Luis Rubio
No government, however powerful, can do it all. In fact, its core function is not, nor should it be, “to do things”. Its prime function is making it possible for the country to prosper and for this to create a favorable atmosphere for prosperity, to keep the population safe and to guarantee the protection of the latter’s rights, in the broadest sense. To achieve this implies choosing: defining priorities and facilitating the achievement of its objectives with the participation of the entire society.
The government of President Peña has come in with enormous and overwhelming impetus and has achieved changing the tonic of Mexicans’ attitudes and of public opinion in general. This said, it is brandishing so copious a surge of programs, projects and initiatives in all ambits, that it runs the risk of losing its concentration on the essential. Not only that: the need to maintain the initiative in the media is leading it to daily pronouncements that, while having the benefit of “making it felt” that there is a government in place, it entails the risk of losing its sense of direction.
Just to illustrate, in the ambit of investment and expenditure projects, governmental officials have announced programs to combat hunger, to construct railway lines to Querétaro, Toluca, and another in Yucatán, and they propose modifying the pension regime, developing oil and gas projects and constructing new infrastructure projects. In addition, they will be required to confront the matter of state and municipal debt. In concept, none of this can be criticized: what is doubtful is whether the government has the financial capacity to achieve this. On taking advantage of high oil prices and low interest rates, public expenditures have grown significantly in recent years, leaving little elbow room for the many projects that the new government proposes to undertake.
The point is not to find fault with the projects, but to propose the need for focusing its energy in another direction: instead of pretending to fulfill these projects itself, why not create conditions for private investors to carry them out?
Some months ago, for example, the country began to experience the scarcity of natural gas for industrial uses. It turned out that there was no lack of gas but rather of infrastructure to transport it from the wells where it is produced to zones where there is a demand for it. PEMEX has developed numberless projects for laying gas ducts, which implies, in many cases, that the tracing of these already exists as well as the rights of way to these. Because there are no constitutional restrictions in this matter, I ask myself whether it wouldn’t be logical to offer concessions throughout the country to take advantage of the already advanced state of things in this area and to create myriad regional development engines. The fact of having gas at extremely competitive prices entails a unique opportunity for promoting a new era of industrial development. From this perspective, it is absurd to accept the bottleneck represented by the lack of gas ducts as a done deed. The solution is obvious. And urgent.
The same could be done in all ambits of the infrastructure and, if a serious reform in matters of energy does indeed advance, up to the exploration and exploitation of deep-sea deposits, shale and the whole gamma of petrochemicals that are at present reserved for the State. It would be relevant for the government to develop a true capacity to set and enforce rules through its attributions of regulation and concession granting. Much more intelligent and productive than the use of scarce fiscal resources.
At heart, the great theme of economic development is to be found in the enormous amount of bottlenecks that exist in all activities and that, typically, respond to two types of circumstances: operative or financial incapacity on the part of the government (including the parastatal sector) or poor decisions in matters of previous privatizations and, in general, of economic regulation. These two factors have become apparently unsalvageable chains that bind.
The existing bottlenecks have to do with the way entities such as the CFE and PEMEX operate: their objectives and priorities are not devoted to creating a competitive environment for growth of the economy. Both act as if they were entities independent from the rest of economic activity. On its part the government is confused with respect to its own functions and objectives. Einstein said that “confusion of goals and means seems, in my opinion, to characterize our age”. This without doubt has been the case of the Mexican Government for decades.
The Mexican Government has been an entity wrapped up in itself, devoted to satisfying the interests of its own bureaucratic, political, vested interests and clienteles. This takes place, on some scale, in all political systems, but in Mexico the concentration of this is infamous and translates into lower economic growth rates. Historically, the government has purported to do it all –starting with that which all politicians love to talk about, the “rectorship” of the State, but which they have never done well- and has ended up scoring very poorly as a project promoter, market organizer or company privatizer. Despite the trade liberation, which has been in place now for more thirty years, the country continues to endure the lack of competitive markets, competition in the services area and a clear strategy for growth.
The central matter is that now that there is a government with a renewed sense of authority and with the decision of transforming the country there exists the extraordinary opportunity to redefine its priorities for acting and the very nature of their act. Effective economic rectorship implies the establishment of rules of the game that generate competitive markets, thus opportunities for private investment. It also implies conceiving of the government as the entity responsible for the creation of conditions for prosperity. Margaret Thatcher stated in an interview that the key lies in the government’s not being a burden on society but rather the factor that facilitates its development. This makes all the difference.
Politics is not defined on the plane of intentions but on that of results. As the case of the gas ducts illustrates, there are so many opportunities literally within arm’s reach -low hanging fruit as it were- that a good development strategy and a well-established set of priorities could constitute the transforming factor in the very short term. Henry Hazlitt says that the art of governing “consists of looking not merely at the immediate but at the longer effects of any act or policy; it consists of tracing the consequences of that policy not merely for one group but for all groups”. Here’s a good place to start.
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