Vices a la Argentine

Luis Rubio

The risk of Mexico acquiring the Argentinian vice of being permanently stuck in a limbo of mediocre economic performance -worse than in recent years- with recurring ups and downs, as well as frequent financial crises is real and rises with the policies adopted by the current government. The coincidences begin to be too many to not see the danger that their consolidation could imply for the country and the generations of young people who renewed their hope with AMLO.

Both Peronism and Morenism are inclusive movements, characterized by an enormous diversity of acolytes and followers, but with one element in common that is the fierce loyalty to the boss: everything is valid as long as that loyalty remains unbreakable. AMLO is replacing the few institutions that existed in the country with personal structures of loyalty and submission, two recipes for certain instability in the future. Instead of consolidating the few institutional advances that had been achieved, Mexico is moving towards a project where the rules of government are the will of one person, as happened in the years of the Kirchners in Argentina.

Secondly, the strategy of subsidizing and generating clienteles, which follows the same pattern of subordination, but on a massive scale, inexorably comes with the creation of new rights that, in time, become difficult, if not impossible to reverse. The Argentine fiscal crisis is not the product of chance, but of rights acquired over time, which then turn into obligations that the government has to pay with increasingly scarce resources. Mexico is already advancing in its demographic evolution towards a society with ever more pensioned adults and less new entrants into the labor force, to which the cost of AMLO’s clienteles will now be added.

Third, the policies adopted by the two Kirchner governments in Argentina suggest the kind of risks that the strategy of the new Mexican government is going to foist on the country: the centralization of all social programs in the presidential office. The Kirchners did something very similar with their “banner” programs: Universal Assignment for Child (Asignación Universal por Hijo), Social Income with Work (Ingreso Social con Trabajo), They Do (Ellas Hacen), More and Better Work (Plan Más y Mejor Trabajo), Unemployment Benefit (Prestación por Desempleo), The Completion Plan for Primary and Secondary Studies, Fines (El Plan de Finalización de Estudios Primarios y Secundarios), Argentina Works (Argentina Trabaja) and Entrepreneurs of our Land (Emprendedores de nuestra tierra).

Mexico had already experienced clientele-based programs (and failures) such as these, but since the nineties achieved a certain level of institutionalization of the social policy, which has now been dismantled at a speed that astonishes. Worse, it’s surprising that neither the beneficiaries of programs like Prospera nor what remains of the opposition have raised even a finger. In Argentina, these programs allowed the opposition to be overwhelmed in one electoral process after another: the inexorable question is whether AMLO will navigate with that same ease from here to the elections of 2021 or whether he’ll face at least some pushback. The critical question, as Ben Franklin would have it, is whether the citizenry will defend its conquests.

There are other coincidences that should be of concern about their effect on political competition and the deteriorating business environment. For example, the Youth Program Building the Future (Programa de Jóvenes Construyendo El Futuro), a scheme very similar to that used by the Kirchners to attract young people to the movement of La Cámpora, an organization dedicated to mobilizing unemployed young people with few alternatives in the labor market. This type of programs are designed to generate dependency on the government, eroding the development of a workforce guided by criteria of merit and productivity, increasingly important in the era of the digital economy. An army of permanently mobilized youth is useful for electoral purposes but destroys the economic future of a country.

When the president states that his objective is to subordinate economic decisions to political priorities, now strengthened by the Secretary of Finance’s resignation, he is ratifying that he’s willing to go one of the most powerful forces of our time. When Bill Clinton was running for the presidency, his main political advisor, James Carville, suddenly realized that the world had changed: “I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.” AMLO believes Mexico is still grounded in the 1980s…

The Argentine example is suggestive not only because of what happened there, but because it is the kind of program that AMLO and his followers see as desirable. The disappearance of (almost) all technical capacity in the government allows implementing costly programs without measuring any of their potential consequences, besides providing incentives to adopt policies whose medium and long-term effects always end up being devastating, such as price controls, nationalization of the pension funds and the use of tools such as legal reserve requirements as well as compulsory lending programs at banks. Some members of Morena drool at this type of mechanisms. They have no idea of the destruction they imply.