The Shifty Peso
To cite a bit of wisdom from Mexico, when Mexican shoppers fill the stores of American border cities, something is dreadfully wrong with the economy. As the editor of El Zocalo, a newspaper in Piedras Negras, a small city on the edge of Texas, puts it, if Mexicans can buy food at cheaper prices in Eagle Pass, where the dollar wears the crown, then "you know that the peso's value is inflated." By the same token, peso devaluations spell trouble, and this is true not just for Mexicans who shop across the border but also for American merchants who stake their fortune on sales to them.
These axioms, my father lectured us time and again, were the gospel truth. In his day, Mexicans spoke of pesos as plata, or silver, and of dollars as oro, or gold, the latter worth more. Those days are gone, like my father, but the dollar still calls the tune. The devaluation of the peso in December 1994 brought this asymmetry, which my father lamented, home to me with startling clarity and spelled out in detail the unvarnished truth of this unequal relationship between a poor Mexico and its wealthy neighbor.
On that terrible day for Mexicans, I had been in Tijuana for nearly a year, collecting material for a book, fully aware of the inequality along the border. Even though I had anticipated the peso's pratfall, I was unprepared for the humpty-dumpty behavior that started just before Christmas in December 1994, when the newly enshrined regime of Ernesto Zedillo decided to deflate the peso's value. A few days later, Eliseo Mendoza Berrueto, until recently the governor of the state of Coahuila, invited me on a fact-finding trip that Jorge Bustamante, the president of the Colegio de la Frontera Norte, a Mexican-government think tank, had entrusted him with at the behest of Zedillo's economic czars. The goal of this survey of public opinion was to ascertain how the peso's plunge had affected key