The Myth of Middle Class Mexico

A recent opinion piece in Bloomberg makes a concerted effort to paint Mexico as “a moderately prosperous nation,” that “the World Bank calls upper-middle-income.” The thrust of the article is that Trump’s rhetoric on Mexico is wrong, and the country is, in fact, doing pretty alright. While I’m obviously not out to prove Trump right, I do want to correct the record on a few things…

Bloomberg vs. Trump?

Let’s start with the contention that Mexico is “upper middle income.” In 2019 World Bank ranked 60 countries as upper middle income. These are countries where GNI (Gross National Income, formerly known as GDP or Gross Domestic Product) is between $3,996 and $12,375 per capita (all figures in USD unless otherwise noted). According to the World Bank, Mexican workers earned an average of $9,180 a year, which is the equivalent of approximately $15,000 pesos per month.

Were that the case, Mexico would indeed be something closer to a middle income country. But Mexico’s minimum wage for non-specialized work is $5.14 a day, which means a day-laborer would have to work every single day of the year for almost five years to earn $9,180 (assuming the peso doesn’t lose value against the dollar). $15,000 pesos a month is equivalent to five times what minimum wage dictates, in 2018 only 2.3% of workers made five times minimum wage. The majority of workers earn something closer to twice minimum wage, a far cry from World Bank estimates of income per capita. Mexico’s Ministry of Social Development estimates that in 2018, 41.9 per cent of the population, or 52.4 million Mexicans, lived in poverty.

The Bloomberg piece wrongly suggests profits for capitalists mean an expanded middle class. According to the article, “strong productivity gains, trade deals and a modest depreciation of the peso have kept costs down even as production in China has become more expensive.” Let’s push past financial discourse and go in for some real talk here:

•productivity gains: less workers and lower salaries

•trade deals: more dumping and a harder ride for small and medium sized businesses

•a weaker peso: a higher cost of living for Mexicans living in Mexico

None of the above are conducive to the growth of the middle class. Rather, they point to the hyperexploitation of Mexican  workers, most of whom are unable to unionize, and many of whom face other types of disciplinary structural violence in their day to day lives, from diet related illnesses (see Alyshia Gálvez’ Eating NAFTA for more on this) to police and paramilitary violence (this is widely documented in Ciudad Juárez).

The problem with the middle income country fantasy is inequality, which in Mexico (as elsewhere) is radical, and it is rife. Bloomberg leans on a slight drop in the Gini index, which measures inequality, to show inequality is falling in Mexico. Scholars are far from reaching consensus as to whether or not inequality has in fact been reduced in Mexico over past decades. An International Monetary Fund report shows that any drop in the Gini Index is linked to targeted cash transfers (Prospera) and non-contributory pensions (Programa Pensión para Adultos Mayores).

Sometimes it seems like the whole point of the intellectual apparatus of transnational capital is to muddy the waters with a sludge of complex statistics. So let’s get this out in the open: Carlos Slim, who Forbes currently ranks the fifth richest man in the world, has more assets than 60 million Mexicans combined. In other words, one extremely rich man has more money than half of the population of Mexico.

An undated but couple-years-old report by Oxfam found that the wealth of the four richest men in Mexico was equivalent to over 8% of GDP in 2015 (Slim alone made up nearly 6%). Those same four dudes can employ nearly three million people at minimum wage using ONLY the actual yield (calculated as 5% growth a year) on their fortunes. So yeah, in other words everything is totally fine (eyeroll emoji).

It also seems worth mentioning that so far this year, remittances sent from Mexicans working outside of Mexico have reached historic highs.

To end off, I want to deal with this issue of prosperity. Of course Mexico is a prosperous country. No one with a shred of historical knowledge could doubt that. Here’s a quote from historian Herbert Klein’s 1998 classic The American Finances of the Spanish Empire:

Even before the end of the seventeenth century, the Viceroyalty of New Spain (modern-day Mexico) had become Spain’s richest American colony. By the early decade of the eighteenth century, it was producing over half the crown’s imperial income.

The mines in Zacatecas produced incredible amounts of silver, most of which was promptly bustled out of the country to service Spanish debt. Although the colonial economy extracted a huge amount of wealth from Mexico, the country was born indebted. The fact that a country is prosperous–doted with oil, mineral, forests and other natural resources capitalists transform into wealth–does not mean those who live there enjoy a dignified standard of living. The Bloomberg article suggests rising foreign direct investment (FDI), mostly in manufacturing, is synonymous with better living standards for Mexicans as implied by the term “middle class.” Readers will have to go elsewhere to learn that FDI tends to activate processes of displacement for local communities. Here’s a great piece by Martha Pskowski on resistance to a new TransCanada Pipeline in the state of Puebla.

We are all in trouble when the financial press positions itself as the rational, humanist opposition to the President of United States. Poverty and inequality in Mexico are not accidental. Rather, they are sustained through capitalist economic policy so that:

•a tiny minority of Mexicans can enjoy the privileges of the super rich

•US and other businessmen can get or stay rich

•consumers in the US and Canada can continue to access low priced produce and electronic and other devices

Pretending that Mexico is middle class might be an effective strategy for bankers in New York, or Mexico City for that matter. But these tales are not at all useful from the perspective of understanding actually existing social conditions south of the US border.