Connecting many dots: China, NAFTA, Mexican immigration, global warming, big government, and chicken feed. Chicken feed? Read on.

The other day Dave Schuler wrote a thought-provoking post that connects several dots: China's flooding of Mexico's markets with very cheap goods, the flood of Mexican immigrants to the US, the impact of energy conservation policies on markets, and the impact of global warming-related natural disasters on governments. He notes that "It's a bear how these things are interrelated."

Dave also catches columnist George Will in a misstatement. Will writes:

But now that the government is rigging energy markets with mandates, tariffs and subsidies, ethanol production might consume half of next year’s corn crop. The price of corn already has doubled in a year. Hence the tortilla turbulence south of the border.

Dave notes:

American corn is used mostly in Mexico for animal feed and what white corn (the kind used in tortillas) Mexico imports from the United States has been diminishing due to Mexican price supports for local growers.

Read the post for the rest of Dave's comments on the situation. Dave's good catch helps illustrate that the energy conservation/global warming debates are littered with the kind of errors George Will made. The problem is that one small error in interpreting the data can lead to hugely wrong conclusions, which lead to bad legislation.

The data on energy conservation and global warming are so vast and complex that this is why, out of the more than 600 Pundita posts I've published, I have only discussed the global warming issue once. And that one time was to ask whether anyone has a done a study on the effects on weather resulting from large amounts of steam released into the atmosphere by large-scale use of ethanol fuel. No one wrote me with an answer.

But I digress. Yes, it's a bear how all these things are related. Dave warns that government failures to properly address the impact of global warming on economies will translate to the need for much larger government. Something for fans of small government to think about.

Many situations are driving the flood of immigration to the US from Mexico. Consider this January Washington Post report: In Mexico, 'People Do Really Want to Stay' by Peter S. Goodman.* The report addresses the downsides of NAFTA for Mexico's chicken farmers and the impact on Mexican immigration to the US. The report highlights two factors that haven't received much attention from officials who study the immigration problem: Mexico's population explosion and the great disparity between business efficiencies.

[...] The demographic wave that has carried unprecedented numbers of Mexicans to the United States is the consequence of a baby boom that began in Mexico four decades ago, when improvements in rural health care allowed more infants to survive.

From 1993 to 2006, as those born during the boom reached adulthood, Mexicans of working age swelled from 34 million to 44 million [...]

Population pressure, combined with the lifting of subsidies on the farm, sent rural Mexicans in search of higher wages. They moved within Mexico in vast numbers. Many crossed the border. By 2002, 14 percent of all people born in Mexican villages were living in the United States [...]

An archetype of efficiency, the American poultry industry is dominated by enormous brands that control all aspects of production -- employing computerized feed mills that mix grains, mechanized slaughterhouses, and hatcheries that use genetic science to breed disease-resistant chicks.

At Garcia's feed mill [in Mexico], workers shovel grain by hand. At his slaughterhouse, a man slices throats with a wood-handled blade.

And, as Dave Schuler points out, there is the pesky issue of subsidies, which afflicts both sides of the border:

Feed amounts to nearly 60 percent of the cost of raising a chicken. For the American poultry industry, the cost has been held down, historically, by subsidies for corn production. In 2005, American cropland for corn received a range of subsidies worth more than $10 billion, according to a Washington Post analysis of data from the U.S. Department of Agriculture.

Labor, where Mexico has an advantage, makes up only about 5 percent of production costs.

And it's not only China that is flooding Mexico with cheap exports:

Already, Garcia is feeling the pressure. Americans prefer breast meat, while Mexicans opt for dark. So U.S. poultry producers can sell leg quarters -- dark meat -- in Mexico at low prices and still make money.

From January 2005 to January 2006, even though a 59 percent tariff applied to some chicken imports, the wholesale price of chicken leg quarters sold in Mexico City plunged by nearly one-fourth, according to the U.S. Department of Agriculture.

Next year, as NAFTA's final provisions kick in, the door opens to unlimited imports.

"The price will fall," Garcia said. "It could drop by half."

With that, I'd say that fans of playing connect the dots have had their fix for the day.

* Goodman's report seems so well researched that I wanted to give a mention to journalism's unsung heroes: the researchers. Washington Post Database Editor Sarah Cohen contributed to the report.