Stephen J. Dubner, in Freakonomics Radio, has recently done a podcast where he explored the possibility of merging the U.S. with Mexico into one gigantic country. It was a 55 minute podcast where an immense flow of ideas came in and left American listeners with this hopeful fantasy of being able to have the best guacamole in the world for cheaper than ever.

NAFTA Logo

In the other hand, one day I was looking for a new book at Chapters and I stumbled upon a book named The Merger of the Century by Diane Francis, where she discusses why Canada and America should become one country.

Now, as we have been hearing on the news lately, with Catalonia pushing for independence from Spain, California trying to split itself into 6 states, Scotland trying to become an independent sovereign state, and more, why not unify and become a super powerhouse? East and West Germany is a perfect example of why this is possible.

Here I will discuss the potential upside and downside for each of the North American countries, politically, economically, and socially, and why this is not a feasible idea.

Political

The American political system is something that not many people understand very well. Basically it is divided into a judiciary branch, which interprets the Constitution, federal laws and regulations; the legislative branch, which is vested in the two chambers of Congress, the Senate and the House of Representatives; and finally, the executive branch, which is headed by the president and is independent of the legislature.

U.S. Capitol – Legislative Branch

Canada, in the other hand, is a constitutional monarchy that has a multi-party system and a legislature that derives from Great Britain’s Westminster Parliament.

Finally, Mexico is organized in a system that is somewhat similar to the U.S., with executive, legislative and judicial branches organized into a federal representative democratic republic.

Bringing Mexico and Canada into the equation would require some large political restructures for everyone. The U.S., being the larger country, would probably impose their system and begin electing Senators for each of the new states incorporated. Canada would need to detach completely from the U.K. and divide itself into democrats or republicans. Mexicans would more easily adapt into the new system.

Passing new bills, restructuring the new legislative system –  Canada and the U.S. derive from Common Law, with the exception of Quebec and Louisiana which, alongside Mexico, derive from Civil Law – would be harder than ever. Can you imagine the confusion this would cause to businesses and people?

Would we then have one single president who would rule the entire continent of North America? How would we determine whether he/she should be from Canadian, American, or Mexican descent? How about the changes in languages that Quebec has so hardly fought for through the implementation of the Bill 101? Would we not require ex-Mexicans to learn french and english in school? What kind of super citizen would we be breeding by mashing together all these different cultures and expecting them to become a single one?

And I will not even touch on how the militaries would unify, because this is a whole different ball game.

The bottom line is, regardless of how different these systems are, and the fact that this new gigantic country would be trilingual, this change would costs trillions of dollars and a restructuring that would take decades to be implemented, slowing down the growth of this country and potentially putting it in a hole impossible to get out of.

Economic

The benefits that businesses would get from this unification would probably be the only positive thing out of this merger.

Mexico has one of the strongest automotive industries in the world. Ford, GM, and Chrysler have been operating there since the 30s and nowadays it produces a lot of the technologies we see in our cars. Alongside the automotive industry, Mexico is the 6th largest producer of oil in the world. Their tourism is arguably the strongest in North America, being the 8th most visited country in the world with over 20,000,000 tourists per year.

Canada is as natural resources rich as Russia and is U.S.’ largest importer of oil. From the oil sands in northern Alberta, to the unexplored oil reserves in the Arctic Sea, to having the largest coast line in the world, the nation is an economic power house with a shortage of workers.

The U.S.’ financial markets account to nearly 45% of the world’s market and has an immensely diversified economy. From the tech hub located in the Silicon Valley, to the off shore oil explorations in Louisiana, to their internal real estate dynamics, the country represents 22% of the nominal global GDP, being the strongest economy in the world.

If these three countries unified, the final result would account to a GDP of over $20.6476 trillion.

But how beneficial would this unification really be? By summing up the numbers everything indicates that it would be a great idea, however we need to take into account the different legislations that govern these economies, which allow them to flourish in the way they do.

The different currencies would present an issue

The North American Free Trade Agreement (NAFTA) was created for the strengthening of each country’s economy without interfering with the way the countries are ran. Since the dynamics of an economy are highly tied to the country’s politics, changing the internal legislation of each nation to accommodate this North American merger would affect a lot more than just the economy. What about the currency? The Canadian dollar is lower than the American right now, and the Mexican peso is worth nearly $0.07. How would this new country compensate for the financial shift that would occur?

That is why NAFTA is such an asset to these countries, because it allows them to become a trilateral economy (free trade and exchange of workforce with TN Visas) without compromising their independence and currencies.

And let’s not forget about the darkside of Mexico. The cartels run large drug trafficking operations from South America (where they get a lot of their drugs) all the way to the U.S. (who are their largest consumers). Although the DEA works hard to keep things in order in the Southwest (Braking Bad will show you exactly how), becoming one gigantic country would enable drug lords to move illicit drugs across North America with much more ease than ever before, now that they don’t need to go around borders anymore.

Therefore, the economical upside isn’t as good as we would have thought, since there already is a great agreement in place that allows these three countries to operate in a trilateral economy.

Social

The social changes from a merger would be unimaginable.

From looking at the data above we can conclude a few things:

1. Canada has a lot of uninhabited land
2. The U.S. has an immense amount of people (who make good money)
3. The average Mexican makes barely enough money to pay rent

Now, with all the immigration issues that the U.S. has with Mexico, it would be safe to say that once these nations merged, a large chunk of the Mexican population would migrate to the U.S.’ current land to look for jobs. The Mexican work force is a lot younger than the U.S.’ and is used to get paid a lot less. This would bring the minimum wage down across this new gigantic nation, bringing down with it the GDP per capita.

Americans would not be very happy about that, and would start moving up to Canadian lands to work in the oil sands (more than they do now). This increased workforce competitiveness would increase the unemployment rate in the northern part of the territory and Canadians would not be happy about that.

A few Canadians would then move down to warmer regions, such as Arizona and California, and eventually move back after suffering from severe sun burns.

Jokes aside, this new nation would cause an immense amount of inland migration leading to severe impacts on unemployment rates and lowered average income, causing the nation to collapse. Plus, the government would need to find a way to standardize and restructure Mexico’s water treating system.

Another big issue to consider is how would this new nation deal with the elderly. Nowadays, Connecticut pays for a large amount of elderly compensation across the U.S., whereas poorer states, such as Mississippi, need a lot more compensation than other states. Bringing in Mexican retired people, who live under the American poverty line, would require this new nation to compensate the southern territory with larger retirement checks, leading income taxes across the country to sky rocket.

Finally, these are only a few of my social predictions from this unification, and I am sure that there are a million other scenarios that we could think of that would lead to a million more, and so on. The bottom line is, merging these three countries into a single one with a population of almost half a billion people would require a lot of governmental changes to compensate for the inequality that would result from this.

Plausible Solution?

Mexicans are very proud of their culture and are not willing to melt into a single nation identity. Canadians are on the same boat, they are proud of the maple leaf and would never want to unify their hockey team with the Americans’ (I cannot imagine Mexicans playing hockey, I’m sorry). So the Americans are standing in the middle with their hands in the air thinking: what do we have to gain from this?

The North American Union would be extremely large

One possible dream that Mexico’s ex-president Vicente Fox proposed on Freakonomics Radio was to create a union, such as the European Union, where countries are independent but people do not need a passport to move around the continent or live somewhere else.

This would be called the North American Union and would potentially bring a lot of benefits to the continent. However, Europe has shown us that it is not all sunshine and rainbows; when one country struggles, the others suffer from it too, leading to inland migration to the countries that are doing well, increasing unemployment rates, and so on. The repercussions from such a Union would be somewhat similar to a merger.

Dreaming is fun, but maybe things should just remain the way they are.

PA