Book Review: How NAFTA Transformed a Mexican Border Town
Like many a good horror story, Boom, Bust, Exodus begins with an ominously peaceful scene: Galesburg, Illinois, in the early 1970s, a locale described in a 1974 Chicago Tribune article as an “industrial Eden” peopled by “mid-Americans straight out of a Norman Rockwell Saturday Evening Post cover,” the very epitome of “stability in [the] heartlands.” The area’s economic mainstay was Appliance City, a unionized manufacturing plant producing Admiral, Maytag, Magic Chef and other familiar home-appliance brands.
A less halcyon stability reigned in the area to which author Chad Broughton next turns our attention: the Lower Rio Grande Valley of Texas. Drawing on “remarkably thorough and balanced reporting” by Ronnie Dugger and others in the pages of The Texas Observer, Broughton describes the farmworker strikes of the late 1960s and the period that followed the crushing of these strikes by growers and Texas Rangers. It was in this post-strike period that multimillionaire onion grower and self-described “conservative visionary” Othal Brand began his 20-year mayoral command of McAllen, using police brutality, backroom deals and political favoritism to cement his rule and enforce the peace.
Broughton gives the devil his due by allowing that Brand modernized McAllen, if not in the toy-village manner of Galesburg, at least by paving the streets and building such amenities as an airport next to a mall—a mall that would become the most profitable in the country on a per-square-foot basis, thanks to well-off Mexicans who could fly in, shop, and fly home. With his eye fixed on trade with Mexico, Brand established the McAllen Economic Development Corporation (MEDC) to smooth the way for companies wishing to build maquiladora assembly plants in Reynosa, where workers would be paid a fraction of the wages paid to those in U.S. factories such as Appliance City.
The 1994 North American Free Trade Agreement further opened the border to maquiladora-produced products, and NAFTA, coupled with Maytag’s transformation from a family-run, customer-centered, paternalistic company to one obsessed with “shareholder value,” helped signal doom for Appliance City. In October 2002, Maytag announced that it would shut down its Galesburg operations and move them to Reynosa. “It was like somebody telling you that your father’s dead,” said plant manager Kirk King. “It just knocked me out.” Keith Patridge, today the president and CEO of MEDC, was unsympathetic. “There is no right to a living wage,” he told Broughton flatly.
Right or no right, if a living wage had been subtracted from Galesburg, it had hardly been added to Reynosa. Rather than take MEDC’s claim of $2.60 an hour for maquiladora workers at face value, Broughton, a sociologist, interviewed workers and examined their pay stubs, verifying what Reynosa’s director of industrial development had told him: The average maquiladora pay before overtime is about 78 cents an hour. (Maquiladora wages, adjusted for inflation, have remained stagnant since the early 1980s.) Pablo Lara, a fervent follower of James Dobson’s evangelical Focus on the Family programming, said of his own circumstance, “This job doesn’t pay nearly enough to raise a family. My family’s economic situation would never allow me to buy one of the refrigerators I make. I don’t have enough to buy fruits and vegetables.”
Because maquiladora boosters kept telling Broughton how much better workers have it in Reynosa than in rural Veracruz—whence many of them, including Lara, had come—he traveled to that state to see for himself. And, indeed, it wasn’t good. He found that what had previously been communal ejido land was now privatized; to enter NAFTA, Mexico had bowed to pressure from the U.S., the International Monetary Fund and the World Bank and reversed the land reforms of the Mexican Revolution. And those landholding campesinos who remained could not compete against American corn subsidized by the U.S. government, or Florida orange growers who used their “influence to get special protections in the so-called free-trade deal.”
“With the Mexican and U.S. governments against them,” Broughton writes, “and prices plunging, many campesinos and other rural folk headed north.”
But Reynosa, the main city up north, was a mess: overcrowded, crime-ridden, lacking in infrastructure. As Broughton writes, “With economic globalization, companies like Maytag had found a way to slough off not only union wages, pension obligations, taxes, and regulations, but also any sense of obligation to the place where they made their money. In Reynosa, Maytag could be practically anonymous in a sea of factories that did nothing to address the urban anarchy their presence had spawned.”
Laid-off workers in Galesburg, meanwhile, went on food stamps and Medicaid and took entry-level jobs, though even menial work proved hard to come by. Maytag CEO Ralph Hake (“poster child for what’s wrong with CEO pay,” in the words of executive compensation expert Fred Whittlesey) parachuted to a McMansion on the 11th hole of the Anthem Country Club in Las Vegas with at least $10 million in severance and millions more in stock after overseeing Maytag’s sale to Whirlpool, where he had formerly held executive positions. “He came into Maytag from Whirlpool and absolutely ruined it in a three-year period,” Doug Dennison, a union negotiator at Appliance City, told Broughton. “He ruined so many lives.”
It’s hardly a secret that the world’s wealth chasm is widening. This is dramatically illustrated by Oxfam’s recent revelation that the planet’s 80 richest individuals now have as much wealth as the 3.5 billion poorest combined, and that by 2016, if current trends hold, the 1 percent will own more than the other 99 percent. In the U.S., in the 30 years after 1977, the 1 percent received 60 percent of the increase in national income, and that percentage is growing. Between 1950 and 1980, before the rise of the U.S. political right and the full flowering of its political agenda, the average family income of the bottom 20 percent of Americans rose 138 percent; from 1980 to 2010, it shrank by 7 percent.
The story told in Boom, Bust, Exodus suggests that this chasm is not the result of inevitable and intractable market forces, as free market ideologues would have us believe, but the product of calculated political actions that include union-busting, tax loopholes for corporations, rollbacks on capital gains taxes, the delinking of executive pay from company performance, deregulation of financial markets, and trade agreements such as NAFTA, all of which have ensured that increases in productivity enrich only owners, not workers. The rise in inequality can be attributed almost entirely to stagnant wage growth.
It took Broughton more than 10 years to research and write this book, and he has crafted a narrative that reads like a novel, well paced and free of polemic. He puts a human face on economic inequity, and by showing that it is politics that brought us to the current predicament, he lets us see that it is through politics that we can find our way out.