How Trump and AMLO Can Lay the Foundation for A Successful US-Mexico Alliance

Trump and AMLO have a chance to reset the currently strained US-Mexico relationship, based on mutual self-interest.

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AMLO and Trump should ditch the rhetoric and focus on the basics: boosting foreign trade and investment, increasing the skilled labor force, and basing policy on mutual self-interest.

With this month’s electoral landslide in Mexico, leftist populist Andres Manuel Lopez Obrador (AMLO) rode a wave of discontent with the traditional ruling political classes to a shocking result, utterly stunning Mexico’s establishment parties, and humiliating current president Enrique Pena Nieto of PRI (Partido Revolucionario Institucional).

One can’t help but smirk a bit at the name of Mexico’s longstanding establishment party in and of itself: is it feasible to suggest that a political party can truly be both revolutionary and institutional?

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How revolutionary will AMLO prove to be?

Is his election a dire defeat for the current global economic order? Does it bode poorly for the future of US-Mexican relations? Is this a sign of renewal for the Latin American left?

On all three points…most likely, the answer is no.

As a libertarian who firmly believes in the wondrous ability of free-markets to create stability and prosperity, AMLO undoubtedly appeared to be the worst choice for Mexico. That is not in doubt. Nonetheless, he won a free and fair democratic election, and should at least be given the chance to put his policies into action.

Viewing the prosperity and stability of Mexico and the United States through the prism of libertarianism, Constitutionalism, and pragmatism, I believe that Trump and AMLO would be wise to consider these five points as they work towards mutual prosperity and stability.

Focus on the labor market: jobs with benefits, where real value is added, are the key

The great irony of socialism is that while it has claimed to be the champion of the working man, it has produced discontent and misery for the working classes throughout the annals of the past 100 years. Fundamentally, a free-market economy has proved to be the most effective means of eliminating poverty.

AMLO has proposed creating a free trade zone along the entire US/Mexico border, where he plans to offer generous incentives and tax benefits to American companies to set up shop.

Good. He seems, at least, to recognize that these companies, far from “exploiting” the proletariat, will be far more likely to offer the kind of good paying jobs, with healthcare and retirement plans, that workers crave for themselves and their families.

Look for the mutual benefit

Top AMLO adviser Marcelo Ebrard has argued that “He [AMLO] doesn’t see Trump as a lunatic. He sees him as making a political plan, and he wants to work with the United States on our shared interests.”

If that is true (and that is a big if), that would be the silver lining in AMLO’s disappointing overwhelming victory.

Yes, illegal immigration is a serious problem. However, the United States does have an urgent need for migrant labor, both from Mexico and from the United States. Likewise, Mexico has an urgent need for foreign direct investment from the United States and elsewhere.

It’s a waste of time for Trump to use Mexico as a perennial punching bag: we need Mexican labor, but we also can not afford mass illegal immigration and open borders. It is high time for Trump and AMLO to sit down and forge a comprehensive agreement on a guest worker program that streamlines the process for businesses to higher Mexican workers.

Some Mexicans can and should seek higher wages in the United States. Others can and should seek higher wages in the special economic zone that AMLO is proposing.

Keep spending under control

The biggest and most serious criticism of AMLO thus far is that he has no plan to pay for all of the wonderful things that he proposes to do. It is the same Achilles heel that has perennially plagued the Bernie Sanders campaign.

Bottom line: if you make populist proposals to win elections, with no credible plan to pay for them, you aren’t much better than the 10 year old who runs for class president promising free pizza and cupcakes for the whole class every day.

Debt is a serious problem, a ticking timebomb, for both candidates. AMLO should honor his pledge to not increase Mexico’s external debt, currently at USD $480 billion, but in order to do so, he will have to scale back his spending proposals.

Free trade is the foundation of prosperity

NAFTA has been a success, end of story. AMLO has apparently backtracked on his anti-NAFTA rhetoric. Trump should do the same. Trump claims, perhaps with some degree of truth, that he does in fact support free trade, but that under current trade agreements the United States does not enjoy free and fair trade.

It is crucial to the prosperity of nearly 500 million people, that Trump, Trudeau, and AMLO sit down and hammer out an agreement that does constitute free trade: no tariffs, no quotas, no loopholes, no protectionism, no bailouts and caveats for special interests and wealthy donors.

Wherever free trade and international commerce have gone, the results have been astounding. Wherever protectionism and paternalism have gone, economic stagnation has followed.

Forget the base; focus on the basics, and get results

Under Mexican electoral law, AMLO can only serve one six-year term. He doesn’t have to worry about reelection, so he has the luxury, in a sense, of doing what he thinks is right. Hopefully we are going to see that he has abandoned his hardcore socialist, leftist, and populist ideology, and will govern with a sense of pragmatism.

Other leftist leaders have turned out to be pleasant surprises: Lenin Moreno in Ecuador and Ollanta Humala in Peru come to mind.

We can’t know what is truly in AMLO’s heart, but if he truly wants what is best for Mexico, he will not be foolish enough to destroy the free market.

Trump, on the other hand, is beholden to his red state heartland base; he is already gunning for reelection. He can maintain the support of  Rust Belt voters and disenchanted blue collar workers, however, without making Mexico his pinata (pardon the analogy).

Here is what Trump should say: “Let’s be realistic here. We need Mexico, and they need us. We need some foreign labor, and Mexico needs our foreign investment. Let’s work together for a stable economy based on mutual self-interest. We are not going to open our borders to anyone who wants to come in, but we will work to match qualified Mexican and Central American immigrants with employers in the United States who have a need for migrant labor.”

How hard was that? Trump needn’t antagonize the Mexican community…he needs to focus like a laser, on the message of mutual self-interest and shared prosperity.

If he does that, he will win reelection, Mexico and the US will see increased trade, our respective GDP per capita will grow as we keep unemployment and inflation in check…and Trump could improve his currently strained relationship with many sectors of the Latino community.

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