Mexico's (and the U.S.'s) Real Problem (Watery Chicken Potpie Edition)

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Why, asks Steve Forbes in his "Fact and Comment" col in the most recent ish of the mag that bears his father's (and grandfather's, and his) name, does Diner 24 insist on serving up "tepid 'disco' fries, third-rate meatloaf and watery chicken potpie?"

More importantly, he asks "Why isn't Mexico–which has virtually free access to the U.S., the world's largest and most productive market–growing faster?" One major culprit, sez Forbes, is the relative cost of starting a business:

In Mexico…it takes at least 58 days to start a business, compared with 5 in the U.S., 3 in Canada and 27 in Chile. Mind you, this is only the process of getting all the legal permissions needed to launch a business. The cost of starting a business as a percent of per capita income is even more startling–16.7% in Mexico versus 11.7% in Brazil, 10% in Chile and 0.6% in the U.S.

Forbes' data comes from a World Bank study released last year. That study created "Rigidity of Employment Index," which measures such things as the ease of hiring and firing workers, mandated benefits, and the like, on a scale of zero to 100 (the higher the number, the more rigid the laws).

Mexico's score is a business-killing 72 versus Argentina's 51, Chile's 19 and the U.S.' 3. The cost of letting a worker go in Mexico is equivalent to 83 weeks of the worker's wages; this covers severance pay, fines or penalties to the government and the costs involved in meeting advance-notice requirements. In Chile the comparable number is 51 weeks; Canada, 28; the U.S., 8. (In New Zealand, by the way, it's 0!) Mexico also severely lags other countries in the time it takes to register property and in the cost of doing so.

Whole thing, including restaurant reviews–there's nothing that takes the taste of Mexican economic misery out of your mouth like the "obscenely good french fries" at Cafe du Soleil–here.

By talking about the time and difficulties it takes to register businesses, Forbes–and the World Bank–are channeling Peruvian social critic Hernando De Soto (read his Reason interview here).

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  1. No link on the World Bank study, and I am too lazy to find it, but I was wondering how health insurance would be scored in the US. I assume that it would not be considered “mandated benefits”, but in a way, for many types of jobs it is quasi-mandated.

  2. For some reason I’m remembering the scene from Back To School where Rodney Dangerfield explains to the professor all the “other” expenses that go with running a business. I’m fairly certain that there may be a bit of that kind of thing going on on top of everything else. It’s a pretty dismal situation.

  3. Coach, doesn’t “quasi-mandated” mean “not viable in the market without them?”

  4. On the plus side, in Mexico you don’t have to worry about things like “copyright infringement” so you have a big leg up on marketing once you’re under way.

    What tourist hasn’t fallen for the carne asada at “Caesar’s Palace” in Tijuana? Or a hunk of the slowly-rotating mystery meat for sale at the open-air “Taco Bell” just down Avenida Revolucion?

  5. Indy Worm, Did you read the Wall Street Journal yesterday? Many Mexican companies are upset that they did not register trademarks in the U.S. Their names and designs are being used by American businesses to sell to recent Mexican immigrants.

  6. Twba, that’s funny! Hadn’t read that. But I’m not surprised. What I am surprised by is that there isn’t some int’l rule or law against this (what does WIPO do, anyway? anyone?). For years, US businesses would complain about all the knock-off stuff for sale down in Tijuana. I remember one big raid back in the late 90’s where the US and Mexican cops got together to enforce US intellectual property interests, and they seized tons of crap. Really awful crap. Like literally, I’ve seen leather Mike baseball caps (yes, leather) with the swoosh thing so badly drawn it looks like an overcooked sausage link; Chicago “Bills” jerseys; and every imaginable misspelling of Nautica, Adidas, and Hilfiger you can think of.

    Anyway … given that there have been these raids in the past, that means all that infringing must have been illegal. Which suggests to me that… it must also be illegal for US companies to do it here to Mexican companies?

  7. From the WSJ article:

    With the explosive growth of immigration in the U.S., many old-country firms are discovering that their brands are being appropiated here. It may be unethical for a U.S. company to use a brand developed by a foreign firm outside the U.S., but U.S. law doesn’t make it illegal – unless the original brand has registered its trademark here.

    Most big multinational companies register their trademarks in just about every jurisdiction. Small family owned businesses in Mexico better consider at least registering in the U.S.

  8. For some reason I’m remembering the scene from Back To School where Rodney Dangerfield explains to the professor all the “other” expenses that go with running a business. I’m fairly certain that there may be a bit of that kind of thing going on on top of everything else.

    Yeah, times 2: getting the certificates from the government livensure boards no doubt requires cash or a Rolex.

  9. Informal restraints are also a big problem in Mexico.

    Many Mexican businesses like tailors, plumbers, mechanics etc still work under something very much like the medieval guild system. It is still common in Mexico to find entire streets devoted to one type of business. Individuals who try to start up competing businesses to those already established can face severe extra-legal pressure from the established order.

    Mexico is very rigidly organized from the bottom to the top. Nothing gets down without cronyism and the general acceptance of the wider community. It is nearly impossible for a Mexican business to gain a competitive advantage by innovating.

  10. How long does it take to start a business in China?

    …One of the big reasons that Mexico isn’t growing faster than it might is that it continues to lose would be manufacturing jobs to China. When your main export is commodities, you have to compete with the cheapest supplier in the world, and if what you have to offer is cheap labor–same thing. …That giant sucking sound we hear to the South is jobs going from Mexico to China.

  11. Why, asks Steve Forbes in his “Fact and Comment” col in the most recent ish of the mag that bears his father’s (and grandfather’s, and his) name, does Diner 24 insist on serving up “tepid ‘disco’ fries, third-rate meatloaf and watery chicken potpie?”

    Heh. I kinda stumbled over two unfam abbrevs in the first line of the first para of your po, Ni.

  12. Speaking of Mexico, I wish Reason covered immigration more. The nativists have been going nuts lately and seem to be infiltrating deeper into the Republican Party. I’m not a pure open borders guy (I don’t think it’s compatible with a welfare state), but I know enough basic economics to worry about these “Seal the borders!” nuts getting any power, and I care enough about human liberty to be wary of the cultural and racial crusaders who are licking their chops at the new recruits for their cause. Free market types should be sharpening their arguments are trying to nip this nativist surge in the bud.

  13. Should be “and”, not “are” in my last sentence there.

  14. I lived at “Taco Bell” while attending SDSU. Dollar for three tacos dollar for a corona. We’d get togeth a group of 15 and make a day event of it after stopping by the Tax and Duty Free store. After a few weeks the waitresses would recognize us and cooke up special toppings for us with spiced leeks. The mystery meat is called pastor, it is spiced shredded pork and is my very favorite.

  15. Chicago “Bills” jerseys; and every imaginable misspelling of Nautica, Adidas, and Hilfiger you can think of.

    My favorite was the “polo” shirt with the guy in a wheelchair holding up a crutch.

  16. >>I care enough about human liberty to be wary of the cultural and racial crusaders who are licking their chops at the new recruits for their cause.

  17. “The mystery meat is called pastor, it is spiced shredded pork and is my very favorite.”

    All the hot dogs on Revolution are crunchy on the inside, and all the stray dogs are missing either a leg or their tail.

  18. …I’ve seen leather Mike baseball caps (yes, leather) with the swoosh thing so badly drawn it looks like an overcooked sausage link; Chicago “Bills” jerseys; and every imaginable misspelling of Nautica, Adidas, and Hilfiger you can think of.

    This place has all the name brands; Sorny, Magnetbox, Panaphonics…

  19. This place has all the name brands; Sorny, Magnetbox, Panaphonics…

    and it’s not (usually) a gimmic to avoid infringement via “parody” or some such. They just misspell a lot of the stuff. And it is sad, in a way, when you think of the time some of these leathersmiths put into making them. And even sadder to consider who might think it’s cool to sport one of these misspelled status symbols. But the price always ends up right. A lot of the fun of the Tijuana marketplace is getting the sarape dealers down to 10 (or 8 if you’re really good) from $30.

    Addendum: my folks came out to Cal (when I lived there) and we went to TJ. Against my strenuous objections, they bought a boatload of jewelry off a guy who was walking down Revolucion with about 100 chains around his neck. I think he took them for about 80 bucks. “Suckers” said I. They recently had the stuff appraised — in the US — for $400. So much for the infallibility of my endless skepticism.

  20. The TJ hotdogs are wrapped in bacon too. It may well be the dogs, but it doesn’t make it not delicious. Forget health codes, at “El Paisano Taqueria” (best tacos ever) in Rosarito we would watch them wipe off the machete on the side of the trashcan before cutting the meat, it was still great and it only seemed to season the food better.

  21. This place has all the name brands; Sorny, Magnetbox, Panaphonics… -Jason Sonenshein

    Thanks! It is my opinion that the comment section can’t be complete without at least one Simpsons reference.

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