Luis Rubio

The objective, as the president tells Mexicans once and again, is regime change. However, to judge by his actions, his true mission is that of concentrating power and eliminating any source of opposition or counterweight. Perhaps this would be a new regime as the president promised, but that is certainly not the reason why the electorate went for the president back in 2018 in such a big way.

The real problem that Mexico faces, the reason why President López Obrador won the presidency in 2018, is that the population was fed up after three decades of reforms from which it was perceiving few benefits. And that electorate was right. What the country had experienced in recent times was not an incorrect path, but instead a skewed process that had not resolved -in fact, that it had not even confronted- the structural problems that had ended up translating into enormous convergences of power and wealth, as well as intolerable regional disparities.

The key question is not who the guilty party is, the daily theme of the President´s early-morning press conferences, but rather what the cause is of these poor or biased results. Had Mexico been the sole nation on the planet that undertook that reform process, it would stand to reason to proceed to determine who made a mistake and why. However, given that the strategy followed comprises a virtually universal blueprint, the pertinent query is another: why were results of nations such as Korea, Taiwan, China, Chile, and similar others so much more successful?

In a word, what is it that Mexico did not do -or that it did wrong- that was done right in other latitudes? In the sixties, for example, Korea as well as Mexico made the opportunity created by the U.S. Customs Law their own by permitting the importation into the country of manufactured goods paying only a tax on the value added in a third country, which is known as a maquila or assembly tariff: raw materials, prime parts and components are imported, and processed goods are exported. In Korea, maquiladora plants were installed in that nation´s industrial centers to stimulate the development of an ample industry of suppliers, to the extent that, decades later, more than 80% of inputs are derived from local enterprises. In Mexico, that number was never higher than 10%. The establishment of similar value-added operations in Mexico was circumscribed in northern border regions to avoid “contamination” of the remainder of the industry.

Something much the same took place from the eighties in which the economy was opened to imports to promote the growth of a modern industrial plant, an export base and to raise the general productivity of the economy. The objective was clear and indisputable, identical to what occurred in other nations that in the end proved successful. What was the difference? It was that those nations understood the liberalization as an integral process of change in which there would be no sacred cows: this is no better illustrated than by China. In that nation it was decided that the priority was to raise growth rates and that there would be no obstacle that would impede this. Next step was to deal with unions, petty fiefdoms, and personal interests that impeded growth to achieve the objective. Mexico continues to be plagued by mafias in charge of education and abusive unions and criminal syndicates that extort firms as well as workers, and a panoply of untouchable political and business interests.

The result is an industrial powerhouse, but accompanied by an old manufacturing plant that is obsolete, living in a limbo of ever lower productivity, incapable of competing in the world.

An example says more than a thousand words: in view of all the ongoing conflict between the US and China, many speculate that there will be thousands of plants migrating from China to other locations, including Mexico. Nonetheless, the experience of Apple with the iPhone suggests something quite distinct. The production of that sophisticated artifact required a highly skilled work force, one that is extraordinarily disciplined and that possesses skills specifically developed for high-tech processes. Apple has explored other options, but none offers an educative system capable of generating that labor force, and a government dedicated to resolving problems for their productive system to be successful, and the scale necessary to satisfy their market. Many nations would entertain dreams of attracting the Apples of this world -which pay excellent salaries and contribute to the general development- but none is devoting itself to engendering the conditions for this to come about.

A workforce such as that of Apple -one example among thousands- allows the middle class to grow, elevates overall welfare, and propagates prosperity. In other words, it becomes a regime change because it undermines the concentration on wealth and diminishes regional imbalances.

Companies can generate jobs and produce exceptional artifacts, but only governments can create the conditions for a middle class to prosper in an accelerated manner, as have the previously mentioned nations. None of that is happening in Mexico.

Instead of obsolete refineries and inoperable airports, the government should, for instance, remove the union mafias and devise a new educative system with the teachers themselves at the helm. That is, reforming everything that no one has wanted to touch because it threatens the true objective, which is not development but power.