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Two Nations Indivisible: Mexico, the United States, and the Road Ahead by Shannon O'Neil BY ANDREW SELEE Click here to view a video interview with Shannon O'Neil. No relationship in the Western Hemisphere is more critical for the United States than its relationship with Mexico. U.S. security is closely tied to Mexico’s ability (and willingness) to strengthen its legal and judicial system, and to Mexico’s economic potential. And conversely, an improving American economy will have an outsized impact on Mexico’s future development. In Two Nations Indivisible: Mexico, the United States, and the Road Ahead, Shannon K. O’Neil, a senior fellow at the Council on Foreign Relations, provides both a readable recent history of Mexico and a cogent argument for why U.S. policymakers, business leaders and citizens should care about the future of their southern neighbor. In one of her more compelling passages, she imagines what it would be like if Mexico’s economy were to take off as Spain’s did in the 1980s and 1990s. Even allowing for Spain’s current economic problems, the point remains a powerful one. If Mexico were to sustain growth over the next two decades, expand incomes, unlock innovation, and get a handle on violence and corruption—all within reach with the right policies—the consequences, O’Neil argues, would be dramatic and mutually beneficial. The two economies and societies are already so interwoven that gains on one side of the border have significant impacts on the other side. Her analysis parallels a recent report by Christopher Wilson (Working Together: Economic Ties between the United States and Mexico, Wilson Center, 2011), which found that 40 percent of all Mexican exports to the U.S. are produced by U.S. companies based in Mexico. O’Neil takes the point even further, arguing that shared production between the two countries means that “near-shoring,” where components of U.S. manufacturing or services take place in Mexico, is far preferable for U.S. jobs than offshoring, in which the production process migrates to countries farther away. Indeed, Mexico and the U.S. increasingly take part in the same production process, with jobs created on both sides of the border as these companies become more competitive in the global market. “The border today” O’Neil argues, “is a choreographed dance of parts and processes, moving back and forth to create a final competitive product for our own markets and for the world. This dance, it turns out, can be good for U.S. workers and the U.S. economy.” O’Neil is at her best when she addresses the rise of Mexico’s middle class, now slightly more than half the population. Although she notes the precarious conditions in which many people in the lower ranks of the middle class live, and the plight of the 40 percent of the population who remain poor, she presents a convincing case that Mexico has been moving forward over the past decade at a much faster pace than most observers have recognized. “The magnitude of Mexico’s economic shift is hard to overstate,” she writes. “In the 1990s, seven out of every ten Mexicans were considered poor by the Mexican government’s measures. Today, it is closer to two in five.” At the same time, O’Neil recognizes that Mexico’s considerable economic achievement has been undermined by poor regulation, persistent monopolies and oligopolies, and weak rule of law—and she warns that unless strategic policy decisions are made, the country’s progress will be affected. The chapter devoted to public insecurity strikes a note of concern. While O’Neil notes recent positive developments, such as the creation of a robust (if still imperfect) federal police force over the past six years and congressional approval of far-reaching judicial reforms, she points out that these processes have been slow to take root. The murder rate, as of publication, has been dropping gradually for over a year; but O’Neil argues that violence is likely to remain endemic and at high levels until Mexico comes to terms with the shortcomings of its police, prosecutors, courts, and jails—and until the U.S. comes to terms with its drug habits, which supply the profits to Mexico’s mafias. “Focusing solely on Mexico lets the United States ignore its responsibility for the dangers to the south,” she observes. Finally, the book pays special attention to the binational, cultural, social, and family ties nurtured by immigration. The slowing U.S. economy (and an improving Mexican one), as well as tighter border controls, have contributed to the lowest level of undocumented immigration in four decades. This may, in fact, create an opportunity for both countries to address an issue that has long been a source of friction between them. O’Neil makes a convincing case that the demographic ties between the two countries could become the basis for building a new paradigm of understanding in the future, what she calls “a partnership through people,” by bringing immigration rules “in line with the underlying economic and community realities” that now exist between the two countries. The book will interest those who are concerned about the future of U.S.-Mexico relations, but it is also an indispensable account of Mexico’s recent history—including its processes of democratic opening and political reform. The author manages to cover in less than 200 pages most of the major developments that have shaped Mexico’s emergence as a democracy and modern economy, as well as the work that needs to be done to make those changes permanent. And the writer’s easy style makes it a quick and accessible—even exciting—read without sacrificing depth. Watch an AQ Q&A with Shannon O'Neil below. Back to top The End of Power: From Boardrooms to Battlefields and Churches to States, Why Being in Charge Isn't What It Used to Be By Moisés Naím BY SASKIA SASSEN Power is fundamentally changing in the twenty-first century. While there is movement from “brawn to brains, from north to south and west to east, from old corporate behemoths to agile start-ups, from entrenched dictators to people in town squares and cyberspace,” there is more to the story than just a power shift. So writes Moisés Naím in the opening chapter of his book The End of Power. As he says in the title, power in the world today has shifted from “boardrooms to battlefields and churches to states.” Naím, a scholar at the Carnegie Endowment for International Peace, who has served as Venezuelan Minister of Trade and Industry and more recently as editor-in-chief of Foreign Policy, has written an illuminating, smart and highly readable book. He takes us on a journey that disassembles power as we have known it, and reassembles what is left into a new meaning of power that explains why, as he writes, it is “easier to get, harder to use—and easier to lose.” For many people, power is a self-evident concept. But Harvard’s Joseph Nye, for one, made us re-examine the notion when he coined the term “soft power” in the 1980s to describe the ability of countries to influence others through culture and political ideas rather than through economic or military might—which he later elaborated on in a 2005 book of the same name. In his book, Naím takes us a step further. He argues that it is not enough to point to the rise of other forms of national influence, but rather we must examine the concept of power “decay”—more precisely, the systemic ripple effects that unsettle the alignments inside nation states that have historically enabled them to project power. Naím points to the convergence in the twentieth century of the rise of powerful states with the emergence of powerful corporations, labor unions and political parties, all organized as complex bureaucracies where size, hierarchy and centralized control were key features. Big government, big business and big labor are the success stories of the period. Naím reminds us that the German social theorist Max Weber “helped us understand the rationale and workings of bureaucracy in the exercise of power,” and that the British economist Ronald Coase then “helped us understand the economic advantages that they conferred on companies.” Coase explained why large organizations were not just profit-maximizers, but also more efficient than the alternatives. This was due largely to their capacity to internalize a broad range of necessary tasks, thereby saving on what came to be called transaction costs. But size, Naím goes on to argue, is no longer an advantage—putting him at odds with current conventional notions that wealth and power tend to become concentrated, and that globalization further strengthens this dynamic. Instead, he asks: “what if the model of organization” developed by “Weber and his inheritors in economics and sociology […] has become obsolete?” To answer this question, Naím covers a broad range of themes, from the personal to the political, in the next seven chapters. He demonstrates that power is increasingly more dispersed in individual countries and in the world at large. And this has made populations and resources more “difficult to regiment and control.” In fact, writes Naím, we are also experiencing a revolution in mobility that allows people to travel, communicate and transfer goods with little control by national states or large bureaucracies. The result is an “end of captive audiences” and a changing distribution of power. Adding yet a third concept, Naím highlights what he calls a revolution in mentality, in which higher expectations and standards have created a new mindset that has “profound consequences for power” in both liberal societies and the “most hidebound ones.” Naím concludes that these developments have created new limits to the power of states. Governments “from Mexico and Venezuela to Pakistan and Philippines have lost control” over their citizens in some fundamental ways. In a world of almost 200 separate sovereign states, with no hegemon or group of dominant countries and a variety of independent actors ranging from terrorists to nongovernmental organizations, “there is a greater moral consensus about the proper behavior of nations than humanity has ever known before.” But the rise of these multiple actors creates the risk that many little conflicts will proliferate, as opposed to the grand standstill of the Cold War. All of this does not mean “big power” is dead. But it does mean that micro-actors and micro-powers are constraining big power in ways they had not until now. One major consequence is that today’s power players often pay a steeper and more immediate price for their mistakes than did their predecessors. What results is the faster rate of turnover of CEOs and companies on the Fortune 500 list than ever before. In domestic politics, Naím writes, it leads to gridlock and policy paralysis. Naím provides two examples of new players who are transforming the concept of power: John Paulson, who runs Paulson & Co, one of the world’s largest hedge funds, and Julian Assange, founder of Wikileaks. The former became a billionaire through his success in foreseeing an escalating financial crisis and capitalizing on it, and the latter through the use of the Internet to expose government secrets. Although the two have little in common otherwise, they have each constrained government power. Naím’s analysis certainly identifies a real trend, and many of his conclusions are valuable. But there are a few points in his analysis that I would contest. While not contradicting Naim’s argument, it is not always clear that he is dealing with power rather than authority. It may be clarifying to differentiate power and authority—the latter a kind of cleansed form of power, more complex and intractable. At times it is not clear if Naím is describing the decline of authority as constructed in an earlier era more than the decline of power. Similarly, Naím’s contention that all state institutions have weakened may be too sweeping. Although many of the institutions of the state, such as legislatures and parliaments, have declined in authority, there has also been a simultaneous growth in the raw power of the executive branch. The executive branch, including key agencies such as ministries of finance (the Treasury in the U.S.) and central banks (the Federal Reserve in the U.S.), has gained power because of globalization. Their increased power comes from their responsibilities for implementing policies—favoring inflation control over job growth, privatization and deregulation—that have required the executive branch to negotiate directly with major global regulators, notably the International Monetary Fund and the World Trade Organization. Thus, the more significant the role of such global regulators, the more critical became the role of the state in ensuring implementation. While that work is now largely done, the after-effect is that the executive branch has become increasingly unaccountable to the legislature/parliament. Naím in a way gives us an insight into a new type of powerlessness. I would call it “complex powerlessness” to describe the various types of decaying power he examines. But Naím never really addresses the reverse question. If big states and big bureaucratic institutions are losing power, is it possible to argue that those who were formerly unable to influence global events—those who were largely voiceless—can create a new history of their own? Naím doesn’t explore that. As with many good books, it’s a sign of the rich possibilities offered by his analysis that such questions are now on the table.