Now’s the Time

Luis Rubio

The sum of the expectations, demands and needs of the population do not allow the new government much leeway. A month after his inauguration, Andrés Manuel López Obrador is now formally in charge and is responsible for the daily and the long-term comings and goings of the country. Now it is his responsibility and on him depend not only the satisfiers that the citizenry presses for, but also the change of perspective that he promised.

The paradox of such a resounding win is that there is no mincing of words in terms of the responsibility involved.  When a government emerges from a plurality of votes, as has been the case from the time the millennium began, the president knows that there is a majority citizen contingency that did not vote for him; however, with such an overwhelming triumph, the responsibility is integral and, in fact, absolute. The government of AMLO is responsible for what ensues and this does not make it freer, but precisely the opposite: it has to produce lasting results. In contrast with minority governments, the expectations are virtually infinite, and in a 6-year government, the short-term achievements must subscribe to the final result: there is no margin for error nor anyone else to blame for what goes wrong.

The problem for AMLO is that he does not control all of the variables that will affect his performance, and even those that are found within his sphere of influence, at least in principle, are subject to factors outside of his control. In terms of the former, the Mexican economy is implanted into the world and its main source of income derives from exports, which entails the enormous virtue that the internal errors (of vast transcendence with a coalition so complex and diverse as that which led to the win) are minimized but, at the same time, constitutes a factor of uncertainty about which the government possesses null influence.

The U.S. economy has been in an expansion period for more than ten years after its last recession and, in recent years, has been growing at rates superior to those of its historical average, which has generated a growing demand for our exports. The problem is that no expansion is perennial and this one shows all the signs of a recession in some months or at the beginning of next year. In addition to this, the U.S. central bank, the Federal Reserve, has started to raise interest rates, due to lesser degree to some inflationary threat than to the rapid growth of corporate debt of that country.  Both factors –the potential recession and the rise in interest rates- imply a strong dollar, that is, a devaluated Mexican peso, and lower economic growth due to fewer Mexican exports.

On the other side, in the upcoming months we will see a perceptible growth in the transfers that the governments makes to the so-called “ninis,” young people who neither work nor study, as well as to older adults. This would involve a source of satisfaction for its beneficiaries and higher consumption, but not more economic growth. Independently of what happens outside, internal expectations will improve, at least for AMLO’s base.

Where expectations will not improve will be in the support platform that swept AMLO into power. In a growing and vigorous economy, the government has at hand many means to parcel out benefits to the diverse groups comprising its coalition, as transpired in the seventies with the oil boom and as undergone by countries such as Brazil and Argentina with the accelerated growth in the demand for their merchandise (grains, meat, steel) from China in the past decades. However, once that exceptional situation was over, the accounts payable reverted and, on not having invested in future growth, the recession ended up being inevitable. That’s what happened in the seventies in Mexico and could well happen again.

The point is that we have at our door a year that should be benign for the Mexican economy, but great thunderheads at the end of this period. The colossal question is how the brand-new government will confront the panorama that presents: will it seek to create conditions for a more accelerated growth in the future, or will it devote itself to identifying guilty parties for a situation that is quite obviously predictable.

Even more important, how will the coalition behind AMLO react: Will it be willing to adapt itself to a complex environment or will it call for immediate satisfiers, benefits and public expenditure?  Faced with the inexistence of options, will it exact radical actions from the government? The scenario, easy to foresee, obliges thinking about potential conflicts or, at least, about the huge complexity in political management on the part of the government.

The essence of politics is the imperative of being able to choose. Galbraith said this in a manner beyond compare: “Politics is not the art of the possible. It consists in choosing between the disastrous and the unpalatable.” The problem for AMLO is, as illustrated by his party’s conduct in the Congress, his followers are not on board with the plan of accepting what is difficult to digest: rather, they are characterized by an absolute intransigence and a total indisposition for understanding the complexity of the exercise of power. In this context, Will AMLO behave like a statesman or like an activist, adding or alienating?