The Principle

 Luis Rubio

In the realm of folklore and ancient traditions, as set forth by Carlos Lozada, myths are tales forever retold for their wisdom and underlying truths. No one understands this logic better than President López Obrador, who is not only a master of narrative (and mythology), but of another trait that few have noticed: his success does not depend on his concrete actions or on his results, but instead on his personality cult. To date, the formula has been implacable; the question is what that implies for the future of the country.

There are at least four factors that are critical for development and that the presidential narrative reviles day in and day out, but not for that do they stop being key:  investment and economic growth; security; the relationship with the United States; and the rules of the game. In terms of each of these items, the President has been gnawing away at the scaffolds, frail in themselves, which make things work.

Development is, evidently, the sole objective possible, despite the disdain in which the current government holds it. Focused exclusively on power and its perpetuation, it prefers a poor but loyal electorate to a developed and wealthy country with a hale and hearty citizenry. Regardless of who wins the 2024 election, he or she will be obligated to focus on development (and what that implies in terms o health and education) not only due to the obviousness of its being the only possibility for the country’s future, but also because social problems have been piling up. The formula is known: create conditions to attract capital, without which economic growth is impossible, but with a redistributive strategy that allows raising the population’s living standards without affecting the functioning of the economy. All that is required is certainty: clear and predictable rules. Given the conditions, nearshoring is a huge opportunity (not a panacea) that can grow without limits.

Security is a matter that is not only unresolved, but one that becomes more complicated by the day. Whatever the governmental spokespersons say, it is evident that organized crime controls vast territories, where extortion, abduction and violence reign. Nominal popularity can be high, but the reality at ground-floor level is mutilating and is not solved with rhetoric nor with the National Guard that is not a substitute for local police forces (and judicial system) that protects the population and generates an environment of stability and peace. The Army is a requisite, but solely to pacify the country, not to make it function. Bear hugs look great, but security hinges on an everyday life not besmirched by fears or grounds for the latter.

Berating the Americans and inviting their rivals to the Independence Parade is perhaps the most revelatory of Mexico’s mythical rottenness. Rallying for the people to wrap themselves in the flag was viable as a strategy fifty years ago, but not in the era in which it is increasingly rarer to find a family with no direct relatives in the U.S. This in addition to the economic, political and social   transcendence of the exports and remittances for the country’s stability. It would seem suicidal attempting against these manifest sources of viability.

Finally, the rules of the game: what is technically known as the Rule of Law. The great achievement of the original Free Trade Agreement (NAFTA) was that it engendered a legal and regulatory framework that would confer certainty on the investor and the entrepreneur: general rules, which were clear and that could be enforced through trustworthy, not politicized mechanisms. AMLO has inverted the equation: rather than general and known rules, he has tried to solve every situation in individual fashion, revealing that he does not care for the law, nor does he understand (or cares for) what makes investors tick: the reliability of the general rules.

The question remains of how to confront these maladies. The answer is, in concept, crystal clear. Thirty years ago, a scheme of rules of the game and reliable dispute resolution mechanisms was sought through an international treaty, which in essence implied that Mexico borrowed the rules and judicial system in trade and investment matters from our trading partners. That avenue has not been exhausted, but it has experienced serious deterioration. Consequently, the only way to recreate conditions that make the rules predictable is with enforceable internal political arrangements. In a word: Mexicans have to do today what could not be achieved internally before: a political-legal framework that is reliable.

The great challenge for the next government will lie in building a framework of agreements that reduce the sources of hatred and polarization, which translate into political agreements that entail a source of reliability and certainty for the economic agents. It sounds complex, but it is the only way through which Mexicans can contemplate a way out of the hole in which the current government has placed them and whose legacy will be much more complex and chaotic than apparent.

The country needs an “indigenous” understanding that opens spaces for participation and eliminates sources of disruption and insecurity. This would involve the formal political forces, but also a broad representation of the citizenry, business, and unions. Mexico has become too large and complex to depend on a few actors with special interests. The challenge is enormous, but so is the opportunity.