The System and Walmart

The Walmart case is an affront because it illustrates a facet of Mexican life that no one wants to face. We all know that in Mexico nothing can be resolved without the employment of an intermediary that, in good Spanish, implies give and take, licit or not. The impressive breast beating that the case has incited does nothing more than confirm the old saying that “a good scapegoat is nearly as welcome as the solution to the problem”.

Beyond the specifics of the Walmart case, whose details remain obscure, what it evident is the fundamental contradiction that today characterizes the country and that can be synthesized in a phrase: today we have first-world entrepreneurs but still have a fifth-world system of government. The capacity of the country’s economy togrow depends on the strength of the companies, but this will always be restricted by the power of a vile bureaucracy whose rationality is not concerned with the growth of the economy, the generation of employment, or the enrichment of the country.

The matter exhibits several angles. Above all is the economic transformation that the country has experienced over the past decades and that, although real, has exerted a lesser impact than that promised. In the last twenty five years there have been numerous “investments” that, little by little, have transformed the nature of the economy. Among these the following are prominent: the liberalization of imports, which has drastically reduced the cost of industrial goods, but also of meat, clothing and footwear, to cite some obvious examples. The growth of the physical infrastructure -highways, dams, bridges, generation of electrical power- has permitted raising companies’ productivity, reducing communications costs, and making the supplying of electrical power reliable. The export capacity of the country has mushroomed in volume and in geographic diversity. With all of its defects, the electoral system has transformed the political culture. The middle class has grown prodigiously. Business productivity is comparable today with that of economies much wealthier than ours. The point is that, despite all of the limitations and problems, the country is transforming itself below the surface.

Surely delays persist in economic matters and the inputs supplied by many state companies, above all PEMEX and CFE, are not price competitive or dependable with respect to their delivery times. Similarly, there still arenumberless activities that continue to be protected, thus enjoying the dubious privilege of not having to compete. The result of all of these evils is that the overall economy is less competitive than it could be and that rather than generalizing the benefits of the successful part of the economic activity, these tend to concentrate. But what can’t be ignored is that today there are thousands of companies that are ultracompetitive and that, little by little, are changing the face of the economy.

What hasn’t changed is the quality of governmental administration, above all at the state and municipal level. The famed “permisology” (the science of getting permits of all kinds from government offices) continues to be as complex as ever. The simple opening of a business can take months and its incorporation into the Tax system or the Mexican Institute of Social Security can leave the sprightliest aged and infirm. But it is doubtless that those that take the cake are the local governments, whose modus vivendidepends on “contributions” by businesses to undertake any activity. The historical instruments of the politicians’ and bureaucrats’ sudden coming into wealth are construction and zoning permits, to which we may add diverse authorizations such as liquor licenses in restaurants and opening businesses.

What we have is the collision of two worlds. On the one hand, the liberalization of the economy was and continues to be partial, leaving behind infinite breaches of unproductiveness. On the other hand, a political system that was never reformed and that translates into criteria of plundering rather than of promotion by the authority, at all levels of government.

In the old system, much of which persists, governmental and political positions were distributed with criteria of awards for loyalty to the system or to expand the realm of control. That is, namingpublic officials responded to political and corporatist logic and entailed implicit permission to utilize each post for personal ends. Loyalty to the system was rewarded with positions that afforded access to power and/or corruption. A functionary saw the post not as an opportunity to generate economic development, attract companies to their locality or raise the productivity of an industry or a sector, but as a means of personal or group enrichment.

The latter has not changed practically anywhere. The Federal District delegation authorities or those of the municipalities still understand their positions as means to benefit their clienteles or to accumulate funds to line their own pockets or for the next electoral campaign. In other words, corruption was and is the raison d’être of the dividing up of government posts. It would be a truly exceptional situation for a civil servant -named or elected- to understand their function as that of promoting economic development and paving the way for this to occur.

From this perspective, what’s pathetic about the Walmart case is not the corruption into which this company could have fallen, but the impressive show of hypocrisy that has characterized the politicians, who now lend themselves to reviewing the files, as well as that of many of the critics, who would have us believe that they had never in their lives chanced upon any evidence of corruption. I doubt whether it would be possible to find a sole Mexican who has not been obliged to opt for obtaining a service or permit that requires the inevitable corruption fee, or to sustain himself in the limbo of morality.

Instead of insisting on this world of simulation, it would be more useful to begin to look for the way to resolve the basic problem: to construct a modern country. The country requires institutionalizing its governmental processes, eliminating the sources of discretionary authority that confer such great power on the bureaucracy and generating the growth platform that, due to these absences, continues being so decrepit. Professionalizing municipal services with managers who don’t change with the electoral cycles would be a good place to start. But this would only be relevant if the objective were the development of the country…

Yogi Berra said “Before we build a better mousetrap, we need to find out if there are any mice out there”. The question is whether we have budding statesmen/stateswomen or merely predatory bureaucrats.