The mirage of exports

Thursday, 17 April 1997

Hugo Salinas Price

(Translation of an article in Spanish, dated april 17, 1997).

All countries of the world, with the exception of the U.S., are very concerned about their exports. This is irrational and denotes a pathological condition in their economies.

There is no country in the world – with the exception we just noted – where the government is not striving to promote exports. Exports have become the sine qua non or essential pillar of prosperity. We might say that the “center of gravity” of each of the national economies of the world is not to be found within each country, in production and consumption for its own use, but rather outside its borders, in exports. We are, each and every one, off-center and unbalanced, seeking the market for our production outside our borders.  And we are all also unbalanced – even in a psychological sense – seeking “foreign investment” to promote our progress.

This aberrant situation, is the meaning of “globalization”. Globalization means that no country is solidly built upon its own foundations, but rather that its center of gravity is outside its borders. Globalization is a sickness, not a sound condition or process.

The cause that promotes this sickness, is the world’s monetary system. The U.S. manufactures dollars, which are the principal reserve currency of all countries in the world. Without dollar reserves, any currency collapses: all currencies are paper and nothing more.   Dollar reserves are indispensable. In order to have reserves, it is necessary to export more than is imported. All countries in the world, the U.S. excepted, seek to export more than they import.

It doesn’t take more than five minutes of thought, to understand that this is impossible. Someone has to buy more than they export. If that were not so, where are all the surplus exports going to wind up? In fact, the U.S. imports more than it exports, and pays…with dollars, which are only paper vouchers. But the U.S. does not actually pay, because imported goods must be paid with exported goods. Dollars are simply promises to pay.

There is also a worldwide thirst for “foreign investment”, another pathological condition. If so many countries are hunting for foreign investment, where is it going to come from? Again, we look to the U.S.. However, we know that savings in the U.S. are meager. So, when we receive capital from the U.S., what are we really getting? We are getting dollars, which are nothing more than promises to pay, vouchers which the U.S.  manufactures. With papers, American interests obtain property rights over tangible resources all over the world. That is “globalization”.

The road we are traveling is based on falsity. It will not endure. The consequence of this madness of globalization, will be a world economic breakdown, inevitably.

We are certainly not saying that exports are unimportant. They are of course, beneficial for any country, when the exporting country is using some productive advantage that allows it to offer the world some good or service at a competitive price. But, what sense is there, for instance, in impoverishing the Mexican worker by consciously and deliberately devaluing his peso, to cheapen his product? Exports won this way, are not gained by exploiting some advantage, but by creating an advantage out of impoverishment. This is madness.

Foreign investment can also be beneficial, but only when it purchases goods with other goods, not with papers; or when the foreign investor brings tangible goods which he owns, to the country he is investing in, and puts them to work there. In fact, the “privatization” of government-owned enterprises all over the world, has really been nothing more than shifting ownership of these enterprises, from national governments, to foreign finance which only provides paper dollars in return for ownership of real assets. Is the foreigner to come to our countries to purchase our resources, with papers or glass beads? That is insane.

The health of Mexico, and of all countries, calls for a monetary system that is not parasitic on the dollar. Our money must be worth something on its own, as has been the case for centuries. This is the only way we can build a country whose foundations rest within itself. For the time being, we are an alienated or schizophrenic country – and this is reflected in the breakdown of our social structure – blindly following the mirage of exports, more than the solid and orderly development of the whole of our Mexican economy.

Postscript: Page one news in “Excelsior”, Mexico City newspaper, on 27 November 2002:

“The Industrial Sector is Lethargic due to Lack of Exports”.

(So, we went all-out for exports to the U.S. Now, the U.S. demand for our exports has fallen. Now, what do we do? Comment: it was bound to happen, and we told you it would happen.)