Gonzaga Debate Institute 2013
US/Mexico Econ Core
Brovero/Lundeen Lab
***United States/Generic***
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UQ – U.S. Econ Low
The economy will inevitable decline within the next 12 months – unemployment and
lack of consumer spending prove
Profit Confidential, 7/15/13
[7-15-13, Profit Confidential, “Why a Recession for the U.S. Economy within the Next 12 Months Is
Inevitable”, http://www.trefis.com/stock/fdo/articles/195633/why-a-recession-for-the-u-s-economywithin-the-next-12-months-is-inevitable/2013-07-15, accessed 7-16-13, HG]
But current consumer spending in the U.S. economy is looking bleak, and it makes me skeptical about
the GDP growth ahead. We’ve already seen GDP in the first quarter revised lower due to consumer
spending; and it won’t be a surprise to me if something similar happens in the second quarter.
Don’t just take my word for it. Look at what the CEO of Family Dollar Stores, Inc (NYSE/FDO), Howard
R. Levine, said about consumer spending while presenting his company’s corporate earnings for its fiscal
third quarter (ended June 1, 2013):
“Our consumables sales remained strong and we continued to gain market share. However, our
discretionary sales remained challenged as our customers have been forced to make spending
choices between basic needs and wants. Consistent with market trends, we expect that our
customers will continue to face financial headwinds…” (Source: “Press Release; Family Dollar reports
Third Quarter Results,” Family Dollar Stores, Inc. web site, July 10, 2013.)
Remember: retailers like Family Dollar Stores see the patterns of consumer spending first-hand—their
opinions shouldn’t be taken lightly.
More proof that consumer spending (which makes up a major portion of our GDP) isn’t as robust is the
fact that wholesale trade sales are down and inventory figures are up. Inventories at wholesalers in May
were up 3.3% as compared to a year ago. And inventories of durable goods were up 4.8% in the same
period. (Source: U.S. Census Bureau, July 10, 2013.)
Inventory build-up is an indicator suggesting consumer spending isn’t what it was expected to be. In
addition, surging durable goods inventories also suggest that consumers are not spending on their wants,
but instead focusing on their needs for now.
Consumer spending on nondurable goods—goods that don’t last for long periods of time, like clothing—
isn’t great either. From the fourth quarter of 2012 to the first quarter of 2013, real personal
consumption—consumer spending adjusted for price changes—increased by just $14.6 billion, or 0.7%.
(Source: Federal Reserve Bank of St. Louis web site, last accessed July 11, 2013.)
I can’t stress this enough: consumer spending won’t improve and the GDP will remain depressed
until the average Joe American feels confident spending money.
Nothing has changed in the U.S. economy. The daily struggle for many Americans continues.
Following the financial crisis, many Americans are now working at jobs that pay minimum wage or
have part-time positions, while others are losing their skills the longer they are out of work.
That’s why I’m predicting the opposite of what so many analysts and economists are forecasting: they see
growth, while I see the U.S. headed back to a recession within the next 12 months.
Did the Federal Reserve just tell us it wants much higher inflation?
In the most recent meeting minutes from the Federal Open Market Committee (FOMC), it said:
“Most [members], however, now anticipated that the Committee would not sell agency mortgage-backed
securities (MBS) as part of the normalization process, although some indicated that limited sales might be
warranted in the longer run to reduce or eliminate residual holdings. A couple of participants stated that
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they preferred that the Committee make no decision about sales of MBS until closer to the start of the
normalization process.” (Source: “FOMC Minutes,” Federal Reserve, July 10, 2013.)
Leaked IMF report shows economic decline inevitable in the next year
Amerman, Chartered Financial Analyst with MBA and BSBA degrees in finance
and financial author and speaker with over 25 years of professional experience,
7/11/13 [Daniel, 7-11-16, Gold Resource Cooperation, “Leaked IMF Report Shows Dangers for U.S.
Economy”, http://news.goldseek.com/GoldSeek/1373560088.php, accessed 7-16-13, HG]
Greece is not the only nation that has what could be called an "artificial" economy, if we define an
artificial economy as being one where both economic output and employment levels are each
materially dependent on the government borrowing money that it can't possibly pay back under
normal circumstances.
And arguably the globe's largest "artificial" economy is also the globe's largest economy – which is
that of the United States of America.
As I have previously covered in detail in a series of articles which includes, "The Economic Deception At
The Heart Of The Fiscal Cliff", linked below, the economic situation in the United States is in fact much
worse than what can be seen at the surface level of government statistics and the financial media's
reporting thereof.
And this can be established quite easily by going directly to the government's own statistics themselves,
and looking underneath the headline statistics, to the next level below.
The government share of the United States economy has been growing for many decades now,
fundamentally transforming the country as a result. And by 2007, the United States economy had
reached the extraordinary point (outside of a major war) where the government was consuming a full
35% of the economy. That is, government spending amounted to 35% of the economy, and 65% was the
private sector.
Then something remarkable happened. At the height of the Financial Crisis of 2008, the private economy
imploded by $1.3 trillion per year when it came to the real private production of goods and services. This
was a catastrophic decline that if left untouched, would have pushed the United States straight into an
overt Depression.
But this implosion, while confirmed in the government's own statistics and very real, is not what the
government's surface level reporting of GDP shows at all. Instead, what the official statistics indicate on
that top level is that there was "only" a $300 billion contraction in the economy, with the recession
officially having ended in June 2009.
Wait, what? How could it be that if the private sector within the economy plummeted by $1.3 trillion, that
the total economy only fell by $300 billion?
Well, when it comes to desperate governments in a time of economic collapse, there turns out to be
a bit of a loophole . And that is that when GDP is reported by the media, what is reported is almost
always total GDP - which is the sum of economic activity by the private sector and the public sector.
So in looking only at total GDP then, any catastrophic declines in private economic activity can be
effectively masked by equally extraordinary increases in public spending - at least temporarily.
That obscure little loophole is the hidden-but-real story behind 2009, and every year since. In
practice, the difference between the actual government-reported $1.3 trillion collapse in the private sector,
and the officially reported $300 billion decline in the total economy, came from federal, state and local
governments increasing their spending by a staggering $1 trillion between 2008 and 2009.
This resulted in a massive and unprecedented shift in spending as the government soared in size, even as
simultaneously the private sector was collapsing in size. So the economy nearly instantly shifted from
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being 35% government and 65% private, to being 43% government and 57% private – a level which
remains in approximate terms true today.
So when we look at these fantastic levels of deficits that have been consistently coming in at well over $1
trillion per year, what we have in fact been seeing is the increase in the size of the government from 35%
to 43% of the overall economy, in order to maintain the facade of an intact economy.
In other words, since the fall of 2008, a substantial chunk of the US economy has been "artificial".
The private-sector imploded. It has not recovered to this day. And the great majority of damage
containment has been dependent on the United States government running unsustainable deficits,
of which it lacks the ability to pay back under ordinary circumstances.
Recent economic studies prove that the U.S. economy will inevitably falter because
of a lack of economic freedom – job creation and free trade are key
Heritage Foundation Economic Freedom Task Force, 7/8/13
[7-8-13, Heritage Foundation, “2013 Global Agenda for Economic Cooperation”,
http://www.heritage.org/research/reports/2013/07/2013-global-agenda-for-economic-freedom, accessed
7-16-13, HG]
Promoting economic freedom at home and abroad is essential to revitalizing the U.S. economy. In
2010, the United States fell from the ranks of the economically free countries in the Index of Economic
Freedom and, in the years since, the U.S. has continued a steady decline. The warnings in the 2013
edition of the Index are too stark to ignore. Only by pressing for more freedom everywhere can the
U.S. hope to avoid further decline. A road map to put the United States back on the path to more
economic freedom has been clearly laid out in The Heritage Foundation’s Saving the American Dream
plan. A plan for promoting economic freedom in the world is laid out in this Special Report. It describes
many actions that nations around the world need to take and offers Washington a blueprint for a practical
and effective global strategy. American leadership can be decisive in promoting property rights and anticorruption measures in other countries. In addition, the U.S. should pursue more trade agreements around
the world and stress the importance for all governments (including the U.S.) to identify and reduce
support for state-owned enterprises that are breeding grounds for cronyism. This global agenda can and
should be implemented—starting today.
Declining economic freedom in the United States continues to threaten Americans’ prosperity and
opportunity. In 2013, the U.S. score in the Index of Economic Freedom, published annually by The
Heritage Foundation and The Wall Street Journal, dropped for the sixth year in a row. The U.S. clings to
the ranks of the world’s Top 10 most economically free—barely. It remains in 10th place again this
year—still just a “mostly free” country.
This reduction in freedom has been accompanied by stagnant growth of the U.S. economy and
persistently high unemployment. Promoting adoption of the revitalizing policies of economic
freedom in the United States is essential to creating good new jobs for Americans. It is also vital to
promote economic freedom abroad since U.S. companies and workers increasingly rely on international
trade and finance to improve productivity and build markets. America is a global economic superpower,
but to remain so, its government and business community must encourage the free flow of capital, goods,
services, people, and ideas around the world that contribute to ongoing U.S. and global prosperity.
Implementation of such forward-looking policies will kick-start the economic dynamism and
innovation that will lead to better products, new markets, and greater investment.
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UQ – U.S. Manufacturing Declining
United States manufacturing is in steady decline – our evidence is predictive
Hargreaves, CNN Money, Staff Writer, 2-01-13
[Steve Hargreaves, 2-01-13, CNN Money, “Manufacturing jobs dry up”,
http://money.cnn.com/2013/02/01/news/economy/manufacturing-jobs/index.html, accessed, 7-16-13
AMS]
The much-lauded growth in American manufacturing jobs appears to have stalled.
After generating nearly a quarter million jobs since the recession ended, the U.S. manufacturing sector
created just 4,000 new positions in January, according to the latest jobs report from the Bureau of
Labor Statistics. The industry has basically seen zero job growth since the middle of last year.
The manufacturing recovery "is clearly petering out," said Alan Tonelson, a research fellow at the
U.S. Business and Industry Council, which represents smaller and mid-size manufacturers.
Slowing U.S. demand for goods, sluggish economic growth overseas, and uncertainty over the
federal budget mess are among the factors keeping a lid on the sector.
One big reason manufacturing job growth looked so good over the last few years was that the sector fared
so poorly during the Great Recession.
Related: Jobs report: Steady hiring continues
The value of goods produced during the recession dropped by a staggering 20%, Tonelson said. With that
drop came the loss of more than 2 million jobs.
When the recession ended, Americans went out and bought stuff -- especially automobiles. With that
spending came a jobs rebound, Tonelson said. Higher energy prices and the rising costs of labor in China
seemed to be sparking a resurgence of manufacturing in this country.
In 2010, U.S. manufacturing production growth registered a brisk 7.4%, he said, citing industrial
production figures compiled by the Federal Reserve.
But in 2011 the growth in the value of manufactured goods slowed to just under 5%, said Tonelson.
Last year it didn't even register 3%.
"The release of pent-up demand is tapering off," said John Lonski, chief economist at Moody's Capital
Markets.
A recession in Europe and relatively weaker Chinese growth are also weighing on the U.S.
manufacturing sector. The value of exported manufactured goods rose just 4% in 2012, Lonski said.
That compares to growth of more than 7% in 2011 and over 14% in 2010.
That export slowdown comes mostly from slowing growth abroad, rather than "a fundamental loss
of competitiveness in the Untied States," Lonski said.
Both Lonski and Tonelson said uncertainty -- over the the health of the global economy, Washington's
ongoing tax and spending fight, and how much it will cost to cover employees under the new health care
law -- has led businesses to put off capital investments.
Going forward, the outlook is murky.
Friday saw a fairly strong reading of the ISM manufacturing index, which measures activity in the sector.
The index registered 53.1, ahead of the 50.5 expected by economists polled by Briefing.com. A reading
over 50 represents growth, while under 50 means contraction.
But Lonski said industrial production is expected to rise by just 2.3% in 2013, even slower than
2012's 3.8% growth rate. That means manufacturing jobs may become even scarcer in the year
ahead.
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Our domestic manufacturing base is failing – outsourcing and long-term trends
prove
Harrington, Economy in Crisis, Journalist, 2-09-13
Craig Harrington, 2-09-13, Economy In Crisis, “The Continued Decline of American Manufacturing”,
http://economyincrisis.org/content/the-continued-decline-of-american-manufacturing, accessed 7-16-13
AMS]
Politicians on both sides of the aisle have called on America’s manufacturing economy to drive our
national recovery in 2013. The talking point of growth in manufacturing and industrial production
creating jobs, exports and prosperity is common in political media. Unfortunately, it is not realized in
practice.
According to the latest report from the Bureau of Labor Statistics, the United States created just 4,000
manufacturing jobs in January 2013. Measurable growth is better than no growth at all, but paltry job
creation figures reveal the weakened state of industrial production in the United States. The
economy created more manufacturing jobs than it lost in 2012, but that well of good fortune seems to
have run dry. The employment trend in manufacturing is overwhelmingly negative and has been for
nearly twenty years.
This country does not simply lack manufacturing jobs, it lacks entire industries.
The Manufacturers Alliance for Productivity and Innovation (MAPI) released a report in January 2013
detailing the generational decline in manufacturing output and capacity in the United States. In general,
for every two new plants that come on line, three others are shut down. For every two jobs created
at one plant, three are lost somewhere else.
The companies that make up our so-called “manufacturing base” often survive, but they do so by
moving jobs and production overseas. The MAPI report shows dramatic increases in overseas
production and sales by the foreign affiliates of American multinationals alongside virtual stagnation of
domestic metrics in the United States.
Why are these companies fleeing the United States to produce and sell their goods? More importantly,
what can we do to reverse the trend?
The loss of manufacturing began decades ago, and accelerated in earnest from the 1990s. The era of
global free trade incentivized relocating to cheap labor markets with lax regulations and generous tax
benefits. A for-profit commercial enterprise cannot afford to take note of the human cost facing its newlyunemployed workforce when it moves from one country to another. Its only concern is the bottom line.
Worldwide tech phenomenon Apple makes its products in China despite polling indicating a strong
preference in the United States for the “Made in USA” brand. Some analysts have calculated that Apple
devices could be sold at a profit for the same cost even if they were made by highly-paid American
workers. The problem is that the profit margins available thanks to near slave wages in China is
enormous compared to slim profit ratios presented by American workers. Shareholders want
profits, and extravagantly-paid corporate executives make their fortunes protecting those profits. In
such an environment, it is hard to believe any company would remain in the United States.
What is the solution to this pervasive problem? Some on the political right advocate destroying unions
and depressing wages in the United States. It is nonsensical to witness a flight of jobs to overseas
sweatshops and come away with the conclusion that America needs more sweatshops.
Manufacturing is in gradual decline
Stewart, LL.M. in domestic and international taxation, 6-19-13
[Hale Stewart, He has three certifications from the American Academy of Financial Management:
Chartered Trust and Estate Planner, Chartered Wealth Manager and Chartered Asset Manager. 6-19-13,
Seeking Alpha, “U.S. Industrial Production Slowdown”, http://seekingalpha.com/article/1509982-u-sindustrial-production-slowdown, accessed, 7-16-13 AMS]
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The latest contraction in the ISM manufacturing report indicates the U.S. manufacturing sector is
slowing. There have been signs this was happening for the last few months. First, we've seen weak
readings from some of the regional manufacturing reports. For example, here is the latest Empire
State report:
The May 2013 Empire State Manufacturing Survey indicates that conditions for New York manufacturers
declined marginally. The general business conditions index fell four points to -1.4, its first negative
reading since January. The new orders index also edged into negative territory, and the shipments
index fell to zero. The prices paid index declined eight points to 20.5, indicating a slowdown in selling
price increases, while the prices received index was little changed at 4.6. Employment indexes were
mixed, showing both a modest increase in the number of employees and a slight decline in the length
of the average workweek. Indexes for the six-month outlook were generally lower, suggesting that
optimism about future conditions had weakened.
And the latest Philadelphia Fed Report:
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity,
decreased from 1.3 in April to -5.2 this month. The current activity index has shown no pattern of
sustained growth over the past seven months, generally alternating between positive and negative
readings (see Chart). The number of firms reporting decreased activity this month (29 percent) edged
out those reporting increased activity (24 percent).
Richmond also shows a slowdown:
In May, the seasonally adjusted composite index of manufacturing activity — our broadest measure of
manufacturing — gained four points settling at −2 from April's reading of −6. Among the index's
components, shipments recouped seventeen points to 8, the gauge for new orders slipped two points to
finish at −10, and the jobs index subtracted six points to end at −3.
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War – Green and Schrage
Economic decline causes global instability and failed states
Green, Senior Advisor and Japan Chair at CSIS, and Schrage, CSIS Scholl Chair in
International Business and a former senior official with the US Trade
Representative's Office, ‘9
[Michael J Green Center for Strategic and International Studies, Associate Professor at Georgetown
University. Steven P Schrage is the, State Department and Ways & Means Committee, Asia Times, 2009
http://www.atimes.com/atimes/Asian_Economy/KC26Dk01.html, accessed: 7/13/13, ML]
Facing the worst economic crisis since the Great Depression, analysts at the World Bank and the US
Central Intelligence Agency are just beginning to contemplate the ramifications for international
stability if there is not a recovery in the next year. For the most part, the focus has been on fragile states
such as some in Eastern Europe.
However, the Great Depression taught us that a downward global economic spiral can even have
jarring impacts on great powers. It is no mere coincidence that the last great global economic
downturn was followed by the most destructive war in human history .
In the 1930s, economic desperation helped fuel autocratic regimes and protectionism in a downward
economic-security death spiral that engulfed the world in conflict. This spiral was aided by the
preoccupation of the United States and other leading nations with economic troubles at home and
insufficient attention to working with other powers to maintain stability abroad. Today's challenges are
different, yet 1933's London Economic Conference, which failed to stop the drift toward deeper
depression and world war, should be a cautionary tale for leaders heading to next month's London Group
of 20 (G-20) meeting.
There is no question the US must urgently act to address banking issues and to restart its economy. But
the lessons of the past suggest that we will also have to keep an eye on those fragile threads in the
international system that could begin to unravel if the financial crisis is not reversed early in the Barack
Obama administration and realize that economics and security are intertwined in most of the critical
challenges we face.
A disillusioned rising power? Four areas in Asia merit particular attention, although so far the current
financial crisis has not changed Asia's fundamental strategic picture. China is not replacing the US as
regional hegemon, since the leadership in Beijing is too nervous about the political implications of the
financial crisis at home to actually play a leading role in solving it internationally.
Predictions that the US will be brought to its knees because China is the leading holder of US debt often
miss key points. China's currency controls and full employment/export-oriented growth strategy give
Beijing few choices other than buying US Treasury bills or harming its own economy. Rather than
creating new rules or institutions in international finance, or reorienting the Chinese economy to generate
greater long-term consumer demand at home, Chinese leaders are desperately clinging to the status
quo (though Beijing deserves credit for short-term efforts to stimulate economic growth).
The greater danger with China is not an eclipsing of US leadership, but instead the kind of shift in
strategic orientation that happened to Japan after the Great Depression. Japan was arguably not a
revisionist power before 1932 and sought instead to converge with the global economy through open
trade and adoption of the gold standard.
The worldwide depression and protectionism of the 1930s devastated the newly exposed Japanese
economy and contributed directly to militaristic and autarkic policies in Asia as the Japanese people
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reacted against what counted for globalization at the time. China today is similarly converging with the
global economy, and many experts believe China needs at least 8% annual growth to sustain social
stability. Realistic growth predictions for 2009 are closer to 5%.
Veteran China hands were watching closely when millions of migrant workers returned to work after the
Lunar New Year holiday last month to find factories closed and jobs gone. There were pockets of
protests, but nationwide unrest seems unlikely this year, and Chinese leaders are working around the
clock to ensure that it does not happen next year either. However, the economic slowdown has only just
begun and nobody is certain how it will impact the social contract in China between the ruling communist
party and the 1.3 billion Chinese who have come to see President Hu Jintao's call for "harmonious
society" as inextricably linked to his promise of "peaceful development".
If the Japanese example is any precedent, a sustained economic slowdown has the potential to open
a dangerous path from economic nationalism to strategic revisionism in China too.
Dangerous states
It is noteworthy that North Korea, Myanmar and Iran have all intensified their defiance in the wake of
the financial crisis, which has distracted the world's leading nations, limited their moral authority and
sown potential discord. With Beijing worried about the potential impact of North Korean belligerence or
instability on Chinese internal stability, and leaders in Japan and South Korea under siege in parliament
because of the collapse of their stock markets, leaders in the North Korean capital of Pyongyang have
grown increasingly boisterous about their country's claims to great power status as a nuclear weapons
state.
The junta in Myanmar has chosen this moment to arrest hundreds of political dissidents and thumb its
nose at fellow members of the 10-country Association of Southeast Asian Nations. Iran continues its
nuclear program while exploiting differences between the US, UK and France (or the P-3 group) and
China and Russia - differences that could become more pronounced if economic friction with Beijing or
Russia crowds out cooperation or if Western European governments grow nervous about sanctions as a
tool of policy.
It is possible that the economic downturn will make these dangerous states more pliable because of
falling fuel prices (Iran) and greater need for foreign aid (North Korea and Myanmar), but that may
depend on the extent that authoritarian leaders care about the well-being of their people or face internal
political pressures linked to the economy. So far, there is little evidence to suggest either and much
evidence to suggest these dangerous states see an opportunity to advance their asymmetrical advantages
against the international system.
Challenges to the democratic model
The trend in East Asia has been for developing economies to steadily embrace democracy and the rule of
law in order to sustain their national success. But to thrive, new democracies also have to deliver basic
economic growth. The economic crisis has hit democracies hard, with Japanese Prime Minister Aso
Taro's approval collapsing to single digits in the polls and South Korea's Lee Myung-bak and Taiwan's
Ma Ying Jeou doing only a little better (and the collapse in Taiwan's exports - particularly to China - is
sure to undermine Ma's argument that a more accommodating stance toward Beijing will bring economic
benefits to Taiwan). Thailand's new coalition government has an uncertain future after two years of postcoup drift and now economic crisis.
The string of old and new democracies in East Asia has helped to anchor US relations with China and to
maintain what former secretary of state Condoleezza Rice once called a "balance of power that favors
freedom". A reversal of the democratic expansion of the past two decades would not only impact the
global balance of power but also increase the potential number of failed states, with all the attendant
risk they bring from harboring terrorists to incubating pandemic diseases and trafficking in persons. It
would also undermine the demonstration effect of liberal norms we are urging China to embrace at home.
Protectionism
The collapse of financial markets in 1929 was compounded by protectionist measures such as the SmootHawley tariff act in 1932. Suddenly, the economic collapse became a zero-sum race for autarkic
trading blocs that became a key cause of war. Today, the globalization of finance, services and
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manufacturing networks and the World Trade Organization (WTO) make such a rapid move to trading
blocs unlikely. However, protectionism could still unravel the international system through other
guises.
Already, new spending packages around the world are providing support for certain industries that
might be perceived by foreign competitors as unfair trade measures, potentially creating a "SmootHawley 2.0" stimulus effect as governments race to prop up industries. "Buy American" conditionality in
the US economic stimulus package earlier this year was watered down somewhat by the Obama
administration, but it set a tempting precedent for other countries to put up barriers to close markets.
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War – royal
Studies prove econ decline leads to war
Royal, CTR Director @ the DOD, 10’
(Jedediah, Director Cooperative Threat Reduction DOD, “Economic Integration, Economic Signaling and
the Problem of Economic Crises” in ‘Economics of War and Peace: Economic, Legal and Political
Perspectives’ ed. Goldsmith and Brauer, p. 213-215)
Less intuitive is how periods of economic decline may increase the likelihood of external conflict.
Political science literature has contributed a moderate degree of attention to the impact of economic
decline and the security and defence behaviour of interdependent stales. Research in this vein has been
considered at systemic, dyadic and national levels. Several notable contributions follow. First, on the
systemic level. Pollins (20081 advances Modclski and Thompson's (1996) work on leadership cycle
theory, finding that rhythms in the global economy are associated with the rise and fall of a pre-eminent
power and the often bloody transition from one pre-eminent leader to the next. As such, exogenous
shocks such as economic crises could usher in a redistribution of relative power (see also Gilpin.
19SJ) that leads to uncertainty about power balances, increasing the risk of miscalculation (Fcaron.
1995). Alternatively, even a relatively certain redistribution of power could lead to a permissive
environment for conflict as a rising power may seek to challenge a declining power (Werner. 1999).
Separately. Pollins (1996) also shows that global economic cycles combined with parallel leadership
cycles impact the likelihood of conflict among major, medium and small powers, although he suggests
that the causes and connections between global economic conditions and security conditions remain
unknown. Second, on a dyadic level. Copeland's (1996. 2000) theory of trade expectations suggests that
'future expectation of trade' is a significant variable in understanding economic conditions and security
behaviour of states. He argues that interdependent states are likely to gain pacific benefits from trade so
long as they have an optimistic view of future trade relations. However, if the expectations of future trade
decline, particularly for difficult to replace items such as energy resources, the likelihood for conflict
increases, as states will be inclined to use force to gain access to those resources. Crises could potentially
be the trigger for decreased trade expectations either on its own or because it triggers protectionist moves
by interdependent states.4 Third, others have considered the link between economic decline and external
armed conflict at a national level. Mom berg and Hess (2002) find a strong correlation between internal
conflict and external conflict, particularly during periods of economic downturn. They write. The linkage,
between internal and external conflict and prosperity are strong and mutually reinforcing. Economic
conflict tends to spawn internal conflict, which in turn returns the favour. Moreover, the presence of a
recession tends to amplify the extent to which international and external conflicts self-reinforce each other
(Hlomhen? & Hess. 2(102. p. X9> Economic decline has also been linked with an increase in the
likelihood of terrorism (Blombcrg. Hess. & Wee ra pan a, 2004). which has the capacity to spill
across borders and lead to external tensions. Furthermore, crises generally reduce the popularity of a
sitting government. "Diversionary theory" suggests that, when facing unpopularity arising from economic
decline, sitting governments have increased incentives to fabricate external military conflicts to create a
'rally around the flag' effect. Wang (1996), DcRoucn (1995), and Blombcrg. Hess, and Thacker (2006)
find supporting evidence showing that economic decline and use of force arc at least indirecti) correlated.
Gelpi (1997). Miller (1999). and Kisangani and Pickering (2009) suggest that the tendency towards
diversionary tactics arc greater for democratic states than autocratic states, due to the fact that democratic
leaders are generally more susceptible to being removed from office due to lack of domestic support.
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DeRouen (2000) has provided evidence showing that periods of weak economic performance in the
United States, and thus weak Presidential popularity, are statistically linked lo an increase in the use of
force. In summary, rcccni economic scholarship positively correlates economic integration with an
increase in the frequency of economic crises, whereas political science scholarship links economic
decline with external conflict al systemic, dyadic and national levels.' This implied connection between
integration, crises and armed conflict has not featured prominently in the economic-security debate and
deserves more attention.
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War – Harris and Burrows
Economic collapse causes a nuclear disaster
Burrows, counselor in the NIC, and Harris, member of the NIC’s Long Range
Analysis Unit, 09
[Mathew J. Burrows is a counselor in the National Intelligence Council (NIC), the principal drafter of
Global Trends 2025: A Transformed World, Jennifer Harris is a member of the NIC’s Long Range
Analysis Unit, “Revisiting the Future: Geopolitical Effects of the Financial Crisis”, The Washington
Quarterly, April, http://www.ciaonet.org/journals/twq/v32i2/f_0016178_13952.pdf, accessed: 7/13/13,
ML]
Increased Potential for Global Conflict Of course, the report encompasses more than economics and
indeed believes the future is likely to be the result of a number of intersecting and interlocking forces.
With so many possible permutations of outcomes, each with ample opportunity for unintended
consequences, there is a growing sense of insecurity. Even so, history may be more instructive than ever.
While we continue to believe that the Great Depression is not likely to be repeated, the lessons to be
drawn from that period include the harmful effects on fledgling democracies and multiethnic societies
(think Central Europe in 1920s and 1930s) and on the sustainability of multilateral institutions (think
League of Nations in the same period). There is no reason to think that this would not be true in the
twenty-first as much as in the twentieth century. For that reason, the ways in which the potential for
greater conflict could grow would seem to be even more apt in a constantly volatile economic
environment as they would be if change would be steadier. In surveying those risks, the report stressed
the likelihood that terrorism and nonproliferation will remain priorities even as resource issues move up
on the international agenda. Terrorism’s appeal will decline if economic growth continues in the Middle
East and youth unemployment is reduced. For those terrorist groups that remain active in 2025, however,
the diffusion of technologies and scientific knowledge will place some of the world’s most dangerous
capabilities within their reach. Terrorist groups in 2025 will likely be a combination of descendants of
long established groups inheriting organizational structures, command and control processes, and training
procedures necessary to conduct sophisticated attack and newly emergent collections of the angry and
disenfranchised that become self-radicalized, particularly in the absence of economic outlets that would
become narrower in an economic downturn. The most dangerous casualty of any economically-induced
drawdown of U.S. military presence would almost certainly be the Middle East. Although Iran’s
acquisition of nuclear weapons is not inevitable, worries about a nuclear-armed Iran could lead states in
the region to develop new security arrangements with external powers, acquire additional weapons, and
consider pursuing their own nuclear ambitions. It is not clear that the type of stable deterrent relationship
that existed between the great powers for most of the Cold War would emerge naturally in the Middle
East with a nuclear Iran. Episodes of low intensity conflict and terrorism taking place under a nuclear
umbrella could lead to an unintended escalation and broader conflict if clear red lines between those states
involved are not well established. The close proximity of potential nuclear rivals combined with
underdeveloped surveillance capabilities and mobile dual-capable Iranian missile systems also will
produce inherent difficulties in achieving reliable indications and warning of an impending nuclear attack.
The lack of strategic depth in neighboring states like Israel, short warning and missile flight times, and
uncertainty of Iranian intentions may place more focus on preemption rather than defense, potentially
leading to escalating crises. Types of conflict that the world continues to experience, such as over
resources, could reemerge, particularly if protectionism grows and there is a resort to neo-mercantilist
practices. Perceptions of renewed energy scarcity will drive countries to take actions to assure their future
access to energy supplies. In the worst case, this could result in interstate conflicts if government leaders
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deem assured access to energy resources, for example, to be essential for maintaining domestic stability
and the survival of their regime. Even actions short of war, however, will have important geopolitical
implications. Maritime security concerns are providing a rationale for naval buildups and modernization
efforts, such as China’s and India’s development of blue water naval capabilities. If the fiscal stimulus
focus for these countries indeed turns inward, one of the most obvious funding targets may be military.
Buildup of regional naval capabilities could lead to increased tensions, rivalries, and counterbalancing
moves, but it also will create opportunities for multinational cooperation in protecting critical sea lanes.
With water also becoming scarcer in Asia and the Middle East, cooperation to manage changing water
resources is likely to be increasingly difficult both within and between states in a more dog-eat-dog
world. What Kind of World will 2025 Be? Perhaps more than lessons, history loves patterns. Despite
widespread changes in the world today, there is little to suggest that the future will not resemble the past
in several respects. The report asserts that, under most scenarios, the trend toward greater diffusion of
authority and power that has been ongoing for a couple of decades is likely to accelerate because of the
emergence of new global players, the worsening institutional deficit, potential growth in regional blocs,
and enhanced strength of non-state actors and networks. The multiplicity of actors on the international
scene could either strengthen the international system, by filling gaps left by aging post-World War II
institutions, or could further fragment it and incapacitate international cooperation. The diversity in both
type and kind of actor raises the likelihood of fragmentation occurring over the next two decades,
particularly given the wide array of transnational challenges facing the international community. Because
of their growing geopolitical and economic clout, the rising powers will enjoy a high degree of freedom to
customize their political and economic policies rather than fully adopting Western norms. They are also
likely to cherish their policy freedom to maneuver, allowing others to carry the primary burden for
dealing with terrorism, climate change, proliferation, energy security, and other system maintenance
issues. Existing multilateral institutions, designed for a different geopolitical order, appear too rigid and
cumbersome to undertake new missions, accommodate changing memberships, and augment their
resources. Nongovernmental organizations and philanthropic foundations, concentrating on specific
issues, increasingly will populate the landscape but are unlikely to affect change in the absence of
concerted efforts by multilateral institutions or governments. Efforts at greater inclusiveness, to reflect the
emergence of the newer powers, may make it harder for international organizations to tackle transnational
challenges. Respect for the dissenting views of member nations will continue to shape the agenda of
organizations and limit the kinds of solutions that can be attempted. An ongoing financial crisis and
prolonged recession would tilt the scales even further in the direction of a fragmented and dysfunctional
international system with a heightened risk of conflict. The report concluded that the rising BRIC powers
(Brazil, Russia, India, and China) seem averse to challenging the international system, as Germany and
Japan did in the nineteenth and twentieth centuries, but this of course could change if their widespread
hopes for greater prosperity become frustrated and the current benefits they derive from a globalizing
world turn negative.
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War – Mead
Economic decline causes war
Mead, Senior Fellow for U.S. Foreign Policy at the Council on Foreign Relations, 9
[Walter Russell Mead 2009 “Only Makes You Stronger,” The New Republic, February 4th, Available
Online at http://www.tnr.com/story_print.html?id=571cbbb9- 2887 - 4d81 - 8542 - 92e83915f5f8,
accessed: 7/13/13, ML]
None of which means that we can just sit back and enjoy the ¶ recession. History may suggest that
financial crises actually ¶ help capitalist great powers maintain their leads¶ —¶ but it has other, less
reassuring messages as well¶ . If financial ¶ crises have been a normal part of life during the 300¶ -¶
year rise of the liberal ¶ capitalist system¶ under the Anglophone powers, ¶ so¶ has¶ war¶ . The wars
of the League of ¶ Augsburg and the Spanish Succession; the Seven Years War; the American ¶
Revolution; the Napoleonic Wars; the two World Wars; the cold war: The list of ¶ wars is almost as lon¶
g as the list of financial crises.¶ Bad economic times can breed wars. Europe was a pretty peaceful
place in 1928, but the Depression ¶ poisoned German public opinion and helped bring Adolf Hitler to
power. If the ¶ current crisis turns into a depression, what¶ rough beasts might start slouching ¶
toward Moscow, Karachi, Beijing, or New Delhi to be born?¶ The United States may not, yet, ¶ decline,
but, ¶ if we can't get the world economy back on track, we may still have to ¶ fight.
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War – new hotness
Econ decline inevitable in the status quo – greater financial crises increases
protectionism and causes great power wars
James, Professor International Affairs @ Princeton, 7/3/13
[Harold, Project Syndicate, “Financial Crisis and War“,http://www.projectsyndicate.org/commentary/financial-crisis-and-war-by-harold-james, accessed: 7/19/13, ML]
In 1907, a major financial crisis emanating from the United States affected the rest of the world and
demonstrated the fragility of the entire international financial system. The response to the current
financial crisis is replaying a similar dynamic.
Walter Bagehot’s 1873 classic Lombard Street described the City of London as “the greatest combination
of economic power and economic delicacy that the world has ever seen.” In one influential interpretation,
popularized by the novelist, Labour Party MP, and future Nobel Peace Prize laureate Norman Angell in
1910, the interdependency of the increasingly complex global economy made war impossible. But the
opposite conclusion was equally plausible: Given the extent of fragility, a clever twist to the control
levers might facilitate a military victory by the economic hegemon.
The aftermath of the 1907 crash drove the hegemonic power of the time – Great Britain – to reflect on
how it could use its financial clout to enhance its overall strategic capacity. That is the conclusion of an
important recent book, Nicholas Lambert’s study of British economic planning and the First World War,
entitled Planning Armageddon. Lambert demonstrates how, in a grand strategic gamble, Britain began to
marry its military – and especially naval – predominance and its global financial leadership.
Between 1905 and 1908, the British Admiralty developed the broad outlines of a plan for financial and
economic warfare against Europe’s rising power, Germany. Economic warfare, if implemented in full,
would wreck Germany’s financial system and force it out of any military conflict. When Britain’s naval
visionaries confronted a rival in the form of the Kaiser’s Germany, they understood how power could
thrive on financial fragility.
Pre-1914 Britain anticipated the private-public partnership that today links technology giants such as
Google, Apple, or Verizon to US intelligence agencies. London banks underwrote most of the world’s
trade; Lloyds provided insurance for the world’s shipping. These financial networks provided the
information that enabled the British government to discover the sensitive strategic vulnerabilities of the
opposing alliance.
For Britain’s rivals, the financial panic of 1907 demonstrated the necessity of mobilizing financial power
themselves. The US, for its part, recognized that it needed a central bank analogous to the Bank of
England. American financiers were persuaded that New York needed to develop its own commercial
trading system to handle bills of exchange in the same way as the London market and arrange their
monetization (or “acceptance”).
The central figure in pushing for the development of an American acceptance market was Paul Warburg,
the immigrant younger brother of a great Hamburg banker who was the personal adviser to Germany’s
Kaiser Wilhelm II. The Warburg brothers, Max and Paul, were a transatlantic tandem, energetically
pushing for German-American institutions that would offer an alternative to British industrial and
financial monopoly. They were convinced that Germany and the US were growing stronger year by year,
while British power would erode.
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Some of the dynamics of the pre-1914 financial world are now reemerging. In the aftermath of the
2008 financial crisis, financial institutions appear both as dangerous weapons of mass economic
destruction, but also as potential instruments for the application of national power.
In managing the 2008 crisis, foreign banks’ dependence on US-dollar funding constituted a major
weakness, and required the provision of large swap lines by the Federal Reserve. Addressing that flaw
requires renationalization of banking, and breaking up the activities of large financial institutions.
For European bankers, and some governments, current efforts by the US to revise its approach to the
operation of foreign bank subsidiaries within its territory highlight that imperative. They view the US
move as a new sort of financial protectionism and are threatening retaliation.
Geopolitics is intruding into banking practice elsewhere as well. Russian banks are trying to acquire
assets in Central and Eastern Europe. European banks are playing a much-reduced role in Asian trade
finance. Chinese banks are being pushed to expand their role in global commerce. Many countries have
begun to look at financial protectionism as a way to increase their political leverage.
The next step in this logic is to think about how financial power can be directed to national advantage in
the case of a diplomatic conflict. Sanctions are a routine (and not terribly successful) part of the pressure
applied to rogue states like Iran and North Korea. But financial pressure can be much more powerfully
applied to countries that are deeply embedded in the global economy.
In 1907, in the wake of an epochal financial crisis that almost brought a complete global collapse,
several countries started to think of finance primarily as an instrument of raw power that could and
should be turned to national advantage. That kind of thinking brought war in 1914. A century later, in
2007-2008, the world experienced an even greater financial shock, and nationalistic passions have
flared up in its wake. Destructive strategies may not be far behind.
Economic decline increases the likeliness of nuclear conflict
Heinberg, Senior Fellow-in-Residence of Post Carbon Institute, 12/12/12
[Richard, Resilience, “Conflict and Change in the Era of Economic Decline: Part 2: War and peace in a
shrinking economy”, http://www.resilience.org/stories/2012-12-04/conflict-and-change-in-the-era-ofeconomic-decline-part-1-the-21st-century-landscape-of-conflict, accessed: 7/17/13, ML]
When empires crumble, as they always do, the result is often a free-for-all among previous subject
nations and potential rivals as they sort out power relations. The British Empire was a seeming
exception to this rule: in that instance, the locus of military, political, and economic power simply
migrated to an ally across the Atlantic. A similar graceful transfer seems unlikely in the case of the
U.S., as economic decline during the 21st century will be global in scope. A better analogy to the
current case might be the fall of Rome, which led to centuries of incursions by barbarians as well as
uprisings in client states.¶ ¶ Disaster per se need not lead to violence, as Rebecca Solnit argues in her
book A Paradise Built in Hell: The Extraordinary Communities that Arise in Disaster. She documents five
disasters—the aftermath of Hurricane Katrina; earthquakes in San Francisco and Mexico City; a giant
ship explosion in Halifax, Canada; and 9/11—and shows that rioting, looting, rape, and murder were
not automatic results. Instead, for the most part, people pulled together, shared what resources they had,
cared for the victims, and in many instances found new sources of joy in everyday life.¶ However, the
kinds of social stresses we are discussing now may differ from the disasters Solnit surveys, in that
they comprise a “long emergency,” to borrow James Kunstler’s durable phrase. For every heartwarming
anecdote about the convergence of rescuers and caregivers on a disaster site, there is a grim historic
tale of resource competition turning normal people into monsters.¶ ¶ In the current context, a
continuing source of concern must be the large number of nuclear weapons now scattered among
nine nations. While these weapons primarily exist as a deterrent to military aggression, and while the
end of the Cold War has arguably reduced the likelihood of a massive release of these weapons in an
apocalyptic fury, it is still possible to imagine several scenarios in which a nuclear detonation could
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occur as a result of accident, aggression, pre-emption, or retaliation.¶ ¶ We are in a race—but it’s not
just an arms race; indeed, it may end up being an arms race in reverse. In many nations around the globe
the means to pay for armaments and war are starting to disappear; meanwhile, however, there is
increasing incentive to engage in international conflict as a way of re-channeling the energies of
jobless young males and of distracting the general populace, which might otherwise be in a revolutionary
mood. We can only hope that historical momentum can maintain The Great Peace until industrial
nations are sufficiently bankrupt that they cannot afford to mount foreign wars on any substantial scale.
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Heg – econ version
Economic strength key to American influence- largest internal link
Hubbard, Assistant at Open Society Foundations Washington, ’10
[Jesse, 2010Hegemonic Stability Theory: An Empirical Analysis By: Jesse Hubbard Jesse Hubbard
Program, District Of Columbia International Affairs Previous National Democratic Institute (NDI),
National Defense University, Office of Congressman Jim Himes Education PPE at University of Oxford,
accessed: 7/13/13, ML]
Regression analysis of this data shows that Pearson’s r-value is -.836. In the case of American
hegemony, economic strength is a better predictor of violent conflict than even overall national
power, which had an r-value of -.819. The data is also well within the realm of statistical
significance, with a p-value of .0014. While the data for British hegemony was not as striking, the
same overall pattern holds true in both cases. During both periods of hegemony, hegemonic
strength was negatively related with violent conflict, and yet use of force by the hegemon was
positively correlated with violent conflict in both cases. Finally, in both cases, economic power was
more closely associated with conflict levels than military power. Statistical analysis created a more
complicated picture of the hegemon’s role in fostering stability than initially anticipated.
VI. Conclusions and Implications for Theory and Policy
To elucidate some answers regarding the complexities my analysis unearthed, I turned first to the
existing theoretical literature on hegemonic stability theory. The existing literature provides some
potential frameworks for understanding these results. Since economic strength proved to be of such
crucial importance, reexamining the literature that focuses on hegemonic stability theory’s economic
implications was the logical first step. As explained above, the literature on hegemonic stability
theory can be broadly divided into two camps – that which focuses on the international economic
system, and that which focuses on armed conflict and instability. This research falls squarely into
the second camp, but insights from the first camp are still of relevance. Even Kindleberger’s early
work on this question is of relevance. Kindleberger posited that the economic instability between
the First and Second World Wars could be attributed to the lack of an economic hegemon
(Kindleberger 1973). But economic instability obviously has spillover effects into the international
political arena. Keynes, writing after WWI, warned in his seminal tract The Economic
Consequences of the Peace that Germany’s economic humiliation could have a radicalizing effect
on the nation’s political culture (Keynes 1919). Given later events, his warning seems prescient.
In the years since the Second World War, however, the European continent has not relapsed into
armed conflict. What was different after the second global conflagration? Crucially, the United
States was in a far more powerful position than Britain was after WWI. As the tables above show,
Britain’s economic strength after the First World War was about 13% of the total in strength in the
international system. In contrast, the United States possessed about 53% of relative economic
power in the international system in the years immediately following WWII. The U.S. helped
rebuild Europe’s economic strength with billions of dollars in investment through the Marshall
Plan, assistance that was never available to the defeated powers after the First World War
(Kindleberger 1973). The interwar years were also marked by a series of debilitating trade wars
that likely worsened the Great Depression (Ibid.). In contrast, when Britain was more powerful, it
was able to facilitate greater free trade, and after World War II, the United States played a leading
role in creating institutions like the GATT that had an essential role in facilitating global trade
(Organski 1958). The possibility that economic stability is an important factor in the overall
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security environment should not be discounted, especially given the results of my statistical
analysis.
Another theory that could provide insight into the patterns observed in this research is that of
preponderance of power. Gilpin theorized that when a state has the preponderance of power in the
international system, rivals are more likely to resolve their disagreements without resorting to
armed conflict (Gilpin 1983). The logic behind this claim is simple – it makes more sense to
challenge a weaker hegemon than a stronger one. This simple yet powerful theory can help explain
the puzzlingly strong positive correlation between military conflicts engaged in by the hegemon and
conflict overall. It is not necessarily that military involvement by the hegemon instigates further
conflict in the international system. Rather, this military involvement could be a function of the
hegemon’s weaker position, which is the true cause of the higher levels of conflict in the
international system. Additionally, it is important to note that military power is, in the long run,
dependent on economic strength. Thus, it is possible that as hegemons lose relative economic power,
other nations are tempted to challenge them even if their short-term military capabilities are still
strong. This would help explain some of the variation found between the economic and military
data.
The results of this analysis are of clear importance beyond the realm of theory. As the debate rages
over the role of the United States in the world, hegemonic stability theory has some useful insights
to bring to the table. What this research makes clear is that a strong hegemon can exert a positive
influence on stability in the international system. However, this should not give policymakers a
justification to engage in conflict or escalate military budgets purely for the sake of international
stability. If anything, this research points to the central importance of economic influence in
fostering international stability. To misconstrue these findings to justify anything else would be a
grave error indeed. Hegemons may play a stabilizing role in the international system, but this role
is complicated. It is economic strength, not military dominance that is the true test of hegemony. A
weak state with a strong military is a paper tiger – it may appear fearsome, but it is vulnerable to
even a short blast of wind.
That’s key to global stability
Gelb, President Emeritus of the Council on Foreign Relations, ’10
[Leslie H. Gelb was a senior official in the U.S. Defense Department from 1967 to 1969 and in the State
Department from 1977 to 1979, and he was a Columnist and Editor at The New York Times from 1981 to
1993. “GDP Now Matters More Than Force”, Published 2010 by Foreign Affairs in Washington DC,
USA. Table of Contents A U.S. Foreign Policy for the Age of Economic Power, accessed: 7/13/13, ML]
Today, the United States continues to be the world's power balancer of choice. It is the only regional
balancer against China in Asia, Russia in eastern Europe, and Iran in the Middle East. Although
Americans rarely think about this role and foreign leaders often deny it for internal political reasons, the
fact is that Americans and non-Americans alike require these services. Even Russian leaders today look
to Washington to check China. And Chinese leaders surely realize that they need the U.S. Navy and
Air Force to guard the world's sea and trading lanes. Washington should not be embarrassed to remind
others of the costs and risks of the United States' security role when it comes to economic transactions.
That applies, for example, to Afghan and Iraqi decisions about contracts for their natural resources, and to
Beijing on many counts. U.S. forces maintain a stable world order that decidedly benefits China's
economic growth, and to date, Beijing has been getting a free ride.
A NEW APPROACH
In this environment, the first-tier foreign policy goals of the United States should be a strong economy
and the ability to deploy effective counters to threats at the lowest possible cost. Second-tier goals, which
are always more controversial, include retaining the military power to remain the world's power balancer,
promoting freer trade, maintaining technological advantages (including cyberwarfare capabilities),
reducing risks from various environmental and health challenges, developing alternative energy supplies,
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and advancing U.S. values such as democracy and human rights. Wherever possible, second-tier goals
should reinforce first-tier ones: for example, it makes sense to err on the side of freer trade to help boost
the economy and to invest in greater energy independence to reduce dependence on the tumultuous
Middle East. But no overall approach should dictate how to pursue these goals in each and every
situation. Specific applications depend on, among other things, the culture and politics of the target
countries. An overarching vision helps leaders consider how to use their power to achieve their goals.
This is what gives policy direction, purpose, and thrust--and this is what is often missing from U.S.
policy.
The organizing principle of U.S. foreign policy should be to use power to solve common problems. The
good old days of being able to command others by making military or economic threats are largely
gone. Even the weakest nations can resist the strongest ones or drive up the costs for submission. Now,
U.S. power derives mainly from others' knowing that they cannot solve their problems without the
United States and that they will have to heed U.S. interests to achieve common goals. Power by
services rendered has largely replaced power by command.
No matter the decline in U.S. power, most nations do not doubt that the United States is the
indispensable leader in solving major international problems. This problem-solving capacity creates
opportunities for U.S. leadership in everything from trade talks to military-conflict resolution to
international agreements on global warming. Only Washington can help the nations bordering the
South China Sea forge a formula for sharing the region's resources. Only Washington has a chance
of pushing the Israelis and the Palestinians toward peace. Only Washington can bargain to increase
the low value of a Chinese currency exchange rate that disadvantages almost every nation's trade with
China. But it is clear to Americans and non-Americans alike that Washington lacks the power to solve or
manage difficult problems alone; the indispensable leader must work with indispensable partners.
To attract the necessary partners, Washington must do the very thing that habitually afflicts U.S. leaders
with political hives: compromise. This does not mean multilateralism for its own sake, nor does it mean
abandoning vital national interests. The Obama administration has been criticized for softening UN
economic sanctions against Iran in order to please China and Russia. Had the United States not
compromised, however, it would have faced vetoes and enacted no new sanctions at all. U.S. presidents
are often in a strong position to bargain while preserving essential U.S. interests, but they have to do a
better job of selling such unavoidable compromises to the U.S. public.
U.S. policymakers must also be patient. The weakest of nations today can resist and delay. Pressing
prematurely for decisions--an unfortunate hallmark of U.S. style--results in failure, the prime enemy of
power. Success breeds power, and failure breeds weakness. Even when various domestic constituencies
shout for quick action, Washington's leaders must learn to buy time in order to allow for U.S. power--and
the power of U.S.-led coalitions--to take effect abroad. Patience is especially valuable in the economic
arena, where there are far more players than in the military and diplomatic realms. To corral all these
players takes time. Military power can work quickly, like a storm; economic power grabs slowly, like the
tide. It needs time to erode the shoreline, but it surely does nibble away.
To be sure, U.S. presidents need to preserve the United States' core role as the world's military and
diplomatic balancer--for its own sake; and because it strengthens U.S. interests in economic
transactions. But economics has to be the main driver for current policy, as nations calculate power
more in terms of GDP than military might. U.S. GDP will be the lure and the whip in the international
affairs of the twenty-first century. U.S. interests abroad cannot be adequately protected or advanced
without an economic reawakening at home.
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a/t: econ resilient
No resiliency to prevent a collapse
Isidore, writer at CNNMoney, ‘11
[Chris, “Recession 2.0 would hurt worse,” 2011,
http://money.cnn.com/2011/08/10/news/economy/double_dip_recession_economy/index.htm, accessed:
7/13/13, ML]
And while economists disagree on just how likely the U.S. economy is to fall into another downturn, they
generally agree on one thing -- a new recession would be worse than the last and very difficult to pull
out of.
"Going back into recession now would be scary, because we don't have the resources or the will to
respond, and our initial starting point is such a point of weakness," said Mark Zandi, chief economist at
Moody's Analytics. "It won't feel like a new recession. It would likely feel like a depression."
Zandi said the recent sell-off in stocks have caused him to raise the odds of a new recession to 33%
from 25% only 10 days ago.
Other economists surveyed by CNNMoney are also raising their recession risk estimates. The survey
found an average chance of a new recession to be about 25%, up from a 15% chance only three months
ago.
Of the 21 economists who responded to the survey, six have joined Zandi in increasing their estimates
in just the last few days. The main reason: the huge slide in stocks. Standard & Poor's downgrade of the
U.S. credit rating is another concern.
"The correction in equity markets raises the risk of recession due to the negative hit to wealth and
confidence," said Sal Guatieri, senior economist for BMO Capital Markets.
Even with a 430-point rebound in the Dow Jones industrial average Tuesday following the Federal
Reserve meeting, major U.S. stock indexes have lost more than 11% of their value over the last 12 trading
days.
Recovery at risk
A plunge in stocks doesn't necessarily mean a new recession. The economy avoided a recession after the
stock market crash of 1987.
"Stock price declines are often misleading indicators of future recessions," said David Berson, chief
economist of BMI Group.
But with the economy already so fragile, the shock of another stock market drop and resulting loss
of wealth could be the tipping point.
"It really does matter where the economy is when it gets hit by these shocks," said Zandi. "If we all
pull back on spending, that's a prescription for a long, painful recession," he said.
Most economists say they aren't worried that S&P's downgrade makes recession more likely, although a
few said any bad news at this point increases the risk.
"The downgrade has a psychological impact in terms of hurting consumer confidence," said Lawrence
Yun, chief economist with the National Association of Realtors.
On shakier ground
Another recession could be even worse than the last one for a few reasons.
For starters, the economy is more vulnerable than it was in 2007 when the Great Recession began. In
fact, the economy would enter the new recession much weaker than the start of any other downturn since
the end of World War II.
Unemployment currently stands at 9.1%. In November 2007, the month before the start of the Great
Recession, it was just 4.7%.
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And the large number of Americans who have stopped looking for work in the last few years has left the
percentage of the population with a job at a 28-year low.
Various parts of the economy also have yet to recover from the last recession and would be at serious
risk of lasting damage in a new downturn.
Home values continue to lose ground and are projected to continue their fall. While manufacturing
has had a nice rebound in the last two years, industrial production is still 18% below pre-recession levels.
There are nearly 900 banks on the FDIC's list of troubled institutions, the highest number since 1993.
Only 76 banks were at risk as the Great Recession took hold.
But what has economists particularly worried is that the tools generally used to try to jumpstart an
economy teetering on the edge of recession aren't available this time around.
"The reason we didn't go into a depression three years ago is the policy response by Congress and the
Fed," said Dan Seiver, a finance professor at San Diego State University. "We won't see that this time."
Three times between 2008 and 2010, Congress approved massive spending or temporary tax cuts to try to
stimulate the economy. But fresh from the bruising debt ceiling battle and credit rating downgrade, and
with elections looming, the federal government has shown little inclination to move in that direction.
So this new recession would likely have virtually no policy effort to counteract it.
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*Neg*
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No impact
Economic decline empirically doesn’t cause great power wars – global integration
checks
Barnett, senior managing director of Enterra Solutions, 9
[Thomas P.M., August 24, World Politics Review, “The New Rules: Security Remains Stable Amid
Financial Crisis,” http://www.worldpoliticsreview.com/articles/4213/the-new-rules-security-remainsstable-amid-financial-crisis, accessed 7-13-13, UR]
Can we say that the world has suffered a distinct shift to political radicalism as a result of the economic
crisis?
Indeed, no. The world's major economies remain governed by center-left or center-right political
factions that remain decidedly friendly to both markets and trade. In the short run, there were
attempts across the board to insulate economies from immediate damage (in effect, as much
protectionism as allowed under current trade rules), but there was no great slide into "trade wars."
Instead, the World Trade Organization is functioning as it was designed to function, and regional efforts
toward free-trade agreements have not slowed.
Can we say Islamic radicalism was inflamed by the economic crisis?
If it was, that shift was clearly overwhelmed by the Islamic world's growing disenchantment with the
brutality displayed by violent extremist groups such as al-Qaida. And looking forward, austere economic
times are just as likely to breed connecting evangelicalism as disconnecting fundamentalism.
At the end of the day, the economic crisis did not prove to be sufficiently frightening to provoke
major economies into establishing global regulatory schemes, even as it has sparked a spirited -- and
much needed, as I argued last week -- discussion of the continuing viability of the U.S. dollar as the
world's primary reserve currency. Naturally, plenty of experts and pundits have attached great
significance to this debate, seeing in it the beginning of "economic warfare" and the like between
"fading" America and "rising" China. And yet, in a world of globally integrated production chains
and interconnected financial markets, such "diverging interests" hardly constitute signposts for
wars up ahead. Frankly, I don't welcome a world in which America's fiscal profligacy goes
undisciplined, so bring it on -- please!
Causal chains that link economic decline to great power war are factually and
empirically untrue
Ferguson, Harvard University Laurence A. Tisch History Professor, 6
[Niall, Senior Fellow at the Hoover Institution at Stanford University, September/October 2006, Council
on Foreign Relations, Foreign Affairs vol. 85 issue 5, pp. 62-63, “The Next War of the World,” accessed
7-13-13, UR]
Nor can economic crises explain the bloodshed. What may be the most familiar causal chain in modern
historiography links the Great Depression to the rise of fascism and the outbreak of World War II.
But that simple story leaves too much out. Nazi Germany started the war in Europe only after its
economy had recovered. Not all the countries affected by the Great Depression were taken over by
fascist regimes, nor did all such regimes start wars of aggression. In fact, no general relationship
between economics and conflict is discernible for the century as a whole. Some wars came after
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periods of growth, others were the causes rather than the consequences of economic catastrophe,
and some severe economic crises were not followed by wars.
Many trace responsibility for the butchery to extreme ideologies. The Marxist historian Eric Hobsbawm
calls the years between 1914 and 1991 "an era of religious wars" but argues that "the most militant and
bloodthirsty religions were secular ideologies." At the other end of the political spectrum, the
conservative historian Paul Johnson blames the violence on "the rise of moral relativism, the decline of
personal responsibility [and] the repudiation of Judeo-Christian values." But the rise of new ideologies
or the decline of old values cannot be regarded as causes of violence in their own right. Extreme
belief systems, such as anti-Semitism, have existed for most of modern history, but only at certain
times and in certain places have they been widely embraced and translated into violence.
No major violence empirically results from economic crashes
Naím, Editor-in-Chief of Foreign Policy, 10
[Moisés, January/February, Foreign Policy, “It Didn’t Happen,”
http://www.foreignpolicy.com/articles/2010/01/04/it_didnt_happen?wp_login_redirect=0, accessed 7-1313, UR]
Just a few months ago, the consensus among influential thinkers was that the economic crisis would
unleash a wave of geopolitical plagues. Xenophobic outbursts, civil wars, collapsing currencies,
protectionism, international conflicts, and street riots were only some of the dire consequences
expected by the experts.
It didn't happen. Although the crash did cause severe economic damage and widespread human
suffering, and though the world did change in important ways for the worse -- the International Monetary
Fund, for example, estimates that the global economy's new and permanent trajectory is a 10 percent
lower rate of GDP growth than before the crisis -- the scary predictions for the most part failed to
materialize.
Sadly, the same experts who failed to foresee the economic crisis were also blindsided by the speed
of the recovery. More than a year into the crisis, we now know just how off they were. From telling us
about the imminent collapse of the international financial system to prophecies of a 10-year recession,
here are six of the most common predictions about the crisis that have been proven wrong:
The international financial system will collapse. It didn't. As Lehman Brothers, Bear Stearns, and Fannie
Mae and Freddie Mac crashed, as Citigroup and many other pillars of the financial system teetered on the
brink, and as stock markets everywhere entered into free fall, the wise men predicted a total system
meltdown. The economy has "fallen off a cliff," warned investment guru Warren Buffett. Fellow financial
wizard George Soros agreed, noting the world economy was on "life support," calling the turbulence
more severe than during the Great Depression, and comparing the situation to the demise of the Soviet
Union.
The natural corollary of such doomsday scenarios was the possibility that depositors would lose
access to the funds in their bank accounts. From there to visions of martial law imposed to control
street protests and the looting of bank offices was just an easy step for thousands of Internet-fueled
conspiracy theorists. Even today, the financial system is still frail, banks are still failing, credit is scarce,
and risks abound. But the financial system is working, and the perception that it is too unsafe to use or
that it can suddenly crash out of existence has largely dissipated.
Economic shocks have no effect on global peace – your authors assume biased
studies
Bazzi, UC San Diego Department of Economics PhD, and Blattman, Yale
Departments of Political Science and Econ Assistant Professor, 11
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[Samuel and Christopher, December 1, Center for Global Development, “Economic Shocks and Conflict:
The (Absence of?) Evidence from Commodity Prices,”
http://www.cgdev.org/sites/default/files/1425755_file_Bazzi_Blattman_price_shocks_FINAL.pdf,
accessed 7-13-13, UR]
Ultimately, however, the fact that commodity price shocks have no discernible effect on new conflict
onsets, but some effect on ongoing conflict, suggests that political stability might be less sensitive to
income or temporary shocks than generally be- lieved. One possibility is that successfully mounting an
insurgency is no easy task. It comes with considerable risk, costs, and coordination challenges.
Another possibility is that the counterfactual is still conflict onset. In poor and fragile nations, income
shocks of one type or another are ubiquitous. If a nation is so fragile that a change in prices could
lead to war, then other shocks may trigger war even in the absence of a price shock. The same
argument has been made in debunking the myth that price shocks led to fiscal collapse and low growth in
developing nations in the 1980s.19
B. A general problem of publication bias?
More generally, these findings should heighten our concern with publication bias in the con- flict
literature. Our results run against a number of published results on commodity shocks and conflict,
mainly because of select samples, misspecification, and sensitivity to model assump- tions, and, most
importantly, alternative measures of instability.
Across the social and hard sciences, there is a concern that the majority of published research findings are
false (e.g. Gerber et al. 2001). Ioannidis (2005) demonstrates that a published find- ing is less likely to be
true when there is a greater number and lesser pre-selection of tested rela- tionships; there is greater
flexibility in designs, definitions, outcomes, and models; and when more teams are involved in the chase
of statistical significance. The cross-national study of con- flict is an extreme case of all these. Most
worryingly, almost no paper looks at alternative de- pendent variables or publishes systematic
robustness checks. Hegre and Sambanis (2006) have shown that the majority of published conflict
results are fragile, though they focus on time- invariant regressors and not the time-varying shocks
that have grown in popularity.
We are also concerned there is a “file drawer problem” (Rosenthal 1979). Consider this deci- sion rule:
scholars that discover robust results that fit a theoretical intuition pursue the results; but if results are not
robust the scholar (or referees) worry about problems with the data or em- pirical strategy, and identify
additional work to be done. If further analysis produces a robust re- sult, it is published. If not, back to the
file drawer. In the aggregate, the consequences are dire: a lower threshold of evidence for initially
significant results than ambiguous ones.20
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Economy Resilient
Economy is resilient – there are inherent market checks
Zakaria, Editor of Newsweek International, 9
[Fareed, December 11, Newsweek, “The Secrets of Stability,”
http://www.thedailybeast.com/newsweek/2009/12/11/the-secrets-of-stability.html, accessed 7-13-13, UR]
Pundits whose bearishness had been vindicated predicted we were doomed to a long, painful bust,
with cascading failures in sector after sector, country after country. In a widely cited essay that
appeared in The Atlantic this May, Simon Johnson, former chief economist of the International
Monetary Fund, wrote: "The conventional wisdom among the elite is still that the current slump
'cannot be as bad as the Great Depression.' This view is wrong. What we face now could, in fact, be
worse than the Great Depression."
Others predicted that these economic shocks would lead to political instability and violence in the worsthit countries. At his confirmation hearing in February, the new U.S. director of national intelligence,
Adm. Dennis Blair, cautioned the Senate that "the financial crisis and global recession are likely to
produce a wave of economic crises in emerging-market nations over the next year." Hillary Clinton
endorsed this grim view. And she was hardly alone. Foreign Policy ran a cover story predicting serious
unrest in several emerging markets.
Of one thing everyone was sure: nothing would ever be the same again. Not the financial industry, not
capitalism, not globalization.
One year later, how much has the world really changed? Well, Wall Street is home to two fewer
investment banks (three, if you count Merrill Lynch). Some regional banks have gone bust. There was
some turmoil in Moldova and (entirely unrelated to the financial crisis) in Iran. Severe problems remain,
like high unemployment in the West, and we face new problems caused by responses to the crisis—
soaring debt and fears of inflation. But overall, things look nothing like they did in the 1930s. The
predictions of economic and political collapse have not materialized at all.
A key measure of fear and fragility is the ability of poor and unstable countries to borrow money on the
debt markets. So consider this: the sovereign bonds of tottering Pakistan have returned 168 percent so far
this year. All this doesn't add up to a recovery yet, but it does reflect a return to some level of normalcy.
And that rebound has been so rapid that even the shrewdest observers remain puzzled. "The question I
have at the back of my head is 'Is that it?' " says Charles Kaye, the co-head of Warburg Pincus. "We had
this huge crisis, and now we're back to business as usual?"
This revival did not happen because markets managed to stabilize themselves on their own. Rather,
governments, having learned the lessons of the Great Depression, were determined not to repeat the
same mistakes once this crisis hit. By massively expanding state support for the economy—through
central banks and national treasuries—they buffered the worst of the damage. (Whether they made
new mistakes in the process remains to be seen.) The extensive social safety nets that have been
established across the industrialized world also cushioned the pain felt by many. Times are still
tough, but things are nowhere near as bad as in the 1930s, when governments played a tiny role in
national economies.
It's true that the massive state interventions of the past year may be fueling some new bubbles: the cheap
cash and government guarantees provided to banks, companies, and consumers have fueled some
irrational exuberance in stock and bond markets. Yet these rallies also demonstrate the return of
confidence, and confidence is a very powerful economic force. When John Maynard Keynes described his
own prescriptions for economic growth, he believed government action could provide only a temporary
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fix until the real motor of the economy started cranking again—the animal spirits of investors, consumers,
and companies seeking risk and profit.
Beyond all this, though, I believe there's a fundamental reason why we have not faced global collapse
in the last year. It is the same reason that we weathered the stock-market crash of 1987, the
recession of 1992, the Asian crisis of 1997, the Russian default of 1998, and the tech-bubble collapse
of 2000. The current global economic system is inherently more resilient than we think. The world
today is characterized by three major forces for stability, each reinforcing the other and each historical in
nature.
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AT: Royal/Diversionary Theory
Diversionary theory is false
Meernik, University of North Texas College of Arts and Science Political Science
Professor and Deputy Director of the Castleberry Peace Institute, Waterman,
University of North Texas Graduate Student, 96
[James and Peter, September, Political Research Quarterly, Vol. 49, No. 3. ***PAGE#*** “The Myth of
the Diversionary Use of Force by American Presidents,”
http://www.jstor.org/stable/pdfplus/449098.pdf?acceptTC=true, accessed 7-13-13, UR]
The Misery Index. Quite often the chief domestic problem presidents wish to deflect attention from is the
state of the economy. Many researchers have demonstrated that there is a positive relationship
between the misery index (inflation + unemployment) and the diversionary use of force (Ostrom and
Job 1986; Job and Ostrom 1986; Russett 1989; James and Oneal 1991). While this hypothesis makes
intuitive sense, it would seem to fail more common-sense tests. Would a public that is facing
increasing prices and decreasing employment opportunities really care about and reward
presidents for adven-tures overseas? And if they do give presidents a sudden burst in approval
ratings, isn’t it likely to evaporate rather quickly (Lian and Oneal 1993)? Still, the issue remains, do
presidents believe public attention can be distracted from economic problems? It is our contention
presidents are aware of these difficulties and employ military force anyway. Again, we argue that it
does not make sense theoretically to maintain that presidents engage in this sort of behavior
regularly during hard economic times given these problems. Therefore, we hypothesize that there
should be no relationship between the misery index and the probability of a diversionary use of
military force. To construct this variable, we add the inflation and unemployment rates during the month
previous to the date in which the international crisis first occurred.
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U.S. economy will begin to grow into 2014 – sequestration spending cuts starting to
wane and housing market improving
Conference Board on Canada, 7/15/13
[Conference Board on Canada, 7-15-13, Sacramento Bee, “U.S. to Pick Up the Pace in 2013”,
http://www.sacbee.com/2013/07/15/5567349/us-economy-to-pick-up-the-pace.html, accessed 7-16-13,
HG]
OTTAWA, July 15, 2013 -- /CNW/ - The U.S. economy is in for another year of sluggish growth in
2013, but a rebound in the housing market is expected to lead to stronger gains next year, according
to The Conference Board of Canada's U.S. Outlook - Summer 2013.
"Growth in the U.S. economy will pick up toward the end of this year as the impact of the sequester
and higher taxes fades," said Kip Beckman, Principal Economist. "Bolstered by the rebound in the U.S.
housing market, private sector activity will offset some of the drag on the economy created by the
deadlock over fiscal policy."
The tight supply of homes currently on the market has resulted in rising prices and increasing
residential construction. Housing prices have started to rebound in many parts of the U.S., which,
in turn, is boosting household wealth and spending. Real household spending is expected to pick up
steam in the second half of this year.
The sharp rebound in the U.S. housing market will also support investment spending on equipment and
enable the private sector to grow at a pace of three per cent or better in 2013.
The U.S. economy is on track to grow by two per cent this year. In 2014, the drag on the economy
created by the tax increases and sharp cuts in spending under the sequester provisions should
wane, which will allow the United States to post a solid gain of 3.2 per cent in real GDP.
2014 U.S. economy to pick up because of increases made in housing
Newsroom America, 7/15/13
[7-15-13, Newsroom America, “U.S. to Pick Up the Pace in 2014, Say Economists”,
http://www.newsroomamerica.com/story/375497.html, accessed 7-16-13, HG]
(Newsroom America) -- The U.S. economy is in for another year of sluggish growth in 2013, but a
rebound in the housing market is expected to lead to stronger gains next year, according to The
Conference Board of Canada's U.S. Outlook - Summer 2013.
"Growth in the U.S. economy will pick up toward the end of this year as the impact of the sequester
and higher taxes fades," said Kip Beckman , Principal Economist.
"Bolstered by the rebound in the U.S. housing market, private sector activity will offset some of the
drag on the economy created by the deadlock over fiscal policy."
The outlook predicts:
* The U.S. economy will expand by 2 per cent this year and 3.2 per cent in 2014. * Higher taxes and steep
cuts in government spending will cut 1.5 percentage points from real GDP in 2013. * Housing starts are
forecast to increase in the range of 30 per cent annually over the next two years.
The tight supply of homes currently on the market has resulted in rising prices and increasing residential
construction. Housing prices have started to rebound in many parts of the U.S., which, in turn, is boosting
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household wealth and spending. Real household spending is expected to pick up steam in the second half
of this year.
The sharp rebound in the U.S. housing market will also support investment spending on equipment and
enable the private sector to grow at a pace of three per cent or better in 2013, according to The
Conference Board of Canada.
"The U.S. economy is on track to grow by two per cent this year. In 2014, the drag on the economy
created by the tax increases and sharp cuts in spending under the sequester provisions should
wane, which will allow the United States to post a solid gain of 3.2 per cent in real GDP," it said.
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***Mexico***
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UQ – Mexico Econ low now
Mexico’s economy low now- and won’t recover: no sustainable path to improve
economy kills investor confidence
Business Mexico Online 7-11-13
(“IMF Lowers estimate of Mexican GDP growth in 2013-2014” http://business-mexico-online.com/imflowers-estimate-of-mexican-gdp-growth-in-2012-and-2014/ accessed 7-17-13 KR)
Amid weakening growth worldwide, the International Monetary Fund has lowered its estimates for GDP
growth of the Mexican economy by one-half of a percentage point in 2013 and 0.2 percent in 2014
The IMF lowered its expected GDP growth in Mexico in 2013 from 3.4 percent to 2.9 percent. Photo:
BMO
In general, the IMF estimates that emerging markets and developing economies will grow 5 percent in
2013 and 5.5 percent in 2014, which is down from estimates it released in April.
Expected GDP growth in Mexico in 2013 was lowered from 3.4 percent to 2.9 percent, while 2014
estimates for Mexico were lowered from 3.4 percent to 3.2 percent.
The strength of the global recovery remains uncertain , says the IMF, which also lowered its growth
estimates for the global economy from 3.3 percent to 3.1 percent in 2012 and from 4 percent down to 3.8
percent in 2014.
“Lack of decisive actions to put public finances on a sustainable path in key advanced economies
could hit investors’ confidence and global growth,” said the IMF in its latest Regional Economic
Outlook.
Mexico’s economy looks like its growing but internal structural problems show 50%
of the population lives in poverty
Villagran Christian Science Monitor Correspondent 4-24-13 (Lauren, The Christian
Science Monitor, “is Mexico;s economy more of a fiesta or a siesta?”
http://www.csmonitor.com/World/Americas/2013/0424/Is-Mexico-s-economy-more-a-fiesta-or-a-siesta
accessed 7-16-13 KR)
China, India, and Brazil are out. Mexico is in – at least according to international observers who have
been cooing over Mexico's rise in recent months.
With a new year and a new government, the way the world views Mexico has already changed
dramatically. Mexico has enviable economic stability and a forecast for growth, improved social
mobility, and an emerging middle class. It is competing with Brazil to become the economic darling
of Latin America and is challenging China in manufacturing prowess. The drug war rages on in
many regions, but optimism for Mexico’s future is trumping the dark prognoses of the recent past.
But is all the optimism for Mexico’s future warranted?
There are two sides to the coin when comes to Mexico's future as a global economic force. The new
government inherited an economy rebounding from the impact of the economic crisis, but how the
administration approaches deep-rooted challenges like poverty and inequality will determine whether the
current optimism gains momentum or peters out.
Mexico’s potential remains enigmatic. There is no doubting the country’s macroeconomic successes,
economists say. A stable currency over nearly 20 years, steady (if sometimes slow) economic growth; and
fiscal discipline have combined to keep Mexico sailing in smooth waters. Mexico has signed a dozen
trade pacts, which have opened it to the world. That’s the bird’s eye view.
But zoom in and Mexico’s troubles come into focus.
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Despite a more open economy and a growing middle class, nearly half the population remains poor,
living on as little as $80 per month or less. The widely industrialized north and central regions
contrast with the poverty entrenched across much of the south. Nationwide, between 50 and 62
percent of workers toil in the informal economy, according to the World Bank – an uncharted area
in which workers frequently don’t pay taxes and lack the safety nets of health insurance or
employment contracts.
“We need to ensure that the benefits of this intelligent global integration reach all the economic
players at a national level – small and medium-sized businesses, and all regions of the country,”
said Economy Secretary Ildefonso Guajardo at a recent conference. “It’s unsustainable to continue
having two Mexicos.”
Despite low inflation, Mexico’s economy is weaker than expected, and shows weak
signs of recovery – Our evidence is future predictive.
Young, Mexico City News Financial Reporter 7-12-13
(James, Mexico City News, “Bank of Mexico: Economic Slowdown Could Drive Inflation Lower”
https://mninews.marketnews.com/index.php/bank-mexico-economic-slowdown-could-drive-inflationlower?q=content/bank-mexico-economic-slowdown-could-drive-inflation-lower , accessed 7-14-13 KR)
--Keeps Policy Rate on Hold at 4.0% as Expected
MEXICO CITY (MNI) - The Bank of Mexico announced Friday it is keeping the key policy rate on
hold at 4.0% as expected, with headline inflation dropping quickly amid a noted deceleration in the
Mexican economy and an external environment that is both volatile and weak.
The board also noted the possibility of prolonged weakness in the local economy as a possible
negative pressure on inflation, suggesting a more positive balance of risks for inflation.
The policy board said held tight on the rate, "taking into consideration the recent evolution of inflation
and its outlooks, the important deceleration demonstrated in the Mexican economy, the fragility of the
external environment and the volatility of international financial markets."
The board described its current stance on monetary policy as "congruent with a scenario in which
generalized pressure on inflation is not expected" and where the CPI is approaching the medium-term
permanent objective of 3%.
Policymakers pledged in the statement to "remain vigilant" on inflation pressures and to "be alert to the
implications that the evolution of economic activity and the relative monetary policy posture in Mexico
has on the outlook for inflation."
As reported by state statistics agency INEGI Tuesday, annual headline inflation saw an surprising
drop to 4.09% in June from 4.63% in May, led by a key drop in food prices after non-core prices
saw their highest jump in nearly a decade in the first half of May, with consensus expectations
going into the report closer to 4.14%.
The bump in inflation and subsequent plummet seems to confirm the outlook provided months
earlier by monetary policymakers, who restated in the decision their outlook for headline to stay
between 3 and 4% for 2H 2013 and for core to remain below that level for the rest of 2013 and 2014.
Mexico has shown a stronger-than-expected weakness in number of industrial sectors built upon
poor external demand as well as a drop in public spending in 1H 2013 with only weak signs of
recovery in April and May.
An hour before the announcement, state statistics agency INEGI released May industrial production data
showing a seasonalized annual increase of 1.39%, the strongest calendar-adjusted result in 11-months;
however, the data showed continued weakness in construction, despite some rebound in
manufacturing.
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In light of the recent comments from the Fed regarding a possible tapering of asset purchases and the
subsequent market reaction sending the peso lower and long-term rates "considerably higher", the board
also noted in the statement the reaction was "orderly" and did not have an effect on inflation outlook.
"Taking into consideration the degree of capacity in the economy and the low pass through in variations
in the exchange rate, we do not expect the recent depreciation of the national currency to generate
inflationary pressures."
The board added, "The rhythm of economic expansion is expected to grow in the second half of the year.
Nevertheless, in light of the speed and depth which has taken place with the economic deceleration
(here), the downside risks for economic activity in Mexico have increased."
Looking abroad, the Bank of Mexico governors reported a stronger negative growth risks in general
as well as a lower inflation scenario, bolstered by low commodity prices, weak internal demand in
emerging economies, particularly in Asia, a weak Eurozone struggling with debt relief, and a U.S.
growth outlook that continues to be downgraded despite recent positive signs in job reports.
The central bank is set to release the minutes of today's decision meeting July 26. IT's next meeting is
September 6.
Bank is at a record low- Mexico’s monetary position means that it wont grow for a
while
Cattan and Martin Bloomberg Mexico Economy and Government correspondents,
7-12-13
(Nacha and Eric, Bloomberg, “Mexico Holds Key Rate as Weaker Peso Undermines CPI Gains”
http://www.bloomberg.com/news/2013-07-12/mexico-holds-key-rate-as-weaker-peso-undermines-cpigains.html accessed 7-12-13 KR)
Mexico’s central bank kept its overnight rate at a record low as policy makers balance slowing
growth with above-target inflation and a weakening currency in Latin America’s second-biggest
economy.
Banco de Mexico, led by Governor Agustin Carstens, held the overnight rate at 4 percent today, as
forecast by all 23 economists surveyed by Bloomberg. The peso has plunged 3.2 percent since Federal
Reserve Chairman Ben S. Bernanke signaled May 22 the U.S. could dial back its monthly bondbuying program.
Annual inflation has eased more than expected to just above the 2 percent to 4 percent target range and
economists lowered their growth forecasts for this year to the slowest pace since the 2009 recession.
Policy makers said in today’s statement keeping the rate unchanged was appropriate as they
measure the risks of a prolonged economic deceleration and new inflationary pressures.
Policy makers were “dovish, due to the economic slowdown on a global level as well as in Mexico,
and more comfortable with the inflation trajectory,” Delia Paredes, an economist at Grupo Financiero
Banorte SAB, said in an e-mailed response to questions. “Nevertheless, the volatility and Mexico’s
monetary position relative to other countries are what won’t permit them to move rates for a period
of time.”
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Terrorism internal
Economic decline destabilizes immigration flows which causes Terrorism
Brown, Former Homeland Security Under Secretary, 9
(Michael Brown, Former Under Secretary of Homeland Security, Author of “Deadly Indifference”,
National Security Blog Expert - The National Journal, Political Blogger - The Daily Caller, Radio Talk
Show Host - "The Michael Brown Show", Founder & Chairman, January 15, 2009, Michael Brown
Today, “Border Control: Collapse of Mexico is a Homeland Security & National Security Issue,”
http://www.michaelbrowntoday.com/2009/01/border-control-collapse-of-mexico-is-a-homeland-securitynational-security-issue/, accessed July 16, 2013, EK)
By failing to secure the borders and control immigration, we have opened ourselves up to a frightening
scenario. The United States could face a flood of refugees from Mexico if it were to collapse,
overwhelming state and local governments along the U.S.-Mexico border. During a time of
economic duress, the costs would be overwhelming and would simply add to the already burgeoning
costs at the federal level.
Immigration and border control never was nor should it ever be about racism. Immigration and border
control are national security and homeland security issues.
Sleeper cells from numerous terrorist groups could, and probably already have, infiltrated the United
States, just laying in wait to attack at an appropriately vulnerable time.
Immigration control should permit as many workers as the country can handle or need. The primary
purpose of immigration control should not be about keeping Mexican workers out, but rather simply
knowing who is here.
At some point, Congress must demand, and the President must implement, appropriate immigration
control and border control, if for no other reason, than to stem the possibility of Mexican refugees,
escaping an out of control drug war, overwhelming state and local governments.
And, whether that collapse ever occurs or not, Congress must demand and the President must implement,
border and immigration control so we know who is here, and keep out those who would do us harm.
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Stability internal
Economic Growth in Mexico checks violence
Daily Mail, 5/4/13
(Daily Mail Associated Press Reporter, May, 4, 2013, Daily Mail, “Obama defends America's right to
fight drugs in Latin America as he visits Costa Rica,” http://www.dailymail.co.uk/news/article2319334/Obama-bemoans-drug-violence-Central-America-defending-administrations-efforts-curb-U-Sdemand-narcotics-trade.html, accessed July 13, 2013, EK)
In both Mexico and Costa Rica, Obama cast economic growth as the best way to combat violence and
keep drugs and organized crime from taking hold of another generation.
'We have to make sure that everybody feels opportunity,' the president declared in Costa Rica. 'Even
in countries that are doing well, the scourge of drugs and drug trafficking will still be there. And there still
needs to be a strong law enforcement component. But we can do better than we are currently doing.'
The president had sounded a similar message earlier Friday in Mexico, which he touted as a nation ready
to take 'its rightful place in the world.'
During a speech to students, he urged Mexico's young people to help the region move beyond 'old
stereotypes' and highlighted developments in technology and manufacturing.
While many people in Central America are also weary of the focus on the drug-fueled violence, it
remains an undeniable part of daily life in many parts of the region. Costa Rica has fared better than
many of its neighbors, but it worries about spillover from nearby countries. Honduras, for example, now
has the highest homicide rate in the world, with about 7,200 people murdered last year in the tiny nation
of 8 million people, most in drug-related crime.
Economic growth solves for violence in Mexico
Ugarte, Boston Review Correspondent, 13
(Pedro Salazar Ugarte, researcher at the Legal Research Institute of the National Autonomous University
of Mexico, January 10, 2013, Boston Review, “Taking Off: Mexico's Demographic Challenge,”
http://bostonreview.net/world/taking, accessed July 13, 2013, EK)
Mexico is going through crucial and unprecedented times. It may take off or it may collapse. And I
do not exaggerate or mean this rhetorically. Never before has Mexico had so many young people:
nearly 30 million men and women aged 15–29, representing 26.4 percent of the country’s population.
They are what we call in Mexico the “demographic bonus,” at first considered a great opportunity
to enhance the country’s growth and development, and now a threat to its existence.
Despite improvements in education—95 percent of the population has at least finished elementary
school—and a relatively stable economy, most of these young adults are victims of the inequality and
exclusion characteristic of Mexican society. In 2010, when the last census was taken in Mexico, 17.1
percent of the adolescents (15–17 years old) and 24.2 percent of the young adults living in Mexico did not
go to school or have a job. Millions of them have been excluded from these key social institutions:
learning and work. Young men and women, Mexico’s future, are being left without futures of their own.
Given these demographics, the only way for the country to avert disaster lies in achieving economic and
social inclusion for young people. This is a very large challenge considering Mexico’s profound
inequality: 52 million people, 46 percent of the population, live in poverty alongside the richest man on
earth—Carlos Slim Helú. These extreme disparities are straining social cohesion.
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If Mexico does not guarantee its young people a fair chance at success, it can expect a violent
future.
A lot is said about violence in Mexico and deaths related to the “war against organized crime” that
president Felipe Calderón started. The administration calculates about 40,000 deaths, and
researchers estimate at least 60,000. But the cost of violence goes far beyond even those numbers.
Thousands have been displaced or seen their lives otherwise destroyed.
The causes of the violence are diverse. Mexico’s proximity to the United States—the promised land for
millions of immigrants crossing through Mexico, where the demand for drugs is high and arms sales
policies are very liberal—is one problem. The corruption and judicial inefficiency are others. And social
causes loom large: poverty and marginalization allow the creation of what the economist Ciro Murayama
calls a “criminal reserve army.” Those who have no path into civilized society will likely look for
recognition, acceptance, and economic resources elsewhere.
Mexican Economic Growth key to preventing violence
Shoichet, CNN News Correspondent, 12
(Catherine E. Shoichet, November 27, 2012, CNN News, “Mexican president-elect: Economic growth is
key weapon in drug war,” http://www.cnn.com/2012/11/27/politics/mexico-president-interview, accessed
July 12, 2013, EK)
(CNN) -- Creating more economic opportunities will be Mexico's greatest weapon in the war on
drugs, the country's president-elect said Tuesday.
"That, I think, is going to be the best way my government can prevent organized crime," Presidentelect Enrique Pena Nieto told CNN's Wolf Blitzer.
Without jobs and social programs, he said, "millions of my countrymen have no other option than
to dedicate themselves sometimes to criminal activity."
The wide-ranging interview was recorded just a few hours before the incoming leader met with U.S.
President Barack Obama in Washington. In his first meeting with Obama, Pena Nieto said he planned to
focus on building trust and boosting economic ties to create jobs.
Mexican leader eyes economic ties with U.S.
"We've lost presence and competitiveness on the international market. ... There's still space, an
opportunity, to achieve greater integration as far as productivity, which will allow us to improve
the competitive conditions for creating jobs across North America," he said.
Pena Nieto, 46, said his security strategy will focus on reducing the drug-related violence that took 60,000
lives during his predecessor's six-year term, though he provided few specifics about how he would stem
the violence or what aspects of outgoing President Felipe Caderon's strategy he will change.
"We will keep the policies that I think work," he said, "including cooperation with the United States to
effectively fight organized crime."
Mexican Economic growth key to stability
Rico, Arizona Daily Star Correspondent, 12
(Gabriela Rico, September 23, 2012, Arizona Daily Star, “Booming economy overshadowed by Mexico's
violence,” http://azstarnet.com/business/booming-economy-overshadowed-by-mexico-sviolence/article_8af5dee9-6a33-5188-9d3d-fc1eb0f2fb64.html, accessed July 12, 2013, EK)
Overshadowed by drug violence, Mexico's emerging economy surprises many.
Forbes Magazine reports that Mexico is "the little darling of emerging market investors" and poised
to become Latin American's largest economy, surpassing Brazil.
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"Stars appear to be increasingly aligned for an economic outperformance" by Mexico, says a report by
Nomura Securities, cited in The New York Times. "A changing of the guard is slowly but surely taking
place."
Most headlines around the globe for the past six years have focused on outgoing president Felipe
Calderón's war with the drug cartel.
"The sight of miles upon miles of factories outside the industrial capital of Monterrey attracts far less
attention than the image of nine bodies hanging from a bridge in the border city of Nuevo Laredo," the
Times wrote.
In his final state-of-the nation report earlier this month, Calderón defended his war and cited the
government's programs that helped turn Mexico's economy.
A huge investment in infrastructure - from airports to seaports, highways and railroads - boosted trade and
caught the eye of manufacturers from around the world.
With better infrastructure came better manufacturing jobs.
Calderón said more than 2 million jobs were created during his six years in office.
The economic downturn in the United States and anti-illegal immigrants sentiments in states such as
Arizona also sent many Mexicans home.
That boosted the middle class, analysts say, as those workers put their U.S.-learned skills toward
opening businesses or working in manufacturing plants.
This, in turn, attracted retailers such as Walmart, Costco, Home Depot and Sam's Club to open stores in
Mexico.
"Not only is Mexico doing better, macroeconomically speaking, than the false stereotypes would have us
think, Mexico is actually doing better than the United States," Richard Fisher, president of the Federal
Reserve Bank of Dallas told The Washington Post.
In their report, "Mexico: A Middle Class Society, Poor No More, Developed Not Yet," economists Luis
De La Calle and Luis Rubio of the Mexico Institute at the Woodrow Wilson Center for Scholars, discuss
the impact of this growth.
"The implications of this change are immeasurable, and among its consequences is the appearance
of a society that values stability and demands more accountability from its authorities," they wrote.
"The rise of the Mexican middle class is the most relevant development of the last decade in the
country.
Economic growth key to stability
Central Bank News, 7/12/13
(Central Bank News, July 12, 2013, Central Bank News, “Mexico holds rate steady as downside growth
risks rise,” http://beforeitsnews.com/economy/2013/07/mexico-holds-rate-steady-as-downside-growthrisks-rise-2537064.html, accessed July 12, 2013, EK)
Mexico’s central bank held its benchmark target for the overnight rate steady at 4.0 percent, saying this
policy stance is consistent with a lack of inflationary pressures, slower economic growth and the fragile
and volatile international financial markets.
The Bank of Mexico, which cut its rate in March, said recent information suggest that the economic
slowdown since the second half of last year “worsened significantly” in the second quarter of this year,
reflecting lower exports and weak domestic spending.
Like other emerging market economies, Mexico’s peso has depreciated in recent months due to
expectations of changes to U.S. monetary policy and long-term interest rates have “increased
considerably,” increasing the downside risks to Mexico’s economy, the bank said.
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However, the central bank said the rise market interest rates and the decline in the peso had been in an
orderly fashion and economic activity is expected to improve in the next half year, a slightly less
pessimistic outlook than in its previous statement from June.
Increased economic growth boosts Mexico’s ability to cope with violence
Freidman, Stratfor CEO, 12
(George Friedman, Chairman of Stratfor, guides Stratfor's strategic vision and oversees the development
and training of the company's intelligence unit. He has been featured in TIME, The New York Times
Magazine, The Wall Street Journal, The New York Times, Fortune, Newsweek, The Financial Times and
many other domestic and international publications, as well as broadcast media ranging from NPR to
CNN to CNBC. He and Stratfor were also featured in cover stories in Barron's and the New Statesman,
August 21, 2012, Stratfor Global Intelligence, http://www.stratfor.com/weekly/mexicos-strategy,
accessed July 12, 2013, EK)
From the Mexican point of view, this is a manageable situation. The borderland is distinct from the
Mexican heartland. So long as the violence does not overwhelm the heartland, it is tolerable. The
inflow of money does not offend the Mexican government. More precisely, the Mexican government
has limited resources to suppress the trade and violence, and there are financial benefits to its
existence. The Mexican strategy is to try to block the spread of lawlessness into Mexico proper but to
accept the lawlessness in a region that historically has been lawless.
Mexican Economic Growth encourages stability
Freidman, Stratfor CEO, 12
(George Friedman, Chairman of Stratfor, guides Stratfor's strategic vision and oversees the development
and training of the company's intelligence unit. He has been featured in TIME, The New York Times
Magazine, The Wall Street Journal, The New York Times, Fortune, Newsweek, The Financial Times and
many other domestic and international publications, as well as broadcast media ranging from NPR to
CNN to CNBC. He and Stratfor were also featured in cover stories in Barron's and the New Statesman,
August 21, 2012, Stratfor Global Intelligence, http://www.stratfor.com/weekly/mexicos-strategy,
accessed July 12, 2013, EK)
Mexico still has to deal with its core issue, which is maintaining its internal social stability. It is,
however, beginning to develop foreign policy issues beyond the United States. In particular, it is
developing an interest in managing Central America, possibly in collaboration with Colombia. Its
purpose, ironically, is the control of illegal immigrants and drug smuggling. These are not trivial moves.
Were it not for the United States, Mexico would be a great regional power. Given the United States,
it must manage that relationship before any other.
Given Mexico's dramatic economic growth and given time, this equation will change. Over time, we
expect there will be two significant powers in North America. But in the short run, the traditional strategic
problems of Mexico remain: how to deal with the United States, how to contain the northern borderland
and how to maintain national unity in the face of potential social unrest.
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Stability – brink
Mexican collapse is likely—laundry list of reasons
Debusmann, New York Times Correspondent, 9
(Bernd Debusmann, writer on international affairs, Former Reuters correspondent, news editor and
columnist, January 9, 2009, New York Times, “Among top U.S. fears: A failed Mexican state,”
http://www.nytimes.com/2009/01/09/world/americas/09iht-letter.1.19217792.html?_r=0, accessed July
16, 2013, EK)
What do Pakistan and Mexico have in common? They figure in the nightmares of U.S. military
planners trying to peer into the future and identify the next big threats. The two countries are
mentioned in the same breath in a just-published study by the United States Joint Forces Command,
whose jobs include providing an annual look into the future to prevent the U.S. military from being
caught off guard by unexpected developments.
"In terms of worst-case scenarios for the Joint Force and indeed the world, two large and important
states bear consideration for a rapid and sudden collapse: Pakistan and Mexico," says the study called Joint Operating Environment 2008 - in a chapter on "weak and failing states." Such states, it says,
usually pose chronic, long-term problems that can be managed over time.
But the little-studied phenomenon of "rapid collapse," according to the study, "usually comes as a
surprise, has a rapid onset, and poses acute problems." Think Yugoslavia and its disintegration in
1990 into a chaotic tangle of warring nationalities and bloodshed on a horrific scale.
Nuclear-armed Pakistan, where Al Qaeda has established safe havens in the rugged regions bordering
Afghanistan, is a regular feature in dire warnings. Thomas Fingar, who retired as the chief U.S.
intelligence analyst in December, termed Pakistan "one of the single most challenging places on the
planet."
This is fairly routine language for Pakistan, but not for Mexico, which shares a 2,000-mile, or 3,200kilometer, border with the United States.
Mexico's mention beside Pakistan in a study by an organization as weighty as the Joint Forces Command,
which controls almost all conventional forces based in the continental United States, speaks volumes
about growing concern over what is happening south of the U.S. border.
Vicious and widening violence pitting drug cartels against each other and against the Mexican state
have left more than 8,000 Mexicans dead over the past two years. Kidnappings have become a
routine part of Mexican daily life. Common crime is widespread. Pervasive corruption has
hollowed out the state.
In November, in a case that shocked even those (on both sides of the border) who consider corruption
endemic in Mexico, the former drug czar Noé Ramírez was charged with accepting at least $450,000 a
month in bribes from a drug cartel in exchange for information about police and anti-narcotics
operations.
A month later, a Mexican army major, Arturo González, was arrested on suspicion that he sold
information about President Felipe Calderón's movements for $100,000 a month. González belonged
to a special unit responsible for protecting the president.
Depending on one's view, the arrests are successes in a publicly declared anticorruption drive or evidence
of how deeply criminal mafias have penetrated the organs of the state.
According to the Joint Forces study, a sudden collapse in Mexico is less likely than in Pakistan, "but the
government, its politicians, police, and judicial infrastructure are all under sustained assault and
pressure by criminal gangs and drug cartels. How that internal conflict turns out over the next
several years will have a major impact on the stability of the Mexican state."
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It added: "Any descent by Mexico into chaos would demand an American response based on the
serious implications for homeland security alone."
What form such a response might take is anyone's guess, and the study does not spell it out, nor does it
address the economic implications of its worst-case scenario. Mexico is the third biggest trade partner
of the United States (after Canada and China) and its third-biggest supplier of oil (after Canada and
Saudi Arabia).
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US relations internal
Mexico’s Economic Growth critical to relations with the US
Reyes, NBC Latino Correspondent, 4/29/13
(Raul A. Reyes, April 29, 2013, NBC News Latino, “Opinion: President Obama has the chance to
improve US/Mexico relations,” http://nbclatino.com/2013/04/29/opinion-president-obama-has-thechance-to-improve-usmexico-relations/, accessed July 13, 2013, EK)
This week, President Obama is off to Mexico and Costa Rica for a three-day trip starting Thursday. A
White House statement said that the trip is ”is an important opportunity to reinforce the deep
cultural, familial and economic ties that so many Americans share with Mexico and Central
America.” Obama plans to meet with Mexico’s President Enrique Peña Nieto to discuss economic and
trade issues. His last visit to Mexico was in June, for the G-20 summit in Los Cabos.
The U.S. and Mexico are as tightly bound as siblings, and often just as dysfunctional. While both
governments are concerned with immigration and drug violence, President Obama must forge a more
positive, productive partnership. Mexico is enjoying remarkable economic growth, and Obama
neglects our southern neighbor at his own peril.
Obama will arrive in Mexico with good and bad news. On the positive side, he can highlight the progress
his administration has made towards overhauling our immigration system. The border is more secure
than ever, and the Senate has unveiled a proposal that creates new pathways for legal immigration. On
the negative side, Obama bears responsibility for his failure to reform U.S. gun laws. ThinkProgress
reports that the expiration of the assault weapons ban has resulted in the deaths of hundreds of Mexicans
in cartel violence. Even worse, America’s demand for illegal drugs fuels the growth of these cartels.
However, Obama would be wise to recognize that relations with Mexico should not center on these issues
alone. As president-elect, Peña Nieto wrote in The Washington Post that, “It is a mistake to limit our
bilateral relationship to drugs and security concerns. Our mutual interests are too vast and complex to be
restricted in this short-sighted way.” He wants a deeper relationship, one that is defined by shared
economic goals.
That’s the smart way forward. Since 2008, Mexico has seen steady economic growth, which has been
a net benefit to the U.S. The U.S. exports more to Mexico than to China and Japan combined, and
U.S./Mexico trade hit almost $500 billion in 2012. Obama should build on these ties to create greater
economic integration. If he and Peña Nieto were to collaborate on ways of matching Mexico’s
young labor force with American technology and training, it would be a recipe for a regional
economic boom. Greater U.S. investment in Mexico will make the country safer, as the cartels
generally leave multinational operations alone.
Politically, Obama cannot afford to take Mexico for granted. Consider that Mexico has been fully
engaged with Cuba since the revolution in 1959 (which was launched from Mexico). And although the
U.S. has not recognized Venezuela’s Nicolas Maduro as successor to Hugo Chavez, Mexico recognized
his election on April 19. So Mexico is not an ally that automatically falls in lockstep with American
interests. Perhaps with more attention from the Obama administration, Peña Nieto could be
persuaded to be more supportive of U.S. policies for the region.
True, there are legitimate reasons why Mexico has been viewed warily by past administrations. Mexico
has historically been the largest source of our undocumented population. Border towns have long feared
spillover violence from the drug cartels. But illegal immigration is at net zero, and the fears of violence
on the U.S. side of the border have proved largely unfounded. Obama should take the lead in
encouraging more communication and cooperation with Mexico. Already, Peña Nieto favors opening
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Mexico’s energy sector to private investment, and he may even allow foreign investment in its state oil
company.
President Obama has the chance to turn a page in U.S./Mexico relations, and he should not miss it.
It’s time for a foreign policy with Mexico based on its potential, not on its problems.
Mexican Economic Growth key to US relations
Freidman, Stratfor CEO, 12
(George Friedman, Chairman of Stratfor, guides Stratfor's strategic vision and oversees the development
and training of the company's intelligence unit. He has been featured in TIME, The New York Times
Magazine, The Wall Street Journal, The New York Times, Fortune, Newsweek, The Financial Times and
many other domestic and international publications, as well as broadcast media ranging from NPR to
CNN to CNBC. He and Stratfor were also featured in cover stories in Barron's and the New Statesman,
August 21, 2012, Stratfor Global Intelligence, http://www.stratfor.com/weekly/mexicos-strategy,
accessed July 12, 2013, EK)
A few years ago, I wrote about Mexico possibly becoming a failed state because of the effect of the
cartels on the country. Mexico may have come close to that, but it stabilized itself and took a
different course instead -- one of impressive economic growth in the face of instability.
Mexican Economics
Discussion of national strategy normally begins with the question of national security. But a discussion of
Mexico's strategy must begin with economics. This is because Mexico's neighbor is the United States,
whose military power in North America denies Mexico military options that other nations might have.
But proximity to the United States does not deny Mexico economic options. Indeed, while the
United States overwhelms Mexico from a national security standpoint, it offers possibilities for
economic growth.
Mexico is now the world's 14th-largest economy, just above South Korea and just below Australia. Its
gross domestic product was $1.16 trillion in 2011. It grew by 3.8 percent in 2011 and 5.5 percent in 2010.
Before a major contraction of 6.9 percent in 2009 following the 2008 crisis, Mexico's GDP grew by an
average of 3.3 percent in the five years between 2004 and 2008. When looked at in terms of purchasing
power parity, a measure of GDP in terms of actual purchasing power, Mexico is the 11th-largest
economy in the world, just behind France and Italy. It is also forecast to grow at just below 4
percent again this year, despite slowing global economic trends, thanks in part to rising U.S.
consumption.
Total economic size and growth is extremely important to total national power. But Mexico has a
single profound economic problem: According to the Organization for Economic Co-operation and
Development, Mexico has the second-highest level of inequality among member nations. More than
50 percent of Mexico's population lives in poverty, and some 14.9 percent of its people live in intense
poverty, meaning they have difficulty securing the necessities of life. At the same time, Mexico is home
to the richest man in the world, telecommunications mogul Carlos Slim.
Mexico ranked only 62nd in per capita GDP in 2011; China, on the other hand, ranked 91st. No one
would dispute that China is a significant national power. Few would dispute that China suffers from
social instability. This means that in terms of evaluating Mexico's role in the international system, we
must look at the aggregate numbers. Given those numbers, Mexico has entered the ranks of the leading
economic powers and is growing more quickly than nations ahead of it. When we look at the distribution
of wealth, the internal reality is that, like China, Mexico has deep weaknesses.
The primary strategic problem for Mexico is the potential for internal instability driven by
inequality. Northern and central Mexico have the highest human development index, nearly on the
European level, while the mountainous, southernmost states are well below that level. Mexican
inequality is geographically defined, though even the wealthiest regions have significant pockets of
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inequality. We must remember that this is not Western-style gradient inequality, but cliff inequality
where the poor live utterly different lives from even the middle class.
Mexico is using classic tools for managing this problem. Since poverty imposes limits to domestic
consumption, Mexico is an exporter. It exported $349.6 billion in 2011, which means it derives just
under 30 percent of its GDP from exports. This is just above the Chinese level and creates a serious
vulnerability in Mexico's economy, since it becomes dependent on other countries' appetite for Mexican
goods.
This is compounded by the fact that 78.5 percent of Mexico's exports go to the United States. That means
that 23.8 percent of Mexico's GDP depends on the appetite of the American markets. On the flip side,
48.8 percent of its imports come from the United States, making it an asymmetric relationship.
Although both sides need the exports, Mexico must have them. The United States benefits from
them but not on the same order.
Economic strength is vital to US-Mexico relations—relations are based off trade and
investment
Starr, US-Mexico Network Director, 12
(Pamela K., Associate Professor and University Fellow for the Center on Public Diplomacy @ University
of Southern California, October 2012, “U.S.-Mexico Relations and Mexican Domestic Politics,” p. 7-8,
http://college.usc.edu/usmexnet/wp-content/uploads/2010/10/Camp-Oxford-paper-final.doc, Accessed
7/13/13, JC)
The resulting “special relationship” between the United States and Mexico during the Cold War
allowed successive Mexican governments a striking degree of domestic and foreign policy autonomy,
but with the caveat that their behavior never challenge U.S. strategic interests and that Mexico remain
a stable ally on the U.S. southern border. This peculiar relationship was reinforced by the limited ties
between the two countries made possible by the restrictions on global trade, investment, and
communication that characterized the international setting until the mid-1960s. This backdrop
legitimated and reinforced Mexico’s protectionist approach to economic policy, which created another
barrier to U.S. involvement in the Mexican economy and by extension in Mexican politics.1 This
international foundation for a bilateral relationship based on mutual neglect changed dramatically
beginning in the 1970s and quickly picked up pace in the last two decades of the twentieth century.2
Advances in communication and transportation technologies amplified reductions in trade barriers to
swell interactions among economies and polities, setting off the process we now know as
“globalization.” This process gradually eliminated the autarkic international context that had made
the arm’s-length relationship functional and instead encouraged increased bilateral ties across a
wide spectrum of issues. Improved transportation and communication technologies, for example,
reduced the costs of migration just as weak job creation in Mexico’s growing labor market met up
with a sudden increase in U.S. demand for low-skilled labor. As a result, Mexican migration north
intensified during the 1970s. At the same time, market-driven changes in the supply and demand for illicit
drugs increased their flow into the United States from Mexican territory. And the oil boom and
associated borrowing spree of the 1970s increased Mexico’s economic dealings with the United
States. This expansion in the number and type of cross-border ties was amplified by Mexico’s
ensuing decision to open its economy to international trade and capital flows, and especially the
1
Meyer.
Jorge I. Dominguez and Rafael Fernandez de Castro refer to this relationship as “bargained neglect” in their
volume The United States and Mexico: Between Partnership and Conflict, New York and London: Routledge,
2001.
2
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associated decision to negotiate a free trade agreement with the United States. As the interconnections
between these two traditionally “distant neighbors” grew, the viability of the old approach to bilateral
relations faded.
Mexican economic collapse jeopardizes relations—cooperation between Nieto and
Obama is predicated off economic concerns
Seelke, Congressional Research Service specialist in Latin American Affairs, 1/16/13
(Clare Ribando, Congressional Research Service, “Mexico’s New Administration: Priorities and
Key Issues in U.S.-Mexican Relations,” p. 1-2, http://www.fas.org/sgp/crs/row/R42917.pdf, Accessed
7/13/13, JC)
As Mexico is experiencing a major domestic shift in power, U.S.-Mexican relations could also be ¶ in
for some changes. This year marks the first time in 12 years that U.S. and Mexican presidential ¶ terms
are beginning at roughly the same time. While President Barack Obama and President Peña ¶ Nieto both
face a full slate of domestic challenges, analysts have urged both leaders to work ¶ together on issues
that are of critical importance to both countries, particularly those aimed at ¶ boosting trade and job
creation. At a pre-inaugural meeting in late November 2012, President ¶ Obama embraced President
Peña Nieto’s desire to bolster economic ties and to focus on a broad ¶ array of bilateral issues rather
than focusing predominantly on security issues.3
Congress and the United States have a strong interest in the impact of the Peña Nieto government ¶
on economic and security conditions in Mexico and on U.S.-Mexican relations. Economically, the ¶
United States and Mexico are heavily interdependent, and the U.S. economy could benefit if ¶
Mexico is able to sustain or expand its economic growth rate (which has averaged 3% over the ¶ last
three years). Similarly, security conditions in Mexico affect U.S. national security, ¶ particularly along the
nearly 2,000 mile U.S.-Mexico border. Congress may closely monitor¶ whether the reduction in
organized-crime related violence that Mexico experienced in 2012 can ¶ be sustained without
jeopardizing bilateral efforts against drug trafficking and organized crime. ¶ Maintaining strong bilateral
cooperation on these and other issues, while also ensuring that U.S. ¶ interests are protected, are likely to
be of keen interest to Congress.
Economic decline forces Mexico to improve relations with the US—viewed as key to
restructuring
Esparza, UC Riverside professor, et al 12
(Diego Esparza, Antonio Ugues Jr.¶ UC Riverside professor, and Paul Hernandez, UC Riverside
professor, March 22 2012, Western Political Science Association, “The History of Mexican Drug Policy,”
p. 9, http://wpsa.research.pdx.edu/meet/2012/esparza1.pdf, Accessed 7/13/13, JC)
This equilibrium was disrupted by changes to the structural conditions placed on ¶ the Mexican presidency
during the Miguel de La Madrid administration (1982-1988). In ¶ 1982 México faced a significant
economic shock when it announced that it could no ¶ longer make its principal payments on foreign
loans, a majority of which was owed to ¶ major U.S. commercial banks (Bruner and Simms, 1987). This
led to increased pressure ¶ from the United States and international financial institutions (i.e. the IMF)
to adopt ¶ liberal market economic policies. In an attempt to restructure and salvage its economy, ¶
México began to seek closer cooperation with the U.S. on financial and political affairs ¶ (Doyle,
1993; 83). This largely meant the privatization of government owned enterprises, ¶ a reduction in
government subsidies to farmers, and increased liberalization of trade with ¶ the United States.
What is significant is that this shock precipitated the increased influence that the ¶ United States
would have and later build in Mexican domestic policy. This increased ¶ influence meant that the
Mexican president would now have to take into consideration ¶ the preferences of the United States
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in both economic and anti-drug policies. The initial ¶ manifestation of this increased influence was
Ronald Reagan’s push for a U.S. presence ¶ in México through the offices of the Drug Enforcement
Agency. What is important to ¶ note is that, despite the success of Operation Condor in the
Echeverría/Portillo era, it was ¶ not until the Administration of Miguel de la Madrid that drug trafficking
became “an ¶ important topic on the domestic or international agenda” in México (Chabat 2002, 135).
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Drug Cartels Internal
Continued economic growth crucial to Mexican drug war—produces jobs and social
programs that offer alternatives to crime
CNN 12
(Catherine E. Shoichet, 11/27/12, CNN News, “Mexican president-elect: Economic growth is key weapon
in drug war,” http://www.cnn.com/2012/11/27/politics/mexico-president-interview, Accessed 7/13/13,
JC)
(CNN) -- Creating more economic opportunities will be Mexico's greatest weapon in the war on
drugs, the country's president-elect said Tuesday.
"That, I think, is going to be the best way my government can prevent organized crime," Presidentelect Enrique Pena Nieto told CNN's Wolf Blitzer.
Without jobs and social programs, he said, "millions of my countrymen have no other option than to
dedicate themselves sometimes to criminal activity."
The wide-ranging interview was recorded just a few hours before the incoming leader met with U.S.
President Barack Obama in Washington. In his first meeting with Obama, Pena Nieto said he planned
to focus on building trust and boosting economic ties to create jobs.
"We've lost presence and competitiveness on the international market. ... There's still space, an
opportunity, to achieve greater integration as far as productivity, which will allow us to improve
the competitive conditions for creating jobs across North America," he said.
Mexican economic decline results in rise of drug cartels – empirical examples prove
Barnes, Bonner Means Baker Fellow
James A. Baker III Institute for Public Policy
Rice University, 11
[Joe, 4-29-11, James A. Baker III Institute for Public Policy, “The Future of Oil in Mexico”,
http://www.bakerinstitute.org/publications/EF-pub-BarnesBilateral-04292011.pdf, accessed 7-13-13, HG]
There is already a short- to medium-term risk of substantial instability in Mexico. As noted, the
country is enduring extremely high levels of drug-related violence. Even if the Mexican government
eventually succeeds in its efforts to suppress this violence, the process is likely to be expensive, bloody,
and corrosive in terms of human rights. A period of feeble economic growth, combined with a fiscal
crisis associated with a drop in revenues from Pemex, could create a “perfect storm” south of the
border. If this were to occur, Washington would have no choice but to respond.
In the longer-term, the United States has a clear interest in robust economic growth and fiscal
sustainability in Mexico.34 There is at least one major example of the U.S. coming to Mexico’s aid in an
economic emergency. In 1994, the United States extended US$20 billion in loan guarantees to Mexico
when the peso collapsed, in large part to make U.S. creditors whole.35 Not least, a healthy Mexican
economy would reduce the flow of illegal immigration to the United States. To the extent that
prospects for such growth and sustainability are enhanced by reform of Pemex, the United States should
be supportive. It might be best, in terms of U.S. economic and commercial interests, were Pemex to be
fully privatized, but even partial reforms would be welcome. Not all national oil companies are created
equal: Pemex’s development into something like Norway’s Statol would mark an important
improvement.36
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Further rise in drug cartels results in narco-terrorism and collapse of the Mexican
state
Couto, professor of political science at Liberty University, 13
[Andrew, 2013, Liberty University, “Mexican Drug Cartels: Significance and Potential Impacts on the
United States”,
http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1373&context=honors&seiredir=1&referer
=http%3A%2F%2Fwww.google.com%2Furl%3Fsa%3Dt%26rct%3Dj%26q%3Ddrug%252Bcartel%252
Bimpacts%26source%3Dweb%26cd%3D12%26ved%3D0CC8QFjABOAo%26url%3Dhttp%253A%252
F%252Fdigitalcommons.liberty.edu%252Fcgi%252Fviewcontent.cgi%253Farticle%253D1373%2526con
text%253Dhonors%26ei%3DaM_hUYiGLKMigKp0YHoBw%26usg%3DAFQjCNEvOeR702dl9zQ5Q8
MvLuAy0fDxQ%26sig2%3D6b8LrjKoW4NPdWaV3x1tJw%26bvm%3Dbv.48705608%2Cd.cGE#searc
h=%22drug%2Bcartel%2Bimpacts%22, accessed 7-13-13, HG]
Another threat to the U.S. in the scenario of a failed Mexican state is the presence of narcoterrorism. Narco-terrorism is a theory in criminal justice explaining the relationship between the drug
trade and terrorist groups. Terrorist groups often rely on the sale of illicit drugs to supply their acts
of terrorism; drug cartels (e.g. Los Zetas) often engage in acts of a terrorist nature to establish
dominance in an area or otherwise further their agenda (White, 2009). The United States has begun
to see ties between Middle Eastern terrorism and Los Zetas. Jordy Yager reports that “U.S.
intelligence and security officials have been monitoring the ties of the major drug cartels operating in
Mexico, such as the Los Zetas cartel, for possible connections to Al Qaeda or Al Qaeda affiliates” (2011).
Ileana Ros-Lehtinen, a Florida congresswoman, asserts “it seems that our sworn enemy Iran sees a
potential kindred spirit in the drug cartels in Mexico” (Beith, 2012, p. 30). With ties between Mexican
drug cartels and foreign terrorist groups, it is no stretch to think that a failed Mexican state could
become a training ground for terrorists aimed at the United States. This possibility is both worrisome
to and being investigated by the U.S. (Gregory, 2011, p. 245). Terrorists training in Mexico to attack
the U.S. would become an important priority for homeland security measures should Mexico
become a failed state.
Also, a failed Mexican state would become a hostile neighbor to the United States where now sits an
amiable one. The one change from a unified Mexico as an ally to a chaotic fragmented Mexico as a
hostile next-door security threat would necessitate a change in U.S. foreign policy. Thus, the drug
trade with all its trafficking and related violence that plagues Mexico is also a concern to the United
States. To ignore the Sinaloa Cartel and Los Zetas because they are located in another country would be
foolish. The next section will discuss various potential solutions or preventative measures that can remedy
or mitigate this problem.
Rise of drug cartels turns into a narco-state – threatens U.S. security and spills over
the border to the U.S.
Couto, professor of political science at Liberty University, 13
[Andrew, 2013, Liberty University, “Mexican Drug Cartels: Significance and Potential Impacts on the
United States”,
http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1373&context=honors&seiredir=1&referer
=http%3A%2F%2Fwww.google.com%2Furl%3Fsa%3Dt%26rct%3Dj%26q%3Ddrug%252Bcartel%252
Bimpacts%26source%3Dweb%26cd%3D12%26ved%3D0CC8QFjABOAo%26url%3Dhttp%253A%252
F%252Fdigitalcommons.liberty.edu%252Fcgi%252Fviewcontent.cgi%253Farticle%253D1373%2526con
text%253Dhonors%26ei%3DaM_hUYiGLKMigKp0YHoBw%26usg%3DAFQjCNEvOeR702dl9zQ5Q8
MvLuAy0fDxQ%26sig2%3D6b8LrjKoW4NPdWaV3x1tJw%26bvm%3Dbv.48705608%2Cd.cGE#searc
h=%22drug%2Bcartel%2Bimpacts%22, accessed 7-13-13, HG]
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With regard to the future, some scholars grimly predict that with the growth of drug cartels, Mexico
is at-risk to become a failed state or a “narco-state” (Kellner & Pipitone, 2010, p. 37). In either
scenario, the Sinaloa Cartel or Los Zetas (presumably whichever group won the power struggle)
would come to control larger and larger swaths of land with little if any interference from the
central Mexican government. Joel Kurtzman seriously considers the possibility that Mexico is
regressing into a failed state similar perhaps to the situation in Pakistan (2009). Whether the government
completely collapses or remains but without power would be irrelevant. Mexican authorities viciously
disagree with these allegations, asserting that a comparison between Pakistan and Mexico is
unfeasible (Davis, 2010). Anticipation of a failed Mexican state is no longer the prediction of extremist
commentators but the U.S. government (Gregory, 2011, p. 244). That the possibility of a failed state is
considered speaks to the severity of the situation in Mexico.
Still more serious is the fear that Mexico may develop into a “narco-state.” Barry McCaffrey argues
that “It is not inconceivable that the violent, warring collection of criminal drug cartels could
overwhelm the institution of the state and establish de facto control over broad regions of Mexico”
(as cited in Kellner & Pipitone, 2010, p. 37). In such a solemn scenario, it is more likely that the
victorious cartel would splinter shortly after victory, plunging the nation into further chaos. In this most
severe of predictions, the repercussions for U.S. security can be clearly seen.
The danger of a Mexican fragmented, failed, or narco-state is a potential future threat to the U.S.;
the members of the U.S. government are aware of this problem. Recent pressure has “compelled Obama’s
security and foreign policy aides to consider Mexico’s
‘widening narco-insurgency’ as urgently as the economy and the wars in Iraq and Afghanistan” (Shank,
2009, p. 18). Also, Governor Perry of Texas has requested that President Obama send 1,000 troops to the
U.S.-Mexican border as a deterrence to drug violence coming over the border (Shank, 2009). Were the
state of Mexico to fail, the most pressing threat to U.S. security would be the seepage of violence,
drugs, and cartel activity into the United States.
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Bioterrorism impact
Mexican economic decline results in a flood of refugees and compromises national
security – increases the number of undocumented people in the U.S.
Brown, Former Under Secretary of Homeland Security, 9
[Michael, 1-15-9, Michael Brown, “Border Control: Collapse of Mexico is a Homeland Security and
National Security Issue”, http://www.michaelbrowntoday.com/2009/01/border-control-collapse-ofmexico-is-a-homeland-security-national-security-issue/, accessed 7-13-13, HG]
The Mexican possibility may seem less likely, but the government, its politicians, police and judicial
infrastructure are all under sustained assault and press by criminal gangs and drug cartels. How that
internal conflict turns out over the next several years will have a major impact on the stability of
the Mexican state. Any descent by Mexico into chaos would demand an American response based
on the serious implications for homeland security alone.
By failing to secure the borders and control immigration, we have opened ourselves up to a
frightening scenario. The United States could face a flood of refugees from Mexico if it were to
collapse, overwhelming state and local governments along the U.S.-Mexico border. During a time of
economic duress, the costs would be overwhelming and would simply add to the already burgeoning
costs at the federal level.
Immigration and border control never was nor should it ever be about racism. Immigration and border
control are national security and homeland security issues.
Sleeper cells from numerous terrorist groups could, and probably already have, infiltrated the United
States, just laying in wait to attack at an appropriately vulnerable time.
Immigration control should permit as many workers as the country can handle or need. The primary
purpose of immigration control should not be about keeping Mexican workers out, but rather
simply knowing who is here.
At some point, Congress must demand, and the President must implement, appropriate immigration
control and border control, if for no other reason, than to stem the possibility of Mexican refugees,
escaping an out of control drug war, overwhelming state and local governments.
And, whether that collapse ever occurs or not, Congress must demand and the President must
implement, border and immigration control so we know who is here, and keep out those who would
do us harm.
Mexican economy is key to fight illegal immigration
Bansal, staff writer for Religion Today, 7
[Monisha, 1-30-13, Religion Today, “Helping the Mexican Economy Key to Ending Illegal
Immigration”, http://www.religiontoday.com/1466713/, accessed 7-13-13, HG]
(CNSNews.com) - Amid a growing national debate over how to deal with illegal aliens, one expert
suggested Monday that the way to solve the immigration problem in the United States is to boost the
Mexican economy.
"If you solve the Mexico problem, the rest becomes much easier to deal with. That is the heart of
the problem," said Doug Massey, co-director of the Mexican Migration Project at Princeton University.
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Massey was joined at a Capitol Hill press conference by Jeffrey Passel, a demographer with the Pew
Hispanic Center. According to Passel, the number of illegal immigrants has been steadily increasing over
the past 20 years and is probably now approaching 12 million.
About 56 percent of them are from Mexico, he said. As many as 85 percent of Mexicans who enter
the United States each year do so illegally.
"There is a very strong relationship between availability of jobs in the U.S. and the flow of illegal
immigration," said Passel, adding that undocumented aliens comprise five percent of the workforce in the
U.S.
Massey said the goal of undocumented Mexicans in the U.S. is not to live in the country permanently but
"to use the U.S. labor market as an instrument to raise money to solve an economic problem at
home."
"We've tried this experiment over the last 20 years of trying to integrate the North American economy
without including labor, and it has backfired," he argued. "It has resulted in a record number of illegal
people working in the United States."
Massey said the policy was one of "contradiction."
"It's not because there was an increase in the inflow. It's because there is a decrease in the
outflow," he said. "The decrease in the outflow is due to our own border policies."
Massey advocated "amnesty" for those who entered the United States as minors and a path for earned
legal immigration status for other illegal immigrants in the U.S. To disincentivize Mexicans from
crossing the border illegally, Massey said, the U.S. should help their home country to raise its economic
outlook.
He also questioned expensive border enforcement strategies, like the building of a border fence.
"Rather than spending $3 or 4 billion per year on border enforcement, I think the United States
would do much better by taking some of that money and translating it into other areas of national
security and the war on terror," Massey said.
But many believe strongly in the need for stricter law enforcement along the U.S.-Mexican border.
"It is often said that our borders are our nation's first line of defense," said Rep. Duncan Hunter (R-Calif.),
who proposes extending the San Diego border fence through Arizona, New Mexico and Texas. The fence
has been authorized and partially funded.
"Through the implementation of additional border fencing and its accompanying infrastructure, our
borders will truly be our first line of defense and not our greatest vulnerability," Hunter said in a
statement.
"Based on our experiences in San Diego County, we know that border fencing works," he said. "Since
fence construction began in 1996, crime rates have dropped dramatically, vehicle drug drive throughs
have been eliminated and apprehensions have decreased as a result of fewer crossing attempts."
Massey said he doubted the fence extension would be built. "Even if they did they would have to use
illegal labor," he told Cybercast News Service .
"Putting more money on the Mexican border is useless, is counterproductive," he said. "We're
wasting our money on enforcing our border with our largest trading partner who poses no
conceivable security threat and is in fact a close ally."
Illegal immigrants destroy bioterror prevention capabilities – that’s key to
containing an attack
Gonzalez, The Arizona Republic, 7
[Daniel, 5-19-7, The Arizona Republic, “Migrants Weak Link in Facing Bioterror”,
http://thebreakingnews.com/showarticle.php?articleID=5406, accessed 7-13-13, HG]
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A year after the county received a poor grade for its bioterrorism-preparedness plan, it is at the forefront
of the issue nationwide as communities scramble to meet federal mandates. To contain a bioterrorism
attack, county health officials would have just 48 hours to get lifesaving medicine to every man,
woman and child - more than 4 million people in all - or risk massive death. But health officials
worry that stepped-up immigration enforcement could make many illegal immigrants reluctant to
go to government-sponsored distribution centers to receive the drugs. Without treatment, the
immigrants risk illness or death, and they could spread certain diseases to others. "They are going
to rank as among the hardest-to-reach populations," said Mark Hart, the health department's special
populations coordinator. "It is a twofold challenge: finding and informing them, and then getting
them to come." Maricopa County has received nearly $1.3 millionunder a Centers for Disease Control
and Prevention program to help cities increase their ability to deliver medicine and supplies during
a large-scale public health emergency. More than 70communities nationwide have received
funding. In April 2006, the CDC gave the county a "red" rating, the lowest possible, for its
bioterrorism-preparedness plan, in part because officials hadn't addressed how they would reach the
entire community. That prompted health officials to study how to reach the Valley's diverse population,
including illegal immigrants, Hart said. The planning has taken on greater urgency with the Feb. 3
Super Bowl XLII in Glendale just around the corner. Today, health officials plan to conduct their first
bioterrorism drill, at Cactus Shadows High School in Cave Creek. The drill will test the county's ability
to distribute antibiotics in the event of an anthrax attack. Immigrants targeted Since 1999, the federal
government has provided money to public health departments to plan for a bioterrorism attack. The
funding skyrocketed after the Sept. 11, 2001, terrorist attacks and the anthrax-tainted letters sent to
lawmakers afterward. So far, $5 billion has been dispersed, said Donna Knutson, a senior adviser at
the CDC. Atlanta health officials decided to target illegal immigrants because the population is so large.
With about 500,000, Arizona proportionately has the largest undocumented population of any state,
according to the Pew Hispanic Center.
Migrants weak link in facing bioterror 5/24/07 The majority of
illegal immigrants are believed to live in Maricopa County, the 13th-largest metropolitan area in the
country. Public health departments around the country recognize that many residents may be
hard to reach, but it's unusual to target illegal immigrants. There are an estimated 11 million to
12 million nationwide. In California, which has 2.5 million illegal immigrants, public health
departments have created plans that would use several languages to alert residents of an attack. The
messages would also assure residents that they could receive services regardless of immigration status and
without fear of being turned over to immigration authorities, said Jonathan Freedman, a program
director at the Los Angeles County Department of Public Health. About one-third of the county's 10
million residents are foreign-born, he said. Controversy expected Maricopa County health officials
want to go a step further. To get the message out and persuade illegal immigrants to come forward in
the event of an attack, health officials are identifying people who are trusted in the community,
including priests, church pastors and community leaders. "It's going to have to be a grass-roots
movement," Hart said. "The bottom line is building trust."
Bioterror attacks coming now and outweigh nuclear war
Maurer, UC-Berkeley Goldman School of Public Policy Director, 7
[Steven, Lifeboat Foundation, “Lifeboat Foundation Bioshield, accessed 7-13-13, HG]
“We have an existential threat now in the form of the possibility of a bioengineered malevolent
biological virus. With all the talk of bioterrorism, the possibility of a bioengineered bioterrorism agent
gets little and inadequate attention. The tools and knowledge to create a bioengineered pathogen are
more widespread than the tools and knowledge to create an atomic weapon, yet it could be far
more destructive. I’m on the Army Science Advisory Group (a board of five people who advise the
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Army on science and technology), and the Army is the institution responsible for the nation’s
bioterrorism protection. Without revealing anything confidential, I can say that there is acute awareness of
these dangers, but there is neither the funding nor national priority to address them in an adequate way.”
Today more than a quarter of all deaths worldwide — 15 million each year — are due to infectious
diseases. These include 4 million from respiratory infections, 3 million from HIV/AIDS, and 2 million
from waterborne diseases such as cholera. This is a continuing and intolerable holocaust that, while
sparing no class, strikes hardest at the weak, the impoverished, and the young.
The new realities of terrorism and suicide bombers pull us one step further. How would we react to
the devastation caused by a virus or bacterium or other pathogen unleashed not by the forces of
nature, but intentionally by man?
No intelligence agency, no matter how astute, and no military, no matter how powerful and
dedicated, can assure that a small terrorist group using readily available equipment in a small and
apparently innocuous setting cannot mount a first-order biological attack. With the rapid
advancements in technology, we are rapidly moving from having to worry about state-based biological
programs to smaller terrorist-based biological programs.
It’s possible today to synthesize virulent pathogens from scratch, or to engineer and manufacture prions
that, introduced undetectably over time into a nation’s food supply, would after a long delay afflict
millions with a terrible and often fatal disease. It’s a new world.
Though not as initially dramatic as a nuclear blast, biological warfare is potentially far more
destructive than the kind of nuclear attack feasible at the operational level of the terrorist. And
biological war is itself distressingly easy to wage.
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*Neg*
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Alt Causes to Mexico’s Econ
Cannot solve for violence without solving for poverty
Ugarte, Boston Review Correspondent, 13
(Pedro Salazar Ugarte, researcher at the Legal Research Institute of the National Autonomous University
of Mexico, January 10, 2013, Boston Review, “Taking Off: Mexico's Demographic Challenge,”
http://bostonreview.net/world/taking, accessed July 13, 2013, EK)
Since the 1980s, Mexico’s development model has been neoliberalism, characterized by a decrease
in state intervention in the economy and an increase in exports. Without getting into an ideological
debate, we can say that this model’s results have been mediocre. Mexico’s per capita GDP has grown
less than 1 percent annually in the last 30 years, extreme poverty has declined only 2.6 percent in two
decades, and the level of inequality did not budge between 1984 and 2010. The facts speak for
themselves; this model must change. If we continue to favor neoliberalism, inequality and slow growth
will turn our demographic bonus into a time bomb. Today, people older than 65 represent only 9 percent
of Mexico’s population, but in the year 2050 they will represent 25 percent. A stable economy with
plenty of international reserves isn’t much good if poverty is corroding our social fabric and
creating a segregated society.
Economic growth not key to stability—too many alternate causes like corruption
Dorn, CATO Journal Editor, 1
(James A. Dorn, October 21, 2001, CATO Institute, “Mexico Needs Monetary Stability,”
http://www.cato.org/publications/commentary/mexico-needs-monetary-stability, accessed July 13, 2013,
EK)
Because of past mistakes, Mexico’s monetary credibility is still fragile. Inflation is still too high,
implying that money growth is still too rapid. If the Banco de México wishes to permanently enhance
its reputation, it must convince markets that its first principle is “Do no harm.” That means the Bank
should concentrate on what it can do — control the monetary base — and limit itself to one target, longrun price stability, and not try to do what it cannot do — fine-tune the real economy.
The choice of a rule to achieve zero inflation is less important than a credible commitment to that
objective. Commitment requires that the Bank realize that it cannot serve two masters: it cannot pursue an
independent monetary policy aimed at stabilizing the price level and at the same time peg the nominal
exchange rate, without imposing capital controls.
To his credit, Mr. Ortiz has focused on using monetary policy to strengthen the peso’s domestic
purchasing power and believes that the market ought to set the exchange rate. In May he said,
“Companies here have to realize there isn’t going to be a peso bailout, nor will we compromise on our
inflation goals.”
The challenge is to bring inflation down further and for the Mexican Congress to make price stability the
Bank’s sole responsibility. As in New Zealand, the governor of the central bank should be made liable for
failure to end persistent inflation. By adopting a monetary rule, such as New Zealand’s inflation targeting
rule, the Bank could institutionalize the goal of zero inflation.
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Mr. Ortiz is moving toward inflation targeting, but Mexican monetary policy is still largely
discretionary. Central bankers desire discretion because they think they can do better than a rule, but the
experience of all central banks, including the Federal Reserve Bank, is not encouraging in that regard.
When Fed chairman Alan Greenspan departs, the Fed will have a new head but no rule to guide it.
With U.S. inflation close to 3 percent and no anchor for the future value of the dollar, Mexico would do
better to implement real reform and adopt a rule-based monetary regime than to follow the Fed.
Price stability, however, is not enough. To foster economic growth, Mexico needs to combat
corruption by moving closer to the rule of law, to further liberalize internal and external trade, to
privatize and cut the size of government, and to let freedom reign. That means people should be
free to choose the currencies they wish to hold as legal tender so that the Banco de México is under
constant pressure to improve its performance in achieving price stability.
Economic Growth Cannot solve for stability or violence—too many internal divides
Thomas White Global Investing Firm, 10
(Thomas White Global Investing Firm, June 10, Thomas White International, “Mexico: Striving for
Sustainable Growth,” http://www.thomaswhite.com/world-markets/mexico-striving-for-sustainablegrowth/, accessed July 13, 2013, EK)
Mexico now has a population of over 110 million and the urban-rural divide is stark, with large
numbers flocking to urban centers in search of better employment opportunities. The metropolitan
area around the capital Mexico City is one of the largest urban conglomerations in the world, with a
population of over 21 million people. Widespread poverty and income inequality is a major challenge
facing the nation, with nearly one in five Mexicans living in poverty. The inadequate social security
coverage makes the plight of the poor even worse.
With its people in search of jobs, Mexico faces the huge problem of illegal immigration to the U.S.
Relations between the two countries have often been clouded by the issue of Mexican immigrants,
especially since high unemployment became a highly politically sensitive issue in the U.S. after the
recession. Arizona’s tougher immigration laws to restrict the inflow of Mexicans have been criticized by
the Mexican government. But the U.S. government has recently stepped up border patrol and allocated
more funds for border protection. The only long-term solution to this problem is to create more
employment opportunities within Mexico.
Drug trafficking is another simmering issue with its northern neighbor and probably the most difficult
challenge facing Mexico. The country is the biggest source of marijuana and cocaine flowing into the
U.S. The drug trade is controlled by cartels based in border areas and along the southeast coast. One of
the cartel leaders is listed among the world’s richest and they use their financial wealth to further
the trade. These cartels readily resort to violence, extortion and murder to ensure smooth
trafficking. Though President Calderon’s administration has vastly expanded the campaign against
drug trafficking, with the support of the U.S. government, it is estimated that more than 23,000
lives have been lost since 2006 in drug-related violence.
Considering the large domestic market where the average income levels are nearly thrice that of
China, an export-oriented manufacturing sector, and a relatively young population, Mexico should
command a place among the most attractive emerging markets globally. That the country receives
far less attention when compared to China, India, Brazil or even Russia speaks volumes about the
poor economic management in the country. Dominance by select business groups over entire
sectors have restricted domestic competition and made foreign businesses apprehensive about
investing in the country. However, recent initiatives to address drug-related violence, political instability
and poor governance will likely help improve Mexico’s profile in the world.
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Alt cause – Corruption tanks the economy
Archibald, New York Times, Mexico Bureau Chief, 12
[Randal C. Archibald, 4-23-12, New York Times, “Even as It Hurts Mexican Economy, Bribery Is Taken
in Stride”, http://www.nytimes.com/2012/04/24/world/americas/bribery-tolerated-even-as-it-hurtsmexican-economy.html, accessed, 7-13-13 AMS]
Fiscal watchdogs chafe at the way bribery and other forms of corruption are taken in stride here.
Studies have found it costs the economy upward of $114 billion — 10 percent of its gross domestic
product — and dampens potential investment.
The Mexican chapter of Transparency International said corruption over all was on the rise in
Mexico and last year ranked it 100 out of 183 countries in its perception of corruption index, and last
among the 34 countries in the Organization for Economic Cooperation and Development.
A study in January by Global Financial Integrity, a research group in Washington, said Mexico over all
had lost $872 billion between 1970 to 2010 to crime, corruption and tax evasion, with an acceleration
of losses since the North American Free Trade Agreement began in 1994 and ushered in a wave of
foreign investment.
“It is very much a part of business,” said Heather Lowe, legal counsel for the group. “It is an
international business issue, but it hits Mexico significantly.”
“What our report showed,” she added, “is a disregard for the rule of the law among a lot of the
business community in Mexico, whether it is to evade taxes or engage in bribery or other crimes.
There is a general disregard for the law in Mexico, and American law, too.”
Mexico is the only developing country that shares a border with a major industrial democracy,
making temptation go both ways, she said.
While Mexican bribery investigations are few and far between — government officials here have
promised to look into the Wal-Mart allegations — American prosecutors have sought to crack down in
recent years, using a 1977 law that bars American companies from paying bribes abroad.
In May, a California company and two of its executives were convicted on conspiracy charges for
bribing a Mexican electric utility executive with a yacht, Ferrari and other goods in exchange for
contracts. And last month Bizjet agreed to pay $11.8 million to settle charges it bribed Mexican and
Panamanian officials to win aircraft maintenance work from government agencies.
But promised reforms in Mexico never seem to take root, with a justice system rife with impunity
and botched and delayed investigations. On top of the business-related bribes are the drug-related ones,
in which members of organized crime groups buy off police officers or politicians to look the other
way.
Alt cause – Significant decline in tourism
Mexico Gulf Reporter 11
[11-21-11, Mexico Gulf Reporter, “Mexico reports major decline in tourism due to narco crime, world
economic woes”, http://www.mexicogulfreporter.com/2011/11/mexico-reports-major-decline-intourism.html, accessed, 7-13-13 AMS]
Faltering economies in the United States and Europe have combined with unprecedented levels of
narcoviolence in Mexico to produce a significant decline in the country's tourist industry in recent
years, says a private trade organization here.
Tourism has fallen off 13% in the past half dozen years, and Mexico's high ranking as an
international tourist destination has dropped drastically in the same period.
The dire statistics were reported by the Mexican Hotel and Motel Association (MHMA). In 2010-2011,
the United States, Australia and several western European nations advised their citizens to steer
clear of areas constituting 65% of Mexico's national territory, due to high levels of organized crime
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violence in those regions (http://mexicogulfreporter.blogspot.com/2011/11/65-of-mexico-declared-offlimits-to.html). Last year 12,658 people were murdered in drug related crimes, according to MHMA. The
preceding year, 2009, brought troubles of its own when an outbreak of swine flu (H1N1) scared off
foreign tourists for many months.
Not surprisingly, the trade group reports that border cities and states in northern Mexico, such as
Chihuahua, have been the hardest hit. Those areas are frequently battlegrounds for drug cartels
fighting over narcotics routes leading to the U.S. border, and vehicular travel in the region can be
particularly dangerous.
MHMA reports that one severely affected tourist resort is Rosartio in Baja California state. Offering
pristine beaches and located less than an hour's drive from downtown San Diego, tourism and related
industries there are desperately trying to survive on an average hotel occupancy rate of 16%.
According to the World Travel Organization, in 2007 Mexico ranked in eighth place as the preferred
choice of international visitors. In 2008 that ranking dropped to 19th, and in 2010 it fell to 23rd place. The
administration of president Felipe Calderón has exerted great effort to restore confidence in the country's
security, but in many areas the tourism trade is but a shadow of what it was several years ago. Once
packed resorts like Acapulco and Veracruz have suffered a severe decline in business. Both have been
ravaged by highly public acts of narco terrorism, including widespread extortion and mass executions.
Federal and state tourism departments, as well as private travel agencies throughout Mexico, are quick to
point out that the problem is much more one of public perception than reality. Only a handful of foreign
tourists have been involved in any kind of violence in recent years, including ordinary domestic crime,
and most major resorts operate with extremely high levels of vigilance and private security.
The country's precipitous decline as a travel destination is one more worry for a nation facing many
other challenges. In the state of Morelos, for instance, with its once popular destination of
Cuernavaca, a local trade organization says that tourism accounts for almost 12% of the state's
gross domestic product, and provides nearly 50,000 jobs. With similar economic importance in
many other regions of the country, Mexico will have to find ways to lure back visitors as soon as
possible. It must hope, too, that a factor beyond its direct control -- the worldwide economy,
especially that of its big neighbor to the north -- improves enough to encourage travelers who have been
staying home in recent years.
Alt cause – Decline in remittances
Wilson, University of Missouri, St. Louis, 9
[Tamar Diana Wilson, “Economic Crisis and the Decline of Remittances to Mexico”,
http://www.academia.edu/2483508/Economic_Crisis_and_the_Decline_of_Remittances_to_Mexico,
Anthropological Quarterly, Vol. 82, No. 2, pp. 587–598, accessed, 7-13-13 AMS]
Migrant sending states are affected differently according to numbers of families dependent on
remittances. The governor of the state of México(one of Mexico’s 32 states) has claimed that
remittances to families in that state fell by 8 percent in 2008 as compared to 2007 (Fernández, 2008:
1).According to an institute that oversees the well-being of the Maya in the state of Yucatan (Instituto de
Apoyo al Indígena Maya) there has been a fall in remittances from the United States to the state of
Yucatán amount-ing to 10 million pesos per month, due to the recession in the country. There are
approximately 150 thousand Yucatecans in the United States who had previously been remitting about
100 million pesos annually(Bofill Gómez, 2008). A functionary in the historically powerful
PartidoRevolucionario Institutional (PRI) predicts the possible economic collapse of 10 Mexican
states due to the fall in remittances and the expected return of migrants to their places of origin
fomented by the economic cri-sis in the United States (Franco 2008). The states predicted to be worst
affected economically are Zacatecas, Michoacán, Hidlago, Tlaxcala, Campeche, Guerrero, Oaxaca,
Puebla, Querétaro and Jalisco (Franco2008), all with a long tradition of migration to the United States.
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Mexico Econ high now
Investor confidence low now, but economy set to pick up, investment will follow.
Amaral Fundweb Writer 7-17-13
(Rodrigo, Fundweb, “Emerging markets fight for survival” http://www.fundweb.co.uk/fundstrategy/issues/17th-july-2013/emerging-markets-fight-for-survival/1074132.article accessed 7-17-13
KR)
In Conway’s view, the decision of diving into the market should really be linked to the time horizon
that each investor has in their investment strategy. “Money invested today will show a very good
return in a three-year horizon,” he says. “The problem is between now and the end of the year,
when you could still see some underperformance of emerging markets. There could be in the very
near term a better buying opportunity.”
“At the moment, emerging markets do not have a lot of upside,” Pidcock says. “But once we leave
the current phase, they will have good upside again.”
When investors feel confident the tide has tuned again, the question is where they can find the best
opportunities. Pidcock, for example, says the less impressive performance of China will have a strong
say on who will be the winners and losers in the emerging world. “South Africa, Brazil and possibly
Indonesia, who rely on commodities, should struggle,” he says. “But countries that benefit from low
commodity prices, like Thailand, Philippines, India and Mexico , will probably do better.”
LGIM’s Coulton, for his part, likes the perspectives for India. It is true, he says, that India has a large
deficit and has faced a lot of pressure on its currency but it has also done things correctly in terms of
policy. “The government has started to get its act together on the reform and fiscal side. For example, it
has recently passed a reform of gas prices, which is a huge deal in a country like India,” he says.
India has also recently improved the way it approves investment projects and has allowed foreign direct
investment to be made in the vital retail sector. Coulton also points out that India’s trade deficit looks
close to peaking and growth, at less than 5 per cent a year, is probably as low as it is likely to get. He
expects therefore some rebounding of the Indian economy.
A worry for investors in India is the weakness of the rupee but that is hardly a peculiarity of the South
Asian country. “If you want to invest in India, and probably most other emerging markets for that matter,
you should hedge the currency,” Crawl says. “Emerging market currencies could continue to devalue
against the dollar, given we anticipate a strong US dollar.”
In any case, it is necessary to look around and pick and chose the right opportunities in the
emerging world, she points out. “Mexico has gone through some structural reforms.
It has proximity with the US and offers a cheap labour force, so it is a good area to invest in,” she
says.
Economy set to rise- increase in stimulus spending
Gulf News 7-16-13
(“Mexico eyes $309b to improve infrastructure” http://gulfnews.com/business/economy/mexico-eyes309b-to-improve-infrastructure-1.1209665 accessed 7-17-13 KR)
Mexico City, Distrito Federal: Mexico’s president on Monday eyed $309 billion in private and public
investments to improve the country’s infrastructure during his six-year term by modernising roads,
building passenger trains and boosting the energy sector.
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President Enrique Pena Nieto, who took office in December, said the flow of investments during the
2013-2018 period will depend on the approval of a fiscal reform that will be sent to the congress in
September.
“I am convinced that one of the fundamental elements to transform our country is to develop
infrastructure throughout the length and width of the national territory,” Pena Nieto said in a speech
at the historic National Palace.
The goal is to build new seaports, improve airports and provide universal access to telecommunications.
He said Mexico will build and modernise 19,000 kilometres of roads and 371 kilometres of railways as
well as to launch three high-speed trains. Pena Nieto has pledged to bring back passenger train service to
Mexico.
Investments will also be channelled toward the water and power utility companies and the country’s staterun energy giant Petroleos Mexicanos (Pemex), but he gave few details amid plans to introduce
legislation to attract more private investment to Pemex.
Lamenting the disappointing growth of infrastructure in Latin America’s second biggest economy, Pena
Nieto said the programme is aimed at “converting Mexico into a great, global logistical centre.”
The massive public works project aims to better connect regions and remote communities; speed up
cargo train transport and revive passenger service; build four seaports; and improve Mexico City’s
saturated international airport.
“Everybody knows with more infrastructure, more competitiveness and productivity, economic
growth will take off and social well-being go up, ” Pena Nieto said.
According to the World Economic Forum’s Global Competitiveness Index, Mexico ranks 68th out of 144
nations when it comes to infrastructure.
In October 2008, then-president Felipe Calderon launched a $4.1 billion infrastructure programme
to offset the effects of the global financial crisis on Mexico’s economy.
The size of Pena Nieto’s plan surprised analysts, who had expected investments of $31 billion in the
transport and communications sector.
“Spending in this type of public works will be felt in the last quarter of this year, when public
spending will go back up,” Issac Velasco, analysts with the brokerage firm Ve por Mas, told AFP.
The government’s plan would be equivalent to 25 per cent of the country’s gross domestic product,
Velasco said.
Economy will grow now- Pemex reform
Peixe oilprice.com 7-10-13
(Joao, Oil Price, “Will an End to Pemex’s Monopoly Boost Economic Growth in Mexico”
http://oilprice.com/Latest-Energy-News/World-News/Will-an-End-to-Pemexs-Monopoly-BoostEconomic-Growth-in-Mexico.html accessed 7-16-13 KR)
The board members at Petroleos Mexicanos (Pemex), the state-run oil company of Mexico, have
agreed that their company’s monopoly on oil production in the country must be ended in order to
attract investment and see more development of new fields.
Mexico’s oil output volumes have been declining for eight straight years and it has been suggested
that large reforms are needed to lure foreign investment to the nation’s oil and natural gas fields.
The necessary changes are expected to be introduced by President Enrique Pena Nieto by the end of the
summer, and it is estimated that they will encourage as much as $50 billion in investments each year.
Hector Moreira, who used to work in Mexico’s Energy Ministry, said; “we need far more investment,
we need capacity in production and we need technology. We need to transform the energy sector in
a very deep way. I think now is the time.”
Mexico’s economic growth has been slowing in recent years, and this is putting pressure on Pena
Nieto to make changes that will stimulate more growth. According to Bloomberg, Barclays predicts
the economy to grow by 2.5% in 2013, the slowest rate since 2009, and JPMorgan predict GDP to
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increase by 2.8%. the country’s annual growth of 1.7% over the last five years is half the rate of
Brazil.
Gabriel Casillas, the chief economist for Mexico’s Banorte, stated that “this administration doesn’t only
have the willingness, but the political power and political capital” to make the needed changes that
could ultimately result in faster economic growth, and a stronger currency.
Energy industry reforms, and changes to the tax laws are expected to boost growth to 6% if approved,
although Eduardo Cepeda, the head of JPMorgan in Mexico warns that a failure to enact the reforms this
year could see the national stock market fall by 10%.
Economy growing now- increase in government spending and future predictive
Arai, Bloomberg managing editor and Cattan, Bloomberg Mexico Economy and
Government Correspondent 6-17-13
(Adrianna and Nacha, Bloomberg, “Videgaray Says Mexico’s Growth to Quicken as Spending Rises”
http://www.bloomberg.com/news/2013-06-17/videgaray-says-mexico-s-growth-to-quicken-as-spendingincreases.html accessed 7-16-13 KR)
Mexico’s economic growth will quicken as the government increases spending in the second half of
the year, Finance Minister Luis Videgaray said.
The economy grew at the slowest pace in more than three years in the first quarter after spending was
contained after a new government took over in December, Videgaray said in an interview in London.
President Enrique Pena Nieto took office on Dec. 1.
Videgaray Says Spending to Boost Mexico's Growth12:28
June 17 (Bloomberg) -- Mexican Finance Minister Luis Videgaray talks about the country's
economy, currency fluctuations and fiscal policy. Videgaray speaks with Bloomberg's Adriana Arai in
London. (Source: Bloomberg)
Investor confidence in Mexico has waned after the economy expanded less than analysts expected in the
first quarter and government plans to overhaul the state-controlled oil industry were held up. Capital
flows also have slowed on signs the U.S. Federal Reserve could scale back asset purchases as economic
growth strengthens.
“We expect much more accelerated spending in the second semester,” Videgaray said. “The budget
is there and the revenue is there.”
Mexico’s government spending fell about 7 percent in real terms to 1.16 trillion pesos, or $90 billion, in
the first four months of 2013 compared to the year-earlier period, according to data from the central bank.
Mexico’s government reduced its forecast for growth this year to 3.1 percent from 3.5 percent last month
after the economy grew 0.8 percent in the first quarter, the slowest pace since the 2009 recession. Grupo
Financiero Banorte SAB, Mexico’s third-largest bank, cut its estimate for 2013 to 2.7 percent from 3
percent today.
Protection Cost
The cost to protect Mexican debt against non-payment for five years with credit-default swaps has
risen 43 basis points to 127 basis points in the past month, the most since 2009, according to data
compiled by Bloomberg. That’s more than Brazil’s 33-point rise.
The peso’s one-month historical volatility, a measure of the magnitude of the currency’s fluctuations
during the period, rose to 14 percent, the highest on a closing basis in 17 months, and the most among the
region’s major currencies. The peso weakened today 1.0 percent to 12.8290 per dollar.
Videgaray said markets have already priced in a “good part” of the effect that the scaling back of
so-called quantitative easing will have on Mexico.
The Federal Reserve’s unwinding of asset purchases “is something to be expected and we should be
able to handle it in an orderly manner,” he said.
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Economy set to increase now
Cattan and Martin Bloomberg Mexico Economy and Government correspondent, 710-13
(Nacha and Eric, Bloomberg, “Mexico Leading Reform may Boost Economy in 2014, Aportela Says”
http://www.bloomberg.com/news/2013-07-10/mexico-lending-reform-may-boost-economy-in-2014aportela-says.html, accessed 7/12/13 KR)
A bill to boost bank lending in Mexico would have an immediate impact on the economy, helping to
boost growth as soon as next year, Deputy Finance Minister Fernando Aportela said.
The bill encourages development banks to work more closely with the financial industry to lift
lending, which reached only 26 percent of gross domestic product last year, Aportela said today at
the Bloomberg Mexico Conference in New York. Aportela said he expects the reform bill, which was
presented in May, to be debated in special congressional sessions in August.
Mexico’s commercial bank lending as a percentage of GDP is the lowest among Latin American nations,
according to the most recent data from the International Monetary Fund. President Enrique Pena Nieto’s
reform proposals, which also include measures targeting the energy industry and taxes, would lift growth
by at least one percentage point, Aportela said.
“We’re trying to have in our package elements to accelerate” the impact on the economy, Aportela
said. “We’re expecting to feel the effects of the financial reform, if we get approval by Congress,
during 2014.”
Mexico’s Manufacturing proves that the economy is increasing
Aeppel Wallstreet Journal Editor 6-28-13
(Timothy, Wall Street Journal, “Mexico Manufacturing Looks to Gain Competitive Edge on China”
http://blogs.wsj.com/economics/2013/06/28/mexico-manufacturing-looks-to-gain-competitive-edge-onchina/, accessed 7-12-13 KR)
Bloomberg News
That’s the assessment of the Boston Consulting Group, which in a new report estimates Mexican factory
wages will be nearly 30% lower than China’s by 2015, when adjusted for productivity differences.
Mexican workers typically produce more per hour than their Chinese counterparts. By that same
measure, Mexico already last year became a less expensive place than China to make some
products, according to BCG’s estimates.
Mexico’s strengthening factory sector is helping boost that nation’s economy. BCG estimates that
within five years, Mexico’s factories will churn out up to $60 billion a year more in goods — much
of it destined for export. About two-thirds of Mexico’s exports currently go to the U.S.
“We know there’s a lot of work leaving China for Mexico, because it’s cheaper,” says Harold L. Sirkin, a
BCG senior partner. He says Mexico’s gains will help U.S. manufacturers as well, “since products
made in Mexico contain four times as many U.S.-made parts, on average, as those made in China.”
Mr. Sirkin says four industries in particular are getting a boost: electronics, automobiles, appliances, and
machinery.
Besides having relatively low wages, Mexico is also benefiting from its close proximity to the U.S. and
low energy costs. Mexico also has more free trade agreements — 44 — than any other country.
That makes it an attractive place to make goods destined for many markets.
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***Internals***
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US key to global economy
US key to the global economy
Caploe, CEO of the Singapore-incorporated American Centre for Applied Liberal
Arts and Humanities in Asia, ‘9
(David Caploe, “Focus still on America to lead global recovery”, April 7, The Strait Times, lexis,
accessed: 7/3/13, ML]
IN THE aftermath of the G-20 summit, most observers seem to have missed perhaps the most crucial
statement of the entire event, made by United States President Barack Obama at his pre-conference
meeting with British Prime Minister Gordon Brown: 'The world has become accustomed to the US
being a voracious consumer market, the engine that drives a lot of economic growth worldwide,' he
said. 'If there is going to be renewed growth, it just can't be the US as the engine.' While superficially
sensible, this view is deeply problematic. To begin with, it ignores the fact that the global economy has in
fact been 'America-centred' for more than 60 years. Countries - China, Japan, Canada, Brazil, Korea,
Mexico and so on - either sell to the US or they sell to countries that sell to the US. This system has
generally been advantageous for all concerned. America gained certain historically unprecedented
benefits, but the system also enabled participating countries - first in Western Europe and Japan, and later,
many in the Third World - to achieve undreamt-of prosperity. At the same time, this deep interconnection between the US and the rest of the world also explains how the collapse of a relatively
small sector of the US economy - 'sub-prime' housing, logarithmically exponentialised by Wall Street's
ingenious chicanery - has cascaded into the worst global economic crisis since the Great Depression.
To put it simply, Mr Obama doesn't seem to understand that there is no other engine for the world
economy - and hasn't been for the last six decades. If the US does not drive global economic growth,
growth is not going to happen. Thus, US policies to deal with the current crisis are critical not just
domestically, but also to the entire world. Consequently, it is a matter of global concern that the Obama
administration seems to be following Japan's 'model' from the 1990s: allowing major banks to avoid
declaring massive losses openly and transparently, and so perpetuating 'zombie' banks - technically alive
but in reality dead. As analysts like Nobel laureates Joseph Stiglitz and Paul Krugman have pointed
out, the administration's unwillingness to confront US banks is the main reason why they are
continuing their increasingly inexplicable credit freeze, thus ravaging the American and global
economies.
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Mexico key to global economy
Economic cooperation between the United States and Mexico is critical to the global
economy, China and Japan cannot sustain
Shifter, Georgetown Latin American Studies Professor, 13
[Michael, President of the Inter-American Dialogue, Adjunct Professor of Latin American Studies at
Georgetown University's School of Foreign Service, February 2013, Inter-American Dialogue, “A More
Ambitious Agenda: A Report of the Inter-American Dialogue’s Comission on Mexico-US Relations,”
http://www.thedialogue.org/PublicationFiles/IAD9042_USMexicoReportEnglishFinal.pdf, pg. 2,
accessed July 16, 2013, EK)
The first is to reinforce and deepen economic cooperation. That includes increasing the productivity
and international competitiveness of both nations, opening opportunities for longterm growth and
job creation, and setting the stage for further economic integration. In a world of persistent,
widespread economic insecurity, the more the United States and Mexico coordinate and integrate
their economies, the more ably they can compete for global markets. Their economic cooperation is
more vital than ever as drivers of the global economy falter—as the European financial crisis
persists, as China enters a period of slower growth, as Japan remains stalled, and as many
emerging markets appear increasingly vulnerable. Among the concrete objectives the two countries
should consider are development of a framework to make their shared labor markets more efficient
and equitable; formation of a coherent North American energy market (which could help meet the
needs of energy-poor Central America); and coordination among the United States, Mexico, and Canada
in negotiations toward the Trans-Pacific Partnership (TPP).
Mexican economic crisis tanks the global economy
Rangel, fellow at the Monterrey Bureau, 95
(Enrique Rangel, “Pressure on the Peso,” November 28th, 1995, from The Dallas Morning News, lexis)
All year long, thousands of foreign investors have nervously watched Mexico’s volatile financial markets
as the Clinton administration and congressional leaders debated the pros and cons of bailing out a battered
currency. With the exception of 1982 - when Mexico defaulted on its foreign debt and a handful of giant
New York banks worried they would lose billions of dollars in loans - few people abroad ever cared about
a weak peso. But now it’s different, experts say. This time, the world is keeping a close eye on Mexico’s
unfolding financial crisis for one simple reason: Mexico is a major international player. If its economy
were to collapse, it would drag down a few other countries and thousands of foreign investors. If recovery
is prolonged, the world economy will feel the slowdown. “It took a peso devaluation so that other
countries could notice the key role that Mexico plays in today’s global economy,” said economist Victor
Lopez Villafane of the Monterrey Institute of Technology. “I hate to say it, but if Mexico were to default
on its debts, that would trigger an international financial collapse” not seen since the Great Depression,
said Dr. Lopez, who has conducted comparative studies of the Mexican economy and the economies of
some Asian and Latin American countries. “That’s why it’s in the best interests of the United States and
the industrialized world to help Mexico weather its economic crisis,” he said. The crisis began last
December when the Mexican government devalued the currency. Last March, after weeks of debate,
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President Clinton, the International Monetary Fund and a handful of other countries and international
agencies put together a $ 53 billion rescue package for Mexico. But despite the help - $ 20 billion in
guarantee loans from the United States - Mexico’s financial markets have been volatile for most of the
year. The peso is now trading at about 7.70 to the dollar, after falling to an all-time low of 8.30 to the
dollar Nov. 9. The road has been bumpy, and that has made many - particularly U.S. investors - nervous.
No country understands better the importance of Mexico to the global economy than the United States,
said Jorge Gonzalez Davila, an economist at Trinity University in San Antonio. “Despite the rhetoric that
you hear in Washington, I think that most people agree - even those who oppose any aid to Mexico - that
when Mexico sneezes, everybody catches a cold,” Mr. Gonzalez said. “That’s why nowadays any talk
of aid to Mexico or trade with Mexico gets a lot of attention,” he said. Most economists, analysts and
business leaders on both sides of the border agree that the biggest impact abroad of a prolonged Mexican
fiscal crisis may be on the U.S. economy, especially in Texas and in cities bordering Mexico.
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US-Mexico interdependent
Mexican and US economies are interdependent—collapse of manufacturing sector
devastates US industries
Wilson, Mexico Institute program associate at the Woodrow Wilson International
Center for Scholars, 11
(Christopher E., former Mexico Analyst for the U.S. Military, member of the Center for North American
Studies at American University, and MA in International Affairs from American University, November
11, Mexico Institute, “Working Together: Economic Ties Between the United States and Mexico,” p. 1-3,
http://www.wilsoncenter.org/sites/default/files/Working%20Together%20Full%20Document.pdf,
Accessed 7/13/13, JC)
The integration of the United States and Mexican economies has ¶ transformed the nature of the
bilateral relationship from one of ¶ competition to partnership. U.S. jobs, competitiveness and
economic growth ¶ have all benefited from the nation’s relationship with Mexico. As the second ¶
largest destination for U.S. exports and third largest source of imports, 6 ¶ million U.S. jobs depend
on trade with Mexico.1¶ That means one in every ¶ twenty-four workers in the nation depend on U.S.Mexico trade for their ¶ employment.2¶ Beyond the $393 billion in bilateral merchandise trade each ¶
year is another $35 billion in services trade and an accumulated total of $103 ¶ billion in foreign
direct investment holdings.3
As important as the intensity of U.S.-Mexico economic integration is its ¶ quality. Most people think of
imports and exports as goods made by one ¶ country and then purchased by another, but for the U.S. and
Mexico, crossborder trade often occurs in the context of production sharing. Manufacturers ¶ in
each nation work together to create goods, and regional supply chains ¶ crisscross the U.S.-Mexico
border. Many imports and exports are therefore of ¶ a temporary nature as an item is being produced.
Cars built in North America, ¶ for example, are said to cross the United States’ borders eight times during ¶
production, integrating materials and parts developed in Mexico and Canada. ¶ Several other U.S.
industries, including electronics, appliances and machinery,¶ all rely on the assistance of Mexican
manufacturers as well. In fact, a full 40% ¶ of the content of U.S. imports from Mexico was originally
made in the United ¶ States, and it is likely that the domestic content in Mexican imports from the ¶
United States is also very high.4¶ That means despite an Hecho en México or “Made ¶ in Mexico” label, a
large portion of the money U.S. consumers spend on Mexican ¶ imports actually goes to U.S. companies
and workers. The same cannot be said ¶ for Chinese imports, which have only 4% U.S. content, or for
goods coming ¶ from any other country in the world, with the exception of Canada, where U.S. ¶ content is
25%.5¶ Taken together, goods from Mexico and Canada represent a ¶ full 75% of all the domestic content
that returns to the U.S. as imports.6¶ This is ¶ because only Mexico, Canada and the Caribbean Basin have
production processes ¶ that are deeply integrated with the United States.
The Southwest Border states are especially integrated with Mexico, and the ¶ Mexican market accounts
for a quarter to more than a third of all exports for ¶ Texas, New Mexico, and Arizona.7¶ However, states
throughout the country trade ¶ intensely with their southern neighbor. Mexico is the top export
destination ¶ for five states: California, Arizona, New Mexico, Texas and New Hampshire, ¶ and is
the second most important market for another seventeen states across the ¶ country. Several states in
the U.S. heartland have particularly close economic ties ¶ to Mexico, including Nebraska, Iowa,
Kansas, South Dakota, and Michigan.8¶ In fact, the Detroit metropolitan area exports more goods to
Mexico than other¶ city in the United States, a sign of the importance of Mexico and Canada to ¶ regional
motor vehicle manufacturing.9¶ At the end of this report, you will ¶ find tables and graphs that show how
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much each state and several metropolitan ¶ areas depend on trade with Mexico and roughly what this
means in terms ¶ of job-creation.
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***a/t: dedev***
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a/t: k waves
No theoretical or empirical defense of K-Waves
North, Austrian School economic analyst, 9
[Gary North, 6-27-09, PhD in History, edited the financial newsletter, Remnant Review, “The Myth of the
Kondratieff Wave,” http://www.lewrockwell.com/north/north725.html, accessed 7-17-13 AMS]
Kondratieff had at most two and a half cycles in his two papers. That number was available for
only four data series. Of the 36 data series, he could find evidence of cycles in only 11 of them. The
monetary series and the real series correlated in only 11 of 21 series, all short.
Pugsley then cited extensively from an article by C. Van Ewijk of the University of Amsterdam (The
Economist, Nov. 3, 1981). Van Ewijk noted that Kondratieff followed no consistent methodology in
choosing the types of trend curves that he selected for different data sources. Kondratieff used
various statistical techniques to smooth the curves to make them appear as long waves. "In case
after case, no wave could be identified." He used price data, but these did not correlate with the actual
economic output of the four economies that he studied.
Then the waves that he presented were further "idealized" by whoever created the chart that has
circulated ever since. Pugsley noted: "The upward movement of prices from 1933 to the present has
already spanned fifty years, which is supposed to be the average length of a complete cycle."
So far, price inflation has extended for about 75 years. Yet the deflationists are still predicting long-term,
severe price deflation, and some of them invoke the Kondratieff wave to prove their assertion. Pugsley
concluded: In not one case does the evidence corroborate the existence of the wave. Prices and
output are not directly related – if anything they are inversely related. The forty-five to sixty-year
period of the wave is only partially evident in the nineteenth century, and then only in the price series.
Price moves in the twentieth century do not correspond to this periodicity, as claimed by long-wave
proponents. There is absolutely no statistical correlation between series of real variables such as
production and consumption, and monetary series such as prices and interest rates. Production and
prices of the four countries studied do not statistically correlate; thus there is no wave operating
coincidentally in the industrialized countries.
In other words, Kondratieff's hypothesis is simply not supported by any evidence. The long wave
exists only in the minds of a few misguided analysts, but not in the real world. It is pure hokum.
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warming impact
Econ collapse doesn’t solve warming – [try or die for growth]
Elliott, The Guardian Economics Editor, 8
[Larry Elliott, 8-24-08, The Guardian, “Can a dose of recession solve climate change?”,
http://www.guardian.co.uk/business/2008/aug/25/economicgrowth.globalrecession, accessed, 7-18-3
AMS]
This may strike some as a strange way of looking at things. Sure, the global economy is slowing. But
what's so bad about that? Is it, in fact, bad news that the world economy will no longer grow at its recent
rate of 5% a year? And if the answer to that question is "no", wouldn't it be good news if this modest
retrenchment was turned into a full-blown slump? Indeed, why stop there? Shouldn't those who fear
for the future of the planet pursue something akin to the Great Depression of the 1930s?
It's an interesting thought. Logically, if the obsession with growth at all costs has increased emissions
to the point where rising temperatures pose a threat to mankind's existence (as many experts
believe) then a prolonged period of slow or negative growth will limit the damage to the
environment. At the very least, it would provide a breathing space to come up with an international
agreement on how to tackle the problem.
There are many reasons why it is not quite as simple as that. My rudimentary understanding of the
science of climate change is that concentrations of greenhouse gases have been building up over
many decades, and you can't simply turn them off like a tap. Even a three- or four-year 1930s-style
global slump would have little or no impact, particularly if it was followed by a period of vigorous
catch-up growth. On a chart showing growth since the dawn of the industrial age 250 years ago, the
Great Depression is a blip. Similarly, Britain's trade deficit always comes down in recessions because
imports go down, but then widens again once the economy returns to its trend rate of growth.
Politically, recessions are not helpful to the cause of environmentalism. Climate change is replaced
by concerns about unemployment and stimulating growth. To be fair, politicians respond to what they
hear from voters: Gordon Brown's survival as prime minister depends on how well his package of
economic measures is received, not on what he does or doesn't do to limit greenhouse gases.
Looking back, it is clear that every advance in the green movement has coincided with period of
strong growth - the early 1970s, the late 1980s and the first half of the current decade. It was tough
enough to get world leaders to make tackling climate change a priority when the world economy
was experiencing its longest period of sustained growth: it will be mightily difficult to persuade
them to take measures that might have a dampen growth while the dole queues are lengthening.
Those most likely to suffer are workers in the most marginal jobs and pensioners who will have to pay
perhaps 20% of their income on energy bills.
Hence, recession does not offer even a temporary solution to the problem of climate change and it is
a fantasy to imagine that it does. The real issue is whether it is possible to challenge the "growth-at-anycost model" and come up with an alternative that is environmentally benign, economically robust and
politically feasible. Hitting all three buttons is mightily difficult but attempting to do so is a heck of a lot
more constructive than waiting for industrial capitalism to collapse under the weight of its own
contradictions.
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1ar – growth solves
Growth leads to carbon sequestration
Anderson, Executive Director of the Political Economy Research Center, 4
[Terry Anderson, 4-24-04, “Why Economic Growth is Good for the Environment”,
http://www.perc.org/articles/article446.php, accessed, 7-18-13 AMS]
Hansen's essay concludes on an optimistic note, saying "the main elements [new technologies] required to
halt climate change have come into being with remarkable rapidity." This statement would not have
surprised economist Julian Simon. He saw the "ultimate resource" to be the human mind and believed it
to be best motivated by market forces. Because of a combination of market forces and technological
innovations, we are not running out of natural resources. As a resource becomes more scarce, prices
increase, thus encouraging development of cheaper alternatives and technological innovations. Just as
fossil fuel replaced scarce whale oil, its use will be reduced by new technology and alternative fuel
sources. Market forces also cause economic growth, which in turn leads to environmental improvements.
Put simply, poor people are willing to sacrifice clean water and air, healthy forests, and wildlife habitat
for economic growth. But as their incomes rise above subsistence, "economic growth helps to undo the
damage done in earlier years," says economist Bruce Yandle. "If economic growth is good for the
environment, policies that stimulate growth ought to be good for the environment." The link between
greenhouse gas emissions and economic prosperity is no different. Using data from the United States,
Professor Robert McCormick finds that "higher GDP reduces total net [greenhouse gas] emissions."
He goes a step further by performing the complex task of estimating net U.S. carbon emissions. This
requires subtracting carbon sequestration (long-term storage of carbon in soil and water) from carbon
emissions. Think of it this way: When you build a house, the wood in it stores carbon. In a poor country
that wood would have been burned to cook supper or to provide heat, thus releasing carbon into the
atmosphere. McCormick shows that economic growth in the United States has increased carbon
sequestration in many ways, including improved methods of storing waste, increased forest
coverage, and greater agricultural productivity that reduces the acreage of cultivated land. Because
rich economies sequester more carbon than poor ones, stored carbon must be subtracted from
emissions to determine an economy's net addition to greenhouse gas emissions. McCormick's data show
that "rich countries take more carbon out of the air than poorer ones" and that "the growth rate of
net carbon emission per person will soon be negative in the United States." Put differently—richer
may well be cooler. Global-warming policy analysts agree that greenhouse gas regulations such as those
proposed at Kyoto would have negative impacts on the economy. Therefore, as McCormick warns, we
should take great care that regulations in the name of global warming "not kill the goose that lays the
golden eggs."
CCS solves warming
Science Daily 7
[6-11-07, “Carbon Capture And Storage To Combat Global Warming Examined,”
http://www.sciencedaily.com/releases/2007/06/070611153957.htm, accessed, 7-19-13 AMS]
Carbon capture and storage, also called carbon sequestration, traps carbon dioxide after it is produced
and injects it underground. The gas never enters the atmosphere. The practice could transform heavy
carbon spewers, such as coal power plants, into relatively clean machines with regard to global warming.
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''The notion is that the sooner we wean ourselves off fossil fuels, the sooner we'll be able to tackle the
climate problem,'' said Sally Benson, executive director of the Global Climate and Energy Project
(GCEP) and professor of energy resources engineering. ''But the idea that we can take fossil fuels out of
the mix very quickly is unrealistic. We're reliant on fossil fuels, and a good pathway is to find ways to
use them that don't create a problem for the climate.''
Carbon capture has the potential to reduce more than 90 percent of an individual plant's carbon
emissions, said Lynn Orr, director of GCEP and professor of energy resources engineering. Stationary
facilities that burn fossil fuels-such as power plants or cement factories-would be candidates for the
technology, he said.
Capturing carbon dioxide from small, mobile sources, such as cars, would be more difficult, Orr said. But
with power plants comprising 40 percent of the world's fossil fuel-derived carbon emissions, he added,
the potential for reductions is significant.
Not only can a lot of carbon dioxide be captured, but the Earth's capacity to store it is also vast, he added.
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1ar – a/t: export pollution
Tech diffusion solves
Garsous, European Center for Advanced Research in Economics and Statistics, 11
[Gregoire Garsous, September 2011, European Center for Advanced Research in Economics and
Statistics (ECARES) “The Technology Diffusion and the Green Growth,”
http://www.epip.eu/conferences/epip06/papers/Parallel%20Session%20Papers/GARSOUS%20Gregoire.p
df, accessed 7-19-13 AMS]
Acemoglu et al. (2010) conclude that a subsidy for research in the clean sector should be introduced to
redirect technical change and to close the productivity gap between the dirty and the clean sector.
Nonetheless, their model is a one-country framework and nothing is said about industrial policy in a
multi-country framework. Aghion et al. (2009a) suggests that green technologies will spread across
countries from developed towards developing economies. As a result, developed economies should act
as leaders and unilateral intervention should be sufficient to avoid an environmental disaster.
However, no solid analytical framework has so far been set up to validate such a statement. The purpose
of the present paper is to ll this void.
In a world where developed and developing countries interact, technology diusion mechanisms among
countries will play a fundamental role for climate change mitigation. One can think that two types of
technology are available. First, a dirty technology with which we produce dirty inputs that imply
GHG emissions. Second, a clean technology with which we produce clean inputs that has no
negative impact on the environment. We can fairly assume that the world technology frontier is dened
by the most advanced technology of the developed countries, namely the dirty technology. If technical
change (i.e. innovation) is redirected towards the clean technologies sector, this would imply a transition
period during which clean technologies are catching up with dirty technologies since no innovation would
occur on the latter. In other words, the world technology frontier would stand still for this transition
period. As developing countries are converging towards developed countries by (at least partially)
copying their technology, there is a risk that developing countries imitate the best available
technology, namely the dirty one. Therefore, we must consider the question of whether it is necessary to
implement mechanisms that would prevent this situation.
US is modeled
Khosla, International Union for Conservation of Nature President, 9
[Ashok Khosla, 1-27-09, International Union for Conservation of Nature, UICN, “A new President for the
United States: We have a dream”, http://www.iucn.org/es/news/?2595/new-President-for-the-UnitedStates-We-have-a-dream, accessed, 7-19-13 AMS]
With all the fanfare and show business skills they possess, Americans last week welcomed their new
President with an unprecedented display of support and joy. The remarkable resonance President Obama
has evoked with his fellow citizens should also encourage a new hope beyond their nation -- and indeed
throughout the world.
A rejuvenated America, with a renewed purpose, commitment and energy to make its contribution once
again towards a better world could well be the turning point that can reverse the current decline in
the state of the global economy, the health of its life support systems and the morale of people
everywhere. This extraordinary change in regime brings with it the promise of a deep change in attitudes
and aspirations of Americans, a change that will lead, hopefully, to new directions in their nation’s
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policies and action. In particular, we can hope that from being a very reluctant partner in global
discussions, especially on issues relating to environment and sustainable development, the United States
will become an active leader in international efforts to address the Millennial threats now confronting
civilization and even the survival of the human species.
For the conservation of biodiversity, so essential to maintaining life on Earth, this promise of change has
come not a moment too soon.
It would be a mistake to put all of our hopes on the shoulder of one young man, however capable he
might be. The environmental challenges the world is facing cannot be addressed by one country, let alone
by one man. At the same time, an inspired US President guided by competent people, who does not shy
away from exercising the true responsibilities and leadership his country is capable of, could do a lot to
spur the international community into action. To paraphrase one of his illustrious predecessors, “the
world asks for action and action now.” What was true in President Roosevelt’s America 77 years ago is
even more appropriate today.
From IUCN’s perspective, the first signals are encouraging. The US has seriously begun to discuss
constructive engagement in climate change debates. With Copenhagen a mere 11 months away, this
commitment is long overdue and certainly very welcome. Many governments still worry that if they set
tough standards to control carbon emissions, their industry and agriculture will become
uncompetitive, a fear that leads to a foot-dragging “you go first” attitude that is blocking progress. A
positive intervention by the United States could provide the vital catalyst that moves the basis of the
present negotiations beyond the narrowly defined national interests that lie at the heart of the
current impasse.
The logjam in international negotiations on climate change should not be difficult to break if the US
were to lead the industrialized countries to agree that much of their wealth has been acquired at the
expense of the environment (in this case greenhouse gases emitted over the past two hundred years) and
that with the some of the benefits that this wealth has brought, comes the obligation to deal with the
problems that have resulted as side-effects. With equitable entitlement to the common resources of the
planet, an agreement that is fair and acceptable to all nations should be easy enough to achieve. Caps on
emissions and sharing of energy efficient technologies are simply in the interest of everyone, rich or poor.
And both rich and poor must now be ready to adopt less destructive technologies – based on renewables,
efficiency and sustainability – both as a goal with intrinsic merit and also as an example to others.
But climate is not the only critical global environmental issue that this new administration will have to
deal with. Conservation of biodiversity, a crucial prerequisite for the wellbeing of all humanity, no less
America, needs as much attention, and just as urgently. The United States’ self-interest in conserving
living natural resources strongly converges with the global common good in every sphere: in the oceans,
by arresting the precipitate decline of fish stocks and the alarming rise of acidification; on land, by
regenerating the health of our soils, forests and rivers; and in the atmosphere by reducing the massive
emission of pollutants from our wasteful industries, construction, agriculture and transport systems.
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1ar – a/t: consume more
Their arguments are false resources are sustainable
Sagoff, Director of the Institute for Philosophy and Public Policy and Professor of
Philosophy at George Mason University, 97
[Mark Sagoff, June 1997, [“Do We Consume Too Much?” June
http://www.theatlantic.com/past/docs/issues/97jun/consume.htm, accessed, 7-19-13 AMS]
These prudential and economic arguments are not likely to succeed much longer. It is simply wrong to
believe that nature sets physical limits to economic growth -- that is, to prosperity and the production
and consumption of goods and services on which it is based. The idea that increasing consumption will
inevitably lead to depletion and scarcity, as plausible as it may seem, is mistaken both in principle
and in fact. It is based on four misconceptions.
Misconception No. 1: We Are
Running Out of Raw Materials
IN the 1970s Paul Ehrlich, a biologist at Stanford University, predicted that global shortages would soon
send prices for food, fresh water, energy, metals, paper, and other materials sharply higher. "It seems
certain," Paul and Anne Ehrlich wrote in The End of Affluence (1974), "that energy shortages will be
with us for the rest of the century, and that before 1985 mankind will enter a genuine age of scarcity in
which many things besides energy will be in short supply." Crucial materials would near depletion during
the 1980s, Ehrlich predicted, pushing prices out of reach. "Starvation among people will be accompanied
by starvation of industries for the materials they require."
Things have not turned out as Ehrlich expected. In the early 1990s real prices for food overall fell. Raw
materials -- including energy resources -- are generally more abundant and less expensive today than they
were twenty years ago. When Ehrlich wrote, economically recoverable world reserves of petroleum stood
at 640 billion barrels. Since that time reserves have increased by more than 50 percent, reaching more
than 1,000 billion barrels in 1989. They have held steady in spite of rising consumption. The pre-tax real
price of gasoline was lower during this decade than at any other time since 1947. The World Energy
Council announced in 1992 that "fears of imminent [resource] exhaustion that were widely held 20 years
ago are now considered to have been unfounded."
The World Resources Institute, in a 1994-1995 report, referred to "the frequently expressed concern that
high levels of consumption will lead to resource depletion and to physical shortages that might limit
growth or development opportunity." Examining the evidence, however, the institute said that "the world
is not yet running out of most nonrenewable resources and is not likely to, at least in the next few
decades." A 1988 report from the Office of Technology Assessment concluded, "The nation's future has
probably never been less constrained by the cost of natural resources."
It is reasonable to expect that as raw materials become less expensive, they will be more rapidly
depleted. This expectation is also mistaken. From 1980 to 1990, for example, while the prices of
resource-based commodities declined (the price of rubber by 40 percent, cement by 40 percent, and coal
by almost 50 percent), reserves of most raw materials increased. Economists offer three explanations.
First, with regard to subsoil resources, the world becomes ever more adept at discovering new
reserves and exploiting old ones. Exploring for oil, for example, used to be a hit-or-miss proposition,
resulting in a lot of dry holes. Today oil companies can use seismic waves to help them create precise
computer images of the earth. New methods of extraction -- for example, using bacteria to leach
metals from low-grade ores -- greatly increase resource recovery. Reserves of resources "are actually
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functions of technology," one analyst has written. "The more advanced the technology, the more
reserves become known and recoverable."
Second, plentiful resources can be used in place of those that become scarce. Analysts speak of an
Age of Substitutability and point, for example, to nanotubes, tiny cylinders of carbon whose molecular
structure forms fibers a hundred times as strong as steel, at one sixth the weight. As technologies that use
more-abundant resources substitute for those needing less-abundant ones -- for example, ceramics in
place of tungsten, fiber optics in place of copper wire, aluminum cans in place of tin ones -- the demand
for and the price of the less-abundant resources decline.
One can easily find earlier instances of substitution. During the early nineteenth century whale oil was
the preferred fuel for household illumination. A dwindling supply prompted innovations in the lighting
industry, including the invention of gas and kerosene lamps and Edison's carbon-filament electric bulb.
Whale oil has substitutes, such as electricity and petroleum-based lubricants. Whales are irreplaceable.
Third, the more we learn about materials, the more efficiently we use them. The progress from
candles to carbon-filament to tungsten incandescent lamps, for example, decreased the energy
required for and the cost of a unit of household lighting by many times. Compact fluorescent lights are
four times as efficient as today's incandescent bulbs and last ten to twenty times as long. Comparable
energy savings are available in other appliances: for example, refrigerators sold in 1993 were 23 percent
more efficient than those sold in 1990 and 65 percent more efficient than those sold in 1980, saving
consumers billions in electric bills.
Amory Lovins, the director of the Rocky Mountain Institute, has described in these pages a new
generation of ultralight automobiles that could deliver the safety and muscle of today's cars but with far
better mileage -- four times as much in prototypes and ten times as much in projected models (see
"Reinventing the Wheels," January, 1995, Atlantic). Since in today's cars only 15 to 20 percent of the
fuel's energy reaches the wheels (the rest is lost in the engine and the transmission), and since materials
lighter and stronger than steel are available or on the way, no expert questions the feasibility of the highmileage vehicles Lovins describes.
Computers and cameras are examples of consumer goods getting lighter and smaller as they get
better. The game-maker Sega is marketing a hand-held children's game, called Saturn, that has more
computing power than the 1976 Cray supercomputer, which the United States tried to keep out of the
hands of the Soviets. Improvements that extend the useful life of objects also save resources. Platinum
spark plugs in today's cars last for 100,000 miles, as do "fill-for-life" transmission fluids. On average, cars
bought in 1993 have a useful life more than 40 percent longer than those bought in 1970.
As lighter materials replace heavier ones, the U.S. economy continues to shed weight. Our per
capita consumption of raw materials such as forestry products and metals has, measured by weight,
declined steadily over the past twenty years. A recent World Resources Institute study measured the
"materials intensity" of our economy -- that is, "the total material input and the hidden or indirect material
flows, including deliberate landscape alterations" required for each dollar's worth of economic output.
"The result shows a clearly declining pattern of materials intensity, supporting the conclusion that
economic activity is growing somewhat more rapidly than natural resource use." Of course, we should do
better. The Organization for Economic Cooperation and Development, an association of the world's
industrialized nations, has proposed that its members strive as a long-range goal to decrease their
materials intensity by a factor of ten.
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1ar – collapse causes warming
Recession undermines investment in clean tech
Pendleton, senior research fellow @ the Institute for Public Policy Research 11
[Andrew Pendleton, 2-24-11, “Growth and Climate Change… Again,”
http://politicalclimate.net/2011/02/24/growth-and-climate-change-again/, accessed, 7-19-13 AMS]
Similarly the sun – which is either primarily or secondarily the source of all renewable energy – is
limitless in terms of our ability to exploit it. The challenge of tackling climate change, though fraught
with complex politics and systemic and technological challenges, is at heart simply a matter of
decarbonising energy systems. Energy is of course material to economic growth, but there is no reason
why growth can’t be decoupled from emissions by a shift to apparently limitless clean energy.
And herein lies the most important and significant reason why the de-growth prescription is precisely
the opposite of what is needed for a successful climate change cure. The recent global recession — a
primary example of what happens when economies stop growing — illuminates this.
In order to make the transition from incumbent dirty technologies to new, clean technologies, we
need high levels of investment. And yet during the 2008 recession, investment in many countries
collapsed. In the United States, for instance, by the beginning of 2009 private sector investment in new
plant and equipment was below 2005 levels. So while recession no doubt also produced an
interruption in the growth of greenhouse-gas emissions, the economics of recession meant that less
was done to mitigate future emissions. Unless you believe that climate change can be tackled without
new technologies, this is clearly a bad thing.
In the political economy, the need for growth is just as keenly felt. The US recession produced levels of
unemployment in excess of 10% and the Democrat government has struggled to reduce this quickly
enough to avoid heavy losses in mid-term elections; if climate legislation was difficult in Obama’s first
few months in power, it is nigh-on impossible now and recession is no doubt in part to blame for this.
In other words, recession in our existing economies equates strongly with human misery and
entrenched, outmoded industrial practices. Growth shouldn’t be the only game in town; it’s a measure of
success and not — as Johnson says — an end in itself. Inequality and how the proceeds of growth are
better shared is an important debate too. But without it, our chances of investing in a cleaner, more
sustainable future, avoiding dangerous climate change and raising living standards are scant
indeed.
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1ar – warming inev
And stopping emission won’t stop warming
ANI, 10
[3-20-10, citing Charles H. Greene, Cornell professor of Earth and atmospheric science, One india news,
“IPCC has underestimated climate-change impacts, say scientists”,
http://news.oneindia.in/2010/03/20/ipcchas-underestimated-climate-change-impacts-sayscientis.html,
accessed, 7-19-13 AMS]
According to Charles H. Greene, Cornell professor of Earth and atmospheric science, "Even if all manmade greenhouse gas emissions were stopped tomorrow and carbon-dioxide levels stabilized at
today's concentration, by the end of this century, the global average temperature would increase by
about 4.3 degrees Fahrenheit, or about 2.4 degrees centigrade above pre-industrial levels, which is
significantly above the level which scientists and policy makers agree is a threshold for dangerous
climate change." "Of course, greenhouse gas emissions will not stop tomorrow, so the actual temperature
increase will likely be significantly larger, resulting in potentially catastrophic impacts to society unless
other steps are taken to reduce the Earth's temperature," he added. "Furthermore, while the oceans have
slowed the amount of warming we would otherwise have seen for the level of greenhouse gases in the
atmosphere, the ocean's thermal inertia will also slow the cooling we experience once we finally reduce
our greenhouse gas emissions," he said. This means that the temperature rise we see this century will be
largely irreversible for the next thousand years. "Reducing greenhouse gas emissions alone is unlikely
to mitigate the risks of dangerous climate change," said Green.
Climate change is past the tipping point
Duarte, Director of Oceans Institute at the University of Western Australia, 12
[Carlos Duarte, The Conversation, “Teetering on a tipping point: dangerous climate change in the Arctic”,
http://theconversation.edu.au/teetering-on-a-tipping-point-dangerous-climate-change-in-the-arctic-5156,
accessed 7-19-13 AMS]
We are seeing the first signs of dangerous climate change in the Arctic. This is our warning that humanity
is facing a dire future.
The Arctic region is fast approaching a series of “tipping points” that could trigger an abrupt
domino effect of large-scale climate change across the entire planet. The region contains arguably the
greatest concentration of potential tipping elements.
If set in motion, these can generate profound alterations which will place the Arctic not at the periphery,
but at the core of the Earth system. There is evidence that these chain reactions have begun. This has
major consequences not just for “nature”, but for the future of humankind as the changes progress.
Research shows that the Arctic is now warming at three times the global average. The loss of Arctic
summer sea-ice forecast over the next four decades – if not before – is expected to have abrupt knock-on
effects in northern mid-latitudes, including Beijing, Tokyo, London, Moscow, Berlin and New York. The
loss of sea ice – which melted faster in summer than predicted – is linked tentatively to recent extreme
cold winters in Europe.
Arctic records show unambiguously that sea ice volume has declined dramatically over the past two
decades. In the next 10 years, summer sea ice could be largely confined to north of coastal Greenland and
Ellesmere Island, and is likely to disappear entirely by mid-century.
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Some environmental and biological elements, including weakening of the oceanic biological carbon
pump and the thermohaline circulation,melting of the Greenland ice cap, thawing of Arctic
permafrost and methane hydrate deposit, the decline of forest and peat fires in the boreal region,
may be linked in a domino effect of tipping points that cascade rapidly once this summer sea ice is
lost.
Despite this danger, semantic confusion masquerading as scientific debate – although providing excellent
media fodder – had delayed an urgent need to start managing the reality of dangerous climate change in
the Arctic.
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biodiversity impact
We’re on the verge of a global consciousness shift towards biospheric empathy--makes growth environmentally sustainable and solves every impact---collapse now
destroys the transition
Rifkin, President of the Foundation on Economic Trends, 10
[Jeremy Rifkin, 1-11-10, The Huffington Post, “'The Empathic Civilization': Rethinking Human Nature in
the Biosphere Era,” online: http://www.huffingtonpost.com/jeremy-rifkin/the-empathiccivilization_b_416589.html, accessed, 7-19-13 AMS]
The pivotal turning points in human consciousness occur when new energy regimes converge with
new communications revolutions, creating new economic eras. The new communications revolutions
become the command and control mechanisms for structuring, organizing and managing more complex
civilizations that the new energy regimes make possible. For example, in the early modern age, print
communication became the means to organize and manage the technologies, organizations, and
infrastructure of the coal, steam, and rail revolution. It would have been impossible to administer the first
industrial revolution using script and codex.
Communication revolutions not only manage new, more complex energy regimes, but also change human
consciousness in the process. Forager/hunter societies relied on oral communications and their
consciousness was mythologically constructed. The great hydraulic agricultural civilizations were, for the
most part, organized around script communication and steeped in theological consciousness. The first
industrial revolution of the 19th century was managed by print communication and ushered in ideological
consciousness. Electronic communication became the command and control mechanism for arranging the
second industrial revolution in the 20th century and spawned psychological consciousness.
Each more sophisticated communication revolution brings together more diverse people in increasingly
more expansive and varied social networks. Oral communication has only limited temporal and spatial
reach while script, print and electronic communications each extend the range and depth of human social
interaction.
By extending the central nervous system of each individual and the society as a whole, communication
revolutions provide an evermore inclusive playing field for empathy to mature and consciousness to
expand. For example, during the period of the great hydraulic agricultural civilizations characterized by
script and theological consciousness, empathic sensitivity broadened from tribal blood ties to
associational ties based on common religious affiliation. Jews came to empathize with Jews, Christians
with Christians, Muslims with Muslims, etc. In the first industrial revolution characterized by print and
ideological consciousness, empathic sensibility extended to national borders, with Americans empathizing
with Americans, Germans with Germans, Japanese with Japanese and so on. In the second industrial
revolution, characterized by electronic communication and psychological consciousness, individuals
began to identify with like-minded others.
Today, we are on the cusp of another historic convergence of energy and communication--a third
industrial revolution--that could extend empathic sensibility to the biosphere itself and all of life on
Earth. The distributed Internet revolution is coming together with distributed renewable energies,
making possible a sustainable, post-carbon economy that is both globally connected and locally
managed.
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In the 21st century, hundreds of millions--and eventually billions--of human beings will transform
their buildings into power plants to harvest renewable energies on site, store those energies in the
form of hydrogen and share electricity, peer-to-peer, across local, regional, national and continental intergrids that act much like the Internet. The open source sharing of energy, like open source sharing of
information, will give rise to collaborative energy spaces--not unlike the collaborative social spaces that
currently exist on the Internet.
When every family and business comes to take responsibility for its own small swath of the biosphere by
harnessing renewable energy and sharing it with millions of others on smart power grids that stretch
across continents, we become intimately interconnected at the most basic level of earthly existence by
jointly stewarding the energy that bathes the planet and sustains all of life.
The new distributed communication revolution not only organizes distributed renewable energies, but
also changes human consciousness. The information communication technologies (ICT) revolution is
quickly extending the central nervous system of billions of human beings and connecting the human
race across time and space, allowing empathy to flourish on a global scale, for the first time in
history.
Whether in fact we will begin to empathize as a species will depend on how we use the new distributed
communication medium. While distributed communications technologies-and, soon, distributed
renewable energies - are connecting the human race, what is so shocking is that no one has offered much
of a reason as to why we ought to be connected. We talk breathlessly about access and inclusion in a
global communications network but speak little of exactly why we want to communicate with one another
on such a planetary scale. What's sorely missing is an overarching reason that billions of human beings
should be increasingly connected. Toward what end? The only feeble explanations thus far offered are to
share information, be entertained, advance commercial exchange and speed the globalization of the
economy. All the above, while relevant, nonetheless seem insufficient to justify why nearly seven billion
human beings should be connected and mutually embedded in a globalized society. The idea of even
billion individual connections, absent any overall unifying purpose, seems a colossal waste of human
energy. More important, making global connections without any real transcendent purpose risks a
narrowing rather than an expanding of human consciousness. But what if our distributed global
communication networks were put to the task of helping us re-participate in deep communion with the
common biosphere that sustains all of our lives?
The biosphere is the narrow band that extends some forty miles from the ocean floor to outer space where
living creatures and the Earth's geochemical processes interact to sustain each other. We are learning that
the biosphere functions like an indivisible organism. It is the continuous symbiotic relationships
between every living creature and between living creatures and the geochemical processes that ensure the
survival of the planetary organism and the individual species that live within its biospheric envelope. If
every human life, the species as a whole, and all other life-forms are entwined with one another and
with the geochemistry of the planet in a rich and complex choreography that sustains life itself, then we
are all dependent on and responsible for the health of the whole organism. Carrying out that
responsibility means living out our individual lives in our neighborhoods and communities in ways
that promote the general well-being of the larger biosphere within which we dwell. The Third
Industrial Revolution offers just such an opportunity.
If we can harness our empathic sensibility to establish a new global ethic that recognizes and acts to
harmonize the many relationships that make up the life-sustaining forces of the planet, we will have
moved beyond the detached, self-interested and utilitarian philosophical assumptions that accompanied
national markets and nation state governance and into a new era of biosphere consciousness. We leave the
old world of geopolitics behind and enter into a new world of biosphere politics, with new forms of
governance emerging to accompany our new biosphere awareness.
The Third Industrial Revolution and the new era of distributed capitalism allow us to sculpt a new
approach to globalization, this time emphasizing continentalization from the bottom up. Because
renewable energies are more or less equally distributed around the world, every region is potentially
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amply endowed with the power it needs to be relatively self-sufficient and sustainable in its lifestyle,
while at the same time interconnected via smart grids to other regions across countries and continents.
Collapse is worse for all their impacts---causes extinction of every other species and
then humans---it also proves no de-dev
Monbiot, The Guardian, columnist 9
[George Monbiot, has held visiting fellowships or professorships at the universities of Oxford
(environmental policy), Bristol (philosophy), Keele (politics), Oxford Brookes (planning), and East
London (environmental science), 8-17-09, The Guardian, “Is there any point in fighting to stave off
industrial apocalypse?,” http://www.guardian.co.uk/commentisfree/cif-green/2009/aug/17/environmentclimate-change, accessed, 7-19-13 AMS]
The interesting question, and the one that probably divides us, is this: to what extent should we welcome
the likely collapse of industrial civilisation? Or more precisely: to what extent do we believe that
some good may come of it?
I detect in your writings, and in the conversations we have had, an attraction towards – almost a yearning
for – this apocalypse, a sense that you see it as a cleansing fire that will rid the world of a diseased
society. If this is your view, I do not share it. I'm sure we can agree that the immediate consequences of
collapse would be hideous: the breakdown of the systems that keep most of us alive; mass
starvation; war. These alone surely give us sufficient reason to fight on, however faint our chances
appear. But even if we were somehow able to put this out of our minds, I believe that what is likely to
come out on the other side will be worse than our current settlement.
Here are three observations: 1 Our species (unlike most of its members) is tough and resilient; 2 When
civilisations collapse, psychopaths take over; 3 We seldom learn from others' mistakes.
From the first observation, this follows: even if you are hardened to the fate of humans, you can surely
see that our species will not become extinct without causing the extinction of almost all others.
However hard we fall, we will recover sufficiently to land another hammer blow on the biosphere.
We will continue to do so until there is so little left that even Homo sapiens can no longer survive.
This is the ecological destiny of a species possessed of outstanding intelligence, opposable thumbs and an
ability to interpret and exploit almost every possible resource – in the absence of political restraint.
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Sustainability
Technology protects environment, models internationally.
Gorman University of Virginia Science and Technology Professor 7
[Michael E, 2006, “Cognition, Environment and the Collapse of Civilizations”,
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CC8QFjAA&url=http
%3A%2F%2Frepont.sts.virginia.edu%2Fhomepage%2Fmg%2Fpublications%2Fmbrchina_MS.doc&ei=vzpUcnKE8aIiAKu34GoDg&usg=AFQjCNHENR9d6O5-xiIGhmpLpa0_I9ncQ&sig2=AdySoESFpTTrtfN52ACYQQ&bvm=bv.49478099,d.cGE, accessed 7/19/13, ALT]
Technology promises to extend human capabilities to realms reserved for Gods in traditional stories,
giving human beings the ability to:
•Control evolution
•Change ‘human nature’ by altering our own genetic code and making ourselves into cyborgs(Haraway,
1997).
•Manage the global ecosystem
Civilizations that race ahead with these developments and seek to protect their gains will achieve a
temporary advantage, but the spread of nuclear weapons and the rise of terrorism show the limits to this
strategy. All civilizations are not only part of a single ecosystem, they are also connected by distributed,
high-speed communications and are part of an increasingly global economy. Not everyone has the
opportunity to participate in this new interconnected world, and those who cannot will resent and resist it
as another device by which the powerful and rich get stronger at the expense of others—a global
imperialistic trading zone.
To constitute progress, technological development should enhance freedom and opportunity
worldwide. This kind of progress will require us to engage in moral imagination, developing new
stories for a global civilization that is involved in constant transformation and self-examination.
Of Diamond’s five factors that determine the fate of civilizations, the last one—civilization’s response—
is the most important one. Human beings can see the system of which they are a part, can look critically at
their own actions, collective and individual. Modeling is an important tool for imagining the
consequences of present actions, or failures to act. If civilization survives, it will be radically altered by
the accelerating pace of technological development. Part of this development will be extraordinary
new tools for modeling, that will help us manage the future we create.
Such modeling tools could even facilitate moral imagination. Arizona State University’s Decision
Theater (http://dt.asu.edu/) is an example. This environment allows stakeholders to envision the
consequences of different development plans for Phoenix. This system could evolve into one that allows
stakeholders to visualize their imagine desirable futures, share them with others, and modify them on the
fly, based on discussion. Modeling tools alone cannot span incommensurable ideological divides.
But they can facilitate the development of trading zones over the challenges and opportunities that
face our increasingly global civilization.
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a/t: complexity
Diminishing returns to complexity don’t cause collapse – there are inherent checks
Tainter, Utah State University Department of Environment and Society Professor, 9
[Joseph, November 3, interviewed by Kazys Varnelis, the Director of the Network Architecture Lab at the
Columbia University Graduate School of Architecture, Planning, and Preservation, “Interview with
Joseph Tainter on Collapse,” http://varnelis.net/blog/interview_with_joseph_tainter_on_collapse,
accessed 7-19-13 UR]
Today we are living in the most complex society that has ever existed, yet we’ve avoided collapse
thus far. Why is that?
JT: Diminishing returns to complexity are probably inevitable, but collapse doesn’t necessarily
follow. Collapses are actually not that common. There are several ways to cope with diminishing
returns to complexity. One is to find energy subsidies to pay for the process. That is what we have
done with fossil fuels. And it is a big part of why a future crisis in fossil fuels is the most important
thing we should be worrying about.
Highly complex societies are sustainable through development and adaptation
Tainter, Utah State University Department of Environment and Society Professor, 9
[Joseph, September 9, The Oil Drum, “Human Resource Use: Timing and Implications for
Sustainability,” http://www.theoildrum.com/node/5745, accessed 7-19-13 UR]
In conclusion, sustainability is not the achievement of stasis. It is not a passive consequence of having
fewer humans who consume more limited resources. One must work at being sustainable. The
challenges that any society (or other institution) might confront are, for practical purposes, endless in
number and infinite in variety. This being so, sustainability is a matter of solving problems.
In the conventional view, complexity follows energy. If so, then we should be able to forego complexity
voluntarily and reduce our consumption of the resources that it requires. This approach to sustainability
implicitly sees the future as a condition of stasis with no challenges.
In actuality, major infusions of surplus energy are rare in human history. More commonly, complexity
increases in response to problems. Complexity emerging through problem solving typically
precedes the availability of energy, and compels increases in its production. Complexity is not
something that we can ordinarily choose to forego.
Applying this understanding leads to two conclusions. The first is that the solutions commonly
recommended to promote sustainability–conservation, simplification, pricing, and innovation–can do so
only in the short term. Secondly, long-term sustainability depends on solving major societal problems
that will converge in coming decades, and this will require increasing complexity and energy
production. Sustainability is not a condition of stasis. It is, rather, a process of continuous adaptation,
of perpetually addressing new or ongoing problems and securing the resources to do so.
It is useful to think of sustainability in the metaphor of an athletic game: It is possible to “lose”–that is,
to become unsustainable, as happened to the Western Roman Empire. But the converse does not hold.
Because we continually confront challenges, there is no point at which a society has “won”–become
sustainable in perpetuity, or at least for a very long time. Success, rather, consists of staying in the
game.
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a/t: transition
No causal relationship between economic crisis and war – no transition
Mead, Senior Fellow in U.S. Foreign Policy at the Council on Foreign Relations, 9
[Walter Russell, February 4, The New Republic, “Only Makes You Stronger,”
http://www.newrepublic.com/article/only-makes-you-stronger#, accessed 7-19-13 UR]
So far, such half-hearted experiments not only have failed to work; they have left the societies that
have tried them in a progressively worse position, farther behind the front-runners as time goes by.
Argentina has lost ground to Chile; Russian development has fallen farther behind that of the Baltic states
and Central Europe. Frequently, the crisis has weakened the power of the merchants, industrialists,
financiers, and professionals who want to develop a liberal capitalist society integrated into the world.
Crisis can also strengthen the hand of religious extremists, populist radicals, or authoritarian
traditionalists who are determined to resist liberal capitalist society for a variety of reasons. Meanwhile,
the companies and banks based in these societies are often less established and more vulnerable to
the consequences of a financial crisis than more established firms in wealthier societies.
As a result, developing countries and countries where capitalism has relatively recent and shallow roots
tend to suffer greater economic and political damage when crisis strikes--as, inevitably, it does. And,
consequently, financial crises often reinforce rather than challenge the global distribution of power
and wealth. This may be happening yet again.
None of which means that we can just sit back and enjoy the recession. History may suggest that financial
crises actually help capitalist great powers maintain their leads--but it has other, less reassuring messages
as well. If financial crises have been a normal part of life during the 300-year rise of the liberal
capitalist system under the Anglophone powers, so has war. The wars of the League of Augsburg and
the Spanish Succession; the Seven Years War; the American Revolution; the Napoleonic Wars; the two
World Wars; the cold war: The list of wars is almost as long as the list of financial crises.
Transition fails – war, starvation, environmental collapse would result and continue
for generations
Monbiot, The Guardian, 9
[George, August 17, “Is there any point in fighting to stave off industrial apocalypse?”
http://www.guardian.co.uk/commentisfree/cif-green/2009/aug/17/environment-climate-change accessed
7-19-13 UR]
I detect in your writings, and in the conversations we have had, an attraction towards – almost a yearning
for – this apocalypse, a sense that you see it as a cleansing fire that will rid the world of a diseased
society. If this is your view, I do not share it. I'm sure we can agree that the immediate consequences of
collapse would be hideous: the breakdown of the systems that keep most of us alive; mass
starvation; war. These alone surely give us sufficient reason to fight on, however faint our chances
appear. But even if we were somehow able to put this out of our minds, I believe that what is likely
to come out on the other side will be worse than our current settlement.
Here are three observations: 1 Our species (unlike most of its members) is tough and resilient; 2 When
civilisations collapse, psychopaths take over; 3 We seldom learn from others' mistakes.
From the first observation, this follows: even if you are hardened to the fate of humans, you can
surely see that our species will not become extinct without causing the extinction of almost all
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others. However hard we fall, we will recover sufficiently to land another hammer blow on the
biosphere. We will continue to do so until there is so little left that even Homo sapiens can no longer
survive. This is the ecological destiny of a species possessed of outstanding intelligence, opposable
thumbs and an ability to interpret and exploit almost every possible resource – in the absence of
political restraint.
From the second and third observations, this follows: instead of gathering as free collectives of happy
householders, survivors of this collapse will be subject to the will of people seeking to monopolise
remaining resources. This will is likely to be imposed through violence. Political accountability will
be a distant memory. The chances of conserving any resource in these circumstances are
approximately zero. The human and ecological consequences of the first global collapse are likely to
persist for many generations, perhaps for our species' remaining time on earth. To imagine that
good could come of the involuntary failure of industrial civilisation is also to succumb to denial. The
answer to your question – what will we learn from this collapse? – is nothing.
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a/t: Speth
No causal relationship between the environment and collapse – Speth assumes data
without a complete diagnosis
Adler, Case Western Reserve University School of Law Professor and Center for
Business Law and Regulation Director, 8
[Jonathan H., Fall 2008, The New Atlantis no. 22, pp. 91-98, “Green Bridge to Nowhere,”
http://www.thenewatlantis.com/publications/green-bridge-to-nowhere, accessed 7-19-13 UR]
Speth’s eco-pessimism is not particularly new or original, but his critique of the modern environmental
movement could be. In his view, the modern environmental establishment has proven itself impotent. It
has accomplished much, but not nearly enough. Working within the system failed, he maintains, because
it did not seek sufficiently radical change. Saving human civilization from collapse requires more than
minor adjustments, he warns, as environmental degradation is but a symptom of broader social problems,
and is “linked powerfully with other social realities, including growing social inequality and neglect and
the erosion of democratic governance and popular control.” Reversing course will require a
“transformative change in the system itself,” including an “assault on the citadel of consumption” and the
remaking of corporations. “Our duty,” Speth proclaims, is “to struggle against the contempocentrism and
anthropocentrism that dominate modern life.” A “bridge” to a sustainable society requires revisiting
democratic capitalism, remaking industrial civilization, and reorienting human consciousness; “we
must return to fundamentals and seek to understand both the underlying forces driving such destructive
trends and the economic and political system that gives these forces free rein.” Nothing less will do.
Environmental writers have made a cottage industry from warning of ecological Armageddon and
calling for greener forms of economic growth. Yet it is rare to hear so radical a charge from
someone with Speth’s influence, and unusual to hear someone with his experience offer an
ecological assessment that is so misguided. He purports to offer “a deeper critique of what is going on,”
but his principal complaints echo familiar ones we have heard from other environmental thinkers, his
“new approach on the environment” seems quite like the old, and his analysis is ultimately shallow.
Speth wants to offer “impractical answers” — but the problem is not so much their impracticality
as their wrong-headedness.
Speth catalogues an ever-growing list of environmental insults inflicted upon the Earth by human
civilization to document the “great collision” between the human economy and our fragile planet.
He tries to shock with numbers and graphs illustrating dramatic increases in population or industrial
activity of one sort or another. Such data is easy to find, but trends by themselves do not substitute
for a complete diagnosis. It takes more than identifying recent exponential trends to demonstrate
unsustainability. Exponential growth rarely (if ever) continues indefinitely, and the same factors that
cause growth spurts can cause them to level off. Nor do negative environmental trends necessarily
translate into harmful effects on human well-being. I share his concern for conserving biological
diversity, but merely asserting that biological diversity is important for economic well-being does
not make it so.
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a/t: resource scarcity
Resource scarcity is self correcting- drives innovation.
Haynes Brigham Young University Economics Professor 8
[Beth, 8/19/2008, “Finite Resources vs. Infinite Resourcefulness”,
http://wealthisnottheproblem.blogspot.com/2008/08/finite-resources-vs-infinite.html, accessed 7/19/13,
ALT]
It’s common sense. Save today in order to have some available tomorrow. It’s how our bank accounts
work, so it seems logical to apply the same reasoning to resource use. But there is a catch. All of
economic history, up to and including today, demonstrates that the more we exploit our natural
resources, the more available they become. (3-7) How can this possibly be? If we use our “limited,
non-renewable resources” we have to end up with less, right?
Actually, no. And here is why.
We don’t simply “use up” existing resources; we constantly create them. We continually invent
new processes, discover new sources, improve the efficiency of both use and extraction, while at the
same time we discover cheaper, better alternatives.
The fact that a particular physical substance is finite is irrelevant. What is relevant is the process of
finding ways to meet human needs and desires. The solutions, and thus what we consider resources, are
constantly changing. Oil was a nuisance, not a resource, until humans discovered a use for it.
In order to survive and flourish, human beings must succeed at fulfilling certain needs and desires. This
can be accomplished in a multitude of ways using a multitude of materials. The requirements of life set
the goals. How these goals are met does not depend on the existence or the availability of any particular
material. Limits are placed not by the finiteness of a physical substance, but by the extent of our
knowledge, of our wealth, and of our freedom. Knowledge. Wealth. Freedom. These are the factors which
are essential to solving the problems we face.
“The Stone Age didn’t end because we ran out of stones.” (8)
Think for a minute about how we have solved the problem of meeting basic needs throughout history:
Transportation: from walking to landing on the moon
Communication: from face-to-face conversations to the World Wide Web.
Food: from hunting and gathering to intravenous feeding and hydroponics.
Shelter: from finding a cave to building skyscrapers
Health care: from shamans to MRIs and neurosurgery.
How does progress happen? A synopsis of the process is provided by the main theme of Julian Simon’s
book, The Ultimate Resource 2:
More people, and increased income, cause resources to become more scarce in the short run.
Heightened scarcity causes prices to rise. The higher prices present opportunity and prompt
inventors and entrepreneurs to search for solutions. Many fail in the search, at cost to themselves. But
in a free society, solutions are eventually found. And in the long run, the new developments leave us
better off than if the problems had not arisen, that is, prices eventually become lower than before the
scarcity occurred. (9)
This idea is not just theory. Economists and statisticians have long been analyzing the massive
amounts of data collected on resource availability. The conclusion: our ability to solve the problems
of human existence is ever-expanding. Resources have become less scarce and the world is a better
place to live for more and more people. (3-7) Overall, we create more than we destroy as evidenced by
the steady progress in human well being and there is no evidence for concluding that this trend can't and
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won't continue. Doomsday predictions have been with us since ancient times and they have
consistently been proven wrong.
Growth makes resource use sustainable.
Anderson Political Economy Research Center Director 4
[Terry, Summer 2004, Hoover Digest, “Cooling the Global Warming Debate”,
http://perc.org/articles/why-economic-growth-good-environment, No. 3, accessed 7/19/13, ALT]
Hansen's essay concludes on an optimistic note, saying "the main elements [new technologies] required to
halt climate change have come into being with remarkable rapidity." This statement would not have
surprised economist Julian Simon. He saw the "ultimate resource" to be the human mind and believed it
to be best motivated by market forces. Because of a combination of market forces and technological
innovations, we are not running out of natural resources. As a resource becomes more scarce,
prices increase, thus encouraging development of cheaper alternatives and technological innovations.
Just as fossil fuel replaced scarce whale oil, its use will be reduced by new technology and
alternative fuel sources. Market forces also cause economic growth, which in turn leads to
environmental improvements. Put simply, poor people are willing to sacrifice clean water and air,
healthy forests, and wildlife habitat for economic growth. But as their incomes rise above subsistence,
"economic growth helps to undo the damage done in earlier years," says economist Bruce Yandle. "If
economic growth is good for the environment, policies that stimulate growth ought to be good for the
environment." The link between greenhouse gas emissions and economic prosperity is no different.
Using data from the United States, Professor Robert McCormick finds that "higher GDP reduces total net
[greenhouse gas] emissions." He goes a step further by performing the complex task of estimating net
U.S. carbon emissions. This requires subtracting carbon sequestration (long-term storage of carbon in soil
and water) from carbon emissions. Think of it this way: When you build a house, the wood in it stores
carbon. In a poor country that wood would have been burned to cook supper or to provide heat, thus
releasing carbon into the atmosphere. McCormick shows that economic growth in the United States has
increased carbon sequestration in many ways, including improved methods of storing waste, increased
forest coverage, and greater agricultural productivity that reduces the acreage of cultivated land. Because
rich economies sequester more carbon than poor ones, stored carbon must be subtracted from emissions to
determine an economy's net addition to greenhouse gas emissions. McCormick's data show that "rich
countries take more carbon out of the air than poorer ones" and that "the growth rate of net carbon
emission per person will soon be negative in the United States." Put differentl
cooler. Global-warming policy analysts agree that greenhouse gas regulations such as those proposed at
Kyoto would have negative impacts on the economy. Therefore, as McCormick warns, we should take
great care that regulations in the name of global warming "not kill the goose that lays the golden eggs."
Growth sustains resource use.
Geddes University of Sheffield Political Science PhD candidate 4
[Marc, 2/5/04, “The Monster Non-Socialist FAQ”, http://rebirthofreason.com/War/MonsterFAQ.shtml,
accessed 7/19/13, ALT]
A significant disruption to supplies of critical resources can cause temporary problems, but in a free
market, if resources start to become scarce, prices rise, leading to a search of substitutes and
improved conservation efforts. The pool of resources is not fixed, because human ingenuity can find
substitutes or new sources of resources. Supplies of most raw materials have been increasing
throughout the 20th century, and the cost has been falling (See the entry on Natural resources). For
instance, between 1950 and 1970, bauxite (aluminium source) reserves increased by 279 per cent, copper
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by 179 per cent, chromite (chromium source) by 675 per cent, and tin reserves by 10 per cent. In 1973
experts predicted oil reserves stood at around 700 billion barrels, yet by 1988 total oil reserves had
actually increased to 900 billion barrels.
Production of certain kinds of resources such as fossil fuels may finally be beginning to peak but
there are renewable energy sources in development which can serve as substitutes. Simplistic
thermodynamic analysis of energy production is misleading, because it's not the quantities of
energy used or produced that determine economic value, but the utility, or usefulness if that energy
to humans. If energy is being used more efficiently you don't need as much of it, and some forms of
energy are more valuable than others- for instance kinetic energy in the form of wind power is less
valuable than the same quantity of latent energy in the form of oil. Solar power is a virtually inexhaustible
supply of new energy for stationary sources and the hydrogen fuel cell can serve for transportation in
place of fossil fuels. Developing these technologies costs money, so to avoid resource shortages a good
economy is essential. Libertarian capitalism is the system which generates wealth the fastest.
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