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The problem to address

            Luis Rubio

In 2000, Fox had the opportunity to modify the structure of power that has kept the country subjugated, but he did not have the vision or the guts to do so. Today, the electorate has given Andres Manuel LópezObrador a new –the last?- opportunity to carry it out and prevent the country from drifting. The key lies not in changing per se, but in what to change and, above all, what for.

AMLO has postulated three central priorities throughout his campaigns: economic growth, poverty and inequality. If one adds the security problem that afflicts more and more Mexicans, that is the agenda that has to be addressed. The question is how, because these phenomena are not causes but symptoms and consequences of the evils that the country faces.

Since the 1970s, all governments have tried to raise the growth rate. Some tried it with debt, others with public investment and others seeking to attract investment from abroad; with successes and mistakes, contrasting results were achieved but the central issue was not resolved, behind which lie the other two priorities of AMLO, poverty and inequality. The most accomplished and longest-lived project of all those that have been tried is the one that personifies the NAFTA because it has had an inordinate success in some parts of the country, although almost no impact in others.

The diagnosis that the government-elect makes, now beyond the dynamics of the electoral season, will be crucial in determining what needs to be done. The evolution of the coming administration, and its probability of success, will largely depend on that diagnosis0. As the saying goes, it is not the same to be a drunk than the bar owner, so now it is no longer a rhetorical question but one of responsibility and opportunity.

The governments of the seventies tried to solve the problem with spending and debt and ended up creating the financial crisis that brought the government to virtual bankruptcy in 1982 -and determined the widespread impoverishment that followed. The so-reviled reforms that followed had two characteristics: one, they made it possible to foster the economic activity in some industries and regions; the other was that they were not fully implemented because there was always some political, bureaucratic, business or union interest that prevented it. The reforms were made to reactivate the economy but as long as they did not affect the political status quo. This is where the incoming administration can have a decisive impact: break the status quo and create an environment of equal opportunity for all Mexicans to be successful.

The reason why NAFTA is so important and has been so successful for Mexico is precisely that it created a space of economic activity that was isolated from all those interests and political conundrums. Thus, the NAFTA is not only the engine of the Mexican economy, but a showcase of what is wrong in the country which has caused the permanence of poverty and inequality: what is associated with the institutional framework that characterizes NAFTA works; the rest lives under the cacique interests that kill every opportunity. Just to illustrate, it is no coincidence that the country has many fewer kilometers of pipelines -key for industrial development- than other countries with a similar level of development: because there was a monopoly of tanker trucks in the hands of a politician who had the power to prevent pipelines from being built. That condemned the south and west of the country to many less growth opportunities. Poverty is not the byproduct of the reforms of the past decades but of the absence of political reforms that create a new system of government from the bottom up.

The post-revolutionary political system was based on the allocation of privileges, which have been preserved in the most creative ways. It is not only the appointments that create opportunities for corruption with full impunity or the usual contracts and concessions, but also the mechanisms for assigning senators and members of congress, which allow the same people to remain permanently in the game and to dedicate themselves to their personal and partisan interests rather than caring for those of the citizenship.

If AMLO wants to change the country – the mandate of the polls – the dilemma is very clear: open the political system to take it away from the politicians and their favorites and transfer it instead to the citizens; or try to recreate the old political system with its imperial presidency, something impossible because of the diversity of the population of today and the complexity for the economy.

The first course of action would lead to permanently build trust on the part of the population because it would have to be institutionalized in a new system of government developed from the bottom up. The alternative would be to destroy what exists without the least chance of success.

The problem of the south of the country is not that the north is doing well, but that the south is dominated by bosses, caciques, entrenched political and trade union groups that depredate and submit the citizenship, thus impeding economic development. Therefore, the solution lies in confronting those bosses and interest in order to build a new system of government, not in recreating something that has long since died.

In contrast to Fox, LópezObrador has the political skills to carry out profound structural changes. The question is whether he will use those skills to do away with existing obstacles to development while respecting citizens’ rights or to rebuild the authoritarian system of old. Only the former would really be a revolution worth having.

www.cidac.org

@lrubiof

 

 

And Mexico moved…

 

Luis Rubio

President Enrique Peña offered to “move Mexico.” I doubt that his definition of movement is the one that occurred on the first of July, but there is no doubt who is responsible. In a presidential system as centralized as Mexico’s, where everything works around the president, the presidency constitutes, for good and ill, the heart and compass of the country. The trust among citizens -and that of savers and investors who need certainty to save and employ their money in productive ways- depends on who holds that office. It is the president that establishes the direction the country follows.

When that sense of direction disappears or the person occupying that office ignores the elementary factors of its function, it ends up being rejected by the citizenship and, when that happens, the whole country goes into catatonia. President Peña arrived with great plans and a huge arrogance to restore the imperial presidency of the sixties, but among all those big plans governing was not one of them. Major reforms were approved by Congress, but citizens did not see any improvement in the things that mattered most: security, incomes and jobs.

What the population saw was a distant president, frivolous and always unwilling to explain and convince; no wonder he’s ending as an example of everything the population despises: impunity, corruption and bad government. Worse, he used the resources of the presidency to persecute a candidate, favor his favorites and take revenge on his enemies. He never understood that governing in the 21st century consists of explaining, leading and convincing citizens, who have access to as many sources of information as the president’s. When the president abandons his responsibility to lead in a country so centralized and without checks and balances, the country gets into trouble. Enrique Peña did not understand his role or the moment of Mexico.

From the moment those 43 students were killed in Ayotzinapa, the president abdicated his elementary functions: he disappeared from the map, creating a vacuum that was filled with diligence and foresight by Andrés Manuel López Obrador, who is today president elect thanks to his decades-long work and strategic clarity. It is not necessary to be in agreement with his proposals and positions to recognize his extraordinary ability and work to achieve what the citizenship granted him the first of the month.

Candidates win for their ability to convince citizens of their project and personality, but presidents are judged by the way they respond to and handle the unexpected. Some presidents grow up in the face of adversity, others are daunted. In serious and developed countries, the president is important in terms of advancing a specific government agenda and to the extent that he or she succeeds in convincing the population and legislative bodies of the relevance of their proposals. But those leaders are limited in their capacity to affect the life of the population in a dramatic or excessive way. In Mexico, a presidential error can lead to a financial crisis in a matter of seconds or it can cause a political crisis of enormous magnitude. Examples abound of both circumstances in our recent history.

The paradox of Enrique Peña was that he advanced the agenda he offered until he ran out of projects, but it was his insistence on showing that he alone was in charge and in control of the country (something that decades ago is impossible) only underscored his mistakes and failures. The reality is that no president can control everything but, rather, in this convulsed era, he is often nothing more than a hostage of circumstances over which he often has little influence, as is now the case with the NAFTA. What makes a president distinct and successful is his ability to respond to difficulties: the leadership he deploys matters more than the problem itself because proper handling makes it possible for trust in him to emerge or, vice versa, to vanish. Peña abdicated his responsibility even before concluding half his term and, worst of all, did not know how to respond to Trump’s insults, something that AMLO will surely enjoy doing, even with the potentially enormous risks such a course would entail.

The issue of his white house and then Ayotzinapa marked this administration definitively. From that moment, his luck was marked. But the president insisted on making things worse.

It is incomprehensible to me that a president will dedicate himself to complaining about the voters, but this president did it without hesitation and, worse, repeatedly. His advertising campaign of “Stop Whining” (ya chole con tus quejas) will go down history of presidential arrogance. But it got worse: the earlier campaign was followed by a new edition: “do the accounts right,” as if voters are always dumb. Over the years, I have listened to many politicians, in Mexico and elsewhere, complain about the electorate, which in general they consider, almost universally, as an obstacle and a bunch of fools; however, until these campaigns came to light, I had never seen a politician tell his citizens what he thinks of them. What happened on the first of July Peña has only himself to blame.

With our vote, Mexicans are responsible for electing a ruler. The lack of effective checks and balances creates a presidency with excessive powers, making dependent the collective well-being on a person’s mood and ability. A presidency like that is about to end, while a new one, hopefully better, starts anew.

www.cidac.org
@lrubiof

 

 

Myth vs Opportunity

Luis Rubio

There now is a president elect and it is high time for reconciliation. A new government, especially one specifically focused on changing the prevailing paradigm, has the unique opportunity to transform the country. To end the climate that characterizes Mexico and, above all, to build a new future. To build on what exists to successfully face the three issues that Andres Manuel López Obrador deemed key priorities in his campaign: economic growth, poverty and inequality.

Over the past three decades, we Mexicans went from an authoritarian political system aimed at controlling the population that did not tolerate competition, towards a competitive electoral regime but without institutions that generate certainty and protect the citizenry. However, the common denominator is the same: elections remain a bet where everything is at stake every six years. No serious country can survive such a sword of Damocles, permanently threatening political and economic stability.

In the regime emanating from the Revolution, the central figure was always that of the president, whose effective faculties far exceeded those expressed in the Constitution. The concentration of power, combined with the leadership of the control structure exercised by the PRI, went beyond the legal framework and gave the president constitutional meta-powers. Those powers were not only expressed in his own decisions, but also gave a central role to personal and group loyalties to the president, which were compensated with corruption and, therefore, impunity. That is the regime with which Mexicans have lived for almost one hundred years and that did not change even one bit with the governments of the PAN. That regime has impeded true development and has been prone to recurrent crises.

So central is the presidential figure that any election -or wrong decision- entails the risk of becoming a schism. The problem does not reside in a person but in that the presidency has such vast powers that it can affect the livelihood of all the population. In the past -in the PRI era that, at least in this regard, ended in 2000- the presidential succession was part of a contained process in which the outgoing president sought to limit the risks that his successor would break the canons and put the viability of the country at risk, as it happened after 1970. The opportunity today is to end this political regime without sacrificing what has been built to generate wealth and jobs like never before.

Things changed since 2000 because the powers inherent to the presidency diminished (as a result of the “divorce” of the presidency from the PRI), but quasi-autonomous powers appeared, such as the governors, while democratic competition brought about candidates who do not share the previously existing paradigms. The combination of excessive power and the absence of shared paradigms exacerbated the dislocation potential associated with a change of government, producing fears, imbalances and crises. Today there is an almost unique opportunity to leave all that in the past.

Mexico is no longer a marginal country in the international world. When the Mexican economy was closed and (almost) all the variables were under government control, the risks inherent to the succession could be contained. Today, in the context of an open financial system, an export-oriented economy and merciless competition to attract investment (in this, Mexican and foreign investment are indistinguishable) on which the welfare of the population depends, the capacity to contain the risks is simply non-existent. There is no country that can resist the onslaught of the markets when the key financial or political balances are broken. That’s what happened to the British Empire in 1992.

The Mexico of 2018 is very different from that of the middle of the last century, except in one factor: the political regime remains, in its essence, the same, but now, instead of generating certainty, it has become the source of imbalances, risks and, in fact, threats to stability. The vast powers allowed the government to act in a concerted manner, as happened during the era of so-called stabilizing development, but they also fostered all kinds of bureaucratic and political abuses that were perhaps tolerable in an era before the social networks. Today, with universal access to information, the capacity to control what was the essence of that system has disappeared.

The opportunity lies in carrying out the political reform that the previous system always rejected, to build effective checks and balances that give economic and political viability to the country for the next century, a true transformation. Only a strong president can achieve such a revolution.

Mexico needs a change of regime to build a different future, one without poverty and with equity. The country requires a political system based on the Rule of Law, which means only one thing: checks and balances that protect the citizen. To achieve the long-awaited development and end the climate of hatred and confrontation.

www.cidac.org
@lrubiof

The country of the imaginary

Luis Rubio

At the heart of the political dispute that ends today is the great lack that Mexico has suffered for decades: capacity of government or governance. That ability to act and resolve disappeared in the maelstrom that produced a lethal combination of circumstances -financial crises, (near) hyperinflation, globalization, organized crime and blindness of the political class- between the seventies and these years of the millennium. Instead of producing solutions, the paralysis led to the decline in government capacity and this generated an endless nostalgia.

The nostalgia, that longing for a mythical past, is easily explained by the daily deficiencies and complexities that the population suffers: insecurity, poor public services, terrible education, poverty. But nostalgia is a bad counselor and can easily become a propaganda instrument of political control and not good governance.

The government that emerged from the revolutionary era was more authoritarian than institutional, a circumstance that allowed it to deal effectively with crime and to allocate resources discretionally, all of which favored some decades of political stability and economic growth. At the same time, its inherent rigidity prevented it from adapting to changes that occurred both within the country and in the external environment.

And those changes ended up undermining its structures, making the government increasingly ineffective. The first manifestations of this decline were the economic crises of the seventies, the insufficient and sometimes inadequate reforms of the eighties and the security crisis since the nineties. All these factors were the product of changes in the external environment that the Mexican government did not have the capacity -or disposition- to face. In a word, Mexico did not prepare itself for the changes that took place in Colombia and the United States and that had the effect of altering the operating patterns of organized crime. Nor did it create favorable conditions for all Mexicans to insert themselves successfully into the process of globalization. Both phenomena transformed the world, but in Mexico the government did not adapt and thus was unable to avoid the security crisis or to generate a strategy to better distribute the benefits of globalization.

In this context, it is easy to fall into the nostalgia of returning to a world in which things apparently worked, where the economy grew and there was no violence: a moment in history that is unrepeatable. Hand in hand with nostalgia for stability and growth comes the dream of unipersonal command, the control of the population and the subjugation of trade unions and employers. It sounds attractive because it allows the voters to imagine magic solutions for the problems that afflict the country, at no cost. But it is a myth: magical solutions do not exist.

For those who live in that idyllic moment of the past, it is impossible to understand that the world changed not because somebody willed it, but because there were circumstances that ended the livelihoods of that era: technology evolved prodigiously, communications accelerated exchanges and the integration of the productive processes allowed to elevate economies of scale that translated in impressive improvements in the quality of the goods and lower prices. Those who drive a car today cannot conceive that thirty years ago they would have had to take their cars to the workshop every so often because the breakdowns were frequent: life has improved dramatically.

The challenge is to right the wrongs of the present without creating a mega crisis and this requires a clear recognition that there are no more resources. The (alleged) austerity of the governments from the eighties onward was not the result or their wishes but of the lack of alternative. There was not that much austerity and there are no savings.

Mexicans live endless contradictions in their daily activities. Instead of things being organized so that it is easy to prosper, obstacles of all sorts are pervasive: bureaucratic, special interests obstructing new ideas and government officials looking after their personal or political affairs rather than generating conditions for development. All of this speaks for the need of a political reform to make it possible for the economy to prosper.

The existing economic structures have made it possible for vast regions of the country to grow at Asian rates, but ancestral political structures have preserved poverty in the south of the country. This speaks of the absence of a government capable of breaking obstacles, not of an erroneous economic model: our evils stem from the political hindrances that keep states like Oaxaca and Chiapas in poverty. The dilemma is not to reconstruct the past keeping the good of the present, something impossible, but to change the vectors that currently exist to make development possible. Therein the political challenge.

The paradox of this election rests in that the regions that suffer are those in which the economic reforms that have been so criticized have not been implemented. Inequality and poverty are the result of intricate special interests: changing that reality entails a change of regime with two characteristics: a modern and functional and the Rule of Law.

As The Economist recently wrote, “Nostalgia, in any form, is an indulgence. And as any clergyman worth his salt will tell you, indulgences come with a price tag.”

 

www.cidac.org
@lrubiof

The Future

Luis Rubio

“Anyone who thinks that things cannot get worse does not know the history of Argentina,” says the keen observer David Konzevik. In 1913, Argentina occupied the tenth place in the world in product per capita; today it is the 57th. The reason: decades of bad economic policies ostensibly aimed at solving problems of corruption, welfare and poverty. Instead of moving forward, the country has retreated and the Argentines have gone from crisis to crisis for more than a century. When I hear that “things could not be worse,” I remember the history of Argentina: things could get much worse, very fast. Just ask the Venezuelans, the country with the largest oil reserves in the world, today living in misery, despair and the worst social and political crisis in its history.

The contest in which we are immersed has three clearly differentiable dynamics: first, the dispute between the future and the past; second, the evolution of President Peña’s administration and the perception of overwhelming corruption that emanates from it; and, third, the candidates as individuals: their virtues and defects. Each of these elements contributes to the perceptions that the citizenship has of the candidates themselves and of how to vote.

The dispute between the future and the past lies at the heart of this struggle: it is about two projects and perspectives of the country that propose, on the one hand, Anaya and Meade and, on the other, AMLO. The first, each with his skills and characteristics, agree on the need to build the country of the future through its integral transformation. Their vision can be summarized in one line: both want Mexico to be a rich country and fully integrated into the circles of successful and developed countries.

AMLO, on the other hand, proposes a return to the origins: the country worked better before, when modernity was not intended, when the government imposed its vision on society and the president was all-powerful. His approach is based on the principle that things were going well and that the reforms that began in the 1980s put a dent in the development that the country was already achieving. His model is the Mexico of then; the problem is that the sense of certainty that the past gives does not solve the issues of poverty, inequality or lack of growth that he has successfully raised.

Regardless of the feasibility of any of the proposals, explicit or implicit, of the candidates, these are two radically different ways of seeing and understanding the world. Thus, this election is not about concrete policies but about the direction the country should follow in the future: forward or backward.

The administration of President Peña is a central factor in this year’s election, essentially because of its shortcomings, but above all because of its distance from the daily reality of the population. The president’s advertising campaigns -in short, stop complaining- and his visits around the country reveal an absolute inability to understand the anger of the citizenship with corruption, and his disinterest in the daily life of the Mexicans. The result is that a nodal component of this election will be the anger with Peña against the fear of returning to the past that AMLO entails. The anger is real and Meade´s future depends on his being perceived as independent from the president. Anaya’s future depends on his being perceived as “presidential.” Meade and Anaya have tried to differentiate themselves from each other, while they present themselves as leaders of the future. Until today, neither has succeeded in establishing that difference and thus becoming a true option before the electorate.

The nature of the candidates themselves is key in the election. In alphabetical order, Anaya has been a successful legislator and heads a coalition of political forces and parties that in the past would have long been considered inconceivable, but his tenacity and rudeness took him to where he is. López Obrador has spent decades in politics, was a successful head of the DF government and has managed to stay in the political arena because he has shown integrity and honesty as a person, while raising the relevant questions that Mexico has yet to resolve, such as poverty, inequality and economic growth. Meade has been a government official for decades, knows better than anyone the twists and turns of the bureaucracy and has a clear and structured vision of the challenges facing the country.

In the American studies on the presidency, a branch of political science, the key element with which presidents are evaluated is their “character,” a term that is different in Spanish and translates essentially as integrity: what the person is made of. It is character that determines the way a leader would respond and deal with problems that are not foreseeable or predictable, the point at which integrity is the only thing that counts. It is in these conditions that figures like Lincoln emerge and why they become paragons of leadership and integrity.

Mexicans have before us an election that combines radically different visions of the world, personalities with contrasting stories and skills and a fundamental decision to make that will determine the future. Will Mexicans address the country’s problems or will they repeat the history of Argentina?

www.cidac.org

@lrubiof

 

 

Together works better for Canada and Mexico

 Policy Options Politiques

Canada and Mexico have very different political and trading relationships with the United States, but they can still accomplish a lot if they work together.

Luis Rubio
June 19, 2018

Before NAFTA, Canada and Mexico maintained relations that were friendly, albeit of little substance. Mexico’s request to negotiate a free trade agreement along the lines of the Canada-US Free Trade Agreement changed all that. Canada wanted to avoid the “hub and spoke” relationship that two bilateral relationships with the US would have produced, and went on to join the negotiations.

The trilateral economic relationship today is significantly bigger, but its true importance is the strategic nature it has acquired. Every cog in the elaborate North American supply chains depend on the other cogs to function smoothly. This has required active governmental participation from the three countries to fix all types of legal and border issues. Meanwhile, Mexico and Canada have developed a close political relationship – albeit one that is not devoid of conflict – largely because of the complex nature of the neighbour both nations share.

 

Canada and Mexico are very different in almost every regard: culture, history, traditions, society; they share obvious economic and trading interests, but it is the US that has forced the two nations to be actively engaged with one another.

At the G7 leaders’ summit in Charlevoix, Quebec, earlier this month, Prime Minister Justin Trudeau had the misfortune to suffer the slings of President Trump, something Mexicans can easily identify with. Might there be some commonalities in what has unfolded? President Donald Trump’s criteria for evaluating trade pacts hinge on trade deficits and American investment flowing into third countries. Canada, Mexico (and China) thus became prime targets, as they have pursued closer trade and investment ties through free trade.

Mexicans have been at the receiving end Trump’s ire and tactics since the primary season for the presidency began in the US. He has abused them over and over, calling Mexicans “rapists,” as just one example. While the Mexican government held tight in order to not poke the bear, many Mexicans kept on calling for a strong response. During the electoral period, the polls showed that each time a Mexican official of symbolic nature (notably former president Vicente Fox) responded to the insults, Trump’s numbers improved at home.

Then, all of a sudden, President Enrique Peña Nieto changed tactics and invited then-candidate Trump to visit Mexico. The visit was a disaster: Trump was given statesmanlike treatment and, at a press conference, was able to insult his hosts further. Trump had simultaneous translation at his disposal, and Peña Nieto did not, which further undermined the latter’s profile while enhancing Trump’s. Relations suffered and the two leaders have not met since, save for minor encounters at a couple of multilateral fora.

Neither substance nor friendliness have helped Canada and Mexico deal with the Trump administration. The NAFTA negotiations have shown an ever-shifting American counterpart, who often tries to use Mexicans to counter Canadian positions, and vice versa. The fact of the matter is that the Trump administration has a few very clear and deeply held positions on issues of importance to Canada and Mexico, and those positions, regardless of whether they are realistic or truthful, have made it very difficult to advance on substantive matters.

The Canada-US and Mexico-US borders are very different, because of the countries’ different levels of development. The trading disputes of the nations are very different. Canada has had far more than Mexico, many of them decades old. While Mexico has profound security issues that require permanent interaction with the US, Canada has lumber.

Much more significant is why the nations approached the US to pursue free trade in the first place. A few months ago, I was at a panel with Jeff Simpson, and he said that NAFTA for Canada is about trade and investment and absolutely nothing else. Well, for Mexicans, NAFTA is obviously about trade and investment, but it is also about politics. NAFTA helped to create strong institutions inside Mexico, supported by the US government. These institutions conferred certainty to investors that there would not be capricious changes in economic policy or the rules of the game.

Mexicans are facing, once more, the clash of two paradigms: on the one hand, an inward-looking nation that is distant from the world, and particularly from the US, or a reforming nation that accepts the complex nature of today’s world and is willing to tackle its difficulties head on.

For Mexico, losing NAFTA would lead to a dramatic change in its domestic politics in the July 1 presidential election. Without NAFTA, the new regime, likely a leftist Morena party government, would be free to turn Mexico inwards and backwards in its attempt to recreate the 1960s. In other words, Mexicans are facing, once more, the clash of two paradigms: on the one hand, an inward-looking nation that is distant from the world, and particularly from the US, or a reforming nation that accepts the complex nature of today’s world and is willing to tackle its difficulties head on.

Every now and then, these different political contexts between Canada and Mexico have led Ottawa to consider going it alone with the US, only to quickly realize that it is the trilateral nature of NAFTA that gives both Canada and Mexico a true fighting chance. If more evidence of this were required, in a classic divide-and-conquer manoeuvre, Trump recently called for two bilateral trading agreements between the US and Canada and the US and Mexico.

Canada and Mexico might be too weak separately to withstand America when it charges head on. But by virtue of their different situations, the two countries have protected each other’s interests. An extreme action taken against Mexico might be seen as wholly inappropriate when applied in the US-Canada context, and vice-versa. By definition, a trilateral pact evens out and moderates power, while a bilateral trade deal would confer immense powers to the already powerful shared neighbour.

Above all, should NAFTA disappear, the existing integrated supply chains would lose vitality, something that two separate trade agreements would not protect either. Trump’s proposal to have two bilateral deals is largely an act of desperation, precisely to separate its two neighbours and impose itself on each one.

Canadians and Mexicans will have to deal with the Trump administration regardless of their preferences and, to be successful in this quest, they need to recognize that Trump is more the symptom than the cause of the change in Americans’ attitudes toward their neighbours (and, in fact, toward the world). They will need to engage with ordinary Americans to drive home the fact that the three countries have shared interests, and above all to underscore the contribution that Canada and Mexico make to the wellbeing of US citizens.

Although the issues that concern Americans about Canada are different from those about Mexico, a common strategy would not only strengthen both Canada’s and Mexico’s interests, but it would also be more compelling to Americans. All three countries would be much better off if they relearned how to work together.

 


 http://policyoptions.irpp.org/magazines/june-2018/together-works-better-canada-mexico/

 

The Problem at Heart

Luis Rubio

 Mexico is a walking contradiction. Ambitious reforms have been implemented and, nevertheless, the results, at least on average, are not praiseworthy. The problem is the average: the country is experiencing extreme contrasts between a poor south that barely stays alive and a north that grows at almost Asian rates. There are entire regions that have been transformed, there is a hyper modern industry that competes with the best in the world, there are examples of virtue in the performance of the functions of local governments and, of course, Mexican companies that are successful inside and outside the country. How is it possible that these extremes coexist?

There are parts of the country that function as in the first world and there are forces -traditions, interests and powerful groups, whether economic, political or union related- that have managed to halt changes and reforms to preserve the status quo. In practice, this implies that, while one part of the population – and the country in general – prospers, there is another that experiences a continuous deterioration in living standards. In other words, they are two indisputable truths and contrasting realities with which Mexicans coexist every day.

If one observes the growth of GDP per capita, exports, formal employment or access to the Internet, to cite obvious indicators, the country has certainly progressed. On the other hand, the lags are equally evident, as can be seen in the contrasting growth rates between Oaxaca and Aguascalientes, the two most extreme cases. The disparities in the Mexican economy are staggering both in terms of performance and attitude, the two a product of a reality that is neither coherent nor consistent.

Both political dysfunctionality and economic transformation are real; in fact they are two sides of the same coin: the combination of over concentration of power with dysfunctional government (where the former explains the latter) leads to paralysis because it prevents the institutionalization of power. The laws and rules of the game change according to the preferences of those who are in government, which becomes the source of dysfunctionality and causes the absence of institutions capable of exercising autonomous and counterbalancing functions. These phenomena are historical and the system emanating from the Revolution sharpened them.

On the other hand, the growth of the country in both economic and demographic terms generated a dislocation of the traditional political system because the old control mechanisms ceased to be functional. The paradox is that the response that successive governments have given to the loss of capacity to govern and the consequent disappearance of the legitimacy of the State has not consisted in the reinforcement or reconstruction of the capacities of the government itself or, even, the redefinition of its functions, but in the adoption of patches, compromises and temporary solutions.

The point of all this is that the problem of the country is not economic but political. If one sees the aggregate growth figures, the economy has experienced a pathetic performance (of 2% annual on average); however, if one sees these region by region, there are parts of the country that undergo an inconceivable transformation. The relevant question is: why doesn’t the south of the country grow at the same speed as the north? The reality is that the reforms undertaken since the eighties to the present have been transformative where there has been leadership (political or business); On the other hand, growth has been very low or nonexistent where political-social structures have entrenched themselves and privilege groups such as unions, bureaucrats and traditional entrepreneurs.

The issue ends up being political, not economic. The country’s economy is doing well and it could be much better if deep political reforms were carried out. In this sense, AMLO’s proposal to do away with the economic reforms would only impoverish the country. If what he wants is to resolve the wrongs that characterize the country, he should be proposing an advanced political reform that would lead to the institutionalization of power, the construction of checks and balances and the liberalization of the political system to foster an active participation of the citizenship. He does not do this because his vision is that of concentrating power. That is, he does not recognize that the country has advanced economically and that its problem is precisely paralysis and political dysfunctionality.

Mexico has been a peculiar case of partial and incomplete transformation. Many nations have sought reforms, but few have been as partial in their reform process as Mexico has been. Chile, Spain, Korea and other paradigmatic nations assumed modernization as an integral process; Although they have evidently encountered problems and crises along the way, their instinct has been to reform more in order to move forward. In Mexico, economic reforms were undertaken in order not to reform the structure of power and that is the problem that lies at the heart of the country’s so-called “social bad mood.” Canceling the reforms would destroy what does work.

The solution is there: in a comprehensive reform, not in the recreation of the program of “stabilizing development” that failed fifty years ago.

www.cidac.org
@lrubiof

 

 

Reengineering

Luis Rubio

The symptoms -and paradoxes- are evident everywhere. No one can avoid seeing them, whatever their circumstance, party persuasion, or activity. The country is springing leaks all over and, at the same time, it possesses impacting strengths that are not wholly exploited because something limits them, stands in their way. Mexico has made enormous advances in numberless areas and, nonetheless, there is something that does not jell: the change materializes but is not consolidated and the population does not perceive the benefit. The daily political disputes, which naturally are magnified during electoral periods, have their raison d’être because they reflect a national sense.

Whoever takes in the general panorama cannot help observing the contrasts that characterize us because they reveal our way of being, but also the self-imposed limitations to development. Here is a small sample, clearly not an exhaustive one, from our day-to-day life:

  • We have a thriving export economy, but we do not build the infrastructure necessary -including security- for this to multiply.
  • There is not a sole domestic economy, but at least three, with dramatically differentiated growth rates (that of the state of Aguascalientes seems to be an Asian enclave when compared with that of the state of Guerrero, which barely remains afloat), but the political discourse concentrates on how to protect the South instead of what would be needed to be done there to imitate the North.
  • The governors do not do their job: rather than govern –which would imply constructing efficient security systems with competent infrastructure for attracting investment and jobs and to improve the life of their populations-, they devote themselves to frivolousness and to fabricating their next political opportunities or to financing those of their cronies. Some become involved in political skirmishes at the national level as a mission, forsaking their reason for being. Is that what they get paid for?
  • We have edified a costly and not very representative legislative branch that, nonetheless, is not accountable to the citizenry, but to the particular interests of the legislators themselves and their political bosses. Decisions are not made after relevant debates, interparty negotiations or individual conviction, but instead in the aftermath of not always sacrosanct “exchanges”. The private offices of some legislators are irrefutable proof of the criteria that enliven their decisions and actions.
  • Companies raise their productivity prodigiously, but their clients find themselves harassed by extortionists who demand protection money.
  • The federal government sets the control of the public finances to right, but everyone demands more expenditures.
  • The legislators approve electoral laws and those concerning matters of corruption, but along the way they create mechanisms for violating these very laws, as illustrated, particularly, in the financing of political campaigns.
  • Ambitious reforms are promoted, but afterward the monies necessary for implementing them are not forthcoming.
  • Mediocre infrastructure is frequently constructed that is usually insufficient from the day it is inaugurated. Worse, it is not maintained or monitored: anyone who has driven along the “circuito mexiquense,” a beltway through the State of Mexico around Mexico City, will be able to observe the presence of gasoline thieves (huachicoleros) and highway assailants, but not that of a police officer to take care of those traveling through the area.

There are thousands of examples and everybody knows these and many other manifestations of what the country is:  the extraordinary steps forward and the immense waste. Projects with vast reach and worth –the same in matters of structural reforms as well as in infrastructure, the building of institutions (such as the Supreme Court) and the freeing-up of markets- but later these are limited due to the absurdities of the political system and, very especially, because of the indisposition of the old political system to open up and to part with its privileges.

As in the gothic novella entitled The Strange Case of Dr. Jeckyll and Mr. Hyde, about a same person with two faces, one good and one perverse, the Mexican Government, –in reality, the political system, in that it includes all who participate therein- is two things at once: a progressive entity and a promoter of change and development and, on the other hand, a ruthless organism that abuses the population, preys off it and pretends that no one notices. Of course, it is impossible to catch sight of each of the abominations that take place in all ambits of the public sector, at all levels of government, from the most modest municipality to the Presidency itself, but what is indubitable is the general effect: things are not concluded because that would imply affecting some beneficiary of the system. And in these, all political parties are exactly the same.

In this way, the incredulousness of the ordinary citizen is perfectly explicable when the functionary affirms that the public works being carried out are going to transform their municipality or when a Secretary eulogizes a determined reform. Difficult to believe because benefits take time, but also because on many occasions they are not what had been said they would be at the beginning: Mexico City’s second-storey loop solved traffic from one extreme of the city to the other, but the exits were not thoroughly thought through; hence, the interminable bottlenecks just shifted place.

The country is going to change, and it will no longer be so at odds with itself, when there are no longer a Jeckyll and a Hyde, when the government is reengineered so as to be able to dedicate itself to solving problems and governing for all, not only for itself.

www.cidac.org
@lrubiof

 

 

How Should It Work

 Luis Rubio

The contrast between the economic reforms of the last decades and those of an electoral-political nature is striking. The first have followed an impeccable logic and are characterized by their clarity of purpose. The second ones have all been reactive, tiny and of changing compass. One can agree or disagree with one or the other, but it is indisputable that they are two different “animals.”

The need to reform arises when the status quo is insufficient to meet the needs of the population. In this sense, the notion of reforming implies a change in the surrounding reality and, therefore, the affectation of interests that benefit from the state of affairs.

In Mexico, the reforms began to be discussed in the sixties because the factors that had sustained the political-economic order began to erode. Until then, the economy operated within the context of import substitution, which required the importation of various inputs for it to function. Since the country’s exports included virtually not0hing in industrial matters, the decline in grain exports from the 1960s raised a signal of alarm. The same was true of the 1968 student movement for the political system. What had worked for several decades was no longer sustainable.

Mexico required reforms to deal with those two fledgling crises, but what actually 0happened was the beginning of a dispute over the future that was resolved, at first, in favor of a growth in public spending and inflation (1970-1982) as a means to try to satisfy the entire population. The idea was that higher spending would translate into higher growth and lower political tensions. The result was twenty years of economic crisis and an explosive political polarization.

After the 1982 debacle (an external debt crisis that took two decades to resolve), the economic reforms began, at first with timidity, then with greater speed, but always with a clear sense of direction as well as a great limitation: They liberalized imports, opened the investment regime and privatized companies that in virtually no country in the world are owned by the government. The great limitation was also obvious: although the objective was consistent (generating high rates of economic growth), nothing would be done to alter the monopoly of power, which, in practice, protected various groups, activities and sectors for the sake of maintaining political peace and the privileges that accompany it. That is to say, although consistent, economic reforms were always confined -and, therefore, impeded from wholly achieving their purpose- for political reasons.

The political reforms were another song: the monopoly of power was untouchable and was modified only to avoid crises (usually when these were about to explode). While some of these reforms were intelligent and proactive (such as the one of 1977 that sought to incorporate the left in the space of full political legitimacy- or the one in 1996, which created an independent electoral authority), the common denominator was that these were always reactive to the problem of the moment instead of attempting to develop, as had been the case in the economy, a new political order. The reason is simple: as Fidel Velázquez, the long -lasting union leader, said for many years, “by arms we arrived and only by arms will they take us away.”

The contrast between the two processes explains our current circumstance. In the first place, the dispute over the future persists and this has gained enormous importance in the current presidential race; Secondly, as was illustrated by the enormous difficulty faced by independent candidates to achieve their registration, the political system was not liberalized but, rather, the old system was expanded to include two new parties (the PAN and the PRD); finally, in third place, even though the population today votes and its votes are counted (something not minor in Mexico’s history), the population’s capacity to influence the decisions that affect them is almost non-existent because the political system is absolutely refractory to the citizenship.

What Mexico requires is a new political regime. Whoever wins in this electoral season, the citizen will continue to be the loser: although candidates promise to solve this or that, our nodal problem is that we continue to expect a person to solve problems that require the participation of the entire population. The whole direction of the economy and of society is at play in this election, something that should never be possible in a serious country; nobody should have that much power to make such transcendent decisions without proper counterweights.

 

To prevent this from happening again in the future, Mexico needs a new political system that contains effective checks and balances, eliminates the arbitrary faculties which, de facto, characterize the country’s politicians and bureaucrats, and makes possible a functional and professional government, all within an environment of true accountability.

Will it be too much to ask? Without a doubt, but without that, it’s not even possible to go out dancing in Chalma, as the saying goes. The question is who contributes better to this possibility.

www.cidac.org
@lrubiof

 

 

 

 

 

Better Times

Luis Rubio

Nostalgia is pernicious as a guide for action for government, but that does not seem to dissuade many. The notion that a past can be recreated that, in retrospect, seems idyllic, has such an obvious appeal, that invites prospective rulers to create mental utopias and proposals that capture emotions, which does not make them any less deceptive. In this, the electoral protagonist in the current electoral cycle is not very different from those of other latitudes (Trump, Brexit, etc.). By its nature, political discourse always seeks to appeal to emotions, because what is sought is to captivate the voter without having to explain anything other than: the “I am” the solution. It is not necessary to say how or why.

The proposal is simple but powerful: the country worked better when the federal government centralized and controlled everything, but now, due to the reforms of the last decades, corruption was generated an this explains all deviations. No matter the issue (criminality, economic growth, poverty or relations with the United States), the solution is to end corruption through the election of Andrés Manuel López Obrador, whose person is imposing and, therefore, liable to end corruption merely by his election. All the rest is commentary.

The approach is emotional: it seeks to attract those who have not joined, or have not been able to incorporate, to the digital economy, the victims of crime and the old corporate sectors, to make possible the recreation of a nostalgic past, despite the obvious: the past is not repeatable.

About twenty years ago I had the opportunity to talk with Mr. Antonio Ortiz Mena, secretary of finance in one of the most stable and fastest growing economic eras of Mexico (1958-1970). The talk revolved around his strategy as the author of the “Mexican miracle.” His explanation continues to resonate in my head until today: in essence, he told me that there was no possible similarity with the time when he had been responsible for the country’s finances, because before, things were comparatively very easy: the government was almighty, exchange rates were fixed, the economy was closed, control over unions, businesses and the press enormous and, in short, that the key to his success in those years had been the willingness of the government to control itself. In other words, a world absolutely contrasting with the current one, in every sense. I was impressed by his humility and his mental clarity, which led him to visualize the current world as radically different from the one he had led.

The government of President Peña arrived determined to recreate the past but never could achieve it and it is there where it got stuck. López Obrador is convinced that it is not only possible but necessary to go back and, therefore, his proposals are all retrospective and nostalgic. Unless he is willing to destroy everything that exists, there is no reason to think that he will do any better.

The current electoral times compel the voters to elucidate between the options, those that seek to resolve the wrongs that remain or accept the nostalgic solution, each one with its consequences.

I wonder if it would be possible to deal with emotions and, at the same time, advance the development of the country. Part of the reason why nostalgia is so attractive is the fact that, despite having advanced on some fronts, the population feels harassed and paralyzed. Faced with criminality and the apparent absence of options, nostalgia becomes extraordinarily seductive.

The only way to break the vicious circle is to get out of there: to confront nostalgia with a different project that, building on what exists, proposes solutions rather than a return to what stopped working, opportunities instead of utopias. This may involve a new political arrangement, social reforms of various kinds or political and economic initiatives that make it possible to launch a new era of high-quality educational, infrastructure and health paradigms. Above all, a new vision.

Until now, for several decades, the entire government strategy, regardless of person or party, has focused on marginally improving what exists, but always without breaking the political status quo. Maybe it’s time to rethink the political arrangement, because that’s where everything has got stuck. A new political regime does not imply the destruction of the what exists, but it does involve fundamental changes: first and foremost, modifying the purpose of the government and, therefore, its priorities.

If the priority is no longer the preservation of the status quo at any cost, the opportunities become endless and the promises, which appeal to the emotions, become credible. Everyone knows what’s essential: physical and patrimonial security, legal certainty, elimination of the causes of corruption, high quality education and infrastructure (in the broadest sense) for a great future. Everybody knows it but one government after another has shirked that responsibility. The key lies in breaking with the vicious circles in which Mexico has been plunged for decades and that, despite real advances, many enormous ones, keep the country paralyzed and demoralized. This is no rocket science, but its implications almost are.

www.cidac.org
@lrubiof