Mexico: Still a Middle Class Society? – The Expert Take

WILSON CENTER – Mexico Institute - By Luis Rubio and Luis de la Calle

 While Mexico’s society is evolving fast, it surely has not become a fully transformed, democratic, wealthy Western country, but it is clearly moving in that direction. In our book, Mexico: A middle class society, Poor No More, Developed Not Yet, we argued that the country is no longer fundamentally poor. The numbers published by CONEVAL recently, together with other data previously produced by INEGI do not contradict our basic thesis. If one agrees that companies such as Cinemex, Cinepolis and Walmart are not in the business of losing money, then there is no way to explain their extraordinary pace of growth throughout the country. Mexicans are becoming better off even if not wealthy in any sense, the subtitle of our book.

The reasons why Mexicans are better off, or less bad, are critical to understanding what has changed and why. First and foremost, financial stability has drastically lowered the cost of money and an ever larger number of Mexicans have gained access to credit in the past two decades, particularly to mortgages, thus creating a solid foundation for family stability and economic improvement. Second, trade liberalization has radically lowered the cost of basic goods and staples: from clothing and shoes to foodstuffs. Mexicans are spending less money on basic goods, have a more solid family foundation and are spending some money on goods and services they could never have fathomed before. Third, as Mexico begins to enjoy a strong demographic shift parents are able to invest their scant resources in fewer children. This provides the foundations for accelerated growth if necessary reforms are implemented and stability is preserved.  Finally, household income has improved as families’ pool their earnings from all sorts of sources: steady jobs and the informal economy, scholarships and remittances. Each of these sources is important and the diversity has transformed the lives of a significant number of Mexicans.

The extraordinary fact is that a majority of Mexicans are no longer poor, which goes counter to perceptions in both Mexico and abroad. This may not change many things but, as Macario Schettino argues, to be wealthy one has to first imagine it. An ever larger number of Mexicans now have a chance to imagine it. And that changes everything.