On January 1, 1994, The North American Free Trade Agreement (NAFTA) was passed. The passage of NAFTA would eventually remove tariffs on most goods produced and sold in North America and exported between the three North American countries. The passage of NAFTA allowed corporations to buy land that belonged to indigenous people and use it to produce cheap exports. This put a strain on local farmers and merchants who had to compete with the new "cash crops." The same day that NAFTA was passed, a group called the Zapatista National Liberation Army (also called the EZLN or the Zapatistas) came out in armed rebellion against local and national authorities. The Zapatistas said that NAFTA was a "death sentence."
Bishop Samuel Ruiz of San Cristóbal de las Casas said that the Zapatistas were different from past guerrilla groups. He said: "They don't want to seize power. This is something new. They want to create a democratic process that all Mexicans take part in. They want recognition of indigenous culture, history and autonomy." The Zapatista movement in Chiapas procliam to be a participatory democracy. However, in today's free-market information age, only a democracy will be able to meet the demands of the people.
The uprising in Chiapas began on January 1, 1994, the date that the North American Free Trade Agreement (NAFTA) took effect. The timing of the event is not a coincidence; the Zapatistas wanted to undermine the treaty's free trade goals and embarrass Carlos Salinas de Gortari, then president of Mexico. (Mott)
The Zapatistas' stated goal is greater rights for the indigenous people of Chiapas. They feel that treaties such as NAFTA take away the great natural wealth of the region without any benefit for the people of Chiapas and replace the goods provided by local workers with imports. (Rich, p. 73) Further, the Zapatistas and their sympathizers are weary of the large amounts of capital investment that would be necessary for all of the benefits of a new, industrialized economy. (ibid., p. 79) Indeed, on the first day NAFTA was in effect, as the Zapatistas began their revolt, the group's leader "Marcos" declared,
Today the North American Free Trade Agreement begins, which is nothing more than a death sentence to the indigenous ethnicities of Mexico, who are perfectly dispensable in the modernization program of Salinas de Gortari. Then the compañeros decided to rise up on that same day to respond to the decree of death that the Free Trade Agreement gives them, with the decree of life that is given by rising up in arms to demand liberty and democracy, which will take them to the solution to their problems. (Documents)
These claims are contrary to many accepted economic principles. Marcos' statement denotes a belief in what is known as a "zero-sum game." In a zero-sum game, the only way for one to win is for someone else to lose. However, economics are not a zero-sum game. If one side always lost in international trade, then there would be no trading partners for willing traders. (Sowell, 2000 p.269)
Trade occurs due to limited resources, such as labor, capital (things created for the purpose of further creation), and time. Any choice to use any resource involves an opportunity cost, something which must be given up in order to have what you choose. This creates what is known as a production possibility frontier (PPF). One person, or one group of people, can create any amount of goods within that frontier, but nothing beyond it. (Kearl, 2005, p.2-6)
The only way to achieve a production possibility beyond your PPF is to find someone to trade with. Not everyone is highly proficient in all areas of production. Someone might be the best at producing computers. They have the "absolute advantage" in computer production. That person might also be better than everyone else at making hats, but that doesn't necessarily mean they will make hats. They will specialize in making computers, while someone else who has a lower opportunity cost makes hats. The person with the lower opportunity cost has the "comparative advantage" in hat making. To whatever extent is possible and beneficial they will both specialize production. They can then trade with each other and everyone has benefited. More of everything can be created this way, and nobody has to lose. (Sowell, 270-274)
One fear in Chiapas is that NAFTA will destroy farmers in Mexico due to more technologically advanced Canadian and American farmers. Where will they find the resources to modernize and compete? (Rich, p.73) The answer is that they may lose their jobs as farmers, but the "loss" of a job may really be a shift from one area of the market to another. Labor is a resource which can be used for a variety of purposes. Someone who is a farmer one day can be retrained to be something else the next day. When resources are used to a more efficient end, everyone ends up benefiting. Referring to a loss of jobs in the United States, presumably the fault of international trade, Sowell notes,
While it is undoubtedly true that some particular individuals, or even many employees of some particular firms or industries, may have lost ground during the transition, we cannot commit 'the fallacy of composition' and assume that what is true for some is true in general. The rise in the general level of real income in the United States means that gains have clearly outstripped the losses. (p. 277)
When we compare Mexico's 1992 per capita gross domestic product (prior to NAFTA) with the 2005 estimate, Sowell's argument holds water. In 1992 Mexico had an estimated per capita GDP of $3,600. (Factbook 1993) The 2005 figure is estimated at $10,100. (Factbook 2006) The 1992 and 2005 rates of unemployment are 14-17% and 3.6% respectively. Even considering that there may be as much as 25% under employment, Mexico seems to have benefited from NAFTA. It may be argued that Mexico's $10,100 per capita income is artificially high. The CIA World Factbook (2006) notes that income distribution is unequal. Even so, more money in the hands of some Mexicans would eventually benefit all Mexicans. People tend not to just "collect dollars as souvenirs." People want their money to grow. That is done by investing it in the economy for an expected return on the investment. (Sowell, p. 284)
There are many benefits that come from investment. One is that any investment in the economy of any free market nation is multiplied as that invested money is re-circulated. This is due to the fact that when something is bought as an investment in more capital for an industry, the people who sell the capital good save some of the money (which can be loaned out for other investments) and use the rest to buy whatever they want. (Kearl p. 389-390) Another benefit occurs as investment increases technological innovation and the PPF moves out. New technology allows more to be produced at a lower cost, as well as allowing resources to be used more efficiently. As productivity and efficiency increase, employers can afford to employ more workers, pay their current workers more, or perhaps do both. (ibid., p. 355-361)
When looked at from an economic viewpoint, the Zapatistas' fears seem to be unwarranted. While short term unemployment as an economy shifts is bound to happen, that unemployment is won't necessarily last forever. The very shifts in the economy that people revile will eventually benefit everyone in the economy as more jobs are created and more beneficial goods and services can be provided. This growth is made possible by free trade, not by "protectionist" trade barriers.
Mott, Kimberly L., & Housman, Allison L. (1996). Chiapas Uprising and Trade. Trade Environment Database,Retrieved April 10, 2006 from http://www.american.edu/TED/chiapas.htm
Rich, Paul. NAFTA and Chiapas. Annals of the American Academy of Political and Social Science, Vol. 550, NAFTA Revisited: Expectations and Realities. (Mar., 1997), pp. 72-84. Retrieved April 4, 2006 from Stable URL: http://links.jstor.org/sici?sici=0002-7162%28199703%29550%3C72%3ANAC%3E2.0.CO%3B2-R
(1994) Documents of the New Mexican Revolution, Retrieved April 13, 2006 from http://www.hist.umn.edu/~rmccaa/la20c/ezlnday1.htm
Sowell, Thomas. (2000). Basic Economics. New York: Basic Books
Kearl, James R. (2005). Economics and Public Policy. Boston, MA: Pearson Custom Publishing
CIA World Factbook, 1993. Retrieved April 13, 2006 from http://www.umsl.edu/services/govdocs/wofact93/wf940157.txt
CIA World Factbook, 2006. Retrieved April 13, 2006 from http://www.cia.gov/cia/publications/factbook/geos/mx.html