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Counterpoint

 Counterpoint

Luis Rubio

The great magic of the old political system lay in the expectation that there would always be a new opportunity to reinvent the country with the change of governments. When a government was bad, the saying went that “there is no evil that lasts six years nor a people that can endure it.” When the outgoing administration was good, the citizens rewarded it with a favorable vote in the elections for its successor. But the presidents of yesteryear did not leave things to chance: good or bad, popular or not, they resorted to transactional mechanisms to ensure a favorable vote, in addition to employing all the mechanisms of electoral fraud that were necessary to ensure an overwhelming victory. Mexicans are now living through another era of Mexican politics -at least of the country’s political reality-, apparently having returned to vote buying, by good or bad means, within the law or not. The question is whether the new method will be as successful.

The first indication that this six-year term would be different was evident in the President’s disinterest -in fact radical opposition- to promoting economic growth. The priority, from the beginning, was the 2024 succession and nothing else. Despite the rhetoric that “the poor first,” for the President the poor were merely an electoral instrument and reducing poverty went against the succession objective: in the words of the president of Morena at the time, “when you take people out of poverty and they become middle class, they forget where they come from, because people think how they live.” In short: the poor are a reserve of votes and the last thing that Morena wants is that there be fewer poor people and more middle-class voters because the latter stop conceiving themselves as “people” to think as citizens. Economic growth ends up being a curse for the only objective that motivated this administration: ensuring victory in 2024.

Consequently, everything that was done throughout the six-year term followed a strictly electoral logic: where are the votes and how to ensure that government programs make their target voters dependent on the handouts granted by the government, but always in the name of the president, as if they came from his own money. Cash transfers to older adults, young people and other target audiences had a strictly political logic and the evidence shows that poverty was not one of the relevant criteria. That is, the presidential narrative said one thing, but the logic was always laser focused: to secure the votes.

The governments of yesteryear -from the Revolution (1910) until 2018- sought votes in two ways: on the one hand, they employed economic and investment strategies aimed at significant economic improvement that, in turn, would raise the standards of living and, therefore, satisfied the population, trusting that this would translate into a favorable vote for the outgoing government. Some were extremely successful, others ended up causing terrible crises, but there was not even one administration that did not follow this rationale, similar to what one could observe anywhere on the planet.

The other way of seeking votes was transactional: candidates invented all kinds of mechanisms to exchange favors for votes. On some occasions they distributed household goods, breakfasts or groceries in exchange for the promise of the vote (later they demanded a photo of the vote itself), in others they produced cash cards, but the purpose was transparent: whatever the performance of the outgoing government, the candidate offered an “incentive” for the voter to respond favorably on election day. In the era prior to the electoral reform of 1996, various strategies were added to ensure that the vote was as the government and its party wanted: recurring to manipulation of the voters’ registry, “frequent” voting, factious use of the media, etc. With the 1996 reform, all these practices were prohibited and, although what followed was not perfect, it constituted a scheme of impeccable level playing field for electoral competition, as evidenced by the countless alternations of parties in power at all levels of government.

Today Mexico has returned to the prehistoric, certainly pre democratic, era of national political life. The President has not the slightest scruple in using all the resources at his disposal to ensure his electoral objective. When a path is closed to him -for example a call from the INE, the electoral authority, which is already biased in his favor, to refrain from being so crass in his ways- he invents twenty constitutional reforms just to remain a legitimate player in the electoral field through his daily press conferences, known as “mañaneras.” He, too, has not the slightest qualm about presenting himself as the head of his candidate’s campaign, which he controls and limits all the time.

The outcome of this election will depend on a single factor: to what extent citizens recognize the manipulation to which they have been subjected by the government through the exchange of favors for votes. If the voter realizes that it is an old-style manipulation, he or she will act as a citizen; If he or she believes that AMLO is a mythical leadership, he or she will behave like a subject, expecting more handouts.

As another Mexican saying goes, “Every little saint ends up getting his little party.” This year’s will mark a before and after.

 

www.mexicoevalua.org

@lrubiof

 

Is Mexico’s government governing?

Mexico News Daily

Luis Rubio

 

Problems pile up when the capacity to respond diminishes. Even more so when those responsible appear utterly unwilling to respond.

It comes as no surprise to anyone these days that problems such as insecurity, criminality, corruption, racketeering and electoral conflicts continue to mushroom while candidates for office are assassinated, journalists are disappeared, land is expropriated without the least bit of a warning and attacks are made on anything contrary to the message put forth by the president. These are all examples of the contentious environment characterizing Mexico today, and evidence of a complete absence of governance.

To the latter, one must add the day-to-day governmental affairs that do not function as they should, from schools to the supply of drinking water or medicines, to cite three obvious examples. The same may be said of the extraordinary budgetary and financial imbalances taking place this year that will inevitably impact the finances of the next government.

If one accepts the definition of governance by the United Nations Development Program (UNDP) (“governability comprises the mechanisms, processes and institutions that determine how power is exercised, such as decision-making with respect to issues of public concern and how citizens articulate their interests, exercise their rights, comply with their obligations and mediate their differences,”) the country is in effect not being governed; nor does there exist the minimal understanding of governance in order for it to occur. Considering that governance includes the planning and anticipation of future needs and challenges, Mexico maintains stability truly by a miracle. And miracles are always put to the test during the election cycle, during which the outgoing government loses its capacity for action, and the incoming government has not yet begun to focus on and organize itself for the same.

A sensible government that recognizes its limitations would seek out ways to decentralize decision-making to reduce risk and increase its problem-solving capacities. Mexico’s, however, has put all of the decisions not just in the hands of the federal government, but in the hands of the president. The institutional scaffolding constructed during the past decades has proven insufficient to stop this authoritarian onslaught, but it was at least an attempt to prevent this cardinal problem. Today, the only decentralization happening is that of transferring an increasing number of decisions to the army.

Resorting to the army is practical due to the vertical nature of the institution, which confers upon it a capacity for action even beyond that of an authoritarian government. However, the breadth of the activities entrusted to this institution have rendered the attainment of its goals impossible. I do not mean to undermine the work done by the army in this administration. Rather, I seek to acknowledge a simple fact: no one institution can take on the construction of mega infrastructure projects, administer airports and airlines, respond to natural emergencies (such as earthquakes or floods) and provide for national security.

The diversity of responsibilities bestowed on the army is such that their performance is always poor. It is not by chance that nations in which the government absorbed everything (like the former Eastern Bloc) ended up decentralized so as to raise the population’s standard of living. In other words, it is impossible to control everything and, at the same time, comply with the essential aim of any government, which is the physical safety of the population and to create the conditions for economic progress.

It is clear that these factors have not been a priority (or even an objective) of the current government, but their absence constitutes a major challenge for the current electoral year and for the incoming government. It is easy to lose sight of this while the president entertains high levels of popularity at the same time that economic variables (such as the peso-dollar exchange rate and the price of gasoline) remain stable.

But anyone who has observed the country’s evolution over the past decades knows that this is unsustainable. In other words, the absence of governance not only creates a risk for the outgoing government, but also for the country in general — precisely at the most delicate moment of the sexenio: that of the transition of power.

Max Weber, the early 20th-century German sociologist, wrote that there are three types of legitimate authority: the charismatic, the rational-legal and the traditional. Mexico has lived through five years of a charismatic exercise of power, the most unstable of the three according to Weber. Upon abandoning the responsibility of governing, the president has ceded the state to criminals and to chance, therefore guaranteeing that any stability we see today is exceedingly precarious.

Luis Rubio is the president of México Evalúa-CIDAC and former president of the Mexican Council on International Affairs (COMEXI). He is a prolific columnist on international relations and on politics and the economy, writing weekly for Reforma newspaper, and regularly for The Washington Post, The Wall Street Journal and The Financial Times.

 

https://mexiconewsdaily.com/politics/opinion-is-mexicos-government-governing/comment-page-1/#comment-3309

What’s Missing

Luis Rubio

Paraphrasing Albert Camus in his speech on receiving the Nobel Prize in Literature, “all governments doubtless feel called upon to reform the world.” Few achieve it. As soon as their mandate ends, the reverberations begin: what remained inconclusive, what was not done, what was done wrong. Or worse. In the Mexican post-Revolutionary era, the natural response was that of correcting the course in what was denominated as the “theory of the pendulum:” one government moved in one direction, the next one corrected course by going in the opposite direction.  This manner of functioning changed from the eighties on in that the country opted for incorporating itself into the world’s technological, financial and commercial circuits in order to achieve lasting stability. From 2018, the government has attempted to obviate that goal, recreating the risk of a pendular movement. Where does that leave the future?

Contrary to what is usually thought (and is insisted upon in the daily narrative) between the eighties and 2018 there was less continuity than apparent and there certainly was no consistent strategy throughout the period. After a clear beginning and one with strategic vision, what did ensue was an acceptance, sometimes a reluctant one, of the lack of alternatives in matters of economic policy, which translated into a series of disjointed policies, frequently inconsistent, but that advanced in the same direction. The formal objective was the incorporation of Mexico into the global economy and every action of the governments of that era attempted to make headway on certain fronts or to correct deficiencies that rendered the course of action difficult, but no integral or consistent strategy emerged.

The lacks and absences that emerged in that period are known by all because there is irredeemable insistence on them in the daily public discourse. What is not recognized, in that it would be equivalent to engaging in heresy, is that Mexico’s problems are not the product of what was done (although there were errors, no doubt), but instead that of what was not done. Claudio Lomnitz described the heart of the problem in an article appearing in the periodical Nexos a year ago whose subtitle says it all: “The Island of Rights and the Sea of Extortion.” According to Lomnitz, the reforms of the eighties and nineties created a space where there existed rules of the game and toward which resources were allotted in the form of infrastructure as well as of governmental capacity (a semblance of transparency and legality), but rather than amplifying that space for the whole society and territory, the government abandoned the Mexican who did not fit into  the former space to their own devices and it is therein that the country collapsed into a sea of violence, the absence of justice and extortion.

The paradox of the current government is that it did not have much of a favorable impact on any of those lacks or absences that it identified (and with which it won the presidency) but instead, in any case, it has accentuated, if not deepened, them. Although there has been significant improvement in the real incomes of the population, severe reversals in both institutional strength and democratic development do not augur well for the future and could undo the former. Against the expected, and despite the president’s popularity, Mexico today is more unequal and less prosperous.

For the past five years, the government was mindful of public finances and benefitted from both the reforms of the previous decades that it so much condemns, and of the increasing “independence” of the exchange rate from the public accounts. Nonetheless, at the start of this electoral year, the horizon has changed: big deficits now loom threatening fiscal stability, twenty bills to amend the constitution that would change the political and institutional panorama, which could lead to a crisis like that of the 80s, were introduced to the Congress. As the saying goes, he who sows the wind, reaps the storm: nothing is written regarding the president’s popularity, exchange stability or the electoral outcome.

In stark contrast with his predecessors, the President had the opportunity to affect deeply rooted interests in diverse ambits of the Mexican society that have been successful in impeding the adoption of much more aggressive policies in matters of justice, equity, distribution of public resources and infrastructure, but he chose to rest on his laurels, as if the mere presence of a powerful President would change history. Thus, he could have been the grand builder of the future made it much more difficult and saturated with uncertainties.

On October 1, 2024, the day on which the next government will be inaugurated, the country will find itself before a sober panorama, with a divided society and a much less vigorous economy than it could, and, more than anything else, one whose productivity levels are very low, and where poverty and regional inequality will have proliferated. Whoever becomes the President that day will find herself facing severe lacks and the enormous challenge of having to correct course, which will require the support of the Mexican society. The new President’s first decision, from the moment of the inaugural address itself, will of necessity be related to whether she will attempt to unite the entire Mexican society in a common project or whether she will proceed to accentuate the divisions.

Whoever wins, here true dilemma will be how to get out of the hole in which the outgoing government will have left the country and how to get rid of its protagonist.

 

www.mexicoevalua.org
@lrubiof

Governance

Luis Rubio

The problems pile up while the capacity to respond diminishes. If to this one were to add the utter unwillingness of the government to find solutions to the problems that appear (and to those that it unnecessarily generates), the explosive potential, above all in an electoral year, intensifies without limit. It comes as no surprise to anyone that problems such as insecurity, criminality, corruption, protection racketeering, and electoral conflicts mushroom in uncontainable fashion.  Assassinated candidates for office, disappeared journalists, expropriations without the least of warnings and the incessant attack on anything giving rise to a discrepancy in the presidential line are all examples of the contentious environment characterizing Mexico today. These are also evidence of the complete absence of governance.

To the latter one must add the day-to-day governmental affairs that do not function as they should, from schools to the supplying of drinking water or medicine, to cite three obvious examples. The same may be said of the extraordinary budgetary and financial imbalances taking place during the present year and that will inevitably impact the finances of the next government.

If one accepts the conventional definition of governance of the United Nations Development Program (UNDP) (“governability comprises the mechanisms, processes and institutions that determine how power is exercised, such as decision-making with respect to  issues of public concern and how citizens articulate their interests, exercise their rights, comply with their obligations and mediate their differences,”) the country is in effect not being governed; nor does there exist the most minimal understanding of or the disposition to erect the scaffolding for that to occur. Were one to add that the problems do not lie exclusively in the here and now, but instead in the planning and anticipation of the future needs and challenges, the country maintains stability truly by a miracle. And miracles are always put to the test during the processes of presidential succession during which the outgoing government comes to lose the capacity of action, while the following government has not yet begun to focus on and organize itself for that capacity.

A sensible government that recognizes its limitations would search out ways to decentralize decision-making to reduce risk and elevate the capacity of managing the existing ones, but Mexico’s has been employed in centralizing all of the decisions no longer in the government in general, but rather in the person of the President. The institutional scaffolding constructed during the past decades proved not to have the capacity to respond in the face of the presidential onslaught, but it was at least an attempt to attend to this cardinal problem. Today the only existing decentralization, if it can be called that, is that which has been carried out on transferring an increasing number of decisions to the Army.

Resorting to the Army makes sense due to the vertical nature of the institution, which confers upon it a capacity for action even beyond that which an authoritarian government could exercise. However, the diversity and dispersion of the activities entrusted to it have rendered impossible the attainment of the proposed objectives. I do not write this as an evaluation of what has been transferred to the Army, but as a generic appreciation: no one can undertake the construction of any type of work, administer airports and airlines, respond to natural emergencies (such as earthquakes or floods) and the national security. The diversity of responsibilities is such that the performance involved is always poor. It is not by chance that nations in which the government and its entities managed everything (like the former Eastern Bloc) ended up decentralized so as to raise the population’s standard of living. That is, it is impossible to control everything and, at the same time, to comply with the essential core of any government, which is the physical and patrimonial safety of the population and the creation of conditions for economic progress.

It is clear that these factors have not been a priority (or even an objective) of the current government, but their absence constitutes a major challenge for the passing of the electoral year in which Mexicans are immersed and, second, for the incoming government to possess the capacity to operate and move ahead. It is easy to lose sight of the transcendence of these elements when the President entertains high levels of popularity at the same time that the most visible economic variables (such as the peso-dollar exchange rate and the price of gasoline) remain stable and at politically benign levels, but whosoever has observed the country’s evolution over the past decades  knows well that this are unstable, when not ephemeral, factors. In other words, the absence of governance not only entails a risk for the outgoing government, but also for the country in general precisely at the most delicate moment of the sexennial period: that of the transition of power.

Max Weber, the German sociologist at the beginning of the XX century, wrote that there are three types of legitimate authority: the charismatic, the rational–legal and the traditional. Mexico has lived through five years of the charismatic exercise of power, the most unstable of the three according to Weber. On abandoning the responsibility of governing, the President has ceded the State to the criminals and to chance, therefore guaranteeing that the stability at present would be exceedingly precarious.

www.mexicoevalua.org
@lrubiof

Order and Disorder

Luis Rubio

A “trilemma” occurs when there are three critical objectives but only two are attainable at the same time. From the time that I became acquainted with this formulation it seemed to me that it described well the contradictions that characterize Mexico: the search for political and economic stability above the disorder, the violence and the propensity for anarchy; the desire to consolidate a democratic regime; and the eagerness to build a competent and functional governance. The past four decades have been witness to important efforts to advance in these three ambits, perhaps without coming to a halt to notice the inherent contradictions in the objective, thus, the impossibility of achieving it.

The reforms that were advanced between the eighties and the last decade were conceived to advance the first objective, especially economic stability. The goal was to create conditions to attract private investment for the purpose of developing an industrial development platform. Each of the components that was integrated into the process, from the liberalization of trade in    1985 up to the energy reform of 2013, constituted an additional scaffold to conform the scenario that has permitted the consolidation of an export manufacturing industry.  Today’s entire Mexican economy depends on those exports, therefore, despite all the avatars, the achievement is none the lesser.

The flip side of the coin is that everything was wagered on the construction of that export platform, which implied forgetting (and, in fact, losing) the majority of the population that remained trapped in the prevailing disorder, as much due to the poor government itself in general, as to the uncontainable wave of violence and criminality that razes increasing numbers of communities. Both factors –the incompetent government and the organized crime- complement each other and provide mutual feedback: those who occupy governmental posts derive political and personal benefits, while organized crime prospers and proliferates at the expense of the health and tranquility of the citizenry.

The desire to erect a democratic regime has been present since the dawning of Mexico as an independent  nation,  undergoing various exceptionally successful moments in the XIX as well as at the beginning of the XX century, but it was not until the second half of the last century, after the Student Movement (1968) and the growth of a solid and competitive opposition, that a democratic schema began to take shape that obligated the forging of an electoral regime into which everyone would  fit. However, observed in retrospect, that regime travelled faster than what the government and its sources of power were (are) willing to advance, yielding the results that one sees today: a government incapable of providing security to the population, an endless waste of resources; the total absence of transparency in the exercise of the governmental function; and, on top of everything, a government that does not satisfy even the most minimal standards of health, education, infrastructure and, in general, conditions for development.

The propensity toward anarchy that vast regions of the country experience is not the product of chance. A very high proportion of the population lives in submission to extortion and/or violence, in addition to injustice, generated by these same organizations and that impede not only the normality of daily life, but also the development of the country. The worst of it all is that there is not even a recognition of the nature of the problem or of the incompatibility of the current system of government with growth, stability, or democracy.

The question is, well, where to start. The promoters of the democratic transition assumed   that the professionalization of the mechanisms and the administrative organs of the electoral processes would in themselves resolve the problem of governance. It was reasonable to think like that, given that the approval of the respective reforms enjoyed near universal legislative support, with the decided participation of all the political forces. From that perspective, the wager made sense. Nonetheless, the result a quarter of century later is not commendable.

Scholars of the chaos marking nations such as Iraq and Syria have arrived at the conclusion that anarchy is the greatest threat to the construction of viable society. In the words of Robert Kaplan*, “A year of anarchy is worse than a hundred years of tyranny.”

Mexico has not reached the extreme of those nations, but parts of the country suffer in a climate of violence that is not very distant from what takes place in some zones of the Middle East. Also, although the level of dysfunctionality typifying Mexico is not like that of those nations, its inability (and indisposition) to resolve problems is comparable.

The bottom line is that the country runs the risk of advancing toward an ever more generalized chaos and that the democratic processes would not be able curb. What is urgent is to transform the system of government for it to be possible to build a lasting peace, create conditions for development and establish a sustainable platform of economic and political stability. Urgent and important at the very same time.

*The Tragic Mind

 

www.mexicoevalua.org
@lrubiof

 

The legacy of the North American Free Trade Agreement

Mexico News Daily

At its 30th anniversary, the North American Free Trade Agreement (and its second iteration in the form of the USMCA) has been the most successful instrument of economic transformation that Mexico has ever had in its life as an independent nation.

It sounds easy, but in recent decades it has been possible to provide stability to the economy and the exchange rate, two factors that for centuries seemed unattainable. Although there are many complaints and criticisms regarding this agreement, the best way to assess it would be to imagine what would have happened to Mexico in the absence of this instrument.

Three objectives motivated the negotiation of what ended up being NAFTA.

The first two were economic in nature and the third was political. The aim was to promote active engagement in international trade with the aim of modernizing the Mexican economy and generating a source of foreign currency that would allow paying for imports carried out on a regular basis.

Secondly, it sought to promote foreign investment in order to raise the growth rate of the economy, as a means of creating new sources of wealth and employment and, in this way, reducing poverty.

The numbers show that the success in both areas has been dramatic: Mexico has become a manufacturing export power, and these exports finance the growth of the economy as a whole. That is, exports are the main engine of growth of the Mexican economy and constitute a reliable source of foreign currency, which is an important part of the explanation why the peso-dollar exchange rate has remained stable in recent years (the other factor is remittances).

For its part, foreign investment has grown year after year, even in an environment as hostile to it as the one promoted by the current administration. A more favorable environment, particularly in the context of so-called “nearshoring” could raise these rates in an extraordinary way (and, with it, the sources of employment and wealth creation).

The third objective was political in nature: it sought to depoliticize government decision-making related to private investment. The NAFTA constituted a straitjacket for the government, since it committed it to a series of disciplines and limited its capacity for arbitrary decisions as well as those motivated by sheer tantrums.

By signing the agreement, the Mexican government committed to preserving a regulatory framework favorable to investment and foreign trade, protecting private investment and preserving a benign environment for economic development. These purposes arose after the expropriation of the banks in 1982, a situation that had created an environment of extreme distrust among both national and foreign investors, without whose activity the country would have no possibility of fostering economic growth, employment, as well as addressing poverty in a systematic way.

In this context, the NAFTA made it possible to depoliticize decisions regarding private investment, an objective that continues to work even with an administration that would clearly prefer that the NAFTA not exist, but from which it has benefited immensely. In fact, the NAFTA was designed precisely for a government like the current one.

For 24 years, with very different governments, each with its own, contrasting, priorities, the NAFTA was preserved, and its fundamental principles were respected. From this perspective, NAFTA fully achieved its goal, as even many of its staunchest critics at the beginning recognize today.

Criticism of the treaty originates from elements that have nothing to do with the agreement, essentially that it did not achieve the comprehensive development of the country. The inevitable answer is more than obvious: NAFTA is nothing more than an instrument for the achievement of specific objectives, all of which were achieved.

What was not achieved has to do with everything that was not done so that the country could effectively develop, poverty would disappear, and inequality would decrease, and that — all of it — has to do with the absence of a development policy that would have implied the consolidation of the rule of law, the creation of a modern public security system and the concomitant strategies in education, health and the like.

NAFTA was a central instrument for the country’s development, as is the USMCA today. It has allowed business decisions to be depoliticized, contributing to the development of highly competitive and world-class companies and industries. Although still far from benefiting all Mexicans, its success is so overwhelming that its limitations end up being inconsequential in relative terms.

But a free trade agreement is not, nor can it be, an objective in itself. The country requires a development strategy that assumes it as one of its pillars, but that goes further: to governance, to education, to infrastructure, to security, to the comprehensive competitiveness of the economy and the population. In short, to increase the general productivity of the economy, because only in this way will development be achieved.

In the absence of a strategy of this nature Mexico will end up being a country perpetually dependent on low wages. A sad corollary for an institution as visionary and successful as NAFTA has proven to be.

 

Luis Rubio is the president of México Evalúa-CIDAC and former president of the Mexican Council on International Affairs (COMEXI). He is a prolific columnist on international relations and on politics and the economy, writing weekly for Reforma newspaper, and regularly for The Washington Post, The Wall Street Journal and The Financial Times.

https://mexiconewsdaily.com/politics/opinion-the-legacy-of-the-north-american-free-trade-agreement/

Bidenomics

Luis Rubio

Biden is a rare specimen in the world of politics. Despite his chronological years and his (historical) discursive dyslexia, he has proven to be masterful in legislative matters and, although not recognized for it, he has advanced an agenda in a much more successful manner than would have seemed possible within a context of enormous polarization. The tangible fact is that Biden has altered the economic policy as well as the foreign policy of his country. The verdict regarding the goodness of these changes has yet to be discerned, but whatever it may be, Mexico will see itself impacted.

Beyond personalities, Biden shares a characteristic with Reagan, his predecessor in the eighties. Reagan was a great actor, an extraordinarily talented orator, but without the least pretense of being a profound intellectual, as was Adlai Stevenson (twice a presidential candidate in the fifties) or Barack Obama. Nor does Biden entertain the least intellectual aspiration, he stands, as Reagan did, for a set of very clear and simple principles that orient their decisions and their manner of acting. Of course, Biden’s principles are radically distinct from those of Reagan, given that he has not only broken with the notion of the United States as the main promoter of the world economy, but instead advocated for promoting an introspective industrial policy and protecting unionized workers.

Bidenomics, as his economic strategy has come to be known, is nothing other than a coarse way of promoting, through massive subsidies, the installation of manufacturing plants for high-technology goods, especially sophisticated processors, and sustainable energy, as part of his strategy of competing with China. This economic thrust complements the aggressive foreign policy of confrontation with China that Trump, his immediate predecessor, had launched, but now financed with huge fiscal subsidies. That is, the government (or, well, the taxpayers) subsidizes great enterprises to stop the fabrication of technological goods in China, Taiwan, and other latitudes.

In the 2022 mid-term elections Biden’s party lost control of the House of Representatives, whose new majority has been experiencing one convulsion after another in attempting to elect a leadership that ties in with the Trump cult that has come to dominate the Republicans. Despite that obstacle, Biden has achieved, at least to date, avoiding Congress declaring the bankruptcy of the U.S. government on not authorizing the debt limits required. But what is relevant is that, despite the obstacles and the uncertainty of his policies in economic as well as foreign matters, Biden has been able to advance once and again.

In addition to inflation the electorate does not pardon his age. Biden is an octogenarian who, on winning the next election would end his mandate at the age of 86 years. Although Trump is only three years younger, the difference between them in the capacity for communication is without doubt noticeable. This circumstance has led numerous observers and potentials contenders within his own Democratic circuit to call for him to renounce re-election in favor of another, younger alternative.

Biden is an enigma in the electoral sense. Those of us who have observed him over the decades know that his discursive capacity is extraordinarily limited and infinite in his propensity for committing gaffes. In the eighties, as pre-candidate, he was caught plagiarizing a speech, which excluded him from the contest at that moment. Forty years later he surprised half the world on defeating Trump, who will probably again be the contender for the November election.

For Mexico, the U.S. is not only its principal export market but also its principal growth engine through those same exports. Its future depends on the capacity to tighten those links, while expanding and generalizing these throughout the entire national territory, in that the revenue that the exports generate translate into incomes for increasingly more Mexicans. The problem is that this logic is not linear: in his eagerness to safeguard companies with unionized workers, Biden threatens to exclude diverse Mexican products, especially in the automotive realm, from the terms of the commercial treaty that regulates the bilateral economic relationship.

Perhaps the greatest challenge for Mexico lies in that AMLO, the current President, has objectives that are not in sync with the best economic interest of his own country.  In contrast with Biden, who (successfully) has been able to skirt the vast sources of confrontation within the U.S. society for advancing his agenda, AMLO sees no reason to even attempt to be the president of all Mexicans: better to polarize and confront than to advance the development of the country.

Mexico, as a middle-power nation, but with an outstandingly long border and an exceedingly wealthy neighbor, whosoever it is governing it, has the option of deciding to take advantage of the opportunity that this constitutes or pretend that its future would be more successful by joining the losers of the South of the continent. As at other crucial moments of Mexico’s history, the dilemma is real; the question is whether whoever governs Mexico from next October on will understand the magnitude of the challenge.

www.mexicoevalua.org
@lrubiof

 

NAFTA

Luis Rubio

At its thirtieth anniversary, the North American Free Trade Agreement (and its second iteration in the form of the USMCA) has been the most successful instrument of economic transformation that Mexico has ever had in its life as an independent nation. It sounds easy, but in recent decades it has been possible to provide stability to the economy and the exchange rate, two factors that for centuries seemed unattainable. Although there are many complaints and criticisms regarding this agreement, the best way to assess it would be to imagine what would have happened to Mexico in the absence of this instrument.

Three objectives motivated the negotiation of what ended up being NAFTA. The first two were economic in nature and the third was political. The aim was to promote active engagement in international trade with the aim of modernizing the Mexican economy and generating a source of foreign currency that would allow paying for imports carried out on a regular basis. Secondly, it sought to promote foreign investment in order to raise the growth rate of the economy, as a means of creating new sources of wealth and employment and, in this way, reducing poverty.

The numbers show that the success in both areas has been dramatic: Mexico has become a manufacturing export power, and these exports finance the growth of the economy as a whole. That is, exports are the main engine of growth of the Mexican economy and constitute a reliable source of foreign currency, which is an important part of the explanation why the peso-dollar exchange rate has remained stable in recent years (the other factor is remittances). For its part, foreign investment has grown year after year, even in an environment as hostile to it as the one promoted by the current administration. A more favorable environment, particularly in the context of so-called “nearshoring” could raise these rates in an extraordinary way (and, with it, the sources of employment and wealth creation).

The third objective was political in nature: it sought to depoliticize government decision-making related to private investment. The NAFTA constituted a straitjacket for the government, since it committed it to a series of disciplines and limited its capacity for arbitrary decisions as well as those motivated by sheer tantrum. By signing the agreement, the Mexican government committed to preserving a regulatory framework favorable to investment and foreign trade, protecting private investment and preserving a benign environment for economic development. These purposes arose after the expropriation of the banks in 1982, a situation that had created an environment of extreme distrust among both national and foreign investors, without whose activity the country would have no possibility of fostering economic growth, employment, as well as addressing poverty in a systematic way. In this context, the NAFTA made it possible to depoliticize decisions regarding private investment, an objective that continues to work even with an administration that would clearly prefer that the NAFTA not exist, but from which it has benefited immensely. In fact, the NAFTA was designed precisely for a government like the current one.

For 24 years, with very different governments, each with its own, contrasting, priorities, the NAFTA was preserved, and its fundamental principles were respected. From this perspective, NAFTA fully achieved its goal, as even many of its staunchest critics at the beginning recognize today.

Criticism of the treaty originates from elements that have nothing to do with the agreement, essentially that it did not achieve the comprehensive development of the country. The inevitable answer is more than obvious: NAFTA is nothing more than an instrument for the achievement of specific objectives, all of which were achieved. What was not achieved has to do with everything that was not done so that the country could effectively develop, poverty would disappear, and inequality would decrease, and that -all of it- has to do with the absence of a development policy that would have implied the consolidation of the rule of law, the creation of a modern public security system and the concomitant strategies in education, health and the like.

NAFTA is a central instrument for the country’s development. It allowed business decisions to be depoliticized, contributing to the development of highly competitive and world-class companies and industries. Although it is still far from benefiting all Mexicans, its success is so overwhelming that its limitations end up being inconsequential in relative terms. But NAFTA is not, nor can it be, an objective in itself. The country requires a development strategy that assumes it as one of its pillars, but that goes further: to governance, to education, to infrastructure, to security, to the comprehensive competitiveness of the economy and the population. In short, to increase the general productivity of the economy, because only in this way will development be achieved. In the absence of a strategy of this nature Mexico will end up being a country perpetually dependent on low wages. Sad corollary for an institution as visionary and successful as NAFTA has proven to be.

www.mexicoevalua.org
@lrubiof

 

Mexico’s 2024 Elections: Time To Boost Democracy Or Cement Authoritarianism

 • WORLDCRUNCH - ENGLISH EDITION

LOPEZ-OBRADOR
As Mexico´s president seeks to consolidate his power ahead of the 2024 general elections in the fall, will voters and institutions react to safeguard the country´s democracy or fall deeper into outgoing President López Obrador´s authoritarian impulses?

MEXICO CITY — Two philosophies divide the realm of power. One seeks to ensure the state has all the tools it needs to bring about equality, and the other pursues the state’s decentralization and expand civil liberties. The first philosophy, rooted in the ideas of the 18th century French thinker Rousseau, is cherished by governments keen to take charge of their citizens. Such governments will always tout the leader or head of state as the people’s only representative.

Though, inevitably, such regimes incline toward tyranny. The second philosophy, rooted in the writings of the Englishman John Locke, favors a balance of power inside the state, precisely to prevent the tyranny of any one person or party. Another 18th century thinker, Montesquieu, described the state as a structure made of three branches of government (judicial, legislative and executive), with each acting as a check on the power of the other two.

In the last century, the philosophy of government has evolved here in Mexico. An initial, formative period (1916-17) that followed the tumult of the 1910 revolution, saw jostling between liberal, conservative, authoritarian, even trade-unionist and anarchist ideas until a constitutional agreement was reached and a charter approved in 1917.

Much of it was based on the liberal constitution of 1857. Subsequent decades saw a consolidation of this centralising vision, associated especially with the presidency of Lázaro Cárdenas, which shaped Mexican governance through a period of economic development. This system began to falter with the 1968 student riots, and then the 1985 Mexico City earthquake.

These events would fuel electoral rivalries throughout the 1980s, as well as a number of economic and political reforms that would lay the groundwork for a more open economy and a political system that aspired to be fully democratic.

Most importantly, the economic and especially political changes of recent decades did not emerge from a Left-Right division. Students were the first group to demand democratization and limits to presidential powers, later being backed, for a while at least, by the center-right National Action Party (PAN), which had itself emerged as a reaction to the corruption of the PRI (Institutional Revolutionary Party).

 

A new reality
Such changes have entailed an extraordinary, philosophical revolution, which has
inevitably prompted its own counterrevolution seen in the current president, Andrés
Manuel López Obrador (often simply called by his initials AMLO). Since its election in
2018, the current administration has not only worked to consolidate its power but also
eliminate any counterweight or outpost of resistance.

Many institutions have been eradicated, starved of funds or neutralized (by leaving
vacancies in bodies like the market regulator or the Electoral Court, well, vacant). This
all illustrates an easily discernible pattern. The president says parallel bodies are
"onerous" to the public purse and are being removed to save people money. Yet this
downsizing has more to do with his vision of power – call it a blast from the past – that
excludes citizens and gives preference to total presidential control.

Power, unfortunately, corrupts.

In the Soviet Union — another top-down system — they'd say it was easy to
differentiate between authoritarian and democratic systems. In the former, politicians
mocked citizens and in democracies the opposite occurred. But political systems
where one person says and does as they please and mock, or pummel, those who
oppose their vision are all too common. Power, unfortunately, corrupts.
Looking ahead, two fundamental questions hang over the president's institutional plans.
Firstly: how will candidates (for the 2024 general elections) react to his proposals? The
answer to this question will reveal these candidates' inclinations to side either with their
citizens or with tyranny? The second concerns parliament: will it fulfill its responsibilities,
or continue to submit to the president as nothing more than a rubber stamp?

Hope for a new future

In 1997, when the PRI first lost its absolute majority in parliament, the opposition
celebrated the hope of a new future in Mexico.”Together we outnumber you,” one
opponent told the country´s PRI president Ernesto Zedillo. From 1997 to 2012,
parliament was not so much a counterweight as an impregnable wall of opposition.
That changed with Enrique Peña Nieto and the return of some old-style politics with a
bit of help from cash bribes! As for this parliament, it has been Soviet-style in its
submission and loyalty!
We´ve seen a lot of mediocrity and lackluster performances.
But our country has a big opportunity in September and October 2024, with the
formation of a new parliament and a new government. We´ve had a range of
experiences in recent decades, both in leadership and legislative terms, with a lot of
mediocrity and lackluster performances.
People have a chance to vote in a system of checks and balances that constitutes
collective governance. This means a new framework of full legitimacy consisting of
three branches of government. Put simply, it is the chance to end our decline towards
authoritarianism and begin a new stage of development.

https://worldcrunch.com/world-affairs/mexico-2024-elections

Crossing the Abyss

Luis Rubio

“You can observe a lot by just watching” said Yogi Berra, the great baseball icon. There are few things as sobering as the way that campaigns for the presidency are coming to take shape. Times of presidential succession are exceptional moments because they present two contrasting processes: on the one hand, all the political arrangements become tauter, exhibiting cleavage lines and institutional vulnerabilities. On the other hand, there are intervals during which hope is renewed, especially among those aspiring to be part of a new government as well as among those angry and marginalized by the outgoing government. Tension and hope are two potentially transforming elements but only to the extent to which whoever wins possesses the vision and level-headedness necessary to transcend the inexorable pettiness involved in the contest to become a figure of State.

Few achieve this, but the opportunity is immense, at least potentially, for Mexico during this transition from a strong government but one dedicated to polarization, to another much weaker but for which the circumstances could obligate it to build a new institutional scaffolding. It is still too early to come to conclusions, but it is never late to speculate on what could be.

At one moment in the Monty Python film Life of Brian, the revolutionaries opposed to the Romans meet to devise a plan to defeat them; there, a desperate John Cleese asks rhetorically, “What have the Romans ever done for us?!” Abruptly, there arises a great trail of responses proffered by the multitude. In consternation, Cleese again poses his question: “Alright, but apart from the sanitation, the medicine, education, wine, public order, irrigation, roads, the freshwater system, and public health, what have the Romans done for us?!” The Romans, like some other civilizations throughout history, changed the world and opened the doors to a new era of human development. I do not expect something similar from the next Mexican government, but there exists a unique opportunity to change the direction of the country toward development, perhaps the first time in three or four decades.

In plain terms, one way of proposing the opportunity is by asking: how can we transition from the regime of the “other data” and “to hell with your institutions” to a regime characterized by an obsession with economic growth and construction of a new institutional framework with  a future vision? Ambitious, without doubt, but the circumstances under which the upcoming government will be inaugurated might create an exceptional opportunity for that.

After a strong and polarizing government there will arrive a woman president -whichever of the two it may be- under relatively precarious conditions.  Were the trends that we can observe today to materialize, the country in October 2024 (the time of the inauguration of the new government) will be quite different from that of the presidential narrative of the last five years.  Instead of abundant funds for subsidizing Pemex and nourishing Morena-party clienteles, the president will find herself with an exhausted budget, a country under confrontation and a very diverse Congress. That is to say, the world of AMLO will have disappeared and with it the capacity of imposition. The dilemma for the president will be very simple: to limit herself to filling potholes -just patching things up- or to negotiate a new schema of a political relationship with the legislature. The former, the natural propensity of all Mexican governments, is always feasible, but the cost of continuing to relegate and marginalize most of the population would be incremental. On the other hand, the opportunity to concertedly confront the basic problems of security, federalism and governance, all of which are crucial for the entire country, will be a one-off, so that everybody begins to focus on activities of high productivity, growth, certainty and, in a word, future.

The current government has wagered on the preservation of poverty as a means of ensuring votes in the present and the future.  A new government, less fatuous and vain, should focus itself on the creation of conditions for the country to enter into an era of accelerated economic growth, perhaps one anchored to the exceptional circumstances produced by so-called nearshoring.

As the experience of nations such as Korea, China, Estonia and Poland illustrate, the accelerated growth of the economy entails the extraordinary virtue of becoming the great equalizer, as well as the source of convergence. When a nation starts to experience high growth rates, those that imply political costs, the great obstacles diminish in relevance as the population begins to see the benefits and, above all, to perceive the urgency of joining in the process, demanding solutions to the problems of infrastructure, health, education and so on. That is, accelerated growth facilitates breaking with impediments to economic growth, while at the same time creating conditions, including financing, for rendering it possible.

The point is that it is urgent to break the vicious cycle that the country is now experiencing and that will only be possible to the degree that the new government creates conditions to achieve it.  The circumstances under which the new government will come into power will make it doable. The question is whether it will take advantage of the opportunity or persevere in the futility of patchworking.

 www.mexicoevalua.org
@lrubiof