Focus 580; Here: A Biography of the New American Continent

In the first hour of the program today we'll be talking with Anthony DePalma. He is currently the international business correspondent for The New York Times assigned to explore the increasing connections between North and South America. Before taking on this assignment he worked or continued he did work for the times but in other capacities and he has covered both Mexico and Canada and based on his experiences put together a new book that looks at the relationship between these three countries how it is that even though they were started with people that had a rather common world view the three places turned out to be very different. Now how it is over time the three have become politically and economically closer. Then and then they were when they started out. His book is titled here a biography of the new American continent it is published by Public Affairs and it is just out. Before joining the times he was freelance writer for The New York Times magazine for Harper's for the Columbia Journalism Review and Women's Day. And he is joining us this morning by

telephone in fact he's in Nova Scotia this morning as we talk by the way. You can call in and join us by phone if you're here in Champaign Urbana 3 3 3 9 4 5 5. We also have a toll free line good anywhere that you can hear us and that is 800 to 2 2 9 4 5 5 3 3 3 WRAL and toll free 800 2 2 2 Mr. DePalma. Hello David good morning. Thank you for talking with us there. We appreciate it. How's the weather there. Well you know I've been watching and monitoring the news from the from the room here I think I am in one of the only remaining cool corners on the continent. It's really not bad here at all compared to what I hear is happening everywhere. It's been particular the second half of the summer here has been kind of on the warm side so it's the idea sounds pretty good I'm going to be out that way myself in about five weeks if I can stand that. Oh well stay near the water and you'll be alright.

And do I also have a right that you were the first Times correspondent to have covered both Canada and Mexico. Right right. People have commented to me several people and hearing that we're going to have this conversation have commented on the title or at least have raised a question about the title. And this may be sort of a pedestrian way to start but but maybe I'll do that and ask you about what it is that you were thinking about when you arrived at at this title. Yeah. Well as as you very clearly and succinctly mentioned in the intro here it's been a process of evolution over half a millennium. Five hundred years ago people coming from roughly the same area to roughly the same area at roughly the same time beginning sitting down the roots of what became Canada Mexico and the United States beginning at it with a lot of symmetry and then breaking apart. What I see happening now is that rather than focusing on those

dissimilarities and the things that make us set us apart one from the other the circle has. Sort of come all the way around and now we are increasingly forced to look at those things that we have in common as we do that that process of looking at environmental problems or labor problems or political problems or problems of strategic defense problems of health care and on and on and on a tremendously long list. We tend to be forced now because of technology because of the way the world is set up and the way the world is going to look at them from a common point of view that common point of view because this is where we live leads us closer and closer I think as time goes on to referring to all three countries simply as here because we do share so many concerns and so many of our common problems are going to be solved if we solve them by common answers. That's what. I was trying to that's that the central

concept of the book. I think that's the way we're heading. We're certainly not there yet so there's no need to worry about borders disappearing completely but borders I mean last in North America today than they have ever meant you in the book make reference to the way that here in the United States I think we we have for a long time and in some sense still do think about the rest of North America and the image I think is an apt one when you suggest that people think about when we look at the weather for example you turn into the Weather Channel. We see this picture of North America the United States of course is highlighted because that's where we are. And then there are these dark regions. There's there's some stuff to the north and some stuff to the south. And we we know of course that that that's Mexico and and Canada but it's almost as if they're not quite there. And and I wonder though how it is that the Canadians in the Mexicans think obviously they they can't have that sort of luxury in

the never have been able to because what happens in the United States definitely affects them. But. I guess I wonder how it is now. They do indeed think about the United States and what it means to them to have this enormous country in terms of population in terms of economic power in terms of geo political status right there on their doorstep. Right. Obviously the fact that they can never forget even for a moment that sometimes it said that Mexicans and Canadians have one common problem between them. That is that's us. And that very much defines the way they live the way they have to exist on this continent but just look back a couple of years not very long ago at all when the current government here in Canada and I'm speaking to you from Sydney Nova Scotia on Cape Breton Island. The government that is now in power the Liberal government of Prime Minister. Junker Tian was elected in

1993 on an anti free trade platform. They were very much against the Canada-U.S. Free Trade Agreement which had been signed in 1988 and they basically said this is not a good deal for Canada. They've changed in just the eight years since then to be calm extraordinarily strong boosters of not only the North America Free Trade Agreement but the steps of that they feel are very likely to come out towards what they call post the naphtha. And that is trade agreements with the other countries in the hemisphere and increased linkages with the. How did States like the development of a continental energy policy compare that continental energy policy meaning making it easier for coal and natural gas and electricity that is produced here in Canada to get across the border to the United States in the mid 1970s. Canada passed a national energy program

which basically made it impossible for energy to take that route and impossible for U.S. companies to invest in Canadian energy companies. Now I was in Calgary just a few weeks ago went to the Calgary Petroleum Club and most of the people I ran into there were Americans. Thats a huge change obviously in the way we deal with Canada but also the way Canada deals with and perceives its closeness to the United States. I think if you flip over to Mexico its the same thing in 1988 then President Salinas Carlos Salinas the. Sorry was asked by a New York Times correspondent my predecessor whether or not Mexico was ready to sign a free trade agreement with the United States and he said noddle never happen. We are too different. We are too different he said for it ever to work. That was in 1908. By 1993 he was the single most strident voice on the continent for the passage of a North

American Free Trade Agreement. Mexico had been until that point preceded by almost a hundred years of animosity suspicion and belligerence towards the United States. In 1993 with the signing of the nasty and early 1994 with the implementation of it they basically said well we're stuck with them and so we'd better learn how to deal with them and somehow try to turn it to our advantage. Those are huge changes that have taken place in just a few years. And I think that gets to the heart of your question about how they perceive it rather than being necessarily a liability as they did before. They're looking at what kind of advantages they can get from living alongside the United States. Our guest in this first hour focus 580 Anthony DePalma. He's international business correspondent for The New York Times and is the author of this recently published book they were talking about the title is here a biography of the new American continent it's published. By Public Affairs is in bookstores now. If you'd like to read it in a good

concise kind of account of what has happened in the certainly in Canada in the United States over the last few years and what that perhaps means for the United States and for the relationship between all three countries I question certainly are welcome three three three toll free 800 to 2 to W while I'm a minister to be able to spend a little time in Canada fairly regular basis over the last decade or so and tried it as much as I can to keep up with what's happening in the least little bit keep up with what's happening in Canadian news and how Canadians talk about their country and our country. And it seems that the one thing that's fairly consistent as Canadians talk about what it means to be a Canadian is one touchstone for them as well. One thing it say is Canada is not the United States. There's a lot of defining themselves I think in opposition to us. At the same time though it seems that that the idea of Canadian identity and what it is is very contentious and certainly one of the things we know is that. Canada

people on the people where you are in Nova Scotia are very different then the people all the way on the other side and in fact they have sometimes they have more in common with the people that live in the United States due south of them than they do with people across the you know the people in that the Pacific on the side maybe have much more in common with people who live in Seattle and Washington Oregon than they do with the people who live in the Maritimes So this whole issue of what do you what does it mean to be Canadian gets to be very contentious and I wonder from your experience if there is such a thing as Canadian identity and what it is you know. Well I think what's what's happened. Thing as I've lived here and traveled throughout the country probably more than all but a very small handful of Canadians I've seen more of the different parts of the country than than they have in one of the advantages of being a correspondent is

that this issue of Canadian identity certainly is contentious it's not restricted only to Canada. I mean the question of national identity in days of globalization of multinational corporations have the ability to order a McDonald's hamburger whether you are here in Sydney or in Beijing China is one that I think forces us to look at national identity in a new way and Canadians in that respect probably have a little bit of an advantage over many other people in the world because they've had to deal with this closeness to the United States and also their own internal structure domestic politics here and very much still guided or dictated by the French English relationship and of the sounded by originally by French. Conquerors not settlers in the sense of US settlers or colonists but

conquerors who came in took over. Set up a global trading base here in Canada and then were conquered by the English. The French English identity was in Canadian character as forced. Certainly the people in Quebec many French speakers here in the Maritimes to have to develop a dual identity. Yes they are Canadians but they're also French Canadians and those two cultures are different I think what we're moving toward especially in North America is the same pattern of dual identities. We will be Americans in the broadest sense of that word meaning influenced by and guided by what happens in the United States which is popularly called America so there will be that's the level of McDonald's and Sears and Marriott Hotels and those kinds of things which we will all share and increasingly will watch the same television programs and

listen to the same music but below that there will be and is starting to emerge a different identity based on fundamental values that will make Canadians increasingly comfortable with the fact that they're Canadians. The debate that you're talking about is a debate that's been going on for a long time. I found it much more. Passionate in older people than in people Canadians in their 20s today who are quite comfortable with the idea of living next to the United States and being able to enjoy all the advantages of being next to the United States and yet feeling comfortable in the fact that they're Canadian and they know what that means. There are also some fundamental differences I think we sometimes tend to over estimate the similarities between Halifax and Boston or Seattle and Vancouver. When you think about it there are fundamental values in terms of how they govern their country what it means to be Canadian or different. We have in our Constitution imbedded in it the idea that the people

are the primary the individual is of primary importance and the Canadian Constitution isn't written that way. The Parliament is sovereign. The power. It comes from parliament the power doesn't come from the people the way it does here and that changes lots of things about the culture and about the way they deal with each other the idea of order and the idea of shared benefits. A much greater here because of that than they are in the United States where we tend to hold of utmost importance. The idea of individual rights and those kinds of things if you look very closely in Seattle and in Vancouver are as different as they would be from the Arctic down to Texas. Those fundamental differences remain there and there are going to stay. You just tend as Americans not to not to look at that because we don't we don't tend to look at much of anything that's happening outside of the United States. You know and I also like to argue that what's happening in North America is important not just because it's not America but because. It's a

testing ground for our relationship with the rest of the countries around the globe. Most Americans don't have passports. That's about 18 percent of the U.S. population has passports. But lots of Americans do travel to Canada and Mexico where you don't need a passport. So in most cases the only contact that most Americans have with people who are not Americans are with Canadians and Mexicans. And even after that we generally don't do a good job of understanding what it is that they're about. But I think we're going to have to do that starting here if we're going to work in a world where distance and borders basically mean much less than they have in the traditional sense. General Electric wants to buy Honeywell they have to get approval by the European Commission. I mean that's a different world that we're living in. Do people in Mexico have any thing like this sort of debate conversation argue. An about identity to people in Mexico. Sit around and talk about what it means to be Mexican.

Well to a great extent they're sheltered from it because of the difference in language but that is starting to break down as well. You know while I was there there were debates in the cultural sector about Mexican movies and Mexican television and the influence of Hollywood on those areas. In the 1940s and 50s the Mexican movie industry was producing hundreds of films a year that were being shown not just in Mexico but in all Spanish speaking countries in the world and that's a lot. But they simply were not able to compete. The quality wasn't there and most of those very famous studios in Mexico have closed while we lived. My family and I lived in Mexico City they opened up an American style mall which had an American style. Multiplex theater and it there were 14 screens in that theater. We would be hard pressed whenever we went to the movies to find a

Mexican or even a Spanish language film being shown on any of those 14 screens generally. They restricted it to one screen in which they put either a Mexican film or a Spanish film where it was actually produced in Spanish as opposed to dubbed or with subtitles and that kind of thing as Mexico's income increases as people are exposed more and more to this I think is going to be more of an issue even the language is not going to be barrier enough. They're going to have to look within themselves and feel confident in their culture rather than feeling confident. And the fact that the walls of language will keep unwanted influences out. We have a caller here would certainly welcome others into the conversation here in Champaign Urbana 3 3 3 9 4 5 5 and toll free for anyone anywhere you can hear us if you would be a long distance call 800 2 2 2 9 4 5 5.

Any point here you want to join the conversation you're certainly welcome to do that. We have caller here in Peoria. Why number four. Well run we need is more trade between these countries with Mexico or trend of 7 billion dollars. My son was in Nova Scotia twice for his company and they're going to probably be doing the same thing. Well Mr. Balmy good comment on that. Yeah. Well we trade with Mexico has doubled since 1994 when Nat was implemented. Now depending on how you want to look at that you will see either something that's good or something that's not so good. Someone told me recently I guess it's an old saying in the south we all look at the same situation through different not holes in the fence. You never quite sure what how someone will say it but doubling the amount of trade that

goes between Mexico and the United States is a tremendous amount of economic energy that has been created. That means Mexicans are sending a lot more goods that they produce they're here into the United States where we are buying them obviously because we want to no one forces anyone to do that. On the other hand we're sending more goods down there so it works both ways. That means that there are jobs there and there are jobs here. It also means that there are jobs here in the United States that are being lost and jobs there in Mexico where there are industry for half a century no longer has been protected and is finding it difficult to compete with American and Canadian companies that go down there. What happens is David when you talk about globalization and the increasing trade people get concerned and rightly so because it isn't the system that creates only winners. And now I don't know

what system there is that does create only winners but there seems to be an expectation that a new economic system should do that. Well it can't. What we need to focus on as we move into the decades ahead and this system simply deepens and expands and I don't think it's going to go away is to focus more on those people who are not. Sitting from the losers in the sense that their skills and their jobs are not right away going to fit into this system a factory let's say a sneaker factory that began in Massachusetts 100 years ago and then moved to the southern United States to to seek cheaper labor and then moved to the border and had twin plants in Mexico and in Texas to get even cheaper labor. Well the concern among some people is that keeping those plants in the United States by putting up some kind

of barriers and making it impossible for companies to move there. But that's the old debate what's happening today is that that plant that moved to Mexico 20 years ago to escape the wages in North Carolina from a plant that was settled there to escape the higher wages in the north that plant in Mexico is on the verge or has already left for Taiwan which is then losing those jobs eventually to mainland China which it then loses it to Vietnam and the cycle goes all around. Putting up walls doesn't stop it that only can create more losers. But we do need to find the system to protect those people who are going to be in need of some transformation the reason I'm here in Cape Breton is that they are going to close the last coal mine. Within a couple of weeks that will bring to an end some 300 years of coal mining history. Now it's a good example for us to look at because for the last 40 years

the Canadian government operating under those some of those fundamental differences in culture and outlook that we talked about before has been supporting the mines to keep them open even though they were unprofitable. What that did was to prevent the miners. And there are thousands of them from making that transition right away they felt it was more compassionate to keep them going. Well the point is that now the mines don't make any sense at all from an economic point of view. The coal is a high sulfur content so it doesn't make any sense from an environmental point of view and from the private enterprise point of view they've offered it for sale or even to give it away and they can't find a buyer. So they are eventually within a few weeks going to have to close down the last mine. That will mean that there are hundreds of people now forced to find other jobs but you have to ask whether that intervention over the last 40 years has been helpful or harmful because it's simply delayed what 40 years ago. The people in charge knew

was going to be inevitable. So that's the same kind of process that takes place. It has nothing to do with trade here but it has to do with transition and making skills and manpower to match the needs of the day. We're at a midpoint here. We'd welcome other comments questions from people listening. The number here in Champaign Urbana 3 3 3 9 4 5 5 toll free 800 to 2 2 9 4 5 5. Our guest is Anthony DePalma. He's the international business correspondent for The New York Times assigned to explore the increasing connections between North and South America. Before going to work at the times he was a freelance writer for The New York Times magazine also Harper's Columbia Journalism Review and Woman's Day. He is the author of a newly published book it's titled here a biography of the new American continent. It's published by Public Affairs. We have another caller here ready to go and others are welcome. 3 3 3 9 4 5 5. That's four people here in Champaign Urbana.

We also have the toll free line. And that's good anywhere that you might be listening if it would be a long distance call us that it's 800 to 2 2 9 4 5 5. Next caller is here in Urbana. Line 1. Well yeah got two things I like to explore. One is you were just talking about the economics of global trade and it seems to me just by over the years it seems that I've never been very convinced that one of the terms of trade the exchange rate is really a you know fairly ministered kind of factor in all this. It doesn't I mean I've never been convinced that that there's truly a you know a real market that determines the exchange rate

difference. You know how it changes the of the the United States and and Canada and Mexico. And I was wondering if you could talk a little bit about that and then I've got another question about retiring in Mexico and I'll let you answer that one first. OK David should I go ahead and answer that yeah please do him. The exchange rates of course are the we're talking about two different exchange rates one in Mexico the Mexican peso against the US dollar and one in Canada which is the Canadian dollar against the US dollar. Until 1990 for the end of 1994 the Mexican peso was in a fixed exchange rate. The exchange rate was pegged to the dollar on a sliding scale so that you knew on any given day exactly where the peso was going to

be and that was maintained for a number of years through an agreement between the Mexican government and Mexican labor. The problem with that is and so it seemed to be to offer some advantages because there was some sort of. Confidence built into the peso and there was some predictability because you knew today what the peso was going to be in five months because it would go according to the scale of the problem. And the reason they abandoned and were forced to abandon it is because it doesn't take into account outside factors like inflation. And it also doesn't account for increases in productivity. It also comes at a great cost to labor because in order to meet those goals they have to keep inflation down and often the way they keep inflation down is by keeping wages down. That's why it was so important to have that agreement with labor

by the end of 1994. It was clear that in order to support that system Mexico had basically spent all of its foreign reserves and speculators. Once they knew that started attacking the peso Mexico spent most of the international foreign reserves that it had dollars in deutsche marks and other currencies trying to defend the peso. In the end it was all money that just went to the speculators and Mexico couldn't sustain it as most other regimes around the world cannot sustain it against a speculative attack and had to adjust to a floating rate floating rate basically means. That those speculators said the exchange rate based on how much they think of the peso is worth how much they want to hold pesos suppose two U.S. dollars in the basically the same system that has occurred in Canada. Now your caller is right it's not a perfectly free exchange rate it's not just the market it's the market

in some sort of cooperation or conjunction with monetary policy set by the government and the government can increase or decrease interest rates as we do here in the United States to make money more or less available and by doing that they increase or decrease the predictable inflation rates and so on. It's all very technical and very difficult to follow from a trade point of view. Exchange rate can either work in your favor or against you. So there are some people who are saying we should have a uniform currency in North America so that Mexican goods would not have such an advantage entering the United States as they do now when the exchange rate is almost 10 pesos to the dollar. On the other hand in Canada. The exchange rate is a dollar fifty Canadian to $1 U.S. which means that it's much cheaper to buy construction lumber

that is produced in British Columbia and send it across the border and lumber that's produced in the United States. People ask well why don't we have a common currency the way they do in Europe. And if we don't have it now when will we have it. And my answer is I basically don't think we will see it at any time in the near future in North America. The advantage is for Canada and Mexico to have an exchange rate that makes their currencies weaker against the U.S. dollar and therefore makes their exports more attractive to the United States which is their number one market are so great that there is no advantage for them to give that up. On the other hand in the in the United States it would be difficult to imagine a system where you could get political approval for a new Federal Reserve or central bank operating on the continental basis in which Mexico and Canada had voting seats where they could determine what monetary policy was that was going to affect the United States.

In Europe that's what they've done they've basically closed down their all their central banks and created one central bank. Each country has a seat or number of seats on that bank and they set the policy for everybody. It's not going to happen here. What could happen at some point in the future is what's happening now defacto dollar ization which means basically that you can sign contracts in U.S. dollars in Mexico we paid our rent in U.S. dollars all the years that we lived in Mexico and in Canada you'll often see things priced hotel rooms and airfares in U.S. dollars. That will happen but that doesn't give them any of the control and it's not a common currency. That will have a lot but the still seems to me that the Mexicans in particular feel that they're you know easily put upon by monitors. But anyway I want to know about the. I read a an article last year about.

Then sent a fox proposing that. That one way we could meld the United States and Mexico agreeable fashion in a kind of a win win situation would be if people retiring to Mexico would be a allow allow their Medicare Medicare benefits by what they had in mind. What he had in mind was having a Medicare kind of certify certain Mexican medical facilities so that you know maybe put the U.S. inspection or approval or something like that and that would you know help to a lot of Americans to to you know take care of the lower take advantage of the lower cost of living on and off. Will have their Medicare and Medicare benefits there. I was just curious if you were aware of any

follow follow up to that suggestion for anybody anywhere that I know not to specifically but it's the kind of thing that we wouldn't hear about for a while. I'll bet you though that when Fox comes to visit Bush on his first official state visit just after Labor Day that that's on the agenda and they'll talk about that but that'll always be a relatively small number of people. What he's pushing for more is somehow refining the immigration process so that people who leave Mexico to come to the United States for economic reasons find it easier to go back. And if you bring those Mexicans back with the money that they have earned in the United States his feeling is that that would be a tremendous benefit to Mexico. Of course there are lots of money that's already being sent by the Western Union and in other ways but his argument is that with the way immigration is now those economic migrants often have to do so illegally.

It's so difficult and so risky for them to cross the border again that when they come to the United States they tend to stay for a number of years and then go back or not go back at all because they risk getting caught or having to pay an illegal. They call them coyotes people who will help them cross the border they charge lots of money for it and no guarantees. His argument is that if you made it easier to get back and forth they'd come out they'd work and then they'd go back and they take the money back with them and then they'd come back just when you needed them. His argument being it's a win win situation because the United States gets the labor it wants but doesn't have to bear the burden of permanent settlers who really would rather be back in Mexico. Well that's it was interesting that these comments that he's made about this fairly recently that makes it sound like what he's saying is that we should acknowledge the fact that these people are guest workers and be completely open and above board about the whole thing. Yeah. Oh absolutely and you'll hear a lot about it during his visit. But what he's concerned

about and the other Mexican officials are rightly concerned about is once you put them in that situation of having to leave if you give certain advantages to the employers and there are some employers who will take advantage of that. So if you know that as a guest worker that particular migrant who comes in to pick your apples have to leave in order to maintain his status. You can I mean there are so many things that they're concerned about you doing for holding withholding the pay and told they are ready to leave and then at that point putting him on a bus giving him only half of the fair or somehow cheating them and forcing him to go because if they stay they'll lose their legal status. Canada. Interestingly enough operates a guest worker system and has done for 25 years they bring Mexicans from all throughout the country up to Ontario Quebec and the prairies to work in the fields during the harvest.

And when it's done they go back. They are completely legal they're up here with papers. They contribute to the retirement system and in fact when they retire if they stay in Mexico the Katyn government will send them their pensions that they've earned by working in the fields in Canada. There's sort of a twist on what your caller suggested at the very beginning for American retirees in this case they're Mexican retirees because it's a guest worker program that's enforced the. They end up going back. Now there are differences clearly because of the distance involved and between Canada and Mexico and also because the numbers are so much smaller than in the United States but they're proving that it can be done and they're proving that Mexicans are willing to work on that sort of a basis that they're not just leaving because they want to leave Mexico they're leaving for economic reasons and they would go back if they had the opportunity to do so. We just have about 10 minutes left we have a couple of other callers. We'll continue talking with our guests here Anthony DePalma. He works for The New York Times he is currently the

international business correspondent for the newspaper. He's also the author of the. A recently published book which is a biography of the new American continent as the subtitle The title of the book is simply here. It's published by Public Affairs. We have a caller Next up in the talk with in Champaign County this is lie number two. Hello. Hi I called up with something completely different but maybe I can get back to that and just throw these things out here just for relevance for that last bit about the Canadian guest worker program I understand there's a lawsuit by former U.S. and actually Mexicans who were going to the U.S. guess worker program who never got their pensions or something like that. The legacy of when there was a cost worker program. Just put a bet about the Mexican US border. And I wonder if Jorge Castaneda who I guess is the foreign minister still the U.S. doesn't said anything untoward yet there though he grew up a leftist in the Fox administration. And I wouldn't be surprised at some point he

makes a joke about Guadalupe Hidalgo which is the treaty that ended the Mexican-American war that has some kind of language about free passage back and forth. I don't think any American diplomats would probably get it because we actually have successfully I think. Forgotten about that sent that to the memory hole. But what I really wanted to call about was that since you did work for Harper's you're probably familiar with the blacksheep MacArthur and his book about naphtha and the selling of it. I think one section of it talks about and since we're talking about monetary policy. There was the peso lie before the there was a devaluation right after naphtha was passed and that's when the banking crisis sort of went and I think you have a fairly long section about how that was just also in the memory hole and and denied and and not talked about but everyone knew it was going to happen everyone who was in the know actually knew that the currency was going to have to be devalued and the banks were in a really bad way but

it wouldn't have. It wasn't a good thing for selling after the SO and what it didn't come up until after after the Right is some of what you say is right your details are a little bit off the. The peso crisis took place during the year 1904 which we've been after enough to was passed and that was during the course of all of those political shocks with the subsidies. As in the assassinations as people started pulling their money out Mexico tried to stand strong defending the peso and had to spend a lot of money in order to spend that money they had to borrow more. This is the government and they did it by short term issuance of a short term Tesla bonus which had a high interest rate that was payable in dollars. Even though you took it out in pesos they actually if I might interrupt because I was making that point the peso crisis did happen after an after. But people knew it was going to happen before in fact the great Henry Gonzalez down there on the border

district represented a couple years ago was investigating the way a Texas southwest Federal Reserve Bank actually was helping prop up the peso before naphtha because. You know it would have been on comfortable fact if it had collapsed you know before that were had been voted on. You know well the important point of what happened since then is that the one reason those kinds of subterfuges were able to happen at the time was that the Bank of Mexico the central bank was required to officially release its reserves which is the critical figure we talked about before. Only once a year they would actually talk about it one other time during the banking convention and that was it. And sorry that was it yet another one when they had to they had to report to Congress three times a year which meant that a lot of time in between when nobody really knew. I mean you could surmise

you could guess you could get figures and you can draw from that but you didn't know. As a result of entering into the nav and. Signing on to the international system they now host those international reserves which they used to report only three times a year on the internet every day. So it's that kind of transparency which you have to be willing to give if you can operate as part of the system. That changes things those are the kinds of changes that take place from this new system that and rippling all through a country like Mexico which is just a fledgling democracy and for should it be more transparent in things like that and all the way across the board there are lots of other changes that also take place where you are being forced because you are attempting to be or present yourself as an international competitor where you have to or operate with the same transparency and so I think that kind of thing would be much more difficult if not impossible to try to pull again.

Well I agree with that but and it is a way of you know trying to deflate the currency speculators if its all right there in the open. Let's let's let's room for subterfuge. But another point about the doubling of of trade a lot of this trade is actually internal to the multinationals and I think one of the best examples that I can think of is the making of the P.T. cruiser only in the to Lucca Mexico plant time or Chrysler operates. There's a perfectly good Belvedere Illinois plant that makes neon switches. Same frame there. It make make P.T. cruiser appear. But you know they clearly don't want to do that but the point I'm making is that that treat is actually recorded as being between Mexico and the US but it's also internal to dialer Chrysler and there are a lot of other situations where multinationals are effectively sort of an internal transaction when you're absolutely right. It could be is as high as 30 percent of the trade that is

being recorded on these international trade figures. Happens that way but it happens that way in Canada too. There are auto plants in Detroit that take part in an on time delivery basis from the factories in Ontario. I think with it what it means is that those companies see North America as a single manufacturing base and they're going to move that stuff around in whichever way it makes sense. Now there are certainly advantages to producing cars in Mexico because the wages are lower but then you have to add the transportation cost of sending that stuff down and sending it back because while Mexicans can buy a few P.T. cruiser most of the beekeepers are not sold in Mexico so they've got to ship them back and it will make economic sense to do that. If if all of that works out in the equation on the other hand that we produce a lot of cars in Canada and the wages there certainly are not last. But there are other advantages there in terms of the overall package because the health care benefits are

less in Canada than they would be in the United States because that's all covered by the government health care system. So the auto industry is is really unique unto itself but they've probably gone farther than anybody else for good or bad and the bad part is what we talked about earlier on in terms of losers created by the system. But they've gone farther than anybody else in integrating the whole place for General Motors and Ford and Chrysler basically at this point the border barely exists. They have they don't even consider their Mexico operations of foreign operations in their hierarchy they're considered part of the North American manufacturing operation. FARN we just have a about two minutes. We have two other callers and I'm sure I can take them both I want at least tried it too. This person here in pain on line 3 go ahead but you'll have to be quick. OK I was reminded by your program when I was in high school I had an economic cycle we were talking where the workers produced a product and then they

were able to buy it protected by protecting care. And it seems like that's gone by the wayside and I was just interested. Yeah if you were serious. We're working our small town here. I used to have a lot of that mystery and now it has hardly been at my. Yeah well and we unfortunately we don't have a lot of time on what you can do with that Mr. DePalma. Well just to say that it's not his small town I mean lots of lots when that happened it may not be that the plants moved to Mexico they could have gone way overseas in the Pacific is there any way to get to the next call. I think if we do we will find ourselves not really giving you any time to respond and or for the caller much time to to to make the comment so I think probably what we're going to have to do is say that that's it and say thanks very much. On the other line. Well occasionally it happens. We appreciate you spending some time with us today

very much. Sure it was a pleasure. Thank you very much. Our guest Anthony DePalma he is the international business correspondent for The New York Times and if you're interested in reading this book that we've been talking about here this morning again the title of his book is here a biography of the new American continent and it's published by public affairs should be out in bookstores now.