Capital Is Key to Mexico Trade Pact

I read with interest Prof. (Dennis) Aigner’s measured endorsement on behalf of Orange County of the North American Free Trade Agreement (“In the End, Mexico Trade Pact Is a Plus for Orange County,” Nov. 1).

Although NAFTA would, in principle, support “level playing field” rules, he makes it clear that not everyone would benefit from the new rules. Nor do I believe that everyone would be expected to.

Perhaps Aigner’s most significant observation is that the amount of capital per worker considered necessary to create jobs is increasing. Even a casual analysis of figures being bandied about to rebuild the Los Angeles riot area indicates that replacing even retail sales jobs costs something on the order of $100,000 per worker. Small manufacturing operations may require several times that, and large-scale international enterprises often require more than $1 million per worker.

To the extent that employment and consumer demand creation are important, the issue becomes one of limits to scale in both local and global enterprises. The financial costs and benefits to U.S. companies of investing in the present 15-mile free trade zone along the Mexican border are well-known, even if the environmental and human costs and benefits are not.

I believe that the most critical issue, with or without NAFTA, for long-term sustainability will be to closely match over time both domestic and foreign investment capital to the benefits of both the peoples and economies of Mexico and the United States. Prof. Aigner’s article provides one of the dimensions for discussion.

CHARLES G. GUNNERSON

Laguna Hills