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The Big Bang of Modern Globalization

by Dan Robles on June 30, 2015

Tijauna_slums_against_the_fence_largeThe early 1990’s saw the end of the Cold War,  spectacular advances in computers, the Evolution of the Internet, and a new world order fueled by commerce instead of warfare. Upon this landscape,  NAFTA is considered to be the Big Bang of modern Globalization. What is not often considered is how NAFTA, for better or worse, was to influence every free trade agreement that followed.  The Secret of NAFTA was the failure of engineering mobility and therefore the failure of real economic development.

What made NAFTA unique was the provision for the trade of services specifically, financial services and professional engineering services.  The former succeeded while the latter largely failed.  Herein lies the flaw that needs to be corrected.

Many people remember NAFTA as that giant sucking sound of US jobs going South of the Boarder. When I was a young and idealistic engineer I saw NAFTA as Mexico needing everything that US engineers provided. With the free trade of financial services, engineering projects could be capitalized – this had to be huge.

Intangible Assets are the REAL tangible assets

I found myself in Mexico in 1994 taking what was supposed to be a temporary assignment in a small engineering department of a private university right over the California border – I ended up staying 3 years.  This turned out to be the most profound experience of my professional career.

What struck me the hardest was how intelligent, resourceful, and creative the Mexican engineering students were.  By contrast, I saw the general stage of development of Mexico – at the time it was still being described by the Cold War label as a “Third World Country”.   Soon after, I witnessed a tragic devaluation of the Mexican Peso, where the local currency lost about 1/2 of it’s value against the dollar seemingly overnight.  To observe the reaction of the Mexican citizens, was simply indescribable.  I wondered how could money and jobs just disappear when there was so much work to do and so many people who could do it?

I decided that I’d like to test the Mexican engineering students against a known standard.  I developed a program that prepared a select group of 12 students to take the NCEES EIT examination (The Board Exams for US Engineers).  Their success rate was exceptional; 11 out of 12 passed.   Over the next two years we sent a random sample of over 250 Mexican engineers to the US Exams with a success rate comparable to the US engineers pass ratio.  If the engineers were equally intelligent and equally educated as US Engineers, then something else must be happening here.

Cause and Effect

I would later learn that economic development is a hugely complex subject.  However, at the time, I was deeply intrigued by the following idea:

If you throw economic growth (money) at a country are you guaranteed increased productivity?

The answer is NO. 

However, if you throw productivity at a country, are you guaranteed economic growth?  

The answer is YES.

Herein lays a tiny and nearly imperceptible flaw in NAFTA that needs to be corrected.

Technological change MUST precede economic growth. Economic Growth cannot precede technological change. 

We have gotten it backwards

Banks and and associated securities exists for the sole purpose of creating money to fund innovation. The REAL economy lives where the fact of innovation creates the REAL money.  This is the domain of Engineering, therefore, this is the direction that The Ingenesist Project has and will continue to focus on.

 

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