question. The United States governmentrnis, today, the largest and most successfulrncriminal enterprise in all of humanrnhistory.rnIt began in exactly the same way thatrnthe Mafia began, with limited goals andrnlimited demands. The defense of the nation,rncourts of law, interstate trade, internationalrntrade and tariffs, a common currency,rnand common dealings withrnforeign powers were funded by agreeablernextortions: It was protection. We paid arnlittle, and we got peace of mind. It wasrnno big deal. There were benefits.rnBut both the Mafia and the governmentrndiscovered, at about the same time,rnthat they could go “big time” by transferringrnwealth from the pockets of thosernwho actually produce something tornthose who produce nothing. Unlike thernMafia, however, the government madernno attempt to limit its membership; itrnwould accept everyone who applied.rnBut it turned out that there were toornmany people to take care o£ More andrnmore money had to be extorted from thernvictim-citizen, and inevitably, the producerrnlost his incentive to keep producing.rnIs the mob taking over the UnitedrnStates? To the contrary. The governmentrnhas replaced the mob, with one importantrndifference: Uncle Sam no longerrnprovides protection for those who pay up.rn-George E. Mohun, M.D.rnNovato, CArnCULTURAL REVOLUTIONSrnNAFTA was approved by Congress inrnNovember 1993. That year, the UnitedrnStates had a $1.6 billion trade surplusrnwith Mexico, down from $5.7 billion thernyear before. The proponents of the newrnagreement argued that the “opening” ofrnMexico would reverse this trend.rnHome to 90 million people, Mexicornwas portrayed as a “big emerging market”rnwhich President Clinton claimed couldrnrevive the U.S. economy. Clinton camerninto office with a very pessimistic view ofrnAmerica’s economic future. Administrationrnreports regularly asserted that “as arnmature economy with few domestic opportiinitiesrnfor growth, we must reach thern96 percent of our customers who livernoutside the United States.” That Mexicornlacked the money to buy American-producedrngoods in volume was never considered.rnMexico’s GDP was only $366rnbillion when NAFTA was signed (lessrnthan six percent of the size of the U.S.rneconomy), and Mexico was running arn$24 billion current account deficit. Notrnonly were Mexicans poor, but the abilityrnof their government to finance more importsrnhad also reached its limit.rnMexico went into financial crisis inrn1994, requiring a $54 billion bailoutrnpackage, financed primarily by the UnitedrnStates. In order to restructure itsrndebts, Mexico had to generate a tradernsurplus. Between 1992 and 1997, Mexicornincreased its exports to the UnitedrnStates by 144 percent, running up somern$50 billion in trade surpluses betweenrn1995 and 1997 alone. Mexico’s 1998rntrade surplus with the United States willrnbe around $16 billion. But instead of applyingrnthis windfall to its internationalrndebt, Mexico has used it to attract foreignrninvestors and to pay for imports from Europe,rnwhere Mexico still runs a traderndeficit.rnThe Clinton administration stillrnclaims that “NAFTA provides an unprecedentedrnset of comprehensive marketrnopening rules that have expanded opportunitiesrnfor U.S. goods and services inrnMexico.” Yet the deep peso devaluation,rnfrom 3.5 per dollar in l993 to 9.9 per dollarrnin November 1998, raised the pricesrnof American goods in Mexico more thanrnNAFTA tariff cuts lowered them. ThusrnNAFTA has not lowered the cost of U.S.rnexports, only of Mexican imports.rnExports to Mexico did increase 76 percentrnbetween 1992 and 1997, but the increasernhas consisted primarily of componentsrnto be assembled in Mexicanrnfactories for export back to the UnitedrnStates as finished products. The peso devaluationrnaided this process by loweringrnwages and other production costs inrnMexico.rnThe largest American export categoryrnis auto parts, $6.8 billion worth in 1997.rn(In contrast, the United States exportedrnonly two billion dollars in finished carsrnand trucks.) That same year, the UnitedrnStates imported $9.4 billion in cars andrntrucks and $10.8 billion in auto partsrnfrom Mexico. All across the country,rnAmerican parts suppliers are being toldrnto close their plants and head south orrnlose their contracts to Mexican firms.rnThe “giant sucking sound” only getsrnlouder.rnThe automotive industry accounts forrntwo-thirds of our trade deficit with Mexico.rnThere are no Mexican auto makers,rnonly foreign firms —American, Japanese,rnand German—which have built factoriesrnin Mexico. Mexican factories nowrnexport more cars and trucks to the UnitedrnStates than American factories exportrnto the rest of the world. The same patternrnis evident in other industiies.rnThe Clinton administration knewrnfrom the start that this would happen. Inrn1994, the International Trade Commission’srnannual report stated that “HavingrnU.S. materials processed or U.S. componentsrnassembled in Mexico increases therncompetitiveness of U.S. producers of labor-rnintensive articles with Asian producersrnon the U.S. market” (emphasisrnadded). Rather than protect the wages ofrnAmerican workers from cheap foreign labor,rnNAFTA was designed to protect thernprofits of corporate America by providingrna pool of cheap foreign labor closer tornhome. The ITC calls this “productionrnsharing.”rnWhen parts are exported to Mexico forrnassembly, jobs are lost in the UnitedrnStates. In the past, these componentsrnwere shipped across town or across state,rnto other American factories, to be assembledrnby American workers. As a result ofrnNAFTA, what used to be a domesticrntransaction has become an internationalrnone; what used to be a positive additionrnto our GDP now represents a loss of economicrnactivih’ in the United States. Sornwhile NAFTA apologists trumpet thernrise in exports to Mexico over the pastrnfew years, the numbers alone don’t tellrnthe real story.rn— William R. HawkinsrnT H E IRAQI CRISIS last fall seriouslyrneroded American influence in Europe.rnOn November 16, European foreign andrnFEBRUARY 1999/5rnrnrn