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Pagamos con pesos?
The New York Times reports (and more):
Pizza Patrón, a Dallas-based pizza chain with many Latino customers, has begun accepting pesos as payment, hitting a nerve in the nationwide immigration debate. Critics call the idea unpatriotic.
I see five readings:
1. This is testament to the remarkable new-found stability of the Mexican peso. Immigrant arrivals still hold pesos rather than ditching them ASAP.
2. People could have free banking or competing currencies already, if they wanted it.
3. The pizza chain is receiving lots of positive publicity with its Latino customers. I saw this same item on Primer Impacto last week.
4. If everyone accepted pesos, currency substitution effects would make the demand for dollars harder to predict, and thus monetary policy would be harder to implement. Inflation would accelerate the velocity of monetary circulation to a greater degree, if dollar inflation is high just switch from dollars to pesos.
5. Change is given at the rate of twelve pesos to the dollar, so this is price discrimination against patriotic and possibly unsavvy Mexican customers.
Posted by Tyler Cowen on January 15, 2007 at 01:02 PM in Current Affairs | Permalink
Comments
I consider this a poor indication of whether a person is patriotic or not. It's just business, after all. If he wants to accept Pesos, or Euros, or Yen, or anything, that's his business.
Posted by: pawnking at Jan 15, 2007 1:09:11 PM
Not that unusual a thing near the Canadian border either, on both sides. Well, with the loonie, obviously.
Posted by: John Thacker at Jan 15, 2007 1:12:44 PM
John Thacker is correct. Seattle businesses have always accepted Canadian dollars, and it's a two hour drive from the border.
Posted by: Patrick R. Sullivan at Jan 15, 2007 1:35:49 PM
Every Tim Horton's* I've ever been to in Canada has accepted U.S. currency. Most post the rate they give on their menu signs. This include Tim Horton's in Calgary, Toronto, London (ON), Kingston, Kitchener, etc. - none of which (other than Kingston) are close to the border.
I wouldn't be surprised if Tim's accepted U.S. currency somewhere like Edmonton, Fort McMurray, or Yellowknife, which are a long, long way away from the border.
(Tim Horton's is a Canadian donut chain, which has thousands of locations in Canada and is a national icon. Tim Horton's is to Southern Ontario what Starbucks is to a lot of places in the U.S. It's not uncommon to be able to see 2-3 different Tim Horton's locations if you stand in the right spot)
Posted by: Mike Moffatt at Jan 15, 2007 1:51:12 PM
The owner of the chain has already expressed the fact that this is a publicity move and not much else. It's targeted towards families with ties to Mexico who may have visited south of the border over the holidays and have unexchanged pesos(which is why he doesn't expect it'll last beyond the current February end date). The exchange rate is also set for the entire period of the promotion, and includes an exchange premium.
Posted by: Dan at Jan 15, 2007 2:02:27 PM
Tyler watches Primer Impacto? Where does he find the time?
Posted by: Carl Marks at Jan 15, 2007 2:16:24 PM
Are these patriotic Americans aware of who's paying for most of their government services?
Posted by: neil at Jan 15, 2007 3:01:25 PM
If inflation resulted from Americans using pesos, then the dollar would have driven the peso to zero value a long time ago. On the other hand, if a dollar is backed by assets worth one ounce of silver, while a peso is backed by assets worth one ounce of copper, then a dollar will be worth an ounce of silver and a peso will be worth an ounce of copper, regardless of which side of the border they trade on.
Posted by: Mike Sproul at Jan 15, 2007 3:03:50 PM
You know what, all those Bugaboo Creek restaurants accept Canadian currency! Those unpatriotic bastards!
Posted by: Xmas at Jan 15, 2007 3:33:08 PM
John, Patrick, and Mike are quite right. I grew up on the Canadian border in Michigan, and many, possibly most stores on either side will take either country's currency. Usually at a rate favorable to the store, but occasionally stores trying to attract business from the other country will offer a better than normal exchange rate.
It's funny/sad how it feels like a big deal if it's pesos, but it's second nature if it's (Canadian) dollars....
Posted by: Sol at Jan 15, 2007 3:40:14 PM
Would these be the same critics that would complain if a business outside the US refused to accept US money? It should be up to the business to decide what additional currencies they want to accept.
I live in Windsor, Ontario, Canada, right across from Detroit, Michigan, and almost every store has the US Dollar exchange rate posted in clear view. I'm not hearing any Canadians complaining that is unpatriotic. In fact, it makes good business sense. Many businesses in Detroit will accept Canadian money - some even have special Canadian money at par promotions. Nothing new here. Move along.
Posted by: Vincent Clement at Jan 15, 2007 3:57:14 PM
Sol,
Why should the two cases be treated the same? Many people feel that there are too many Mexicans in the US, that they represent a disproportionate share of the illegals, that they do not assimilate well, and that they impose many negative externalities on the US including the possibility of transforming the default language and culture of large parts of the Southwest. Any move that makes it even fractionally easier for Mexicans to enter and live here affects that calculus. Their arguments might be wrong or wrong-headed, but it's hardly odd. The same cannot be said for Canadians as a group. If there were 150 million mostly poor French Canadians and there were a danger of them exporting their French first rules to the US, the public would also see them differently.
Posted by: toad at Jan 15, 2007 4:03:29 PM
As a Brit of Irish ancestry, many is the time I've travelled 'back' to Ireland for a family gathering at short notice. We rarely changed money & often paid for hotels, food & drink in Sterling (usually at a small premium - often negotiable). I've also paid for goods in London with leftover holiday Euros & in Sweden & Norway with Norwegian & Swedish Krone (respectively) & Euro. Pre-Euro I've paid for goods in Spain & Portugal (the most surprising - to me - omission in Tyler's map of places visited btw) in the other's currency & with Deutschemarks in Austria, Holland, France, Denmark & Belgium. I also once went to Malaysia spending only Singapore Dollars (and was often given change in like). As a child on holiday in communist Bulgaria my Sterling (& even my adidas t-shirt!) proved more fungible than local currency, but maybe that's no great surprise in hindsight.
Maybe a decent Dallas pizzaria would already have a peso account to pay for decent jalapeños, maybe taco flour & other ingredients?? This would render transaction costs negligible.
I'm surprised this is considered unusual, but then I've never been to Dallas...
Posted by: nick at Jan 15, 2007 4:48:27 PM
There is little economic point of buying Pizza with pesos rather than just going to an exchange office. The costumers are paying a cost to demonstrate their chauvinist Mexican nationalism in America. This pure is symbolism, thus the objections.
The people who use Canada or American tourist as an example are missing the point:
A large proportion of Mexican immigrants do not want to assimilate and become American. They primarily identify with Mexico, and gain utility from demonstrating their foreignness and unwillingness to become Americans. This is exactly what Samuel Huntington has predicted, movement toward dual cultures in America, for the first time in immigration history.
Some libertarians may believe that assimilation is unnecessary, and that (permanent) multi-culturalism works. If you believe that this means nothing. But if you think that classical liberalism is a function of culture and norms, not only economic incentives, this development is depressing.
Tyler Cowen has continued to claim Hispanic immigrants are assimilating to Americans like all other immigrants in history. Yet much of what he (admittedly with some intellectual honesty) is reporting about Hispanics in America argues strongly against this.
In a free society Mexicans have the right to demonstrate their anti-Americanism and chauvinistic national pride by using pesos, cheered on by the leftist elite. Conversely those who believe in the American ethos have the right to draw the logical conclusion about what kind of people the United States is better of admitting as immigrants.
Posted by: Tino at Jan 15, 2007 5:18:03 PM
I wouldn't be surprised if Tim's accepted U.S. currency somewhere like Edmonton, Fort McMurray, or Yellowknife, which are a long, long way away from the border.
Mike--
I think we're using different terminology here. No offense, but "close to the border" has a much different meaning in US parlance than in Canadian. By the US measure, nearly the entire population of Canada is "close to the border," including Edmonton I'd say. Maybe not Fort McMurray.
Posted by: John Thacker at Jan 15, 2007 5:43:36 PM
El restaurante es listo. Doce pesos por dollar en cambio? Muy caro por los mexicanos.
Posted by: drtaxsacto at Jan 15, 2007 6:07:11 PM
Doce es correcto.
¿No adora usted el arbitraje?
Posted by: Dave Barnes at Jan 15, 2007 9:49:51 PM
Observations from the Southwest:
Patron's clientele is already mostly hispanic, though this will pretty much tie up them up as a base.
Personally, my attitude is who cares, I don't.
However, it is obvious that they are doing it solely to appeal to an already strong demographic for them, while making a statement at the same time. Therefore, we should hear no whining from them about the blowback they receive for making such a statement.
It's kind of like the kid with the purple mohawk, and dozens of facial piercings, who acts offended if someone takes a second look at him.
And no one in the southwest regularly accepts pesos because they're laughingly worthless. Crossing into Mexico, you'll be hard pressed to find any accessible places to exchange your dollars. Why? Because they'd rather have dollars.
Canadian currency carries a little more credibility with it.
Posted by: Ray G at Jan 15, 2007 10:07:41 PM
Yes, no whining when you get a death threat. For using pesos.
What's wrong with this picture?
Posted by: shecky at Jan 15, 2007 11:39:29 PM
There is little economic point of buying Pizza with pesos rather than just going to an exchange office. The costumers are paying a cost to demonstrate their chauvinist Mexican nationalism in America. This pure is symbolism, thus the objections.
Right now the exchange rate is 10.95 pesos to the dollar. So the 12 pesos to the dollar for pizza rate is about a 10% surcharge. Taking $15 or $25 worth of pesos to the exchange office gains a couple of bucks before any fees they might charge. For those with that modest amount of pesos left over it makes reasonble economic sense not to bother with the exchange office.
Posted by: bertram at Jan 16, 2007 12:47:15 AM
Local coverage suggests that many of the peso users are relatives visiting locals or people who've just come back from Mexico to visit their families. That makes sense, since local employers don't pay in pesos--though I suspect many pay in cash. A local reporter who tried to cash in some pesos for pizza discovered, however, that they only take bills, no coins.
Posted by: Virginia Postrel at Jan 16, 2007 2:07:35 AM
bertram:
Why is going to a pizza-resturan more convinient than going to the exchange window in the airport when you land (this is
NY, I assume most people travel by plane).
If you actually are a visiting Mexican with 200 pesos in your pocket here is an radical idea: Why not keep the pesos untill you get back home?
Posted by: Tino at Jan 16, 2007 4:57:25 AM
I've never seen an American in an airport in Europe wanting to pay for something in dollars. Oh no siree. And if you're a European with Euros showing up at, say, the train station at the airport in Copenhagen, it would never occur to you to buy tickets with Euros instead of Danish crowns. The only reason you would want to do so is if you were making some insiduous imperialist political statement.
How can red-blooded Americans stand for this? Doesn't it make you want to cry, to see these barbarians destroy our culture from within?
Posted by: Barbar at Jan 16, 2007 6:20:58 AM
This is a tempest in a teapot, probably started by the owner of Pizza Patron himself, for publicity. Is his the only business near the Mexican border that accepts pesos? I doubt it.
When things get as bad as they were in Nicaragua a few years ago, then I'll worry. I don't know what the situation is nowadays, but back in the early 1990s when I was there, you had to pay an exit tax to get out of the country. This had to be paid in U.S. dollars -- they would not accept their own currency.
Posted by: John S. at Jan 16, 2007 7:24:07 AM
toad, unless you have some evidence of an underground economy that would enable people to earn pesos in the US, accepting pesos at a US business is simply going to make things more convenient for visitors to the US. I can't see any downside to that.
Posted by: Sol at Jan 16, 2007 8:09:48 AM
