Rynar wrote:
Those natural barriers don't restrict markets in so much as they create new markets for things like shipping and travel. This is much in the same way that gravity doesn't restrict the flying car market in so much as it creates markets for shoes and roads.
Actually, they do restrict markets or they wouldn't create the new ones you cite. They do both. However, that need for travel and shipping is what makes the global market really a collection of smaller ones.
The relatively permeable nature of the natural barriers between the U.S. and Mexico means that labor can self-transport between two markets, making them act like one big labor market, but the goods markets don't because goods don't transport themselves. Becuase of the disparity in prosperity, this results in a massive, one-sided shift of labor from one market to the other. This wouldn't be bad if we and Mexico were really just one big economy, but because we're two separate countries, we aren't. Even attempts to artificially engineer this situation in places like the EU haven't really succeeded.
There IS a way to solve the entire problem, and remove the need for artificial barriers to counter the artificial labor shift, if both countries are willing to do it, but I doubt they are, and it would inevitably involve a lot of its own complications.