The Effectiveness of the Governmen

                                                                                          Luis Rubio

At the beginning of President Peña’s government the notion in vogue was that this would be a great opportunity for Mexico, the so-called “Mexican moment”, and that all that was needed to consecrate it in reality was an effective government. As a campaign stunt it was powerful and it was convincing for a sufficient proportion of the electorate to ensure its triumph. The experience of the months since then confirms something that all of us Mexicans instinctively know: although governmental effectiveness is necessary (and regardless of how much rhetoric is employed), there is no certainty that the country will achieve development.

Success in development has nothing to do with the country’s potential (infinite), but with its performance and this depends on more than an effective government. Required are strong institutions, a competent government (not the same as effective) and, above all, a consolidated Rule of Law.

At present, Mexico is exhibiting an enormous tendency toward chaos, defining this as corruption, poor government, uncertainty, violence, criminality and volatility. There are regions of the country that are immersed in permanent chaos, which may not impede the functioning of daily life, but does make it impossible to think about development as a real possibility. The same is true for less chaotic regions, but there the essence of the lack of predictability (the sine qua non for the Rule of Law) lies is in the reigning impunity.

Millions of Mexicans have developed an extraordinary capacity for adapting themselves, functioning with a certain degree of normality and being successful. Practically all who achieve success take pride in that their feat was accomplished in spite of the government. At the same time, it is evident that without a competent, reliable and effective government success is always relative, mercurial  and subject to so many circumstances and comings and goings –chaos- that there’s no way of making it endure. The key, then, resides in the conformation of a competent system of government.

An effective government is indispensable for the functioning of a country, provided that effectiveness is not identified with arbitrariness. It is clear that in the country there abides no end of abuses, freeloaders, disorder and criminals, a scenario that demands a strong government, one capable of establishing order, limiting those excesses and creating an environment propitious for development. But that effective government must exist and operate within an institutional context that holds it in check and that avoids its own potential to overstep itself.

A government must be able to count on sufficient attributions to be able to act, and with a margin of discretion that allows it to comply with its duty. However, those powers cannot be so wide-ranging as to permit it flagrant impunity, the old predicament of who takes care of the caretakers.

In Mexico we do not frequently make a distinction between discretionary powers and arbitrariness, but the difference is one that separates an effective government from one bent on impunity. On one occasion I was present at an audit conducted by the U.S. Securities and Exchange Commission (SEC) and two things impressed me: on the one hand, the unlimited discretionary powers of that governmental agency; on the other, however, I was also impacted by the total absence of arbitrariness in its processes. When the result was finally emitted of its probe it delivered a thick stack of bound sheets of paper in which the resolution itself was found on a single sheet at the top of an enormous document. The entire remainder of the latter comprised an explanation of what had motivated the Commission’s decision, why it modified its judgment with respect to existing precedents and what its view was toward the future. That is, although its decision had been severe, there was nary a nanometer of fat in it and all of the actors in the process were precisely clear on what was to follow. This contrasts with the typical resolutions of our regulating agencies (such as the old Federal Competition Commission) where one page resolves the issue at hand with no explanation and independently of whether a decision contradicts prior or later ones. This is a particularly relevant issue in light of the recent energy reform.

To be successful Mexico has to construct solid institutions that bestow certainty on the citizenry: that permit it to trust that there are competent authorities who are not going to act with impunity nor conceal it. A strong institution implies limiting the government’s potential for abuse of authority vis-à-vis the citizenry, without this curtailing its functioning. It is within this context that the architecture of institutions is so transcendental: a poor design –I think back to the recent electoral political imbroglio- may not repress but rather may multiply the corruption of the system.

Another benefit, one not lesser than that of the existence of strong institutions, resides at the core of Mandeville’s book The Fable of the Bees: human societies can prosper if they have proper institutions, as occurs with those of bees, even when some of their members act violently or simply behave badly. That is, the key to a good performance of the country –raising growth, more employment, better salaries, peace and safety- resides in the construction of solid institutional foundations that, without hindering the functioning of the government, impede its excesses.

Another way of saying the same thing is that, to be successful,  Mexicans must construct a normal country, yet one not so exceptional that it makes it impossible to be successful.