Challenges to Our State Organizations
Friday July 31, 2020
| Month | World Virus Cases[i] | World Virus Deaths |
| January 31 | 10,017 | 120 |
| July 31, 2020 estimated | 17,000,000 | 700,000 |
| Month | Texas Virus Cases | Texas Virus Deaths |
| March 27 | 1,662 | 23 |
| July 31, 2020 | 420,000 | 6,100 |
These data as reported to various sources need some commentary. First case data is dependent on test resources. These vary greatly from nation to nation. In general Africa and Latin America with high rates of poverty are/will be under-reporting. Death reports also are approximations. With the elderly the virus often accompanies other morbidities such as circulation problems, cancer, diabetes, respiratory declines and other conditions found with aging populations. Both the USA and Texas data show a leveling and perhaps a comparative decline in the later part of July. Mexico’s numbers are still climbing and showing about a 10% fatality rate as compared to less than 2% in the United States. Mexico’s population is 130,000,000. Texas’s population is 30,000,000 thus Mexico is more than 4 times as populous. Almost identical case numbers comparing Texas suggest a severe undercount of cases in Mexico.
Known Facts on the Virus and Impacts
It is a virus neither bacteria or fungus. That means as a virus it is a tiny bit of biological information that cannot live or reproduce on its own. It is a biological code, DNA or RNA, which enables it to enter a cell of a host and use the components of the cell to maintain the life of the virus and permit it to multiply.
It is thought to have first appeared in the city of Wuhan in southeastern China in November or December of 2019. It is a variety of a virus, a corona virus that is common. The name corona virus comes from the appearance of the virus with many raised points on the surface as a crown (a corona) has. The raised points function as keys that fit into openings in cells permitting the virus to enter the cell.
There are an estimated 1 million viruses that exist in vertebrate animals. There are estimates as well of 1 million species of bacteria. Most viruses cause diseases and are often harbored in other species. The most common host is bats.
Part of the official story of how the Covid-19 came into being was that in a food market, live bats were kept for butchering for customers as well as other animals that the population eat including pangolins, chickens, cats and several other species. The virus dropped from the bat to perhaps a pangolin and then when the pangolin was eaten, the virus came to a human its new host.
A different explanation of how the virus came into being was that it escaped or was released from a biological laboratory. Wuhan is the site of China’s two most advanced such laboratories and one of the stories is that lab as well as others in Canada and the United States were experimenting with altering viruses (adding functions). The logic offered for performing these experiments is that the work paves the way of a deeper understanding of virus like influenza, AIDS, hepatitis, measles, smallpox, herpes and polio.
So, at this point we are left with two explanations of where the virus came from. One is a species’ jump, happens frequently, in situations where species and their blood come into contact with each other and with humans. Wet markets are common across Asia but also occur in America where live species are kept in cages to be killed and processed when a customer orders one.
The second explanation is that a virus laboratory was experimenting with a corona virus and created the current one and either it escaped from an accident or was released intentionally. This raises the specter of biological/germ warfare.
In either case this is a new virus and reminds that the host of viruses that exist often in animals like bats is a reservoir and the possibility perpetually exists of a virus jumping to another species. Think of that when you are near the Colorado River in downtown Austin in the summer time when the Mexican Free-tail Bats come out from under the Colorado River bridges to hunt misquotes. Sometimes a vaccine is possible as in the case of smallpox that confers immunity. But other viruses like AIDS can only be controlled with medications.
Covid-19 has a host of companies working on a vaccine and treatment protocols have improved since April. Older medications used for treating viruses are showing some efficacy in use with this new virus.
Economic Challenges
Since the 1990’s Texas has built an economy far more diversified than the agriculture and oil foundations of most of the 20th Century. In the 1990’s electronics was the new and third component. Creating, designing and building integrated circuits, computers and software grew in Dallas and more so in Austin. Another component began as well in that decade and that was shared manufacturing along the border with Mexico taking advantage of labor in Mexico that costs only a fraction of rates in the United States. Today average wages in Mexico are under $3 while over $20 for the U.S.
Electronics, autos, machinery, clothing, items that have a substantial manpower factor in creating the item, began to be made in Mexico often with managers living in Texas and commuting daily. This model began in El Paso-Juarez and with trade legislation in Mexico and the United States, products could move back and forth with little or no restrictions or duties. Today the border between the United States and Mexico has the greatest value of economic exchanges of any border and Laredo-Nuevo Laredo is one of the busiest land ports in the world.
Problems Developing
In 2019 issues began to occur that affect Texas business activity. One was growing tensions with China impacting exports to China and complex manufacturing chains especially in electronics where low cost labor much like in Mexico was used by many companies such as Apple to manufacture and assemble components that then were brought back to the United States and other countries to sell. China after Mexico is Texas’ largest customer and these tensions began to affect trade.
It was 2020, though, that brought the greatest challenges to the economy in Texas. One was the COVID-19 virus that brought much activity to a standstill. Two was a historic crash in oil prices in April caused by increased levels of production from Russia and Saudi Arabia. This has resulted in a collapse of exploration and production in areas like West Texas and severe business declines in Houston where many oil companies are headquartered and much of the refining and shipping of oil occurs.
Air travel is a clear measure of economic activity in Texas. It remains down, albeit not as sharply as at the onset of the coronavirus pandemic. For example, Austin-Bergstrom International Airport announced July 23 that its May passenger traffic fell 91.5% year-over-year — from a record 1,543,108 passengers in May 2019 to 130,826 passengers in May 2020.
Passenger traffic at Austin-Bergstrom began its dip in March, as companies froze employee travel, large gatherings like South by Southwest were cancelled and international travel restrictions were put in place. March passenger traffic fell 52% compared to last year. But traffic fell off a cliff in April — dropping nearly 97% from 2019 to 2020. The 91.5% drop in May traffic was a slight improvement over that brutal April.
Some air service is returning to Austin after the shutdowns in the spring. In July, Aeromexico resumed international service to Mexico City — the first international route to come back to Austin-Bergstrom. Dallas Fort Worth International Airport officials noted in a recent report that the commercial aviation industry doesn’t expect consumer confidence in air travel to be restored until a Covid-19 vaccine is available.
Impact on Texas’ Greatest Trading Partner: Mexico
Over half of Texas’ international trade is with Mexico. Refined oil products including gasoline, drilling and refining equipment, border manufacturing products, grains, dairy and poultry all are exports to Mexico.
Until the 1980’s Mexico was a largely rural country. Most people lived on the land and raised the food needed. Four changes started the urbanization process. One was border industrialization accelerated with the signing of NAFTA in the mid-1990’s removing many trade and travel restrictions including duties. Cities like Juarez, Nuevo Laredo, Reynosa and even Monterrey, 200 miles south of Laredo, grew explosively as jobs in factories as well as service jobs in restaurants and bars offered a much higher standard of living than farming in rural regions. Two was sharp increases in tourism. Increasing air, train and auto travel to Mexico City and both coasts provided millions of jobs as waiters, waitresses, hotel personnel, cab drivers and tour guides. Like the manufacturing jobs, the wages provided a higher standard of living than working the land. Three was the discovery of oil in the Gulf of Mexico just off the Mexican state of Veracruz. The oil drilling and production was under the control of a state oil monopoly, PEMEX, and provided the highest labor rates in all of Mexico. By 2000 Mexico was more than 80% urbanized with Mexico City and the adjacent areas totaling over 20 million people.
Four is travel by Mexicans to work in the United States. It began decades ago with Mexicans coming into Texas to gather vegetables and then grew to migration to Florida, Michigan and Washington to gather fruits and vegetables. Other Mexicans live in American cities and work in construction as well as maids and housekeepers. The 10 million plus temporary residents then send money back to families in Mexico-remittances and they are the fourth major component in the Mexican economy.
Mexico like Texas has built its economy on trade. Its population of 130 million is highly urbanized with 70% of the population residing in the State of Mexico and adjoining states. Immigration flows from the south including Central America of persons with little capital and education come first to Mexico City and then some head north particularly along the Gulf coastal states.
The economic decline that was visible in Texas in the 2019’s and grew pronounced this year has affected Mexico even worse. Plunging oil prices have dried up jobs and tax revenues from PEMEX. A declining world economy has lessened manufacturing and international trade. Lastly and most profoundly COVID-19 has deeply reduced vacation travel to Mexico as well as overwhelming an already weak health system. Mexico’s hospitals are overcome and Mexicans and Americans living in Mexico near the border are flooding into border hospitals in Texas and California where health systems are also now at capacity.
A less well-understood problem in Mexico affecting the economy is the Mexican political system. The current system that in many ways has its roots in the 1910 Revolution has most of the control centered in the national government. That pattern of a powerful centralized government dates back at least to the Aztecs in the 15th Century and even today most travel and communication patterns go first to Mexico City and then radiate out to other areas. States and municipalities, compared to the federal government, have less authority and fewer resources. But citizens in Mexico have less trust in the government. Moreover today the Mexican political system is being stressed by Mexicans that do not feel that the current Mexican president is delivering on his promises to achieve prosperity and safety. The most evident indicator is the rate of homicides rising sharply in 2018 then 2019 and now in the first half of 2020, Mexico has record high rates of homicides. These are the data since 1997 through 2019
There are areas of Mexico were organized crime controls the territory not the government. This includes several Mexican states including the borders of Sinaloa and Chihuahua, much of the Pacific states of Guerrero and Colima, and the Gulf states of Tamaulipas and Veracruz. Deteriorating conditions in Mexico lessen trade with Texas and increases stress on Mexico and then on Texas with persons from Central America and increasingly other parts of the world coming to Mexico to enter the United States at the southern border.
Summary
Wealth in a community is a function of three forms of capital. The most visible is physical capital. This consists of natural resources like forests, grasslands, available water, productive fisheries, mineral deposits, and clean air as well as capital additions like buildings, transportation, streets, electricity, water, and telecommunication resources. The second capital is human capital. This is the level of education and skills in the population and the mechanisms to renew and improve human capital. The third form is social capital. That is the level of trust and reciprocity in the community. Texas is more advanced than Mexico in human capital and probably even in physical capital. It is social capital where Mexico is most lacking and its high and rising homicide rate is a brutal measure of this collapse of what is required to build safety and prosperity!
Both Texas and Mexico will need the catalyst of social capital to build the new economies in the coming years.