Reform What?

In one of his many memorable moments, on sitting down to play a game of dominoes, Cantinflas asked: “Are we going to play like gentlemen, or like what we are?” We have been playing for many years as what we are and not as gentlemen, that is, with rules of the game that always change. Without rules, without political agreement, there will be no reform worthy of the name. In a country in which the law is accepted solely to the extent to which it serves the interests of each person, group, or party, the point of departure must be that of agreeing on the rules of the game. Only in this manner can we aspire to obtain legislation or reform that might transcend the sheer vanity of its promoters. If there is something that proliferates, it is laws, but these do not modify the reality: they only complicate it. We have laws for everything, but their enforcement is always discretionary, therefore becoming a permanent source of arbitrariness; thence, of uncertainty.


It is evident that diverse reforms are urgent for the country. However, proceeding to approve them would constitute a futile exercise until and unless the point of departure is addressed: a political covenant to which all political actors are committed. This absence need not deter us from conducting a debate on the necessary reforms, but it does not guaranty any relevance either. In this spirit, the following are some of the conceptual themes that cry out for reform.


The first group refers to the functioning of the system of government. It is indispensable to redefine the government’s function, as well as to construct the checks and balances susceptible to making it work efficaciously. The first great theme that is necessary is to strengthen the presidency of the Republic. The presidency tended to be strong, but more because of its tie-in with the PRI than due to its Constitutional powers. Today, an institutional redefinition is required for the executive branch, as well as for its relationships with the other two branches. The three branches require equilibria in the form of checks and balances within a democratic context.


Next comes federalism. We went from a centralized system of control from the presidency to a libertine system –in politics and in the exercise of public spending- in which there are neither rules of play nor accountability. In this same regard, it is imperative to reconstruct public security, encroached upon during these years, precisely when the growth of narcotrafficking experienced runaway rhythms. The distinct levels of government must devote themselves to structuring an efficient system capable of restoring the safety of a population and of building the foundations of the Mexico of the future.


A second item is that of the economy. Just as in the political arena, there is an untold number of proposals for economic reform ranging from the fiscal to trade. If one accepts that it is essential to create an effective system of government, its equivalent within the economic milieu would be to create conditions for productivity to rise dramatically. This would imply three great approaches: first, integration of the national market; second, the creation of an environment that would make savings and investment propitious; and third, consolidation of public accounts. Each of these approaches is a world in itself, but the conceptual content of each is easy to elucidate.


Integration of a national market is what was not put into effect when the North American Free Trade Agreement (NAFTA) was set into motion, that is, the existing economic structure was preserved, leaving it to businesses or individuals with personal vision to exploit the perks of the new system. Creating a national market entails two processes: eliminating the barriers to access, and driving the transformation of the productive plant. The first would include conversion of the educational system into the platform for the development of social and human capital, elimination of the biases that create inequity, and creation of mechanisms that support restructuring companies that continue to function under the closed-market paradigm. In this same respect, effective rules are required to promote market competition, to submit the entire productive plant –including that of public enterprises- to competition, to eliminate mechanisms that protect the productive plant in order to favor a non-discriminatory environment, and to construct effective mechanisms in defense of consumer interest. The final objective would be to raise the general productivity of the Mexican economy. The fundamental means for achieving the latter would be to eliminate rent seeking, i.e., the tendency to prosper not because of productive capacity or innovation, but rather, as the result of political connections or regulatory barriers.


The creation of an environment that makes saving and investment propitious involves acting on all of the other fronts to create certainty, predictability, thus confidence, in the population. Although there are myriad specific actions and reforms that could be encapsulated under this section, in reality  this involves that resulting from actions on the previously mentioned fronts herein: effective checks and balances; effective government; equitable economic conditions; effective mechanisms for conflict resolution; continuity in governmental policies, and accountability. In the last analysis, all of the reforms undertaken must eventually create surroundings that are favorable for saving and investing, or they do not fulfill their mission.


Consolidating public accounts implies shoring up the government’s fiscal base, reducing its dependence on income from oil, and inspecting the spending structure of all government levels with the goal of achieving three central objectives: to eliminate the government’s fiscal vulnerability; to reduce superfluous, unnecessary, and electorally motivated expenditures (which leads to more spending than investment), and to distribute the fiscal burden, not only in fairer fashion, but also, for it to contribute to raising savings, investment, and productivity.


The great theme at present in Mexico is that of recognizing that the old system is no longer adequate for guiding the fate of the country, and that orchestration of this does not depend on persons themselves, but rather, on the strength of the institutions that they design, construct, and adopt. Recognizing the urgency of an institutional redefinition implies commencing with the latticework of political accords that are necessary so that a broad political-economic reform can be implemented. That is, the precondition for the series of reforms that are necessary is an accord among the political forces that recognizes the new realities and relations of power. Once this is resolved, legislation will consist of nothing other than putting it into writing.