National Autoworkers Union won 78 percent of the vote to replace the incumbent union. A first election in April 2021 was overturned when uncounted ballots were found in the offices of the incumbent union, and an August 2021 election ended the existing contract.

Mexico’s minimum wage is 173 pesos ($8) a day in 2022. Regular workers at GM in Silao begin at $9 a day and top out at $23 a day. Low Mexican wages in factories reflect the government’s failure to raise minimum wages significantly for many years, slow productivity growth, and protection unions that assist employers rather than workers.

Puerto Rico. A federal judge approved a restructuring of $33 billion of Puerto Rico’s debt in January 2022 under a plan crafted by the Puerto Rico Oversight, Management and Economic Stability Act or Promesa (promise). The plan allows Puerto Rico to repay $7 billion and shifts future pensions from defined benefit to defined contribution plans.

Puerto Rico had $70 billion in bond debt and $50 billion in unfunded pension obligations to public workers in May 2017. The bankruptcies of several public entities, including the Puerto Rico Electric Power Authority, have not yet been resolved. Puerto Rico, with 3.2 million residents in 2022, had the largest government bankruptcy in US history; Detroit in 2013 owed $18 billion.

Act 60, enacted in 2012 and revised in 2019, gives tax breaks to “resident investors,” defined as newcomers who have not lived in Puerto Rico for the previous 10 years; they can be exempt from capital gains tax and pay a four percent corporate tax rate. Puerto Rico’s population fell by 12 percent between 2010 and 2020, and the tax breaks aim to draw people to Puerto Rico and create jobs in construction.

St Barts, a French island collectivité of 10,000, is the winter playground of the rich and famous. The Rockefellers and the Rothschilds built hilltop mansions in the 1950s, the entire island was electrified in the 1980s, and today there is a construction boom. Even though 60 percent of St Barts is deemed unbuildable and off limits to developers, a local joke is that the green American dollar can generate building permits, making the official bird the construction crane.

Plans to build the new 50-room hotel L’Etoile next to the Eden Rock hotel led to controversy when Eden Rock and environmentalists objected. Permits were granted, construction began despite continuing suits, prompting a stop-work order in February 2022.

The Dominican Republic attracted over 700,000 foreign tourists in December 2021, the most ever and giving the Dominican Republic over five million tourists in 2021, 60 percent Americans. The Dominican Republic had $5.7 billion in tourism revenue, the most of any Caribbean island. All of the 175,000 Dominican Republic tourist workers are vaccinated and wear masks when interacting with guests, but guests at the Dominican Republic’s all-inclusive resorts do not wear masks or test regularly.

Central America. Vice President Kamala Harris attended the inauguration of Honduran President Xiomara Castro in January 2022 to strengthen efforts to reduce corruption and provide opportunities for potential migrants at home. Harris’s goal is to tackle by root causes of migration by “combating corruption and expanding economic opportunity.” The Biden administration says that US firms pledged to invest $1.2 billion in Northern Triangle countries.

Some three million Guatemalans live in the US, and they remitted a record $35 billion in 2021. Rising remittances have helped to offset the rising cost of food and other items.

El Salvador declared a 30-day state of emergency in March 2022 after gangs went on a killing spree that resulted in over 60 random deaths in one day. President Nayib Bukele promised law and order, and seemed to be keeping his promise due to a secret pact with gang leaders under which the government gave them financial incentives in exchange for less violence appears to have unraveled.

Argentina. The government has long spent more than it collects in revenue, borrowing from foreign investors and repeatedly defaulting on its foreign debt. The IMF refused to bail out Argentina in 2001, which led to an historic default and peso devaluation that sharply reduced the accumulated wealth of the middle class.

Argentina owes the IMF $57 billion, some of which was incurred in a bail out in 2018 that aimed to support the conservative PM, who thought that borrowing to improve infrastructure would attract foreign investment. This plan failed, and Peronists were re-elected in 2019.

Almost 30 percent of Brazilian adults are obese, prompting laws that reserve subway seats for obese people and give them priority at some public places by considering obesity a disability. Some cities remind residents that they should not discriminate against obese residents in a bid to tackle gordofobia, which has led to one of the world’s highest rates of plastic surgery as residents try to have fat removed. In Mexico, the United States and Russia, a third or more of adults are obese.

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