Luis Rubio

The saying goes that one defies nature at his own expense and risk. In economics, there is ample evidence of the risks involved in challenging the most basic principles of human behavior. The idea that government should devote its actions to reconstruct a bygone era cannot lead to anything other than failure. In plain terms, no government can survive if it disregards the context within which it attempts to conduct public affairs. 

Three moments changed the history of the world in a radical fashion: the invention of the Gutenberg printing press, the Industrial Revolution and, more recently, the Digital Revolution. Each of those moments transformed humanity and altered all patterns and ways of life. Just as there were people making whips for horse-drawn carriages when the automobile appeared, the desire to reconstruct the lost fatherland of the past is absurd given the Digital Revolution we live in.

Each of these transformative moments in history was accompanied by dislocations. The most conspicuous and well known is the effect that the arrival of the steam engine had on production  at the dawn of the Industrial Revolution. Previously depending on people assisted by pack animals, production was revolutionized in a matter of years. This change left behind a trail of suffering in the form of poverty, unemployment and uneasiness. Anyone who has read the harrowing chronicles of Charles Dickens can understand the enormous human cost that these processes of change entail. The memories of such processes explain the reluctance to accept their inevitability and, above all, the impotence -of both individuals and governments- in the face of the unstoppable force of such Revolution.

The time we are living in presupposes exactly the opposite of what the current Mexican administration of President Andrés Manuel López Obrador (AMLO) intends to do. To begin with: tomorrow was yesterday. Everything is interdependent, and nothing waits for you. What happens in China or France affects everyone in the planet and can unleash actions that seemed unimaginable a minute prior. Just as Brexit practically annihilated the traditional British political parties, Mexico’s ruling party (MORENA) emerged as a movement that, in just a few years, displaced all existing political forces. Nothing is permanent anymore. The only constant certainty is that nothing is constant.

Second, the traditional educational system is no longer relevant in a world in which the skills demanded by the economy change inexorably. Mexico’s old teachers’ unions will continue to protect the interests of small groups or of the most extreme elements in the current Mexican government. However, they are nothing more than obstacles to the adjustments that today’s education needs in order to make children successful in a world they will have to faces sooner than anyone could have imagined.

In the same way, the once all-powerful Mexican government has no choice today but to manage its weakness if it wants to remain relevant. This structural weakness has nothing to do with the immediate political moment we are living in. It has to do with the way that communications, markets and citizen demands work now. The key lies in government strengthening and rendering efficient its primary functions such as security and basic services. The ambition to control everything is just a chimerical idea that defies the basic laws of nature, this is, reality. López Obrador’s predecessor in the Mexican Presidency, Enrique Peña Nieto, attempt it and one can see where he is today.

The challenge for the Mexican government today is flexibility and adaptability, not control and dogmatism. Certainly, wealth in Mexico is poorly distributed and everyday life leaves much to be desired. All this manifests itself in a nearly total shutdown of social mobility, the factor that provided Mexico decades of progress and stability during the past century. The solution is not to be found in more government spending, greater austerity or in an always elusive tax reform that solves everything. It is rather to be found in a very different use of Mexico’s public resources. If the key component for economic success is adding value through knowledge, it is  impossible not to conclude that what is urgent is a radical change of direction in the nature of the Mexican education system. Needless to say what this change could imply for the functioning of Mexico’s justice and security system as well as for the markets.

The changes that Mexico requires to build an accelerated development platform are many and undoubtedly complex. However, to achieve their objective, these changes must be compatible with the Digital Age. Authoritarianism, government control, contempt for education and rejecting the nature of the 21st century’s economy are reactionary recipes that will only impoverish Mexico. The series of reforms that the current Mexican government has undertaken, and those that it proposes to carry out in the upcoming months, are the product of nothing more than nostalgia for the past and resentment.

However one wants to measure it, all these actions will impede progress, and will provoke the opposite of  what was sought because they imply ignoring and challenging reality. It is not a good starting point to say the least.

As commendable as it might be to seek to return to a less convulsive and accelerated time, it is a futile effort that in itself defies the force of nature and that involves incommensurable risks.

* Luis Rubio is chairman of the Mexican Council on Foreign Relations (COMEXI) and of México Evalúa-CIDAC. A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition. 

Twitter: @lrubiof

https://mexicotoday.com/2020/11/25/opinion-against-nature/

www.mexicoevalua.org
@lrubiof

Luis Rubio

One key question in Mexico these days is understanding whether corruption is a tool for the government to advance a political project or an evil that should be eradicated. What is certain is that both things cannot coexist given an evident flagrant contradiction: corruption is either something government makes use of or something it fights to erase from sight. Available evidence shows that corruption is an instrument in the hands of the current Mexican government to consolidate its political base and power at large.

Government corruption is an ancient vice in Mexico, but not an inexplicable one. In historical terms, there are two factors that have fostered and allowed corruption to take root. In the first place, Mexico’s post-revolutionary political system transformed corruption into an instrument of power. The political regime that emerged from Mexico’s revolutionary era required the creation of a mechanism to satisfy the ambitions of the many leaders on the winning side and that could consolidate its hegemonic nature at the same time.

The key to solve this post-revolutionary Mexican dilemma laid in creating a system of political loyalties nourished by two components: on the one hand, access to corruption and, on the other, interrelated complicities. The former would allow the existence of a verbal arrangement to justify any act and to excuse anyone stealing as some sort of service to the nation. People would often say: “the Revolution did justice to them”. Government and party jobs were assigned following one rule: reward loyalty. This can be summed up in another revelatory popular dictum of Mexico’s authoritarian era: “Don’t give me anything, just put me where there is”. People appointed to become purchasing managers at the different Mexican government Ministries (or even better, at a government-owned company like Pemex) knew that they have been sent there not to improve productivity, but rather as a reward for their loyalty.

Another factor that fosters and that renders corruption possible in Mexico, is the nature of the legal system. For example, construction inspectors in Mexico know that their function is not ensuring that the authorized blueprints of buildings are complied with. They know that their job is rather one of negotiation between what has been authorized and what the builders are actually doing. Under-the-table arrangements allow buildings to have 15 floors when they were originally authorized to have 10. Still, the responsibility does not lie with the inspector or the builder, but in the Mexican legal system that confers such vast discretionary power upon the inspector.

Discretionary power becomes in the end arbitrary power because it does not have to comply with any previously established and duly published code, regulation or rule (the basic condition for an effective Rule of Law). The discretionary power that a government official has in Mexico grows as he ascends through the bureaucratic hierarchy. One example is the law of foreign investment that the administration of president Luis Echeverría (1970-1976) advanced. The bill’s title did not leave any doubt of its goal: Law to Promote Domestic Investment and Regulate Foreign Investment. One might agree or not with the objectives or specific limits to investment established in it but the wording of the law was clear and it intended to give certainty to potential investors. However, the law also included one clause granting all-encompassing powers to one single Minister in the Mexican government who was able to redefine limits to investment following his or her own judgement. With this ability, the foreign investment law ceased to have any relevance given that this discretionary power superseded the law itself. The point is that discretionary power easily becomes arbitrary and, thus, a wellspring of corruption within the government, between citizens and the government, and also among private actors themselves.

Corruption in Mexico assumes many forms and not all of these necessarily involve money: taking advantage of public resources, profiting from the government’s budget and buying land through which a future highway will pass are just some of the many means of illegal enrichment. They have become an intrinsic component of what is Mexico and no political party is untainted, including the current López Obrador administration. The diversion of public funds to nurture political clienteles is corruption no matter how it is disguised.

In addition to time-honored modes of corruption, Mexico is witnessing the growth of other phenomena not entirely new: the pardoning of corrupt officials or businesspeople close to the government, the destruction of government institutions, the elimination of key services like daycare for working mothers and the scarcity of medications in public hospitals. All of these are forms of corruption that prevail in Mexico given the country’s full impunity.

The two crucial sources of corruption in Mexico –the nature of the country’s legal system and the informal system to repay loyalty- can be eradicated in that both arise are from factors that are known and, at least in principle, modifiable. But none of that is being done. The decision to send to jail the former Social Development Minister Rosario Robles and the President’s use of the bully pulpit to attacks his alleged opponents are in no way different from the arbitrary actions of any previous Mexican administration. The idea behind these actions is not to expunge corruption but the derision of people. The president is applying a pliable standard and not acting following the law.

Thus, political rhetoric changes but corruption persists. As it has happened in other times in post-revolutionary Mexico, what we are seeing today is a process that has to do with consolidation of power, nothing more.

* Luis Rubio is chairman of the Mexican Council on Foreign Relations (COMEXI) and of México Evalúa-CIDAC. A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.
Twitter: @lrubiof

Opinion | Corruption and Impunity

www.mexicoevalua.org
@lrubiof

Council on Foreign Relation, November 10, 2020
Luis Rubio,
Chairman, Mexican Council on Foreign Relations (Mexico)

The U.S. founding fathers clearly stated that the United States would be a republic, not a democracy. This distinction has become one of the most contentious elements in American elections and the cause of mockery the world over, particularly in fragile democracies and in countries led by authoritarians close to Trump. Although the media has declared Biden the winner, Trump has not conceded, creating dangerous uncertainty. The election has proved much closer than expected and the primary long-term consequence will be the further erosion of America’s greatest asset abroad: soft power. Over the past decade, the United States—promoter of democracy, liberal values, and market economics—has squandered its image and institutions as its politicians abused them and Trump undermined them.

Few nations have been hit as hard by Trump’s rhetoric and actions as Mexico. Starting in 2016 with his campaign strategy of blaming “Mexican rapists” for American ills, Trump went on to force changes to the North American Free Trade Agreement (NAFTA), a vital factor of Mexico’s economic growth. He produced a new agreement that, despite establishing rules for economic interaction, undermines the value of NAFTA: legal and political certainty for investors. Forgoing geopolitical considerations critical to its security and even with its closest of neighbors, the United States under Trump has been inward-looking and incapable of understanding long-term trends and consequences. The prospect of four more years of similar policies was not enticing.

How much damage is done between now and Biden’s inauguration on January 20 will be crucial to the future of the United States. At stake will be the strength of American institutions, which will almost certainly be tested by Trump’s refusal to abide by tradition. “A republic, if you can keep it,” Benjamin Franklin said. The world will be watching, from some places with malicious intent, but most with the hope that the United States will once again prove to be a shining light of democracy and institutional strength.

https://www.cfr.org/article/biden-and-world-what-us-presidential-transition-means

Luis Rubio

Sir Winston Churchill is often quoted as saying: “Americans can always be trusted to do the right thing, once all other possibilities have been exhausted”. And boy have Americans tried their best! As US presidents, both Barack Obama and Donald Trump stretched the limits of their mandate to the utmost in opposite directions: they polarized US society, accentuated the fault lines that already existed fueling hatred and other passions. While media projections have declared Joe Biden as the winner of last week’s presidential election, Trump has not recognized him leaving the process in limbo.

 Trump has not been a typical president. His opening act during the 2016 presidential campaign was that of a rebel who would not adhere to any rule. Instead of building, Trump dedicated himself to tearing down things and instead of trying to fix things, Trump devoted himself to lash out. As president he has been disgraceful, but no one can deny Trump’s merit of having advanced the agenda he promised in fiscal, regulatory, environmental, and trade matters. One may or may not agree with Trump’s view of the world, but he was been consistent with what he promised to his electorate. As for the rest of the US public, Trump has responded: to hell with your institutions.

Biden was not the most attractive or dynamic presidential candidate out there, but he was the only one who was able to unify the Democratic Party. Despite his obvious limitations, circumstances could not have been better for Biden’s rise: the Covid-19 crisis undermined Trump’s main advantage -the accelerated growth of the US economy, employment and wages- and the press could not have been kinder to him. As president, Biden will have to deal with a complex political landscape, starting with his own party, which has shifted to the left in a way that frightened much of the US electorate, including his own.

The Democratic Party has not only moved to the left, but in recent months, it produced violent and destructive movements on the streets of multiple cities. Biden was unable to dissociate himself from these movements, something that undoubtedly influenced the result. In the face of this scenario, many key independent voters ran back to Trump. In addition, the incipient recovery of the economy and of employment after the Covid-19 downturn, allowed Trump to argue that his strategy was still a winner. Although the polls continued to show a high probability of a win for Biden, the margin kept closing in the last days of the campaign.

Biden was not the natural candidate for the Democratic Party. He won the presidential nomination precisely because he did not threaten any of its components. Biden emerged as a candidate because, Democratic Party’s establishment recognized that Bernie Sanders, the favorite of progressives, had no chance of winning because most of the party remains moderate. Still, it is now clear that all that was insufficient for the Democrats to achieve a decisive victory. Trump continues to have a solid base and, despite his bad manners, many Democrats and independents fear the advancement of progressives’ initiatives more than the intemperance of the current president.

Biden’s main strength is very simple and obvious: he is not Trump. The huge pushback against Trump was enough for Biden to navigate calmly through the campaign. If he wins, Biden will have to contend with the reality of a very divided nation, characterized by extreme positions and contempt among voters with opposing party preferences. And that without counting the huge differences within his own coalition regarding governing agendas and expectations

What is fascinating about the US is the insularity of the two worlds that comprise it. People in the East and West Coasts tend to have an optimistic view of the world, a jobs and income structure increasingly tied to the information economy and a propensity to Europeanize their health care, pensions and other services. On the other hand, the inhabitants of the Midwest (particularly the so-called Rust Belt) live amid precariousness, pessimism and lack of opportunities that the world’s economic and technological transformation has denied them. The contrast in the quality of education between the two regions is staggering. Obama gave precedence to the former, while Trump to the latter. Both Presidents were polarizing forces in the eyes of the opposite side, leading to the tensions expressed in last week’s election.

What is striking about this US presidential election is not the immediate result but its dynamics. What was forecasted as a safe, and even overwhelming, victory by Biden ended in a virtual draw. The new president’s margin to maneuver will be limited, largely determined by the final outcome of the elections in the US Senate. Trump would have no problem with a scenario like this given that his only goal will be to persevere on a divisive governing agenda. For his part, Biden will have to find a way to work with his Republican counterparts to build common ground to restore a semblance of order, repair key institutions, and achieve domestic peace. The good thing about this challenge is that it matches Biden’s personality neatly and will allow him to leave aside the progressive base that did so much damage to him in this election.

* Luis Rubio is chairman of the Mexican Council on Foreign Relations (COMEXI) and of México Evalúa-CIDAC. A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.
 Twitter: @lrubiof

Opinion | Hangover

www.mexicoevalua.org
@lrubiof

Luis Rubio

The popularity of the President of Mexico, while lower than before and of some of his predecessors, continues to be high. Many ask themselves how this is possible given the complex, uncertain and remarkably deteriorated situation of the country and of the economy. The President has devoted himself to undermining all the foundations of development, to debilitating the factors that make economic growth possible, and to eliminating the mechanisms built to confer stability and predictability of governmental actions. Despite all that, his popularity does not appear to be affected by his decision-making style nor its consequences. This is not an esoteric question nor is it difficult to elucidate.

The President’s popularity sustains itself on various elements, not all of which are found under his control. First, the extraordinary propagandistic strategy of his early-morning briefs exerts the effect of keeping his social base captive. This component is key to his popularity and has been proven over time: the connection of the President to the population is real and transcends readings of it based on reason. As in all quasi-religious couplings, it is sustainable while the ingredients that feed it, above all the president’s credibility, endure. The President exploits a profound and ancestral resentment of a broad segment of the populace that has felt betrayed for decades or centuries due to unmet promises. The hate that he promotes toward persons, institutions and groups falls on, and indeed fits the population that begrudges many aspects of the national reality like a glove. In its extreme, it has achieved the creation of fanatics among constituents who consider him a savior.

The second feature of his popularity lies in the most tangible of errors of the traditional political parties in recent years, particularly the so-called “Pact for Mexico” organized by former President Peña Nieto. The PAN and the PRD a-critically joined the now infamous Pact, thus making them fully dependent on the PRI’s success of failure on the project, and it also made them inherit the full historical baggage the PRI came along with. There are surely explanations of why they were willingly yoked together, but, in strategic terms, the two “opposition” political parties sold their souls to a president whose objectives were not the transformation of the country through the reforms pledged, but the enrichment of his small coterie of allies. The PAN and the PRD de facto accepted an absurdity: any upside would have accrued to PRI, while all the downside would be ascribed to all three. This meant that, for the average Mexican, the differences among the parties became blurred, a circumstance that today translates into one thing on which President López Obrador has capitalized with singular ability: the citizenry can harbor doubts regarding the management of the current government, but it does not perceive any alternative among the established political parties.

The great flaw of the reforms of recent decades resides in their partiality, in that not everything was subject to modification. The central, implicit, condition of the reformer project rested on protecting the “system” and its beneficiaries: like the Teachers’ Union (SNTE and CNTE) as well as the political class or particular interests –private, union, political- of any ilk. That guaranteed that the benefits would not be disseminated equitably, which can be appreciated as otherwise obvious in the regional contrasts that linger. This comprises a third mainstay of this presidential popularity: he has been able to convince a segment of the population that the system does not work for them, profiting as it does from their accumulated feelings and resentments.

Ultimately, however, popularity is sustained in the use that López Obrador makes of the population and that the latter makes of him. It is a society of convenience that is solely sustainable as long as its pillars are not overly worn down. Thus the enormous impact of the evidence of corruption against the President’s brother, the thefts within the institution supposedly created “to return to the people what had been stolen,” and other cases that are certain to continue accumulating. To this, one must add the mistakes in the matter of health, the lack of medications and the clear-cut incompetence of the government. The Morena party is undergoing what happened to PAN in its time: once in office, it is falling into the Mexican government’s time-honored practices because nothing at the core of its functioning has changed.

The results of Coahuila and Hidalgo states demonstrate that there is something artificial in the percentages of popularity and that, in any case, it is not transferable to the candidates of Morena.

What has definitely changed and that should not be held up to scorn is the solidity and strength of key persons in distinct instances and that have also accumulated. The Supreme Court gave the President carte blanche in his consultations, but the five ministers who voted against this swayed the country with solid and powerful arguments. The minority that blocks constitutional excesses makes a dent in the Senate every day. Public discussion does not desist despite daily threats.

In contrast to the Mexico of a half century ago, there are factors now that limit the worst excesses and there are citizens willing to exert their rights,  providing assurances that although some battles are lost, the pillars of support of the President’s popularity are to a great degree weaker than they might seem.

www.mexicoevalua.org
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Luis Rubio

One feature that defines the current Mexican government is its emphasis on the past. In stark contrast with its predecessors, who always promised a better future, President Andrés Manuel López Obrador (AMLO) appears to fervently believe that one can find in the past the foundation for the future. In reality, the Mexican President battle is a battle to define the country’s future and above all public perception. English writer George Orwell said it best: “He who controls the past controls the future. Who controls the present controls the past.” Therefore, political power resides in the capacity to forge the way in which people perceive the world.

What George Orwell was referring to was “ideological hegemony”, an idea also posed by Italian philosopher Antonio Gramsci. Today, campaign and political strategists call it “the narrative.” Everybody tries to shape public discourse as a means to control public life. A political project can only prosper and move forward without limits to the extent that every citizen (or a great majority of them) accepts such public narrative as valid. This also applies on a lesser scale to particular private interests. President López Obrador’s early morning “press conferences” are exactly that: a means to manipulate and discredit his alleged opponents in order to wipe them out.

However, the mere control of the public narrative does not guarantee progress for the country. If such public narrative does not contribute to unite the population comprehensively it accomplishes nothing more than creating an illusion. This will only frustrate all those who share such narrative. A new public narrative can be extraordinarily powerful but pointless if its goals are impossible to reach. The unsolved investigation surrounding the disappearance of the 43 students of the Ayotzinapa Teachers College illustrates this well. When it arrived in power, the AMLO administration changed the public narrative. It vowed a new investigation and it nearly promised the students’ parents that they would see their children again. It is clear that many of the parents understood it this way. At present, many of those parents are coming back with the same demands as in years past. Independently of the soundness and honesty of the previous administration’s investigation, the current government knew well that the eventual return of the students was impossible. The López Obrador government was able to appease the victims’ parents temporarily, but their demands seeking to find their children are resuming with renewed fury. Nothing is free in politics, and the AMLO administration’s response to the Ayotzinapa case exemplifies its entire approach to governing.

A fallacious public narrative based on a biased and prejudiced reading of history magnifies a country’s problems and exacerbates polarization. The public narrative coming out of President López Obrador’s morning press conferences is not capable of moving his own governing agenda forward. It is not unifying the Mexican people around a common goal even if it implies the submission of specific groups or interests. Furthermore, the President’s public narrative also nurtures the rise of alternative narratives including some exceedingly reactionary. For example, the fight to discredit an education model based on merit also erases any incentive to create jobs and improve wages. If the idea of merit ceases to be relevant, violence ends up being a legitimate tool and crime ends up being a reasonable response in face of Mexico’s dominant inequality.

A public narrative designed to polarize is born from the idea that it is not necessary to accept reality as it is. While changing reality is a rightful objective, achieving such change is impossible if it is based on the denial of reality. Talking about Argentinean politics, film director Juan José Campanella wrote on Twitter some years ago: “Let’s not allow the immense (government) corruption to hide the management (of the country). The management was worse”.

Almost two years into López Obrador’s term, Mexico find themselves at what seems as a transition stage. Back in 2018, the current government arrived in power lambasting the corruption of others, only to find itself with that its own corruption is not a lesser one. This took the wind out of the AMLO administration’s sails. Soon, Mexicans will begin to realize the woebegone quality of the government’s management. It is true that the AMLO government is not guilty of emergence of the Covid-19 pandemic but it will inexorably be guilty of the way of it is managing it. The administration will be responsible for what it did, what it did not do and what it does in the coming months. No public narrative can hide a reality like the one that it is starting to take shape in Mexico.

The past is certainly the origin of what we have today but it cannot be the cornerstone of Mexico’s future. It is precisely such past which produced the outcomes and distortions that Mexicans now find unacceptable and that were at the heart of President López Obrador’s campaign promises. Like everything else in life, every age is full of strengths and shortcomings. However, time marches on and alters the conditions that gave birth to both.

Mexico’s so-called era of “stabilizing development” of 1950s and 1960s yielded some 20 years of high growth and stability. This economic model allowed the accelerated growth of an urban middle class but the circumstances rendering it possible disappeared. This outcome was the result of changes in the international arena and especially, of mistaken measures taken by Mexico in the early 1970s. Were it not for the sudden discovery of vast oil fields, Mexico’s drunken spree of the late 1970s and at the early 1980s would not have taken place. Mexico would have been in a better place. However, this runs against President AMLO’s early public narrative. With all their successes, failures and biases, the economic reforms that followed had no other purpose than to solve the same woes that President López Obrador claims to fight: the low pace of economic growth, the inequality among Mexico’s regions along with political instability. Knowing real history matters greatly.

All governments need to build their own public narrative to attest their own legitimacy and to be able to govern. Only those governments accepting reality as it is are successful.

* Luis Rubio is chairman of the Mexican Council on Foreign Relations (COMEXI) and of México Evalúa-CIDAC. A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.
Twitter: @lrubiof

https://mexicotoday.com/2020/10/26/opinion-narratives/

www.mexicoevalua.org
@lrubiof

Luis Rubio
In memory of Dr. Guillermo Soberón

Spanish writer Francisco de Quevedo wrote: “When we say that all time past was better, we condemn the future without knowing it”. The past was not always better, but it is easier to envision it because it stays frozen in time. The new dogma is that the Mexican economy was going very well into the 1970’s and that the subsequent economic reforms were responsible for its destruction. The so-called neoliberal model may be obsolete and may have caused innumerable failures but the notion that returning to the past will solve Mexico’s current problems is pure nostalgia. New thinking will be needed to get out from the Covid-19 pandemic downturn.

The diagnosis of economic problems requires a minimum of honesty regarding the nature of those issues requiring a solution. For example, the current assumption is that Mexico’s annual average growth rate during the past three decades (of around 2 percent) was mediocre, which obviously it was. But this average growth rate hides more things than it reveals: the Mexican economy has become ever more complex and has experienced great fragmentation, with some Mexican states growing at nearly Asian rates, while others are lagging behind.  In this respect, what must be understood is the reason behind these abysmal regional differences.

The idea that what we need is to “Mexicanize Mexico” is nothing more than an ideological catchphrase oblivious to the basic reality of the past decades. Without a doubt, the citizens of Chiapas, Oaxaca and Guerrero are totally right to protest the huge stagnation that these southern Mexican states have fallen into. In great measure, factors of real power within their own milieus have thwarted change. This in addition to what successive Mexican federal administrations have failed to accomplish. In the same manner, when one visits the states of Aguascalientes and Querétaro, the impressive transformation that they have undergone is immediately evident. The relevant point at issue is to understand what the former Mexican states have done poorly and what the latter states have done well.

Those yearning to recreate the Mexico of the 1970s are right when they say that the country is more unequal today given the contrasting growth rates between different Mexican regions. However, resurrecting the economic strategy of half a century ago is impossible for two reasons.

The first reason is that the sociopolitical and economic realities of yesteryear do not have any similarity with those of Mexico today. In the old era, growth was explained as the result of an optimal combination of government investment in infrastructure and private investment. During those years, private investment responded to a framework of certainty that was the product of a clear understanding between the factors of production and the Mexican government. It was not a perfect world but it was extraordinarily successful while it lasted.

The second reason of why it is impossible to reconstruct the Mexico of the 1970s, is that the key element rendering possible high growth rates during those years –oil production and the expectation that prices would increase permanently- are no longer present. In addition to that, Mexico’s oil production has decreased in absolute terms and its relative importance to the entire Mexican economy has radically diminished. In later decades, manufactured goods replaced oil as Mexico’s growth engine. Those Mexican states that embarked in following such path have gained jobs and new sources of income.

There are many misconceptions influencing the current Mexican government’s thinking. The first and most important, since the rest depends on this, is that Mexico abandoned the so-called “stabilizing development” economic model on ideological grounds. In fact, during the 1970s and 1980s, several Mexican administrations made ludicrous attempts to prolong the life of such economic model at a time when its foundations had already disappeared. Yet, the most important thing to remember is that it is impossible to go back to a world that no longer exists.

The central point here is to say that the reason why Mexico abandoned the “stabilizing development” model was because the economy stopped growing. While Mexico was going through an oil binge, the rest of the world changed its ways of production, advancing headlong into the world market. The subsequent reforms to the Mexican economy were nothing more than a recognition of the new economic reality. Going back in time will only deepen Mexico’s ills.

The implementation of a new model required Mexico to develop novel sources of economic certainty. The anchors that had previously sustained Mexico’s growth were wiped out during several political earthquakes like the 1982’s expropriation of private banks. The North American Free Trade Agreement (NAFTA) in 1993 was an economic development tool whose importance was based in generating trust in Mexico among investors and entrepreneurs.

Those Mexican states that joined the new economic logic -based on manufacturing- were transformed. Those that did not were left behind. The key thing to understand are the obstacles that impede investment to reach Mexico’s poorest states and thus act in consequence, not rhetorically, but in reality.

Evidence shows that factors such as property rights and the rule of law are increasingly more important for economic growth the higher the level of development (Acemoglu, 2003). If one asks an auto company what were the reasons that made them decided to set up a plant  in Puebla or in Durango (and not in the southern states of Oaxaca or Chiapas), these arguments would doubtlessly feature prominently in its answer. The key lies in certainty and political harmony.

Focusing solely on Mexico’s growth rate is a distractor given that it lets championing grandiose government projects instead of paying attention to the country’s sociopolitical complexity. The dilemma between growth and stability is a false one, as exhibited by virtually all Asian countries where governments have devoted themselves to smoothing the way towards prosperity. The issue is not an ideological one, but rather a practical one. That is the true departure point.

* Luis Rubio is chairman of the Mexican Council on Foreign Relations (COMEXI) and of México Evalúa-CIDAC. A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.

 Twitter: @lrubiof

https://mexicotoday.com/2020/10/20/opinion-the-nostalgic/

Luis Rubio

If politicians say it, it must be true. That is the way Mexican politics has worked during the past years: pure verbosity. One needs no more than to listen to the endless ads by Mexican legislators claiming to have fixed one problem by passing a new law. Problems suddenly vanish. If it just were so easy. Of course, many issues that are key for Mexico’s development do require legal reforms. However, the mere fact of passing a law or voicing a pompous government statement does not solve the problem. It is pure sham for politicians’ speeches. 

It is said that we Mexicans live in a democracy. This is in part true given that today Mexicans elect their leaders and legislators in clean and free elections. This is not a small matter after decades of electoral frauds and decisions from the top down. Nevertheless, the  average Mexican citizen has not improved discernibly just because of that fact. There is one critical exception: Mexican leaders have today less capacity to commit abuses than in the past. But if by democracy we understand representation, participation and limits to the leaders’ ability to commit abuses, Mexicans are very far from having arrived there.

The easiness with which current administration has been able to erase any trace of checks and balances demonstrated the frailty of Mexican democracy. Despite this, democracy liberated Mexican citizens from authoritarianism. Above all, it also gave free rein to Mexican politicians -party leaders, lawmakers, state governors, Presidents- to build a rhetorical scaffolding that never comes to fruition. It is the pretense that Mexico moves forward when, in reality, specific problems are not even clearly defined nor are they diagnosed correctly to solve them.

In their book on how the former Soviet countries in Europe evolved after the fall of the Berlin Wall, Ivan Krastev and Stephen Holmes describe how the Russian élite employed language in order not to change the status quo, that is, they built a fake democracy that allowed them to keep their lives of privilege. However, Krastev and Holmes stress that the most important aspect was that pretending living in a new democracy was entirely natural given that they have pretended that communism was democratic and worked well for the two decades prior to the end of the Soviet Union. Any resemblance to the way Mexican democracy evolved is purely coincidental.

Perhaps the most transcendental question would be whether Mexican citizens believe politicians’ rhetoric and accept it is the supreme word. Undoubtedly, many politicians not only believe their own words (and their lies), but that they also assume they become real once they utter them in public. Yet, there is a crucial element that is part of citizenship: history suggests that people believe what politicians say, until they stop doing so. Rhetoric is an inherent part of politics. However when facts on the ground do not change or when day-to-day reality does not take a turn for the better, the relationship between politicians and citizens deteriorates inexorably. The experiences of former Mexican Presidents Vicente Fox (2000-2006) and Enrique Peña Nieto (2012-2018) ought to teach us a lesson about this.  The question still up for grabs is when the same thing will happen with the current López Obrador administration.

This behavior has brought Mexico to a standstill for several decades. Instead of debating the nature of problems and potential solutions, Mexican politics has cultivated verbosity and pretense. The mediocrity that these two rhetorical elements have encouraged is not only reflected in the country’s lack of economic growth but also in believing the idea that growth is even necessary. This mediocrity is also exemplified today in the daily Presidential press conferences whose main goal is to divert attention away from relevant matters.

At bottom, the key problem of Mexico’s political system is perhaps the dysfunction (if not the absence) of a government inclined to comply with its responsibilities from the most basic, such as providing security, to those that are essential including creating the conditions for progress in the broadest sense of the term.

The phenomenon is clearly explained by Francis Fukuyama: a country’s progress depends on the existence of a competent government, an efficient system of accountability, and a democratic electoral system. However, Fukuyama asserts that the order in which these factors arrive is crucial. If a country becomes democratic before building a strong and competent state, the result will be paralysis, dysfunction and, potentially, instability.

Mexico built a great scaffolding to guarantee clean elections. However, it did not transform its system of government into one capable of guaranteeing the country’s social and economic viability. The Mexican government ended up being frail, lacking in suitable tools for the challenge, with weak and mostly powerless institutions (from the Supreme Court to independent agencies) and overwhelmed with non-institutional disputes among political actors.

Political rhetoric has allowed to disguise the fragility of the Mexican government. However, it has also impeded it being addressed as the main national priority that it should be. Worse yet, it is being taken advantage of in trying to recast the omnipotent Presidency of yesteryear that in the end left Mexico where it is now.

* Luis Rubio is chairman of the Mexican Council on Foreign Relations (COMEXI) and of México Evalúa-CIDAC. A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.

Twitter: @lrubiof

https://mexicotoday.com/2020/10/13/opinion-pretenses/

Luis Rubio

Karl Popper, the great scholar of democracy and open societies, wondered once: “What has to be done if ever the people vote to establish a dictatorship?” According to Popper, most democracies include clauses in their laws to prevent that from happening, such as requiring qualified majorities in Congress. Legally or not, the fact is that Mexico’s governing party (Morena) -and therefore President Andrés Manuel López Obrador (AMLO)-  has a qualified majority in the Lower House of Congress and is not far from achieving the same feat in the Senate. In a system of separation of powers, the Mexican Supreme Court was the only branch capable of preventing the consolidation of a dictatorship. Unfortunately, the court fell short.

Each branch of government within a democracy has a specific origin, a structure, and some responsibilities. While the executive and the legislative branches are elected by the people and need to stay close to what citizens think, the Supreme Court was designed to keep some distance from day-to-day things. Using the long-term perspective presented by the constitutional framework, the court examines the proposals, decisions and laws that are the subject of the other two branches. The court’s function is not to be popular but to keep a balance and break the ties between the two other branches of government.

When a branch of government endowed with such powers abdicates its responsibilities it fails society and opens the door to other abuses by the other branches. In the case of Mexico where the executive controls the legislature and routinely subordinates it to its interests and preferences, the Supreme Court was the only stronghold of constitutional protection left to citizens. With its decision last week to endorse López Obrador’s idea of a referendum to prosecute five former Mexican Presidents, the Supreme Court gave in, bowed to the will of the President, and lost all credibility. With a subservient Supreme Court now transformed into a mere clearinghouse of the President’s wishes, there is no longer need for López Obrador to push to create a separate Constitutional Court as he initially had suggested.

Instead of evaluating the constitutionality of the proposed referendum to prosecute the former Presidents, the Supreme Court chose to elucidate  “the feelings of the people” (in the words of President López Obrador himself). There are only two possible interpretations of the Supreme Court’s decision both of which are bad. The first interpretation is that the majority of the Court’s justices believe that politicizing justice is legally valid. A second interpretation is that the Court chose to avoid a conflict with President López Obrador by caving to his wishes. Both interpretations are bad news for Mexico’s democracy and even worse for the rule of law.

The referendum’s proposed question has been widely debated, so I will only highlight three points. First, the referendum is not a legal issue but a political one. President López Obrador wants to be on the ballot in the 2021 midterm election to boost his party’s chances of retaining the majority in Mexico’s Lower House of Congress. The Supreme Court has now given López Obrador what he was not able to do when he unsuccessfully proposed the idea of holding a recall referendum. It is clear to me that the last thing that President López Obrador cares about is to indict his five predecessors even when he would undoubtedly like to see one or two in jail for strictly personal reasons. Second, there is enormous resentment against various former Presidents, partly fueled by López Obrador himself but also in large part by Mexico’s 1994-95 financial crisis and the 2006 Presidential election. Instead of changing reality and solving those grievances through better public policies to improve the quality of life of citizens, López Obrador has opted for a strategy of confrontation and distraction. The referendum to prosecute the five former Mexican Presidents fits this purpose like a glove. Finally, the Supreme Court’s ruling opens the door to any matter be subject of a referendum. It will surely occur to many that new referendums could be used to deal with things like the poor performance of the López Obrador Administration, the current government’s corruption, water rights in Chihuahua state or the management of the Covid-19 pandemic.

One of the peculiarities of power in Mexico is its excess. Mexican Presidents (and especially the current one) enjoy an almost unlimited power, free from checks and balances, which makes them believe that they are omnipotent. To the extent that their actions foster and nurture that sense of absolute power, Presidents begin to believe that their reality is permanent, indisputable, and legitimate. Their advisers and officials become complicit (conscious or not). The mere fact that President López Obrador believes that there is no corruption in his government is an early sign of this fact.

History, however, teaches us another lesson. Only when they are no longer in government (and usually in a bad way), Mexican Presidents begin to realize the mistakes, costs, and deficiencies that happened during his term in office. That is the time when the attacks and demands against them begin: right when they are no longer in control of those government tools that can vindicate them. It never fails.

There are two big losers of last week’s Supreme Court’s decision. First and foremost, Mexican citizens who (whether they recognize it or not) always benefit from the rule of law, now further weakened. The other big loser is, paradoxically, the President himself, whose acts can now be inexorably subject of a referendum.

* Luis Rubio is chairman of the Mexican Council on Foreign Relations (COMEXI) and of México Evalúa-CIDAC. A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.

 Twitter: @lrubiof

Opinion | Falling short

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Luis Rubio

“Each generation doubtless feels called upon to save the world” Albert Camus begins saying in his speech on obtaining the 1957 Nobel Prize in Literature. That is the spirit with which Mexican President López Obrador appears to have undertaken his government: change everything. There were good reasons to change what did not work, thus opening an opportunity toward the integral development of the country. But instead of following that route, he has dedicated himself to the destruction of what exists, which entails profound and serious consequences for the future.

There is no doubt that the president inherited an infinity of problems and maladjustments, but also some very successful and functional assets. However, his logic has been to deny any value whatsoever to what exists without even the offer of an alternative. As a method of distraction, it is a diversionary tactic that is potentially effective, but only for the short term. Four long years from the conclusion of his six-year term, the country requires more than distractions.

First the distractions. By nature, the president confronts and stigmatizes: he does this with the economy, with former presidents, with the business community, and with the entire gamma that what he groups, using one of his favorite words, the “adversaries.” As a strategy of government, it is a useful instrument, as long as the essential works, that is, that the economy runs in reasonable fashion, that at least indispensable jobs are created and that the citizenry enjoys sufficient satisfiers in their daily life. The problem is that the essential is not working and, in fact, it has begun to spring leaks, not only because of the pandemic, but also due to the lack of investment. Because of the manner in which he disposes of public funds (transfers to electoral clienteles with little or a null multiplier effect) the government does not possess the capacity to invest, and because of the way that he frightens investors, nor is there the materialization of private investment. One must question oneself as to what benefit there is in confrontation.

Second, the rhetoric does indeed matter: presidents, in the way they communicate, fabricate political facts and more so in a country with institutions so weak that the president has summarily thrust them aside. The presidential vernacular alienates vast sectors of the population, reverting into criticism of the president himself, as well as into the absence of opportunities for the completion of economic projects. Expectations are highly negative and overcoming them will become increasingly difficult. In a country with the demographic profile of Mexico, with so many young people, six years without the creation of jobs represents an enormous sociopolitical risk. So great is this that one of the targets of the president’s clientele strategy are precisely unemployed youths. But if the economic trends proceed as they have to date, there will soon be no sufficient budget for so many unemployed persons, young or old.

Third, the presidential popularity is not fictitious, but it is also not immovable. Everything indicates that this popularity is sustained on two mainstays: before anything else, on the credibility of the president and his history of denouncing problems such as poverty and corruption. Many Mexicans not only believe him, but they abhor the traditional political alternatives, forcing them to stay where they are, even while many of them are already nursing severe doubts concerning the viability of the governmental project. On the other hand, the strategy of monetary transfers to populations such as that of older adults and young people are not so innocent: they follow a strictly political and electoral rationale. It is very probable that these transfers will not reduce poverty nor will they avoid the recruitment of young people by the narcos. But in terms of an exchange of money for support, these programs are potentially infallible.

Finally, an economic rebound should not be confused with a recovery of the economy. The size of the collapse is such that it is natural, simple logic, to expect a rebound during these and the upcoming months. However, a rebound does not imply a recovery, which is always accompanied by investment, growth in employment and a rise in consumption. None of this is possible to discern at present, the reason that the most benign and optimistic of prognoses are terrible. Without a change in political strategy, the economy will not be able to recover in ensuing years.

I return to the beginning: no one can doubt that the president inherited huge problems, which he himself summed up as poverty, inequality, corruption and low growth. All of these are real problems that merit an integral strategy permitting not only overcoming them, but also their eradication. However, instead of constructing that strategy, the president has devoted himself to destroying everything that exists, much of which is not only functional, but also highly benign. Step by step, the destruction has been rising, to the extent that the moment will come that it will not be reversible. As the anecdote goes about the pilgrim who wanted to go to Rome, if the president wants to build a country according to his vision, he cannot continue on the road he is on.

The discourse of Camus went on: “My generation knows that it will not [change the world], but its task is perhaps even greater. It consists of preventing it from destroying itself.” We have witnessed two years of systemic destruction. Isn’t it time to start to build?

Opinion | Realities & ruptures

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