Shot in the Foot

June 8, 2025

Luis Rubio

In the bleak early days of 1995, when the Mexican economy was shaken by uncertainty following a sharp devaluation and a crisis triggered by a government-issued debt instrument denominated in dollars, the world’s financial and political leaders debated what had gone wrong in Mexico. Just a few months earlier, Mexico had achieved a milestone that set it apart from the rest of the world: privileged access to the North American market and U.S. institutions that were expected to provide certainty to both Mexicans at large and foreign investors. Everything pointed to Mexico finally breaking free from the shackles of underdevelopment and joining the civilized world.

However, the financial crisis that exploded at the end of 1994 was consuming the country, destroying wealth, plunging millions of Mexicans—who had taken out loans to fulfill the dream of homeownership—into poverty, and generally calling into question the entire modernization project. In a word, Mexico was adrift. How could something like this have happened?

The explanation was not difficult to come by. As one observer succinctly put it at the time, Mexico had bought the hardware of a market economy and democracy, but not the software to make them work. The Mexican government had carried out its tasks in a structured and coherent manner throughout the second half of the 1980s and the early 1990s, laying the foundations of a new economic platform for growth, and had crowned it with NAFTA. Everything suggested the country was on the threshold of a new stage in its history.

But the fateful year of 1994 began with the Zapatista uprising and continued with political assassinations, kidnappings, resignations of public officials, and increasingly risky financial bets. Instead of beginning to enjoy the benefits of all those internal transformation efforts (economic liberalization, deregulation, privatization of state-owned enterprises, etc.), the country seemed to enter a vortex of crisis and uncertainty that, in retrospect, foreshadowed the scenario that materialized at the beginning of 1995—with long-term political consequences that we are living with and suffering today.

In his book Civilization, Niall Ferguson argues that China’s problem is that it has refused to download the “killer apps” necessary to ensure continuity in its economic development—apps that would allow for political competition, institutional checks and balances, and the existence of independent social organizations and political parties. All of these are essential components of the rule of law, because, in his words, there can be no rule of law without accountability through an independent judiciary. In other words, a world of impunity.

The similarity of this argument with present-day Mexico is more than evident. In contrast with a broad range of non-Western nations that opted for transformation in the last century—starting with Japan after World War II—Mexico de facto chose not to join Western civilization. One may debate whether this was a conscious, formal, and above all, collective decision, but the fact remains: Mexico did not acquire the “apps” (the software) of legality and democracy. We bought the forms (the hardware) but never collectively accepted the requirements for them to work.

From this perspective, the judicial reform is nothing more than the latest nail in the coffin of the democracy and modernity that Mexico had aspired to, at least since the dawn of the 20th century. Failing to adopt these ideas and institutions fully and consciously, Ferguson would argue, explains the low growth rates of our economy, the poverty of our education and healthcare systems, the violence, and many of the other scourges that define us.

It also explains the growing conflict with the United States. For Mexico, NAFTA was seen as the end of an era: Mexico had done its homework, had created a set of structures and institutions (with more to come) that would form the basis of a promising future that NAFTA would make a reality. However, the Americans saw the agreement as the great opportunity they were offering Mexico to transform itself into a modern and successful nation in the 21st century. For them, NAFTA was the beginning of a transformation. That difference—between an end and a beginning, between hardware and software—is the root of the disagreements that grew and eventually exploded when exposed (though not invented) by Trump. There lie the issues of drugs, insecurity, migration, human trafficking, and so on.

For a few years, Mexico pretended it was advancing toward civilization because it was building institutions for democracy and the rule of law. However, it is now more than evident that these were mere patches, not a solid, consensus-based project that enjoyed popular legitimacy. Morena is simply following the monopolistic instincts of the old Mexico—the one that brought poverty, tyranny, and absolute power. A place where hardware and software truly do align.